BiggerPockets Real Estate Podcast - Home Prices Could Stagnate for Years

Episode Date: August 18, 2025

We may be entering a rare period where home prices stagnate for years. It’s been a long time since we’ve seen real estate prices not appreciate year-over-year, but this reality is becoming increasingly likely every day. With low affordability, high mortgage rates, rising supply, and steady demand, the tables are starting to turn for one of the hottest asset classes of the past decade (real estate). The question is, should you buy fully knowing prices won’t rise anytime soon? J Scott has been investing in real estate for decades. He’s been through the booms and the busts and has maintained a very even demeanor, even in the best and worst of times. So, we brought on a real estate veteran to answer a simple question: Is real estate still worth investing in with stagnant prices, and if so, how do you make appreciation when the market won’t give it to you? J shares why home prices will likely stay flat or even dip for years to come, the strategies you can still use to raise your property values by sizable margins, two types of financing that work best for times like these (and benefit the investor), and when real estate could bounce back. Scared to invest when you don’t know where prices are going? Listen to J’s advice! In This Episode We Cover Real estate price predictions and how long we could go with a sideways market  The two things that control home prices and the direction they’re going in Could real estate prices crash in the near future?  How to use inflation to your advantage and get more from the banks  Two creative ways to finance your next rental that work best in price-stagnant markets  One real estate niche that could be bottoming out with significant price discounts  And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1162 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Home prices always go up, but what if they don't? Housing appreciation is the bedrock of real estate investing, and in a lot of ways of the entire U.S. economy. But prices aren't really going up right now, and they may actually fall for a while, and although no one wants to talk about it, we have to talk about it. This is how to invest profitably while home prices decline. Hey, everyone, I'm Dave Meyer. I'm a housing market analyst, and I've been investing in real estate for more than 15 years. And on the Bigger Pockets Real Estate podcast,

we help you achieve financial freedom through rental properties. Today on the show, we are talking about a big change in the housing market. Home price appreciation has really slowed a lot in recent years, and prices, at least to me,

are likely to begin to decline in a lot of markets by the end of the year. Now, to be clear, I am not saying we are headed for a real estate crash. There is no evidence that something like that is imminent. And not saying prices will never go up again, in the long run, they very, very likely will.

But prices falling at all is not a dynamic we've seen in a long time. So I want to talk about how investors can take advantage of the very real opportunities this kind of market provides and protects themselves against risk, even if they can't just pencil in growth every single year without analyzing deals. Here to do that with me is my longtime friend, the co-authored, of my book, Real Estate by the Numbers, and Friend of the Show and Bigger Pockets in general, Jay, welcome back to the show. Thanks for having me once again. Glad to be here. I am glad to have you. I was thinking about this topic and instantly you came to mind as the person to have this conversation with. I have been saying, going on three or four years now, that my belief is that real

estate prices have substantially plateaued and will stay somewhere in the vicinity of where they are for maybe the next three, four, five, six years. And the reason for that is because historically what we see is that real estate tracks inflation. If you go from 1900 to about 2014 and you kind of graph out the inflation trend line and the real estate home values trend line, they basically go from the same starting point to the same ending point. Now, they diverged for a little bit there in 2008, but they kind of reconverged around 2013 or 14. Good reason to believe, based on that, that long-term housing should grow at about the rate of inflation. Now, we've seen over the last few years since 2014, and especially since 2020, that we've, those, those two trend lines have significantly

diverged again. So housing has gone much higher than, than the inflation trend line. So one possibility is that we see housing prices come crashing back down and those two trend lines kind of intersect again. But my thesis is that given where we are in terms of the inflationary cycle, given where we are in terms of supply and demand characteristics in the market, that what's more likely is that inflation is going to continue to go up over the next several years, but real estate's going to stay flat. And those two trend lines will meet up again at some point in the future. I've sort of reached a similar conclusion looking at a different metric because I think the inflation argument makes a lot of sense what you just said. There's also sort of the affordability piece of it too, which, you know, we are at near 40-year historic lows for affordability.

And a lot of people point out, say like, oh, the market needs to crash in order to get back closer, at least, to historic affordability. not necessarily. I think most of the economists I talk to either on this show or on the market, what they point to is like what can happen instead of a market crash is that prices stay flat and hopefully wages start to increase. Maybe rates come down a little bit. And then you sort of get this gradual restoration of affordability. It doesn't have to be this big event. If prices just stay even, that can still happen over time. So it's like two different, two different methodologies. but sort of reaching a similar conclusion. Yeah, and here's the other way I like to think about it.

We can take a 10,000-foot view of it, but at the end of the day, if we want to see higher prices, if we think they're going to be higher prices, we need to argue why we think supply is either going to go down more or demand is going to increase more. And I think it's unlikely that we see either of those in the near future. Supply is already at, or it was as of a few months ago, it's starting to go up in a lot of markets. But as of a few months ago, supply was basically at a historic low. And demand right now is tremendously high. We're under supplied on housing. A lot of people want to buy houses, whether it's residential homeowners, whether it's investors. There's a ton of demand. I've heard

numbers, something like $2 to $300 billion of cash sitting on the sidelines looking for a home in real estate. And so I think it's unlikely that over the next couple years we're going to see lower supply and higher demand. So I don't think prices are going to go up significantly. So then the question is, are we going to see prices go down? And for that to happen, we'd have to see the opposite. We'd either have to see much higher supply or higher supply and lower demand. And I think it's possible that we're going to see that. So let's talk about each of those sides. So on the supply side, what would it take to see higher supply? The obvious answer, the obvious answer is a recession. So if people are forced to sell for some reason, if people are losing their jobs, if they're having their hours cut, if they're having their wages cut, if they can't pay their mortgage, if they have to move to another town to get a better job or a different job, we're going to see supply go up. People are going to be forced to sell their houses. Then we have to ask the question, how about on the demand side? For prices to come down, not only is supply going to have to go up, but for prices to come down, we're going to want to see some less demand as well because there's so much demand out there.

right now that if supply went up a little bit, if five or 10% more people wanted to sell their house, there's enough demand out there that it would probably be absorbed and prices probably wouldn't drop. So I think to see a significant drop in prices, the big thing we would have to see is a big drop in demand. And I think there's only two things that lead to a big drop in demand. One, a recession so bad that investors and homeowners are terrified to buy again. So for anybody that was investing in 2008. We remember this. We saw prices drop by 10, 20, 30, and some places 40 or 50%. And a lot of us who weren't investing, if you weren't investing in 2008, you're probably thinking, wow, prices dropped 50%. How could I not have been buying everything out there? And the

answer is, it was a scary time. You woke up every day thinking, how much worse is this going to get? Is this ever going to recover? This could be a 10 or 20 year recession. That's what it felt like back then. And so nobody, even though we had the opportunity to buy at amazing prices, it was hard to pull the trigger because it was so scary. So that's one thing that could happen that could reduce demand. The second thing that could happen that could reduce demand was another thing that happened in 2008 due to the recession. And that's bank stopped lending. When banks stop lending, even if people want to buy houses, they're not going to be able to. So my thesis is that it's unlikely prices are going to go up because it's unlikely that supply is going to drop more, demand's going to go up more.

And it's unlikely we're going to see significant drop in prices simply because for that to happen, we would have to have a major, major recession where people were too scared to buy and banks were too scared to lend. And I think that's unlikely as well. So again, if you look at it in that context, I think it's also a good argument for why I believe prices are likely to be relatively stagnant over the next few years. I do tend to agree with you, Jay. Thank you for the explanation. And for similar reasons, I would imagine that people are wondering, what about if rates come down? Could that dramatically increase demand without a corresponding increase in supply? Because that's kind of the key, right? It could increase demand, but if supply goes up at the same rate,

then prices don't really grow that much. There's another intermediate discussion we need to have. You mentioned rates. And so a big question is, do we think rates are coming down? And what would it take for rates to come down? And I think this is the discussion I have with a lot of real estate investors that they really don't like to hear. But the reality is, I think it's highly unlikely that we're going to see significantly lower interest rates unless we see a significantly softer economy. Unless we see a recession, we're not going to see lower rates.

Well, I don't think it's a given for a lot of people because there's a lot of talk now that the Federal Reserve is going to be pressured to lower rates or that the president's going to fire the Jerome Powell or Jerome Powell's term is going to end the beginning of next year, and he's going to be replaced with somebody who's a little bit more a little bit more doveish on rates and is willing to cut rates. But my personal opinion is, and there's a lot of data that supports this, if the Fed cuts their key interest rate called the federal funds rate, without a corresponding

softening in the economy, it's not going to bring down mortgage rates. It's very possible that we can see the Fed drop rates. In fact, we saw that three times last year. year. Cut rates and mortgage rates went up. Yeah, and mortgage rates went up. And so I don't think it's the Fed dropping rates that's going to lead to mortgage rates coming down. It would have to be a softening in the economy. And if you have a softening in the economy, well, that leads to the other questions of how many people are dealing with job losses. How bad is that softening in that recession? And is it going to trigger other concerns that are going to impact supply and demand outside of just rates? Yeah, well, I'm on the downer, the buzzkill train with that.

huge. I put on on the market, I put out a forecast for, uh, for mortgage rates for the rest of the year. And I said, I don't think they're gone much lower than they are today. It's six and a half percent. And, uh, you know, maybe they will. But I believe that sort of regardless of what the Fed does. I don't think the bond market's going to move. I think that I've said this before. And you can listen to the other podcasts if you want to get into this, but, but, you know, just so everyone knows, mortgage rates are not controlled by the Fed. The Fed controls the federal fund rate, which impacts short-term lending and borrowing costs. That is one element that impacts the bond market and mortgage costs, but it's not the only one. And I personally just

think there's so much uncertainty in the global economy that's going on that bond investors are going to need to see a lot more data, a lot more clarity around not just what the federal funds rate is, but inflation, GDP growth, geopolitical tensions. All this stuff needs to be, we need to get some line of sight on where it's going before the bond market's going to move a lot in either direction, in my opinion. And so that's why I think mortgage rates are going the same. But that's where I stand. So I think Jay and I maybe were buzz kills. But I think the whole point here is that like, at least to me, I think there are ways, even with rates as high as they are, even if you're going to have sideways prices, that you could still invest in real estate. So I do

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Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the most modern investor. Welcome back to the Bigger Pockets podcast. I'm here with Jay Scott talking about how to invest in the world where, you know, home prices might be flat for a while. Rates might stay where they are. Jay, does that mean that real estate is dead or are there ways that you can still earn a profit? I don't think that means real estate is dead. In fact, what I've been saying for as long as I've been doing these podcasts with you, Dave and before you, David Green and Brandon Turner and Josh Dorkin,

saying this for literally over a decade now, that we shouldn't be banking on appreciation. Even if we think we're going to see significant appreciation over the next several years, we shouldn't be putting our faith in that. We shouldn't be running numbers based on that. We shouldn't be making purchase decisions based on that. A very smart person that I saw speak at a conference a couple weeks ago said it best. He said, don't pay $3 for an asset that's worth $1.1. dollar in the hopes that it goes to $5.

Yes. That's not a good investing strategy. A good investing strategy is buying a property that's worth a dollar for 50 cents and maybe you get lucky and it goes to $5. But you're buying it for the inherent value on the day you purchase it, not the potential value a year, two years, five, ten years down the road. Because you are so consistent about this, this is exactly why I wanted to have you on to talk about this. You have been preaching this strategy for as long as I've been listening to you for

a long time. I have. And let me tell you something. It means that buying real estate today is harder. Yeah. And in some ways, less profitable than it has been in the past, or at least less profitable short term than it has been in the past. But when you look at real estate, the benefits that real estate provides outside of appreciation, again, maybe we'll get lucky and maybe, maybe prices will go up. And we don't have to get lucky. If you're going to hold a property for 10 years or 15 years, it's going to go up in value. There's been no 10-year period in history where real estate hasn't gone up in value. So we will get the appreciation.

It just may not be next week or next month or next year. But there are other benefits to real estate that we should be focused on in a market where prices are flat, or even where prices might be coming down that still can be beneficial to buy real estate in a market where your concern prices are coming down. because we don't know. I mean, I remember back in 2020, people thinking that it was the end of the world and real estate was going to crash and everybody was sitting saying, okay, as soon as we see a 10% drop or a 20% drop or a 30% drop, I'm buying. And here we are four years later and prices have gone up 50%. Yeah, you missed the biggest bull run in real estate, probably in history. Exactly. So even if we're quote unquote certain that prices are coming down, we don't know that for sure. Okay. So what are these other reasons? to buy real estate besides appreciation. Number one is cash flow. And that's the thing that we're not going to see nearly as much of today as we would have seen three or four years ago when interest rates were really low or 15 years ago when values were really low. To get good cash flow,

you either need low values or relatively high rents to value or you need low interest rates. We're not going to get that today. So we may not be buying for cash flow, but the key is you want to buy properties that generate at least enough cash flow that it's going to pay all of your expenses and your mortgage every month. You don't want to be losing money each month because that's not sustainable. It might be sustainable for a couple weeks or a couple months, maybe even a year or two, but most of us can't sustain losing money every month for the next 10 years. So buy properties that they don't necessarily have to have a lot of cash flow, but enough that they're maintaining themselves. They pay for all their expenses and their mortgage every month. So that's number one is cash flow.

Number two is principal paydown. So one of the best benefits of real estate is the ability to get large loans against your asset. You can buy a house. You can get a loan for 60, 65, 70, 75% of the value. And your tenant is now paying that loan for you. And so over time, over 5, 10, 15, 30 years, your tenant is paying off that loan. So that $300,000 property that you bought for $50,000 because you've got to take.

$250,000 loan, well, your tenant is now paid off and that $250,000 loan is now your equity. So loan pay down is a huge one. And then finally is the tax benefits. And we don't talk about this enough, but there are tremendous tax benefits in real estate, even with single family houses. So we talk about, or I've talked about a lot in the past, that over the course of my career, the rental houses I've held have generated about a 15% of, return year over year. And that's inclusive of the cash flow. It's inclusive of the tax benefits. That's

inclusive of the principal pay down. But a significant portion of that is the tax benefits. A significant portion of what I'm earning is the tax benefits. And the nice thing about tax benefits is it basically keeps money in your pocket so that you can invest in other things. You're not giving that money to the government as soon and sometimes not at all. And that allows you to invest and compound your money more quickly. So tax benefits are a huge. benefit. So again, even if you're not getting the appreciation or you don't expect to get the appreciation, there's still a lot of great benefits to investing. And there's no reason to stop investing at any time if you can get one, two, or three of those other benefits.

The way I think about is those three provide a really nice floor for your investment, because they're very low risk. If you are analyzing your deals correctly and you're producing positive cash flow, you shouldn't have risk. in that because you're accounting for all of your expenses. And I know some people go on social media and they're like, cash flow is not, you know, you might have cash flow until your hot water heater breaks. Well, if you're not accounting for the hot water heater breaking, you didn't have cash flow in the first place. You had bad math. You were just not thinking about this the right way. But if you have real cash flow, outwardization and tax benefits, those things,

they don't care about market cycles. Like, sure, there are times when rents go down, but those are very few and far between. There are times when vacancies go up a little bit, that can happen. But it is, you know, those are minor things. They're relatively low risk. And then, as Jay said, that that's what allows you to earn a return while you're holding on to the property for 10 years, like you said. And then properties will at least keep pace with inflation over the long run, you know, and then sometimes you might get these beneficial times where they do, we might not. We don't know. But then you put you in your position.

So you're already earning a decent return, a strong return. And then you have the opportunity to maybe earn some amazing return if it so happens in your area or macroeconomic conditions allow it. And let's talk about something else. I mean, when is it a good time to borrow money? Obviously, you want to borrow money against good assets anytime, cash flowing assets anytime. But the best time to borrow money is an inflationary environment.

If we have a decent amount of inflation, borrowing money today is going to be paid off in dollars that are worth less in the future. Inflation means our money is going down in value. And so if we expect that we're going to see a good bit of inflation over the next year, five years, or ten years, now is a great time to be borrowing money because that's another benefit that it's hard to calculate exactly how much it helps us. But I promise you, it helps us. And so I personally believe that we are heading into what's likely. to be an inflationary part of the economic cycle. I think that over the next five to ten years, we're going to see higher than average inflation, regardless of what the government does, regardless of what the Federal Reserve does, because that's just where we are in the cycle,

both our debt cycle, our currency cycle, the economic cycle. And so if you think we're going to have a good bit of inflation over the next five to ten years, having a lot of debt, good debt is going to be an extra benefit. Yeah, inflationary cycles hurt the lenders, not the borrowers in these kinds of situations. A hundred percent. I wouldn't want to be lending money over the next 10 years, but I definitely want to be borrowed. Definitely not long-term lending. You know, short-term lending is a little different, but yeah, long-term lending. So this all makes a lot of sense to me. One thing I thought you would mention, though, Jay, is, and we should talk about it, is like the distinction between what in our book we wrote together called market appreciation, which is like macroeconomic

forces. And then there's this other thing that some people call forced depreciation, some people call it value add, whatever it is. But the idea of buying an asset that is not up to its highest and best use, renovating it and bringing it up, what do you think about doing that in this type of market? Yeah, I'm surprised it didn't flow out of me naturally. But yeah, so I kind of disregarded appreciation. But as you said, there really are two types of appreciation. There's the the market or natural appreciation, the thing we can't control, and then the forced depreciation, the thing we can control, you buy something that's run down for 50 cents on the dollar, you put in 30 cents on the dollar, and now it's worth the full dollar. You've basically,

you've built equity by fixing up that property. And I think there's a ton of benefit there. I think there's a lot of benefit there, probably more than a lot of points in history, for the sole reason that we've seen a lot fewer transactions over the last five years, 10 years, because interest rates have been low, sellers haven't sold as much. So we have a lot of owners who have held their properties for longer than the average period of time, and the longer a homeowner owns a property, most homeowners don't do a good job of keeping up with repairs and maintenance, et cetera. And so if homeowners are keeping their properties for longer, when they do sell them, they're going to be more distressed. And so I suspect over the next couple years as we start to see these properties hitting the market that were purchased in 2015, 16, 17, 18, they're going to be more distressed than the typical home that we're accustomed to buying.

And that distress is going to allow us to do a couple things. One, hopefully buy it a little bit cheaper than we otherwise could. But two, add that value through renovations, through improvement of the property so that we can force the value up there. well. Yeah. I am seeing this as a big opportunity right now for all the reasons you just said. I also was looking at some study recently and some data that shows that during these kind of sideways markets or when we get into more of a buyer's market like we're getting into now, the housing market splits a little bit. And a lot of times really great assets, even if, you know, in your neighborhood, in your city, if prices are flat or maybe even declining a little

but certain assets are still going to keep growing or they're going to hold their value. And usually that's like things that are really nicely renovated and that are moving ready. Meanwhile, the properties that start to lose their value are the distressed ones. We got away from this during COVID where everyone was just buying anything that they could get their hands on, including distressed properties. And that premium that you usually pay for a nice, stabilized asset sort of went away. people were paying that same premium for distressed assets. Now we're sort of going back to that normal time where there's an appropriate level of

discount on distressed assets. And that increases the potential margin, I think, for flipping, sure, but also just it could be a burr or it could just even be buying a rental property that needs a facelift, you know, and giving it that facelift, driving up rents and increasing the value. No, I 100% agree. All right, well, I do want to hear from you, Jay, some other strategies that you think would work well in this environment. But we've got to take one more quick break. We'll be right back. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest.

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completely free. That includes places renters are already searching, like Realtor.com, Apartments.com, Redfin, and more. No copying and pasting. No juggling multiple platforms, just one listing that shows up everywhere. If getting rentals organized and filled fast is on the list this year, start with Avail. Sign up for free at Avail.co.com slash Bigger Pockets. Welcome back to the Bigger Pockets podcast. I'm here with longtime BP community legend, Jay Scott. We were talking a little bit about value ad as a great way to invest right now. Jay, what are some other things you would think about, you know, average listener of bigger pockets, average investor, what are some approaches you think could work in this environment?

One that I really like is seller financing. I think that there's going to be an opportunity. I don't like talking about this concept of subject to where you take somebody else's loan. There's a lot of risks around it. I'm not suggesting anybody jump into it lightly. but there's this idea of a distressed seller sometimes has the ability, if their loan gives them the ability, to basically sell a property and the loan at the same time, basically allow the buyer to take over the loan. And so we have a lot of sellers, we have a lot of homeowners that got loans back in 2020, 2021, 2021, 22, at 2, 3, 4%.

And the value of that property today isn't just the property, but the loan itself. Anytime you can inherit or take over a loan that's at 2 or 3 or 4%, where new loans are at 6 or 7%, there's a lot of value in that. And so if you're working with a homeowner that has the ability to transfer their loan, to basically allow you to assume their loan, or if you can find a way to legally take over the loan, notify the lender that you're doing it, get approval, there's a great opportunity for buyers today to basically get built-in financing that was as good as we had a couple years ago. So that's number one. Number two, I really like option contracts. So an option contract is basically this idea of you go to a seller and you basically, you don't buy the property today, but you give the seller some amount of money to give you the right to buy that property at some point in the future.

Interesting. So you're basically buying the option to buy the property at some point in the future. And you can decide that point in the future could be six months. It could be a year. It could be five years. and that gives you time to decide, do I really want to buy this? Can I do with this property what I expect to do? Is it going to perform the way I expect it to perform?

Is the market going to go where I expected to go? For anybody out there that is looking to do a deal, this works especially well with commercial deals, with multifamily deals, but it can also work with single-family deals if you're looking to do a deal, but you're a little bit skittish. You don't know that you're necessarily going to be able to do exactly what you want to do with the property. you're not comfortable that now is the right time to buy and you'd love to have six or 12 months to kind of think about it and see where the market goes. An option contract can be a great way for you to take advantage of that and to control the property without necessarily buying it today.

I have heard this more in the commercial space and I think it makes a lot of sense because sellers might just be more willing to do this than they have been in the last five plus years. I don't know that we're in this situation. Do you think it works in residential as well? It does. And I've seen it working residential. It tends to work better when you're dealing with somebody who is well versed in how to structure deals. So if you're buying from an investor, for example, so I have literally sold a half dozen properties on option contracts.

I've had other investors that have come to me and said, hey, I might want to buy this property. I want six months to basically learn the area or to figure out if I really. want to move forward, they pay me some amount of money to give them the right to buy it at a certain price for the next six or 12 months. And in every case, they've ended up moving forward. And so that's been good for me because I've ultimately gotten the property sold. It's been good for them because they had the six or 12 months to do their due diligence and decide if they really wanted to move forward. So yeah, it can definitely work with single family residential as well. But again, it works best when you're working with other investors selling investment property.

You mentioned seller financing, which is kind of like these assumable mortgages, but I just think like it's kind of shocking, I think for most people that don't study this stuff. But 40% of homes in the U.S. are owned free and clear, something like that. And I've a little bit more. Yeah. And so I think, you know, a lot of those are owned by older folks. And I have not really bought into this idea of the silver tsunami in the past where people say like, oh, it's going to flood the market. But I do think people who are willing to do seller financing, that actually might go up in the future, even just for regular people. One, because they're going to want to get rid of their house. They don't have a mortgage, but that kind of predictable income for someone who's retired is actually super valuable. Like if you're saying, hey, I'll pay you 5% interest on your home. Like that's actually could be a great deal for someone who's in retirement. And so this could be like this mutual, this emerging mutually beneficial circumstance where a lot of

younger investors want to buy these properties from people who could use. you know, mailbox money essentially. Yeah, I kind of merged together seller financing and subject two into kind of one thing earlier. And I was talking more about the mortgage side of things, but absolutely seller financing has some great opportunities moving forward, again, because a large portion, someone in the low 40s, as you mentioned, a percentage of properties are owned free and clear. And a lot of those are older owners. And I've learned a long time ago that when you're buying a property, the first question to ask the seller is, what are you going to do with the money? And a lot of times they don't know. And if they don't know what they're going to do with the

money, well, they're open to suggestions. And that suggestion of, well, how about if you loan it back to me at five, six, seven percent, if they don't have anything else to do with that money, that seems like a pretty good deal, especially when they know it's collateralized by this thing that they just ended up living in for five or ten years. And they know, and they know worst case, they're going to take it back and it's not the worst thing in the world. Yeah. I mean, it does make a lot of sense. And so I think with both of those, right, the options, seller financing, I guess the overarching strategy is like finding the right seller. It's not a, you know, it's motivated seller. Sure, you always want to find that. But it's also just like someone who's willing to get a little bit

creative. It's almost even a more sophisticated seller in a way where they're willing to like see you as an investor, they'll understand your goals and objectives in a more holistic way and then willing to get creative on how to structure something that's mutually beneficial. This goes back to our conversation earlier about why do we want to buy real estate in general, even in a market where we're not sure that we're going to see appreciation. One of the reasons is it's weird to talk about now because we've kind of been in a situation where all other asset classes that we're looking at the stock market and goal. and crypto. Everything has been doing amazingly well for the last decade. And so it's hard to imagine a

world where real estate is kind of the most consistent and best performing asset. But realistically speaking, if you ignore the last five or 10 years, real estate has been a whole lot more consistent in its growth and its returns than any other asset class on the planet. If you look at the growth in real estate values over the last 120 years, there's a lot more consistent. There's only been one or two times, and those one or two times were literally just a blips on the graph where real estate values have gone down. You can't say that with any other asset class. Gold has its ups and downs. Equity markets, stock markets has its ups and downs. Crypto obviously has ups and downs. Real estate has been tremendously consistent. And so if you can kind of get out of

the mindset that the stock market's only going to go in one direction and crypto is only going to go in one direction, real estate is the one thing that is more likely to go in one direction than any other asset class. I think the lack of volatility is really overlooked. And that historical framing makes a lot of sense that everything's been so good. It's like, oh, the stock markets and your real estate, like look at the returns. They're the same. But you got to zoom out a little bit more. And if you look back to, you know, 70s, 80s, 90s, like real estate has continued to perform. Yeah. And I think that's probably one of the benefits to starting now, because it's, at some point, we're going to see the stock market falter.

We're going to see crypto likely see another major, potentially long-term dip. And when that happens, people are going to be asking that age-old question of what should I be doing now? Where should my money be going? And for a couple of years now, I don't think real estate has been like the most obvious answer. But for a long time in the past, it was. And I think in the near future, we're going to get back to that. Hey, real estate has, I mean, I got shiny objects into. with the stock market and with gold and with with crypto. But hey, real estate has been pretty

stable and consistent for the last 120 years. I think I should be thinking about that again. And I think a lot of people will get back there again. But I think we might have another year or two where real estate is not high on a lot of people's lists for quick and easy money. All right. Last question, Jay. Then we got to get out of here real quick. Multifamily real estate. Values are down a lot. Is it time to buy or are you still waiting? I love multifamily. It's been a really tough few years. So starting in March of 22 when interest rates went up, multifamily kind of saw the bottom pulled out from under it. And we've been in a recession in multifamily for the last few years. A lot of people who are just looking at single family values don't realize it. But multifamily and other commercial asset classes, self-storage and office and some industrial have been struggling the last few years.

but one of the nice things about real estate is every asset class is a little bit different and one can be going through one part of the cycle while another can be going through another part of the cycle. And I think we're pretty much at the bottom for multifamily right now, at least for large multifamily. And I think we're starting to see some indication that we're on an up trend. And I think a lot of that is related to the fact that there was a lot of building, a lot of overbuilding for a number of years. but that building has slowed down considerably, and it looks like we're going to see a lot less supply of new multifamily over the next few years. And with less supply, as we talked about earlier, we're likely to see prices tend to go up. There's going to be as much demand as there's always been, maybe even more. But supply is going to dwindle over the next couple years. It looks like. And so I

think multifamily is going to be a great place to be for at least through 2028, 29. Awesome. Well, Jay, thank you so much for being here. We always appreciate it. You. And thank you all so much for listening to this episode of the Bigger Pockets podcast. I'm Dave Meyer, and we'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. On the host and executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calico content, and editing is by Exist

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