Epic Real Estate Investing - What I Learned Studying the HOUSING MARKET in These 8 States for 97 Days (The WORST in America) | 1344

Episode Date: September 11, 2024

This episode delves into the intriguing phenomenon of rising home inventories across eight key U.S. states: Florida, Arkansas, Texas, Idaho, Utah, Oklahoma, Alabama, and Tennessee. The host provides an in-depth analysis of why these states are seeing an increase in unsold homes, surpassing pre-pandemic levels. Factors such as shifting migration patterns, evolving economic uncertainties, and changing buyer preferences are explored in detail. Listeners will gain insight into how these dynamics are reshaping the housing market, with a focus on the emerging trends of tougher competition among sellers, extended time on the market, and the potential for price reductions. The episode also examines the broader implications for both buyers and sellers in these regions. For investors, the episode offers actionable strategies to navigate this evolving landscape. It highlights the potential benefits of purchasing properties now, as sellers may be more willing to negotiate due to increased inventory and slower sales. Additionally, the host discusses the advantages of refinancing in the future when mortgage rates are expected to decrease, providing a comprehensive roadmap for maximizing investment opportunities amidst the current market conditions. 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-i-a-s.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Why aren't homes selling in these eight states? The answer might change how you invest. The first one on the list is Florida. It's experiencing a trend very different than 42 other states, and that is they now have more unsold homes than they did in 2019. And this isn't just about numbers. It's about how these shifts could disrupt the market, especially if you're a homeowner

or an investor. You definitely want to pay attention, because right now there are 190. 37,509 homes for sale in the Sunshine State. That's up 41.2% year over year, up 9.5% since 2019 pre-pandemic. The last time the housing market was considered normal. Following mortgage rates have yet to improve home sales, with buyers uncertain about the economy, the election, and the anticipation of rates actually dropping more. Six of every seven people with mortgages have an interest rate below 6%, prompting homeowners to stay put, contributing to America's housing shortage. But the lock-in effect, it's starting to ease because eventually people have to move.

86% of homeowners with mortgages have interest rates below 6%. That's down from 91% in 2003 and a record 93% in 2022. I've been watching the market more closely than usual the last three months, and Arkansas is the second state on the list that I've noticed. experiencing a very similar situation. 14,849 homes are currently for sale here. That's up 23.9% year over year, and the state has officially returned back to pre-pendemic levels.

Texas is the third state on the list, with 157,090 homes for sale. That's up 21.3% since this time last year, and it's up 34% since 2019, safe to say. Texas is back, and then some. With right now, they've got four months of supply on the market. And what that means, at the current rate homes are being sold, there's enough inventory to last them four months before they run out. The U.S. housing market has been flooded with unsold homes for the past two years, and the number is continuing to grow. But here's the kicker. Not every state is seeing the same trend. In fact, these eight states that I'm walking you through all now have more unsold homes than they did in 2019.

So what's the problem? Don't we need more houses for all of the people that we've got? Yes, but when inventory piles up like this, it often means trouble ahead for owners. I mean, think tougher competition, longer selling times, and price drops. I mean, imagine trying to sell your home in a market where there are 70% more homes just sitting unsold.

That's the real. for places like Florida and Arizona. But don't worry, I'm not here too fearmonger and just talk about the problems. Give me a second. I'll share some strategies that could turn this market trend to your advantage, whether you're buying, selling, or investing. But let's dive into why this is happening, specifically in these states, only when much of the Midwest and Northeast have barely budged off the pandemic lows of inventory. The answer seems to lie in migration patterns, where the people are moving to and where they're moving from. During the pandemic, most of these states were inbound migration states. People moved from the northeast to Florida or moved

from California to Texas and Idaho. I'm speaking of migration within the U.S. by the way, from state to state, not to be confused with immigration from outside the country. What most didn't know, or they certainly weren't aware of, is that these migration patterns were already underway. It's just that they were turbocharged during the pandemic. So home builders had already leaned into these trends and had been building a lot of homes in these parts of the country. But now, with mortgage rates soaring and fewer people moving, the demand has cooled. We're in what's being called the Great Stay. People aren't moving as much, and they're quitting jobs less. And this is resulting in home sales slowing. So if Chicago, let's say, has a long history of outbound migration, those homes would,

normally be listed for sale. Those Chicagoans would normally be buying a home and say Dallas. The normal Chicago housing market assumes a certain outbound flow. The Dallas housing market assumes a normal inbound flow. When that flow stops, there are fewer homes sold in Chicago and more unbought in Dallas. You see how that works? So this growing inventory is creating a supply demand imbalance that could push prices down if demand doesn't pick up.

Idaho is the fifth city on the list with available inventory sitting at 10,367 homes that's up 2.7% since last year. The same number as pre-pandemic inventory. They're sitting right now with the exact same number that they had pre-pandemic. Utah has 15,980 houses on the market. They're up 14.5% year over year. Then Oklahoma has 18,228 houses on the market. They're up 21% percent. year over year and up 23% more than before the pandemic. Alabama is up 20% year over year. And it's worth mentioning Tennessee is down 21.5% year over year, but up 16.5% since 2019 pre-pandemic.

Now, here's where the opportunity lies, especially for real estate investors. Although migration has slowed nationally, the uneven inventory build in these states could be worthy of your attention. When there are more houses on the market, the potential for price adjustments and the flexibility in sellers negotiations, they're more prevalent. So if you're looking to buy right now might be the time to really start planning your moves, particularly with three rate drops almost certainly on the board by the end of 2004. So the strategy would be to purchase now where sellers are getting antsy and open to negotiating. So you do that and you lock in a lower than market price, and then in a few months, when rates have come down, you go ahead

and refinance to lock in a lower monthly payment. That's how you get the best of both worlds. It's certainly not by waiting for the market to get hot again and start buying when prices start going back up. That would be silly, right? Buying now and refinancing later, historically speaking, as long as your strategy is to buy and hold long term, bad advice is undefeated. It's never been wrong. That's all I got for you today. 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 them.

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