All Forum Posts by: Austin Wolff

Can someone explain to me why the national debt (now at $36 trillion) isn't the next black swan issue that will tank the economy? I'm currently having a difficult time imagining the future a decade from now where this issue isn't one of the more important things that needs to be addressed. (Or maybe it is and perhaps I should look into how this will affect my investment portfolio.)

What about what this previous BP podcast guest has to say about Section 8? I don't do Section 8 but my summary of the interview was that this investor made his rental an A-class property (I don't remember what type of neighborhood it was in) to attract an "A-class" Section 8 tenant.

 That's awesome, I didn't know about the manufacturing growth! KY remains an affordable state (for now) and it's great to see the state focused on growth.

Market Analyst here. I constantly see Lexington and Bowling Green on my "lists for out-of-state investors." Now, these "metros" are also competing against every other metro in the USA and there are quite a few metros with better overall fundamentals with similar price points (which is why I haven't written about these KY metros yet). But still, Lexington and Bowling Green continue to pop up on my lists time and time again. Perhaps it's time to do a Kentucky deep-dive...

I now live in Los Angeles. After giving up a $1,600/month lease I had for 4 years in Studio City, I moved twice and now similar apartments go for $2,800/month in the same area. As a renter in Los Angeles, I almost view leases as an asset since we're basically a protected class here. If you plan on staying in LA and aren't moving elsewhere, I'd follow the advice others are giving and continue saving money for the next 12 months. I really really don't think home prices are going up relative to historical averages in the next 12 months (in other words, I think real inflation-adjusted growth will be stagnant in the next 12 months). Keep your lease. And keep saving. 

If you didn't live in a coastal CA city I might have different advice. But as someone who was in an almost identical situation, I feel qualified to give this advice.

Texas has some of the highest property taxes in the nation. As the cities grow and need to build more infrastructure, where do you think a large portion of those funds needed will come from? 

 Great question! I don't think we'll see appreciation like we saw from 2012-2022 in the near future. For various reasons, I think most areas will see appreciation only keep up with inflation (that is, their real appreciation will likely stagnate). This will vary market-to-market. Places in the South and Sunbelt, where adding supply isn't an issue, will likely continue to see price stagnation. Other places with supply constraints will likely continue to see positive real price growth.

In a previous article, I made the case for why North Carolina might be the next boom state. In an accompanying video, I also pointed out that Utah had the highest population growth from new births (see the heatmap above, courtesy of Pew Research Center’s analysis of Census data).

Metros along the Wasatch Front, such as Salt Lake City, UT; Provo, UT; and Ogden, UT continue to see strong job growth, low vacancy rates, and relatively high price appreciation. The area is also geographically constrained between the Great Salt Lake, Utah Lake, and the Wasatch Mountains, leading to the low supply in housing.

The geography reminds me of coastal cities like Los Angeles, which are usually sandwiched between the ocean and the mountains. As long as there is demand to live in these areas and low housing supply, prices will likely continue to appreciate. And I think this effect will be exaggerated along the Wasatch Front metros like Salt Lake City, Provo, and Ogden, UT.

 Great question, I'm just looking at percentages. I think that matters more than absolute dollar amount and here's a theoretical example to show why:

Let's say I have $200k to invest. And my options are: 

-One $800k property in CA (25% down), or

-Two $400k properties in ID (both at 25% down).

If we take the 2015-2020 5-year appreciation (so as not to include the roller coaster and unlikely 5-year market we experienced from 2020-2025) for each state, the CA property would see an average appreciation of 37%. Your property would appreciate from $800k to $1.096M. That's a $296,000 gain for investing in CA.

Meanwhile, if we take the 2015-2020 5-year appreciation that Idaho experienced before the pandemic (62%) and apply that to the 2 properties you were able to buy with the same $200k, both properties would appreciate from $400k to $668k. That's a $268,000 gain per property, or, a total equity gain of $536,000 (which is higher than the CA property's equity gain of $296,000).

This is a theoretical example using gross approximations, but hopefully it displays the point that percent-growth is still more important than total value growth.

And you're also right about it being a coincidence that certain states are blue and experience high appreciation. Technically, all major cities still vote blue (even if they're in a red state), yet it appears that only cities with supply constraints (like geography) see the most appreciation. 

My (unrealistic) goal is for this post to put this debate to rest. Blue or red, it really has no effect on the appreciation. Things like job growth and supply constraints do. 

I was curious, so I looked at 20 years of Zillow data.

Growing up in Los Angeles, I always believed a saying that investors here seem to repeat: blue states appreciate more than red thanks to things like zoning restrictions and certain democratic policies (which is an entirely different topic I won't be delving on here).

For anyone that didn't know, here is a map of each state's electoral voting history (for the previous 5 elections):

Here is a heat map of 10-year price growth by state:

At first glance, it appears the majority of states with the most growth were the "pandemic boom states" like Idaho, Nevada, Tennessee, Georgia, Utah, and Florida. All of these states voted red in the 2024 election. (Surprisingly, the blue states of Maine and New Hampshire did see solid growth, along with the not-so-surprising Washington.)

But what about their growth over a longer time horizon?

(Zillow didn't have 2005 data for Montana or North Dakota.)

I can maybe see a case being made for Washington and Oregon. But Idaho, Utah and Tennessee also saw big price growth over the same time period.

To settle this debate, I simply calculated the correlation between each state's growth and the categorical "red' or "blue" variable. The correlation coefficient came in at 0.03. Basically, there doesn't appear to be any relationship between a state's voting history and its price growth.

Just because a state is blue doesn't mean it will automatically benefit from price growth. Things like job growth and supply constraints affect price much more than its residents' voting patterns.