BiggerPockets Daily

The leader of the bank for central banks—the Bank for International Settlements (BIS)—is sounding the alarm. 

Just this week, BIS general manager Agustín Carstens told reporters that “The global economy is at a critical juncture.” And according to the bank’s just-released annual report, if inflation isn’t tamed and consumer prices remain high for much longer, banks could see credit losses of a “similar order of magnitude” to those of the 2008 financial crisis. 

The comments are jarring, particularly on the backs of three bank failures earlier this year. BIS’s typical stances—which are usually more reserved—also lend gravitas to the statements.

“The resilience of the financial system will be tested again,” the report reads. “Pockets of vulnerability remain. Recent events have shown how the failure of even comparatively small institutions can shake confidence in the overall system.”

Learn more about your ad choices. Visit megaphone.fm/adchoices

Buying a home hasn’t been easy for the past few years. Besides increasing interest rates, a decrease in purchasing power, and a housing shortage, cash buyers have also put a squeeze on some would-be buyers.  

Nearly a third of U.S. home purchases were made with cash in April, a nine-year high, according to data from Redfin that looked at the 40 biggest metropolitan areas in the U.S. That’s in line with data from February, which saw cash purchases reach 33.5% and continuing a trend that started during the pandemic.

The share of homes being bought with cash is at levels not seen since 2014, when the housing market rebounded from the Great Recession. But the housing market today looks very different. So what’s driving this drive of cash buyers?

Learn more about your ad choices. Visit megaphone.fm/adchoices

A recent report published by the National Association of Realtors reveals that the housing shortage and affordability crisis in the U.S. would be alleviated if there were sufficient homes available for buyers at all income levels. Currently, 51% of American households have an income of $75,000 or less, meaning they can only afford houses that are priced at $250,000 or lower. Data shows that of the 1.1 million homes listed for sale, only 25% are listed within that price range. To balance the market, the report indicates that there needs to be an additional 319,460 listings priced under $250,000. 

The top five cities that have large supply shortages of affordable homes include El Paso, Texas; Boise, Idaho; Spokane, Washington; Cape Coral, Florida; and Lakeland, Florida. Conversely, Youngstown, Ohio-Pennsylvania is a region where buyers with an income of $75,000 can purchase 72% of the listings, exceeding the balanced market target rate of 66%.

Learn more about your ad choices. Visit megaphone.fm/adchoices

Where have all the cash flowing properties gone? With high interest rates, low inventory, and purchase prices not budging, it’s becoming harder and harder to find your margins. It’s even harder to find a cash flowing property when your investment budget is modest. That’s why we loved Dave Meyer’s recent Instagram post covering his top five cash flowing market picks with average purchase prices under 200k. Sometimes all you need is someone to help you stop boiling the ocean when you’re looking for your next deal.

Meyer looked at average purchase prices but also reviewed a few other positive financial indicators in each area to support his recommendations. We pulled those together along with a few more reasons these markets are worthy of further investigation. Of course, nothing is all roses, but there are sure to be diamonds in the rough here!

Learn more about your ad choices. Visit megaphone.fm/adchoices

For high-earners raking in between $150,000 and $650,000 annually, a move from New York City to Miami provides the opportunity to save thousands through a reduced effective tax rate and a decrease in the cost of living, according to a SmartAsset study. San Francisco residents can realize similar savings by relocating to Miami. 

It’s not that Miami is cheap—the cost of living is 22.8% higher than the national average, and the median sale price for homes in Miami is about 34% higher than the national median, according to data from Redfin. But it’s still cheaper to buy a home, rent an apartment, or even go to a restaurant or grocery store in Miami than in notoriously expensive cities like NYC. 

But that could all change as more New Yorkers migrate to Miami in hopes of getting more out of their income. Miami residents began taking notice of their new neighbors from New York last year, blaming the skyrocketing rents in the city on heightened demand created by movers. The savings potential is likely to shrink as Miami home values and rents increase amid constricted supply. Furthermore, homeowners insurance rates in Florida are increasing dramatically due to climate change, with premium hikes outpacing every other state. And a surge in property taxes for newly acquired homes is taking new residents by surprise. 

Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s been generally accepted in real estate that a “balanced market” has about six months of inventory. In other words, the sales for that month equal one-sixth of the number of listed properties, so, all things being equal, it will take six months to clear that inventory. As Norada Real Estate Investments puts it,

“As a general rule, 5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have a buyer’s market. If it is less than 5 months and we have a seller’s market.”

Even the National Association of Realtors states that “Historically, six months of supply is associated with moderate price appreciation.”

What’s immediately odd about this is that housing prices have fallen since last year despite what should be a seller’s market. In May 2023, prices were down 2.2% nationally from their peak in June 2022. At the same time, inventory was only half that of a “balanced market,” sitting at 3.0 months in May of 2023. 

Learn more about your ad choices. Visit megaphone.fm/adchoices

The big news to come out of last week’s Federal Open Market Committee meeting was the group’s choice to forgo another rate hike. 

Previously, the central bank had increased interest rates at every meeting since March 2022 (with 10 rate hikes in total). The June decision marks the Fed’s first rate pause in over a year.

Fed. Chair Jerome Powell revealed as much in his post-meeting briefing with reporters. He also delved into key real estate topics—including the impacts of a potential commercial real estate crash and a housing market “bottom.”

Learn more about your ad choices. Visit megaphone.fm/adchoices

Understanding and applying these three sentences could make you wealthy:

“In bad times, securities can often be bought for prices that understate their merits. And in good times, securities can be sold at prices that overstate their potential. And yet, most people are impelled to buy euphorically when the cycle drives prices up and to sell in panic when it drives prices down.” – Howard Marks (2013 Memo “Ditto”) 

I’m excited to share some thoughts about fear and greed. But I’ll start by sharing a few comments on the current economy to set the stage. 

Not long ago, I opened my computer to a startling CRE email subject line: 

“Prices Plummet to 2010 Levels”

It was a great attention-grabber but was inaccurate. The publication went on to say that the sharpness of the decline in CRE values (not the prices) had not been seen since the Great Recession, which is still disconcerting. (Note that the headline was changed at some point since the original publication.) 

Learn more about your ad choices. Visit megaphone.fm/adchoices

What the heck is going on with the 2023 real estate market? From high interest rates and high purchase prices to elusive cash flow, this market includes enough uncertainty to spook new and beginner investors into thinking the best course of action might be to sit this cycle out. 

Pro tip: Don’t sit out.

You know the old adage:

When’s the best time to plant a tree? 

“20 years ago.” 

When’s the second-best time to plant a tree? 

“Today.” 

Many expert investors will call this truth in 2023 in regard to real estate. For sure, this year has forced us to be more conservative and strategic than we’ve been in the past, but most say you’re still better off “in” than “out”. 

Learn more about your ad choices. Visit megaphone.fm/adchoices

We’ve officially entered hurricane season. While the National Oceanic and Atmospheric Administration says there’s a good chance it will be a “near-normal” one for both the Pacific and Atlantic coasts, that’s not exactly comforting for property owners, especially given recent numbers.

In the last three years, 13 hurricanes have made landfall in the U.S. One of those was Hurricane Ida—the second-most damaging storm the country’s ever seen. According to the Insurance Information Institute, Ida racked up an estimated $36 billion in insured losses, behind only Hurricane Katrina in 2005.

It’s storms like these—and the risk of more of them down the road—that has spurred an uptick in property insurance premiums nationwide.

Will 2023 bring more of that costly risk? Here’s what CoreLogic’s recent hurricane report tells us.

Learn more about your ad choices. Visit megaphone.fm/adchoices