Epic Real Estate Investing - WARNING: The Truth About YOUR Real Estate Market in 12 Months | 1331

Episode Date: August 15, 2024

Are you ready to transform your real estate strategy? In this episode, we dive deep into why understanding migration patterns and demographic shifts is essential for savvy investors. Learn from the past as we explore the impact of historical economic downturns—like the aerospace industry's cutbacks and Detroit's population decline—on real estate markets. Discover four game-changing insights to boost your investment success, including how to track migration patterns, decode demographic trends, and leverage market data effectively. With practical tips and real-world examples, including tools like Redfin's heat map and U-Haul's growth index, you'll gain the knowledge to make smarter, data-driven investment decisions. Tune in to unlock the secrets of thriving in the ever-evolving real estate landscape! BUT BEFORE THAT, hear the breaking news on how the Fed's next move could turn your portfolio, including the housing market, upside down. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the 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. Breaking news, the Fed's next move could turn your portfolio, including the housing market upside down. You ready? Because the last time the Fed made an emergency rate cut, the market went wild. Did you know that an emergency rate cut was even a thing? Well, they are. And here's what you need to know. Right now, more stock market investors are calling for the Federal Reserve to do an emergency rate cut to prevent a recession or a stock market crash.

And everyone is wondering what that would mean for the stock market, for mortgage rates, and for housing prices. Now, we don't have a crystal ball, but we can run down real quick. every point in recent history when this happened. And that should give us an idea of what to expect next. Let's look at our current situation first. The Federal Reserve is expected to cut rates at its September meeting due to recent weak economic data, rising unemployment, and moderating inflation. In fact, there's a 100% chance that they will. Based on their meeting last week, we know a cut is coming in just five weeks. The question is just by how much. And that feels like good news for a lot of people. and I think it is. It might not be fast enough, though, because there's talk on Wall Street about an

intermediate rate cut or an emergency rate cut, which means the Fed could cut rates even before September if they fear a sharp recession or economic shock. Historically, the Fed has cut rates between meetings during major crisis. And based on public sentiment, many are considering right now a crisis. The last time this happened was in March 2020, when the pandemic hit and shut down the economy completely, sparking a sharp yet very brief recession. Then, the emergency rate cut was by a half a point five percent or 50 basis points. Mortgage rates plummeted to historic lows, resulting in a surge and refinancing and home buying activity.

House prices increased significantly as low mortgage rates boosted demand. The stock market initially plunged, but later recovered as monetary and fiscal stimulus measures took effect. It's like we just watched this movie, and we're seemingly building up for an encore. I mean, it's like we're getting a chance to place a bet on the store. Super Bowl. On the Monday morning after it was played, and we already know who wins. But is what happened in 2020, how it always plays out? Well, let's check to see how certain we can be about the moves that we can make. In January, 2001, that was when the dot-com bubble burst, leading to a sharp decline in

tech stock evaluations and significant market instability. The Fed cut rates then, by a half a point, mortgage rates began to decline, making borrowing cheaper, and spurring mass refinancing. The lower mortgage rates helped stabilize house prices, which had been under pressure at the time. And the stock market initially reacted positively, but moved downward with volatility for almost two years before reversing. In April of 2001, the economy was weakening further, with growing fears of a recession. The Fed cut rates again by a half a point. Mortgage rates continued downward, encouraging more homebuyers and refinance. House prices stabilized and modestly increased due to cheaper borrowing costs. Stocks, they saw a short moment of gains, but concerns about

economic weakness led to fluctuating performance. In September of 2001, the 9-11 terrorist attacks caused massive economic disruption and uncertainty, the Fed cut rates again by a half a point. This time, mortgage rates dropped significantly, leading to an increase in refinancing and home purchasing, which increased demand for housing and pushed prices higher. The stock market's response, however, was mixed due to the long shutdown after the 9-11 attacks and heightened uncertainty proliferated. I mean, we had never experienced anything like that before. We didn't. know what was going to happen next. So people stood fast in a wait-and-see type mode. In August 2007, the subprime mortgage crisis began to unravel, leading to a major housing market collapse. The Fed cut rates

again by 0.5%. Initially, mortgage rates decreased, but broader financial instability led to tighter lending standards, so less buying, less refinancing, despite the lower rates. House prices, they continued to fall due to the broader housing market crisis, and the stock market experienced severe declines as the financial crisis unfolded. Then in January of 2008, the financial crisis deepened, leading to a dramatic decline in stock prices and economic instability. This time, the Fed cut rates by three quarters of a point. Mortgage rates fell, providing relief to borrowers, but things were feeling so bad, there was a higher than expected risk aversion among the consumer. By this time, people were just freaked out thinking it was the end of the world. House prices

declined even further as economic conditions worsened. Then in October of 2008, the collapse of Lehman Brothers marked a peak in the financial crisis, causing panic in all financial markets. The Fed cut rates by a half a point, mortgage rates decreased sharply, though credit availability remained constrained. What good or low rates if people won't give you the money to borrow? Housing prices, though, stabilized slightly due to lower mortgage rates, but overall remained low due to the economic environment, and the stock market reacted negatively due to the severe financial instability.

So over the recent years, you can see there are some patterns, but it's a mixed bag when comes to the short-term outcomes. And so could the Fed cut rates before September? Well, J.P. Morgan's chief economist Michael Faroly believes there's a strong case for it. However, others, like Wilmington trust Wilmer Smith, argue that such a move could spook the markets. If the latest jobs report is anything to go by, there's a growing consensus on Wall Street that the Fed might cut rates by 50 basis points of September, followed by more aggressive cuts in the fall. When the Federal Reserve starts cutting interest rates, the stock market tends to react with heightened volatility, While lower interest rates can lead to financial asset inflation and long-term stock growth,

the short run, it's very unpredictable. On the other hand, mortgage rates typically decrease, making it a good time for refinancing or purchasing real estate, which often leads to rising house prices. In hindsight, whoever bought during these volatile times and held on tightly eventually came out a winner. The next Federal Reserve meeting is on September 18th, and expectations are high because there's a hundred percent chance that the Fed will cut interest rates. the only question is whether it will be by a quarter of a point or half a point.

And market expectations also predict more rate cuts in November and December. So if you're waiting to buy or refinance, at the very least, that opportunity is here. And in the near future, it seems like it's only going to get a little better for you. So it is a good time to get clear on what type of real estate is going to move you towards your goals the fastest. And if at any time you feel you need some one-on-one help with that, hit me up at rei-aise.com and we'll hammer it out together. By the way, even with a looming recession, there's still a way for you to get up to $150,000 at zero percent interest right now. Let me explain. If your credit score is 680 or higher, you have no open collections or bankruptcies in the last seven years,

you can get zero percent interest capital from Bank of America for real estate and business investments, even when everyone is panicking about a market collapse and emergency rate cuts and all that stuff. This program is still on. I've helped nine clients this month already get up to $150,000 dollars each through this. So before it goes away, check it out at no-costcapital.com, and I'll hook you up to. We'll be back with more right after this. When you go to work for your money, does it return the favor? If not, no worries.

You do not have a money problem. You merely have an idea problem. We're cashflow savvy.com, and we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival. Go to cashflow savvy.com and download a Free investors package, cashflow savvy.com. You do not have a money problem, merely an idea problem. Cashflow savvy.com.

More ideas, less worries. Cashflow savvy.com. Hope is not a financial strategy. Let's get back to work. Did you know that understanding where people are moving is the key to real estate success right now? You know, when I was not yet in the real estate industry, I didn't know the difference between a duplex and a donut hole. I watched in 1989 after the end of the Cold War

as disaster struck when the aerospace industry experienced massive cutback, causing thousands of jobs to disappear almost overnight. This had a devastating impact on the local economy and the Long Beach and Lakewood real estate market in Southern California, as those who lost their jobs ended up relocating to other regions with more robust job markets. Many moved to other parts of California or other states completely with better employment opportunities,

particularly in industries that were growing. The lesson was clear, even for someone as green as me, the primary driver of housing across all markets is people. Without tenants or buyers, even the best market with the best weather and lifestyle can fail. Look at Detroit in the 50s. It was the fifth largest city in the U.S. with 1.8 million people. Today, it's down to around 650,000.

This population declined severely impacted real estate. With houses once selling for a buck. Yeah, I know because I bought one for fun. Real estate success, it hindered. on people, not just interest rates and leverage. Without tenants or buyers, it's all irrelevant. But don't worry, I've got four crucial insights into current migration patterns and how you can use this knowledge to give your real estate investing a boost. First, track migration patterns. Understanding where people are moving, it's crucial for real estate success. For example,

our company, which owns several million in assets, meticulously tracks migration patterns. This data has guided our investment decisions for years, leading to significant returns. For example, a few months into the pandemic, we picked up several properties in Florida after noticing a steady influx of freedom seekers moving to the area. Our worst performer resulted in a 30% increase in property value within two years. That was our worst one. There are two places that you can go to see where people are moving to. It's really easy.

And you can see where they're leaving also. Redfin has a great migration heat map. The darker the orange and area is coated here, the more people that are moving there. And then the darker the blue area that you see, the more people, that are moving from there. And you can see on the map that California is having some issues. So there's a lot of uncertainty there about whether that state deserves your investing dollars or not. That's how you'd interpret this. You know, with Chevron and X just announcing their departure in the last few weeks, it'll only get worse in the short term as those corporations take a lot of their employees

with them, a lot of people that would be otherwise living in California houses. Another place to look is on U-Haul's website. Look at U-Haul's growth index. page where they use a similar coding system. And with this, it shows where all the one-way travel of their moving vans are going and where they're coming from. When you look at their map, it pretty much lines up with red fins. But you do get a little different perspective here. Number two, understand demographic shifts. The U.S. population is projected to reach $341 million by the year $25,000. And key demographics include young adults moving into rentals and homebuyers aged 30 to 35 years old. For instance, targeting properties near universities can be lucrative as students and young

professionals are often in need of rental housing. So we've invested in several small multifamily near major universities and our occupancy rate has remained above 95% year-round. With demographics in mind, number three can provide even more valuable insights, and that's analyze the trends. Birth rates, death rates, and net migration, they all impact housing demand. For example, A decline in population from 2040 to 2050 suggests potential opportunities in sectors like assisted living facilities, funeral homes, or cemeteries. The big bubble, though, or the pig going through the python, as I like to say, right now is the peak age of the millennials.

This is the biggest generation in our adult population. Right now, their peak age is 34 years old. The average age of the first-time home buyer is 36, which represents the most demand for small, single-family homes over the next two years in the history of our country. And it's going to continue far beyond the next two years as well. And right now you're seeing stuff like tiny homes take off. That's happening right now because we have more people at this age and not enough houses for them. You're seeing all types of innovation in housing. You're seeing those little capsule things and you're seeing Lego homes because we've got these people out there and they need roofs over their heads.

By analyzing these trends, we identified a growing and trendy millennial population in Milwaukee. and invested in affordable housing there, resulting in a stable long-term income stream. Before I get to the last one, if you ever feel like you want to go faster in your real estate and get some one-on-one help, go to R-EI-Ase.com, answer a few questions, and then pick a time for us to hop on the phone

and we'll brainstorm some ideas for your next steps. Number four, use data to guide investments. In 2006, housing starts soared due to policies promoting homeownership, creating a rental gap that eventually led to a significant supply shortage. By understanding these patterns, we were able to invest

in rental properties ahead of the curve, achieving high occupancy rates and rental income. Because we were holding these properties instead of flipping them like most investors, the crash of 2008 had much less of an impact on us than it did on them. And because affordable housing is at a crisis level right now, I can only imagine some sort of government intervention or investor incentives are on the horizon. So you want to pay close attention to policy changes coming up when it comes to building and development. Understanding these four insights will make you a better investment. with better investments. I'll see you soon. 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. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.