Epic Real Estate Investing - Prepare for the Biggest Housing Market Pullback in the Last 10 Years | Ken McElroy | 1295

Episode Date: March 7, 2024

Are you ready to seize the reins of the real estate market and unlock its potential? In our latest podcast episode, we delve deep into the current and future states of the real estate landscape. Join us as we explore the delicate balance between supply and demand, forecasting a seismic shift in the housing market over the next two years. Our expert speaker reveals intriguing insights, predicting both a major pullback in housing availability and a subsequent surge in prices and rents. But fear not, for amidst these turbulent waters lies a sea of opportunity. Discover why the upcoming years are primed for real estate investment, particularly in the realm of distressed assets. We'll unravel the intricate tapestry of migration trends, shaped by factors ranging from job opportunities to political climates. But success in real estate isn't just about timing the market; it's about understanding the fundamentals. Our speaker emphasizes the importance of cash flow and value, steering listeners away from risky practices and towards a strategic investment approach. So, if you're ready to navigate the shifting tides of the real estate market and unlock its hidden treasures, hit play now and embark on a journey towards prosperity. P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. When supply is low, whether it's eggs, used cars, Pokemon cards, or houses, prices rise. And when demand is high, prices rise that way too. That's how it works, regardless of the product or service. But when you have both happening at record proportions at the same time, this is the opportunity. Hey, strap in.

It's time for the epic real estate investing show. We'll be your guides as we navigate the house. housing market, the landscape of creative financing strategies and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go. Let's go. We could see the biggest housing market pullback in the next two years than we've seen in the last 20, and then the decade after that. And, you know, I've been sharing with you the future telling Daddy here since 2019-ish and still, no one is talking about it until now. Watch.

For 35 years of real estate investing, never have I seen such opportunity as we're about to see over the next couple of years. The real estate market is short about 6 million housing units. What this is going to do is going to create significant pressure on both pricing and rent. Over the next couple of years, what you will see is all the new supply that started several years is going to be added to the economy in 2024 and 2025. That's going to cause a little bit of disruption in the markets for about two years. And that's going to show up in the form of flat rents, concessions, and possibly even pricing. Ken McElroy, one of Rich Dad's advisors, says 24 and 25 could represent a big downturn for the housing market because of the new supply that's about

to be released into the market. Now, I haven't had a bunch of information on this in the past, but hey, this is really good to know now. Yet, it's what he says, next that finally someone else and a smart and experienced investor at that confirms what I've been saying here for years, something that could completely transform your financial future, north or south. Once that pig goes through the python, as I like to say, after that, the genie's out of the bottle. The supply goes way down and the demand stays steady. And that's when we're going to start to see massive, massive price increases and massive rent increases. So the opportunity for real estate investing is going to be in these.

next two years when you can buy distressed assets from developers that are sitting on construction loans, really high rate loans, or even owners that are undercapitalized or possibly even occupancy problems. And this here is the very reason we started holding a monthly huddle here in the office to keep our private clients abreast of the situation because if they follow the crowd of doom and gloom that's saturating the media, and especially here on YouTube, I mean, you've seen all of these, Listening to this stuff and sitting on the sidelines, waiting it out, could ripple your finances. Here, listen. So for those of you who are skeptical, just take a look at the following graph.

And on the left side, our completions. Now, these are both single family and multifamily. And at the bottom is the year. Please focus on 2006 when you can see that the U.S. added about 1.8 million units of housing. The red represents multifamily and the blue represents single family. And this bubble was created by low interest rates at the time. We've all heard of 2008, 2007. Well, you can see the drop off right after that.

And that's what ensued next. So during this period of time, no banks were lending for new construction because what had happened up to that 2006 time frame is we added a lot more housing than we needed. During that period, we had more houses than people. And that's what creates a housing bubble. But please pay attention to what has. happened from 2006 after. As you can see, there's a huge gap in additional units being added. Now, the United States needs about 1.5 million unit housing just to keep up with the population

growth. This is a part that most experts miss the growing population because most people are of the belief that the growth rate of the population is declining, of which when you look at this chart, that's factual. I mean, notice the orange declining line there. But what's actual is the is still growing and projected to grow. The demand is high and will be for some time, but even more so, it's the age demographic of the population that makes an even bigger difference. I mean, look at this chart. It shows our population broken down into their respective generations by age. And this peak right here of our population is right here inside the millennials. And they are at the age of 36. Now, look at this. This data is showing the median age of the first time homebuyer is at the age of 33.

That just adjusted to 36 last year. And these two numbers here, they are now intersecting, which means that there is more demand for housing right now than ever before in the history of the country. This is an important point because you can just look at the graph and see that we had many, many years, almost 20 years of under supply. So we are just now today meeting what the economy needs. But as a result of the last 18 to 20 years, we are negative about 5 to 6 million housing units. When supply is low, whether it's eggs, used cars, Pokemon cards, or houses, prices rise. And when demand is high, prices rise that way too.

That's how it works regardless of the product or service. But when you have both happening at record proportions at the same time, this is the opportunity. This is precisely why housing prices. have gone up and rents have gone up and rents will continue to go up after these last couple years housing units get absorbed. So like in any market, when a lot of supply hits the market at once, that nobody wants, it actually starts to reduce pricing. And that includes the pricing of housing and the pricing of rents, but not for long. See, the real estate market, it's somewhat returned

to normal in the sense that it's localized. There's no longer in national real estate market. And this predicted decline, followed by the imminent massive growth, it's not going to happen in all of the same places at the same time. So the other thing to watch are certainly the migration patterns that we started to see from the pandemic. Also, what happens when big employers move in and move out of areas, creating supply and demand problems? For example, I had a property in Western Washington, and the state of Washington decided to shut down a big nuclear power plant. And this property was located right near that plant. Once that power plant shut down, the entire town changed for good. The same thing happened in many towns in the United States, whether it's McDonald, Ohio,

when Carnegie Steel pulled out, or Empire Nevada when U.S. Jipsum pulled out, or Pullman, Illinois, when the Pullman Palace Car Company pulled out. When big employers pull out of certain markets, the employees that were once employed there, they used to pay rent, buy homes, use of grocery stores, and all that stuff, are migrating to other areas. And the same thing is true when people are leaving for us. other reasons. So just a decade ago, I would say that most people were moving primarily because of jobs, but now people are moving for lots of other reasons. A couple notable ones are, of course,

the high prices of tax. So people are looking at what does it cost for me to live in a certain area? And that might be sales tax. It might be property tax, whatever it is. It might just be a tax on you living somewhere, which we've seen in a lot of different states like California. So it should be no surprise that the number one state that is losing the most amount of people is, of course, California. People are also leaving as a result of safety and things like politics. I went ahead and I invested a little bit of time to put together a complete list for you based off what the U.S. Postal Service is saying, what the Department of Motor Vehicles and what U-Haul, what they're all reporting, of the top 10 states that people are fleeing from and the top 10 states that people are

flocking to, as well as some additional resources that can help you capitalize on this information. I made it really easy and I uploaded it for you here at flea and flockfax.com. Now, I'm not saying to go buy real estate in these markets based off of this data. I'm just saying that an economy with people works. Without people, it doesn't. Real estate doesn't generate income without people. So as you look at markets to invest in, pay attention to whether people are coming or going. Based on supply and demand, all markets look good in the long run.

But regardless of what market you choose and when you choose it, make sure your property's cash flow. Cash flow first, value second. Obviously, you want both. You're not trying to time a market and buy low and sell high. That is not real estate investing. That's gambling, that's flipping. That's trying to time the market and that's dangerous. What we're trying to do is find markets that are growing as a result of demand. Be in front of that. Don't be a pioneer and take advantage of the price growth, the rent growth, but at the same time, make sure that cash flows. If you buy something and no one wants to be there, it's not going to be a good deal. If you buy something and everyone is moving there, you're going to look like a hero. If you're ready to look like a hero, pick in the right market,

that's a good starting point. And if you believe in what you saw and what you heard today, knowing which market people are moving to and where they're moving from, that can give you an edge on picking the right market. And I put those lists together and some helpful resources for you here at flea and flockfacts.com. All right. Thanks for watching. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would.

And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow.

You didn't know, home for us, we got the cash flow. This podcast is a part of the C-suite Radio Net. For more top business podcasts, visit c-sweetradio.com.