Podcast Summary
Current housing inventory levels are up from last year and two years ago: Investors should monitor housing inventory levels to make informed decisions and stay updated on market trends, as current inventory is significantly lower than pre-pandemic times but higher than the past few years.
Housing inventory is a crucial statistic for real estate investors to understand, and current inventory levels are significantly lower than pre-pandemic times but higher than the past few years. Mike Simonson from Altos Research, a leading expert in housing market data, shared on the Bigger Pockets podcast that there are currently 513,000 single family homes on the market in the US, a 24% increase from last year and a 102% increase from two years ago. This means that there are fewer homes available for buyers compared to previous years, which can impact pricing and decision-making for investors. Understanding inventory levels can help investors make informed decisions about their portfolio and stay updated on market trends.
Current inventory is only half of what it was before: Despite a significant increase in inventory compared to last year, it's still only half of what it was previously, with fewer sellers listing homes this year but the number starting to increase.
While inventory is currently increasing significantly compared to last year, it's important to remember that it's still only roughly half of what it was not too long ago. Mike explained that when we talk about inventory, we're referring to the homes that are available for purchase right now. This number can grow due to an increase in new sellers coming to market or slower demand. Mike also noted that there are fewer sellers listing homes this year compared to last, but the number is starting to increase. It's crucial to keep this context in mind when interpreting inventory data, as headlines may make it seem like the market is experiencing unprecedented growth when in fact, it's still a ways off from previous levels.
Investing in Real Estate with Little to No Money Down: Explore turnkey rental properties and private real estate funds for passive income and potential appreciation with minimal upfront capital. The housing market's rising inventory offers more selection for buyers.
There are innovative ways to invest in real estate with little to no money down, such as rent-to-retirement's turnkey rental properties and private real estate funds like PPR Capital Management. These options provide passive income and the potential for appreciation without the hassle of property management. Additionally, the housing market is experiencing rising inventory, which offers more selection for buyers, especially those sensitive to interest rate changes. Overall, these trends present opportunities for investors looking to enter the real estate market with minimal upfront capital.
Inventory levels and their impact on housing market conditions: An increase in inventory signals a shift towards buyers' market and potential price softness, while low inventory indicates a seller's market and rising prices.
Inventory levels in the housing market play a significant role in determining market conditions and future price trends. When inventory rises, indicating a shift in the balance of power from sellers to buyers, it often signals price softness. For instance, we currently have 24% more homes on the market than last year, which implies essentially flat pricing for the nation as a whole. This is due to a decrease in demand compared to supply. Conversely, when inventory is low, it's a seller's market, and prices tend to rise. It's crucial to consider inventory levels on both a national and local scale, as market conditions can vary greatly from one area to another. For example, some Gulf markets, such as Southwest Florida and Austin, have seen substantial inventory increases, leading to more balanced markets and slower price growth. Meanwhile, markets in the Midwest and Northeast continue to have lower inventory levels and stable prices. Overall, inventory is a key indicator of market conditions and future price trends.
Rising inventory levels due to holding costs and potential reversal with lower mortgage rates: Inventory levels are increasing in some real estate markets due to higher holding costs, but could decrease with lower mortgage rates. Monitor recent trends and price cuts for insights into your local market.
Inventory levels are rising in many real estate markets due to increased holding costs such as property taxes and insurance, causing some areas to still be recovering from pandemic lows. However, if mortgage rates were to decrease, it could potentially reverse the trend and even bring down inventory levels. To understand inventory trends in your local market, focus on recent trends and the relationship to pre-pandemic levels. In some areas like Fort Myers, a high percentage of homes on the market with price cuts is another signal of the impact of rising inventory.
Understanding the impact of rising inventory on housing markets: While rising inventory can indicate market instability, it doesn't always mean a crash. Local market data and trends over time are crucial for accurate analysis. Investors can explore alternative funding strategies and manage insurance needs effectively.
While rising inventory can be a concern for home buyers, it doesn't necessarily mean a housing market crash is imminent. For instance, Austin, which once led the country in price cuts and rising inventory, has found some stability in pricing. It's essential to look at the trend over time and understand that a normal percentage of homes take price cuts before selling. Mike Simonson emphasized the importance of looking at local market data and different statistics to get a full picture. Additionally, investors can explore alternative funding opportunities in today's challenging market environment, such as Fundrise's new private credit strategy. Lastly, NREIG, an insurance company specializing in real estate investors, can help simplify managing multiple properties' insurance needs.
Impact of Interest Rates on Housing Inventory: Lower interest rates can decrease housing inventory due to increased buyer competition, while higher rates can lead to more inventory as demand slows. Passive real estate investing through Connect Invest provides monthly income with minimal investment.
Passive real estate investing through platforms like Connect Invest can provide monthly income with a minimum investment of $500, while interest rates and their impact on the housing market can influence inventory levels. Mike Simonson of Altos Research shared his insights, stating that contrary to popular belief, lower interest rates can actually decrease housing inventory due to increased buyer competition. Meanwhile, higher interest rates can lead to more inventory as demand slows. Despite predictions of falling interest rates for over a year, they have remained steady or even risen since January 1. Connect Invest offers an opportunity to invest in real estate without the hassle of ownership or management, making it an attractive option for those interested in passive income. Additionally, BetterHelp was promoted as a valuable resource for discovering personal priorities and making time for what truly matters through online therapy sessions.
Mortgage rates impact inventory levels: Higher mortgage rates lead to increased inventory, while lower rates lead to less inventory. Consumers' sensitivity to rate changes affects demand and prices.
Mortgage rates and inventory levels are closely connected. Higher mortgage rates lead to increased inventory, while lower rates lead to less inventory. This is because consumers are more sensitive to changes in rates than to the absolute levels. For example, if mortgage rates suddenly increase, buyers may not make offers on homes, causing sellers to reduce prices. Conversely, if mortgage rates decrease, buyers may feel more incentivized to purchase, leading to increased demand and potentially faster price growth. It's important to note that there is uncertainty around the direction of mortgage rates, and they are not directly tied to the federal funds rate. Additionally, the assumption that inventory will increase when rates decrease may not be accurate, as demand may increase at a faster rate than supply.
Understanding the trade-offs in the real estate market: Lower interest rates can lead to increased competition and higher prices, while higher rates can mean fewer bidders and lower prices. It's important to adjust strategies based on current market dynamics.
The real estate market is full of trade-offs. Lower interest rates may make monthly payments more affordable, but they can also lead to increased competition and higher prices. Conversely, higher interest rates may mean fewer bidders and lower prices, but they can also make monthly payments less affordable. Instead of focusing on whether the current market is good or bad, it's important to understand what's good about the current market and how to operate successfully within it. Additionally, contrary to popular belief, lower interest rates can actually lead to less inventory, as opposed to more, as fewer people are incentivized to sell when rates are low. Historically, inventory has been declining since the Great Recession, and it's unlikely to return to pre-pandemic levels or the early 2010s any time soon. Understanding these market dynamics and adjusting strategies accordingly is key to navigating the real estate market.
Higher interest rates and increased inventory causing a shift in real estate market: Higher interest rates have led to an increase in inventory, potentially causing 20M people to lose their homes if rates stay high. Keep an eye on inventory levels to adjust bidding strategy accordingly.
Higher interest rates and increased inventory are contributing factors to the real estate market's shift towards the old normal. Over the past two years, higher interest rates have caused some homeowners to sell their properties to finance new purchases, leading to a build-up of inventory. This trend could continue if interest rates remain high or rise further, potentially resulting in 20 million people being unable to keep their first homes by the end of another two years. Conversely, if interest rates decrease, the trend of increasing inventory could reverse, and the market may tighten up once again. It's essential to keep an eye on inventory levels in your local market as they reflect both the supply and demand sides of the market. By tracking inventory trends and comparing them to historical patterns, you can gain insights into housing price movements and adjust your bidding strategy accordingly. In markets with high inventory, you may be able to bid at or below asking price, while in markets with low inventory, you may need to be more aggressive with your offers.
Understanding median days on market for homes can inform real estate investment decisions: Tracking median days on market provides insights into housing market dynamics, accessible through various real estate websites, helps make informed investment decisions, and connecting with investor-friendly agents can be crucial.
Tracking the median days on market for homes in your local housing market can provide valuable insights into the current housing market dynamics. This metric is easily accessible through various real estate websites such as Altos Research, Zillow, Redfin, and realtor.com. Understanding this data can help you make informed decisions about real estate investments on both a national and local level. Additionally, finding an investor-friendly real estate agent can be a crucial step in navigating the real estate market and achieving financial freedom. With BiggerPockets Agent Finder, you can quickly connect with local market experts who can help you analyze numbers, understand neighborhoods, and take confident action. Remember, the goal is to be in the market for the long term, not trying to time it perfectly. As always, do your research and consult with qualified advisors before making any investment decisions. The content of this podcast is for informational purposes only, and all opinions expressed are those of the hosts and participants. Investing in real estate involves risk, and you should only invest capital that you can afford to lose. BiggerPockets LLC disclaims all liability for any damages arising from the use of this information.
