Future Of Real Estate

13 Replies

The great Brandon Turner had an interesting post on his Instagram today about the future of Real Estate. In the post he talked about how he believes prices will level out over the next 10 years, stating that prices in cities won't go down but everything else will rise making the US more like Europe or Australia, making the prices of properties super high and renting for very little. Do you agree with this and if so what does it mean for the future of real estate investing?

I thought his post was really interesting! I am no expert but I do believe it could happen or not happen. I think it is good advice to keep buying deals as they come and have money set aside for the future. 

I'm not sure I follow @Nick Terrano ( I didn't see the post, so maybe that's it)...but: 

If home prices rise, and loan products don't change, and we don't see a large jump in average income, then who will be able to afford these homes at higher prices? And if people can't find homes to buy, doesn't that make them renters, and thus the rental pool continues to get bigger? And if that's all true.... and the rental stock stays the same (presumably it will in terms of small MFR) then how do rent prices not keep up with the home prices?

To me it's all supply and demand, I'm not sure I see the supply for rentals getting any lower if home prices continue to climb...

@Filipe Pereira I thought something similar to this actually and I probably wouldn't have held a ton of weight to it if it hadn't come from Brandon Turner, but since it came from him I got worried about the future of real estate investing. If prices were to go keep going up and not renting out for very much than the Coc Roi would be pretty lousy, right?

Originally posted by @Nick Terrano :

@Filipe Pereira I thought something similar to this actually and I probably wouldn't have held a ton of weight to it if it hadn't come from Brandon Turner, but since it came from him I got worried about the future of real estate investing. If prices were to go keep going up and not renting out for very much than the Coc Roi would be pretty lousy, right?

It sure would be. What's the alternative? Not invest? Not going to happen...Keep buying, and if prices do go crazy then at least you have some nice equity to cash out on in 30 years, LOL.

Brandon should spend more time investing in property than tweeting and webinaring. Not sure why people think he's so amazing if he has to shill stuff on here to make money...

As for the question? No, renters aren't going anywhere. If property values outside the city rise, then so does rent.

@Nick Terrano

Few things:

There will always be first time renters

Owners will always downsize to rent status

Buyers wont close and will rent

There is no "static cap" to the amount of renters in any large, metropolitan area.

They exist and will continue to exist.

@Gabriel F.

I'm not really worried about renters I'm more worried about prices going crazy. Brandon talked about over the next 10 years prices balancing out, but he thinks everything will rise to cities level. So if prices are high compared to what they will rent for, won't that cause CoC Roi to go down a lot?

Originally posted by @Nick Terrano :

@Gabriel F.

I'm not really worried about renters I'm more worried about prices going crazy. Brandon talked about over the next 10 years prices balancing out, but he thinks everything will rise to cities level. So if prices are high compared to what they will rent for, won't that cause CoC Roi to go down a lot?

 If prices go up so does rent. That is how this works. That is why San Francisco has such absurd rent prices...people still rent.

No, I couldn't possibly care what Brandon thinks.

"Those who can, do. Those who can't, teach"

I remember in high school asking my business teacher if he was so good at business why is he a teacher? He didn't have an answer for that...

Real estate is ruled by supply and demand provided it is allowed to follow those laws. In some areas, the government is jumping up and down wanting to get into the housing business, and it will maybe before it even thought it would. 

A number of LL are about to be forced from their holdings in Seattle, NYC, San Francisco perhaps elsewhere. The gov't will step in and take over. Essentially they already have with rent control, cheering the rent strikes, eviction moratoriums etc. One could easily believe that it is a conspiracy and it is deliberate, and that might even be the case.

This will shrink the potential profits of LL's in even the near term. We will have to compete with those that don't have a profit motive or goal. So prices of rental real estate may rise, taxes will accelerate, but rents will moderate. It is the shrinking middle all over again. Yes it is happening in Europe, but I don't think it is influencing what is going on here. 

The lower tier will be freeloaders and homeless. Most tenants will want a better product than the gov't will offer and there is always room for a savvy business person who pays attention and screens really well. But there is going to be continuing turbulance more in some markets than others.