A "Hurricane" is Coming for the Real Estate Market - Billionaire Real Estate Investor
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Published 2023-08-08
To truly understand what is going on in the real estate market, you first need to understand the relationship between real estate values and interest rates. Real estate is an asset that has what is referred to as a fixed income stream. A fixed income stream is a relatively predictable amount of cash year in and year out. If you are an owner of an office building and your tenant has a 10 year lease, you know what you should be getting paid in rent over the next 10 years. These locked in cash flows are the fixed income stream real estate produces. Here is what Sternlicht meant when he said any asset with a fixed income stream decreases in value as interest rates rise.
Real estate is what economists refer to as a commodity. The price of any commodity is dependent on the supply and demand dynamics at that given time. We know from earlier that the value of the building is dependent on the cash it generates. However, what determines what rent you as the owner can charge for each of those units? It’s the supply and demand of apartments within that particular real estate market.
For owners of the apartment building, so-called “strong fundamentals” is when demand outstrips supply. Over the past few years, the economy has been extremely strong. Unemployment was low and government stimulus programs were high. Add to that the fact that home prices skyrocketed, forcing many would be home buyers to stay renters. These factors caused demand for apartment units to increase, pushing our demand line here out to the right. Notice how the supply and demand line now cross at a much higher price. The higher rents increased the cash apartment buildings generated, making them even more valuable.
*Disclaimer: Neither this video, not any content produced on this channel should ever be considered investing advice or official financial advice. All content is made for entertainment and educational purposes.
All Comments (21)
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Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.
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Thanks. Good video. I'm never 100% sure I can make money. Never place 100% of your savings in just one type or type of investment
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I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
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Asking a real estate agent whether you should buy a home right now is like to asking an alcoholic whether they think you should have a drink lol. Homes in my neighborhood that cost around $450k in sales in 2019 are now going for $800 to $950k. Every seller in my neighborhood is currently making a $350k profit. Simply unreal. In all honesty, deflation is what we require. The only other option is for many people to go bankrupt, which would also be bad for the economy. That is the only way to return to normal.
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Newbies need to learn the ropes, know how much risk they can handle and diversify their portfolio. Some folks get help from money experts or do their homework before making investment moves. It's all about being smart with your funds.
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What are the best strategies to protect my portfolio from a crash? I've heard that the market crash will devastate the financial market, so I'm concerned about my $200k portfolio.
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Watching how the real estate market is being manipulated in favor of some persons, I’ll advise we venture into other marketing options and look for other ways to invest that will be favorable to us
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I used to think every investor went broke during recessions, meanwhile some make millions. I also thought everybody went out of business during the Great Depression, but some went into business. Bottom line, there's always depression for some, and profit for others, it all starts from having the right mindset. That said, I've set asides $150k to invest for future, unfortunately l'm a complete noob.
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Make sure to subscribe to the channel 🎉 Charlie Munger: The real estate crash of a generation https://youtu.be/i8PDEXyajdE?si=VOmaZd-Sb2TkAZmQ
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I believe that the common people need to do the opposite of what these billionaire investors complain about. Everything works in their favor, not ours.
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I just sold a property in Portland and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.
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I don't look at my house as an investment, it's paid in full, all I care is I have a roof over my head, could really care less about what the market does.
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I buy small houses on large lots in towns where new houses are being built on small lots. Eventually the large lot will either be split or someone will want to build a mansion there. It’s always a “good deal/good idea” if it’s a good company/property etc. market fluctuations are just gravy.
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He owns 3,200 single family houses. Corporate America purchasing a lot of homes. This, in part, is why home prices have gone up. This, in part, is why the average American can’t purchase.
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This video is beyond amazing. You’ll achieve a lot doing this.
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Making accurate predictions for the housing market is quite a task due to the uncertainty surrounding the Federal Reserve's ability to effectively reduce inflation and borrowing costs. This delicate balance must be maintained to prevent a substantial decrease in demand from buyers, affecting everything from houses to automobiles.
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I began my investment journey at the age of 38, primary through hard work and dedication. now at the age of 42,I'm thrilled to share that my passive income exceeded $100k in a single month for the first time.this success reinforces the important of the advices mentioned earlier. It is not about achieving quick wealth but rather ensuring long term financial prosperity.
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The Fed's goal isn't to lower inflation but to force home owners into foreclosure so the Billionaire Investors and Pension Funds can buy up those homes at cheap prices in order to rent out at astronomical prices.
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He’s part of the problem. Real estate groups buy up neighborhoods and then either rent them out, not allowing for purchase or they sell them at exorbitant amounts
