House prices keep climbing even as inflation falls and rates drop, pricing out renters. Homeowners locked into 3% mortgages won't sell into 7–8% rates, strangling supply. New construction will add 480,000 units in 2024, but investors are back and buying, keeping prices high.
About 480,000 units.
Approximately 3% (vs replacement rates cited around 7–8%).
House prices are still rising. So interest rates are going down. Right. And inflation's going down. House prices are still going up. So it's still unaffordable for a certain segment of the market. So they're still looking to rent, and the housing supply and the rental supply isn't there. So new construction was kind of ramping up to this. And those 480,000 units that are going to become available, it's going to take a little bit of time. Foreign, we're going to go into current trends right now. So 2024 is really looking like a really great year for us. And I did some research in some Marcus and Millichap is a really great resource for the economy and real estate and what things are looking like. And I found a couple other articles that had some really, really great stats. He was talking about 2024 and how the economic outlook is better than expected right now. And so a few things are happening. People are getting less fearful, more confident. And it's a mix of people who were fearful and kept tight on their income and their savings and their investments and didn't want to put it anywhere because they weren't sure what was going on in the market. There's also the other bucket of investors who were like, I'm liquidating and making my cash available because I know this market. I know this is where millionaires are made because they keep looking at the opportunities. They're not fearful, and they are ready to pounce when things are ready. So there's capital available in both of these buckets. And in 2024, one of the articles was saying, this is going to cause a lot of trading activity because some people made their cash available for opportunities. Some people preserved their cash because they're eek. I don't know what to do with it, and I don't know what the market's going to look like. People are saying, who are fearful and saying, eek. Are going, hey. It's like they open up the door. It's looking pretty.
Is it warm outside here?
So I think I'm to go ahead and start investing my money some more. And so capital is coming back into the marketplace, which means the people who had the cash liquidated to be able to take advantage of opportunities now have their cash and have more cash. And we are seeing this in our own business. Like, we have a lot of cash available and we're having meetings going, here's our balances. Where is this money being deployed so that we can ensure we're making a profit and making that return for our investors that we promised. The other thing that I thought was really, really good to is new construction is going to hit its peak in 2024. 480,000 new units are going to becoming available. So they're talking about housing supply and the fact that there's a shortage of the housing supply and limited availability and the fact that house prices are still rising. So interest rates are going down and inflation's going down. House prices are still going up. So it's still unaffordable for a certain segment of the market. So they're still looking to rent and the housing supply and the rental supply is in. So new construction was kind of ramping up to this. That was 480,000 units that are going to become available. It's going to take a little bit of time. So all of us landlords are still able to increase our rents because of that housing supply. So I thought that was really interesting. And then something else that is. It's one of those things where you don't know exactly what's going to happen, but there's getting a little bit more comfort level. So the reason that there's such a supply and demand issue in the housing market is because sellers who otherwise maybe would have sold are saying, I've got a 3% mortgage. If I sell my house. Right now I'm looking at a 8, 7 depending on when they're. When they're getting approved for the loan.
Right.
Like it makes no sense for me to sell. So they just decided not to sell. Maybe they've decided to tap into their equity and renovate their house instead of selling and moving because they don't want to replace a 3% with a 7 or 8%.
Exactly.
So that leads to more supply and demand issues now that the rates are going down. Little bit more comfort and more sellers are starting to allow those houses. But we still have the. I can't afford, you know, the houses. So there's this weird dynamic going on right now that is all leading to good. Like there is no forecast. Not one article that I read is forecasting any type of crash or any, you know, they're all seeing 2024 as, hey, this is looking good, the economy's looking good. Rates are decreasing. Even us, we're getting ready to refinance six properties. And I keep on emailing them going, hey, you want to give us the new rates?
Exactly, exactly. Did they go down?
Yeah, yeah. I'm so glad that it took this long to actually get those refinances done. You know, Everything happens for a reason. So. Yeah, I thought that was really interesting. Let me see if there's anything else that I wrote down. What's your comfort level, especially seeing all. Everything that's in the pipeline? What are you seeing and what are you hearing from our acquisition team?
Yeah, it's. It's. Well, the acquisition team, they're. They're realizing they're getting more calls and, and they're getting more people ready to sell. Yeah. And what I'm seeing, though, is that it's all of the people that wanted to sell the last year, just year and a half.
Right.
So you got a combination of those people and then you have the combination of the people that were just going crazy two, three years ago where they were buying houses sight unseen and houses that just normal houses had, you know, when they would go on the market, they'd have a line down street of people wanting to walk the house.
Right.
Like, where did that come from?
That's right.
But all that went away when the interest rate started going up. But now just even the slightest sign of the interest rate going down, boom. It's just all of a sudden, the fervor starts. It's starting to bubble already and everyone's going, oh, where's it at? Let me add it. You know, and all the articles that I'm reading too, saying the same exact thing. Just get ready.
Yes.
Don't wait.
Yep.
Get ready and. And take action. We never know how long it's going to last.
That's right.
Now is a great time. You know, get ready and get ready to take action.
Yes.
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