Harry Dent - real estate going down next 20 years

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Harry Dent - real estate going down next 20 years

David Hodge
Rental Property Investor · Laguna Niguel, CA · Member since 2015 · 142 posts · 98 votes
What is everyone's opinion on Harry Dent? He points out that real estate has pretty consistently gone up over most of our life times because of the baby boomers, but now that they are down-sizing and dying off, real estate will decline over the next 20 years. I think most would agree that whatever the baby boomers touched, turned to gold, since they have been the largest generation. Once they are gone, where will the demand for home ownership come from? Millennials prefer to rent, so unless that changes, who will bring the demand that the baby boomers have provided in the past? Appreciation is critical to building wealth in real estate and without it, building a large rental portfolio is a much slower process. Is the consistent appreciation we've seen in the past over? I'm interested in everyone's opinion on this.
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Account Closed
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
10y

A picture is worth a thousand words. I'm surprised he's still in business. He's been wrong over and over and over again. Nuff said. 

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  • Ben Perkin
    Stockton, CA · Member since 2015 · 5 posts · 0 votes
    10y
    Wish we all had a crystal ball. I'm very bearish on the market but who knows what the fed will put in place for more people to afford housing. And if we all had a crystal ball the future would constantly be changing anyway. I think the fed will do what they do best and that is create more money. And I'm talking about oceans of paper. Or in this case lots of zeros on the screen. Example the fed pays all your taxes(all, yes every one tax you can think of) and lowers interest rates more. Everybody has more to leverage. What? they don't need our tax dollars. That's what I'm saying. They own the golden goose who lays the golden eggs. They don't need our money. I believe they Received 1.5 trillion in tax revenues. Click and click. That was a mouse creating 4 trillion in seconds. The future economy is tied to the dollar and the dollar is tied by a noose. It's all ready hanging and will evenly feel the fate of all the other fiat currencies to roam the globe.
    0Reply
  • Kevin Schulte
    MHP Investor · Green Valley, AZ · Member since 2013 · 85 posts · 26 votes
    10y

    I'd much rather be in RE for the coming storm with assets that I owe fixed amounts of interest on.

    Compare Dent's opinion to john bogles recent interview

    https://personal.vanguard.com/us/insights/article/...

    obviously cap rates are going to change once interest rates no longer hover near zero but with proper marketing - even in a heated area , deals will exist that easily beat these projections for "safe , armchair investments" 4-5% , we're staring down, not stagflation or anything like that but a definite slowdown globally, with africa and south america and parts of southeast asia being the last catchups for actual industrialization (I suppose a good portion of india as well but they haven't exactly been growing slowly these last few decades)

    Millenials prefer to rent IMO because so many are burdened with debt and so many baby boomers have yet to retire because of the double whammy to retirement funds that was 2001 / 2008 , millenials aren't stupid - just poor. 

    We might see a glut of inventory for sfr's but IMO at the worst you just need to adjust for slightly higher vacancy rates

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  • Ben Perkin
    Stockton, CA · Member since 2015 · 5 posts · 0 votes
    10y
    As for Harry dent he could be right. I was against his ideas a few months ago. But he grew on me
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    who says millineals wont buy real estate.. look at all of them on BP that want in the game.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    I avoid all the doom and gloom fortune tellers.

    I look for deals TODAY to build wealth. 20 years from now who knows what this Earth looks like.

    There is planning ahead and then there is getting carried away with things. If you are in the business everyday you see the minor shifts way in advance of others. Others usually see it when a major shift has occurred.

    You can make money in any market up,down,sideways.

    If you don't invest one thing is for sure. Your money will collect dust and with inflation be worth much less than it is today. As a real estate professional if I don't take income and put it into investments the taxes get crazy.

    I am more focused on development right now and equity growth than cash flow.

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  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    10y

    @David Hodge,

    Two major holes in Dent's logic:

    First, we are in a housing shortage right now. Demand is driving up both rents and home prices. The only way to reverse that trend would be something on the scale of an extinction event, like Yellowstone blowing.

    Second, the children of the baby-boomers are even more prolific than the parents of the boomers themselves. I'm a boomer myself, and you don't see cities emptying because we're dying off. Suburban sprawl in the 70s, 80s and 90s was not a boomer-related phenomenon - our children drove that. Don't expect it to abate as we expire. Our children had children of their own, who have children of their own, who ...

    David J Dachtera

    3Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    I don't have this info in front of me because I do not do residential only commercial. One of my friends was telling me of a report that says in Georgia we have one of the most biggest shortages of inventory to demand in the country for houses right now.

    Any of the warm belt states are seeing pretty good growth. As boomers migrate down from the cold belt states it keeps fueling growth. With technology boomers as well as other seniors are living longer as well.

    Some of the cold belt states still do well but only in a few areas. The weak suburban to rural areas there tends to be population declines, limited county and city budgets with no growth, old buildings in need of repairs, more government assistance aid to prop up the economies etc.

    I see mainly local investors go to those areas. Mainstream investors investing out of state stick to the urban core to strong suburban markets.     

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  • Pete T.
    Real estate investor · Las Vegas · Member since 2013 · 798 posts · 171 votes
    10y

    No one really knows how the market will go, but I agree w Joel Owens that you can win in every market and you should invest every dollar you can each day to outpace inflation 

    0Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    I spoke to Harry directly on a conference call some time ago. He is wrong. 

    The true metric to watch is formation of familiar housing units.

    Millennials are waiting longer. They are staying home with parent(s) or grandparents. 

    Their resistance (or at least reluctance) to move out and be willing to forestall certain lifestyle benefits and the total true cost of living until the future means that home ownership is postponed until much later.

    We watched the consolidation of families into larger housing units temporarily after the 2008-09 Great Recession. However, in the U.S. the preference is to (eventually) live independently of your parents and in-laws as healthy boundaries are established.

    Interestingly, much of the value of residential real estate has been historically created by the exchange of longer terms benefits such as a homeowner might receive from a lender, or an SFR tenant might trade with a landlord. With the simplified proposition of the vacation rental market continuing to develop, the "value" of a property may be higher in some markets.

    However, I believe the long term benefits are still the metrics that count. Desirability, utility, scarcity and transferability; that's what counts.

    As a friend reminds me, shelter is nit likely to out of style anytime soon.

    4Reply
  • Jacob Beard
    Fairview Heights, IL · Member since 2015 · 48 posts · 27 votes
    10y

    I never quite got baby boomer theories just because the argument to my understanding is there are lots of baby boomers and when they are gone there won't be a lot of "______" fill in the blank, but I mean didn't baby boomers have kids, to me it seems the population would grow due to that era . Or am I just off.

    2Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    Millennials out number baby boomers. There was a miss count and could be over 10 million depending on how one classifies non citizens. Even without non citizens millennials out number boomers. Dent never seems to bring this part up. Yes they are delaying family formation and have different taste. As mentioned they rent longer and are more interested in living a cosmopoltian life and style. This is more of a shift of investment opportunities than a negative in some locations. As Jay mentioned, they still are interested in investing in RE and likely significantly more than the average boomers. Around my location SFRs get torn down at a pace I have never seen and they are building McMansions in their place. 90% are millennial buyers...from all accounts. 

    2Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    A picture is worth a thousand words. I'm surprised he's still in business. He's been wrong over and over and over again. Nuff said. 

    11Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Account Closed:

    A picture is worth a thousand words. I'm surprised he's still in business. He's been wrong over and over and over again. Nuff said. 

    I'm tempted to apply "George Costanza" logic when it comes to Harry Dent's predictions:

    8Reply
  • Account Closed
    Realtor/Investor · San Diego, CA · Member since 2015 · 133 posts · 73 votes
    10y

    I'd say almost impossible, 2022 may be the next 2011 depending on how bad the next one is but I have a feeling this will be a normal correction as affordability is becoming an issue for many. It is True that my generation of millennials  interest in home ownership is lower than baby boomers and a lot of us need to grow up, settle down, and even move out of moms.   I do have folks wanting to buy but burdened heavily by 50k or more 1 was 150k in student/credit debt and with as large as 20% interest rates. Baby boomers were statistically a younger age to settle down and could more easily afford it. Could you imagine the next elected president bankrupting the country and all the banks calling all notes! Might be what the country needs is a bankruptcy to fix this debt , currently we are headed that way with this increased spending. Hopefully they don't call the notes because harry dent would be right and anyone's strategy on BP to use no leverage with real estate would be fine. Better save some of your cash flow!

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    My personal two cosmopolitan REI pesos.

     The mid 2020s are unknown except that some fiscal challenges seem to be in place. Choice locations could still command top end rents. Understand millennials have the known longest life expectancy in history of mankind and thus any delay for them to buy is actually ok for them fiscally speaking. 

    Keep in mind all the known healthly living advances etc...  What is considered old is now 74 years old. It is possible perhaps that those boomers get replaced by the healthiest generation ever and in larger numbers. We kind of know where they want to rent and live now, yet they have not built enough in many of the locations to keep up with this new demand. ( Supply and Demand) The top cities attracting the latest real boomers like Denver and Portland can back this up in the most profitable ways currently. Investing against this trend might not be the best long term scenario for some imo. Dent's take may take shape one day but not in our lifetimes is equally as possible from what I see. This is exactly why exact location really matters. 

    3Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    First, he made the prediction that the stock market would crash to 6,000 by first quarter of 2015. Unfortunately, it didn't work out. However, it didn't stop him from making the same prediction. Only this time, it's later 2016. Is CNBC that sad? They couldn't invite someone with at least a 50% track record instead of someone who is consistently wrong?

    @David Faulkner, thanks for the video clip above. I couldn't stop laughing. LOL!

    1Reply
  • Kou Y.
    Durham, NC · Member since 2016 · 8 posts · 5 votes
    10y

    I think that the interest rates will make the most impact on future real estate contracts.  Can we maintain such a low interest rate on mortgage ? How can mortgage rates be lower than inflation ?  That is not sustainable in the long term.  When interest goes back up, there may be another real estate bust because in the past 10 years, income haven't gone up much.  I have many many cousins and friends who just graduated college and can't get employment in their field of study. Most of our jobs are going over seas.  So, when interest rates goes up, payments on mortgage will raise and many folks will not be able to afford current real estate prices in many markets.

    2Reply
  • Rich Baer
    Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
    10y

    If and when Mr. Trump wins in November, the media will put such a negative spin on things the retail market will drop like a rock very quickly. Protests and disturbing visuals will be shown. The recession word will immediately come out and homeowners will be fearful. Prices over the winter will fall and all the rehabbers who have not sold will be forced to drop their prices. Great opportunities await buy and hold investors. Build your cash positions now. You will be glad for many reasons.

    1Reply
  • Jessica Fatel
    Denver, CO · Member since 2016 · 10 posts · 3 votes
    10y

    Is it that Millennials prefer to rent, or that they are having a harder time saving a downpayment for the purchase of a home, especially given inflated rent prices in so many areas? I don't think it's that they aren't interested in owning real estate. 

    2Reply
  • Brian Lacey
    Rental Property Investor · Hailey, ID · Member since 2015 · 218 posts · 143 votes
    10y

    I'm a doom and gloomer. So I'm very well acquainted with Dent and his works. He is wrong.

    Shelter, literally one of Maslow's basic needs. As @Rick H. pointed out, shelter isn't going out of style anytime soon.

    Dent, Schiff, Faber all 3 are very well established in certain camps whom I find myself agreeing with quite a bit, but none are real estate guys. Dent does have some good stuff on population trends, but this logic fails to note that millenials and the 90s kids are just as numerous as the baby boomers. 

    They aren't making any more Earth, and until they do, it's a finite commodity.

    Earth, the one thing government and the Federal Reserve can't print more of.

    And for the futurists out there, don't worry in 20 years we're all going to be living off a Basic Universal Income and be living off of robotics and AI.

    See you in the VR world, my fellow freaks and geeks.

    1Reply
  • Scott Mclaren
    Investor · Gilbert, AZ · Member since 2015 · 96 posts · 46 votes
    10y

    Well since the population of the United States continues to increase and just about everybody wants a roof over there heads, I think real estate is pretty safe.

    0Reply
  • Dolly Caswell
    Investor · Eagle River, AK · Member since 2015 · 121 posts · 45 votes
    10y

    To those of you who think there is no more room to build, no more space to live in, you can move to Alaska! Just don't bring your traffic jams, noise and industrial pollution. It's a pretty nice place to live, and we welcome you here!

    1Reply
  • David Hodge
    OP
    Rental Property Investor · Laguna Niguel, CA · Member since 2015 · 142 posts · 98 votes
    10y
    Thank you all for the feedback. It does sound like Dent is putting too much emphasis on one factor (baby boomers). I believe he thinks the millennials will shy away from home ownership due to seeing their parents lose their homes in the last down turn. So even after student debt is paid off, they will still choose to rent. I felt like it was really a stretch but wanted to confirm what I was already thinking by posting on here.
    0Reply
  • Don Souza
    Rental Property Investor · San Rafael, CA · Member since 2016 · 57 posts · 16 votes
    10y

    I believe millennials will behave like their baby-boom parents by creating demand for real estate, particularly single-family residences as they start to have families. The question is where? 

    2Reply
  • Bill Paesano
    Entreprenuer/Investor · Rochester, NH · Member since 2015 · 32 posts · 3 votes
    10y

    As long as people "Keep Up With The Jones's" there will always be demand for what others have or want. 

    0Reply
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