2022 Will it FINALLY be The Year of The Real Estate Crash? Will it Be another Great Year Like 2021?

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one rental at a time

back with the ceo of him lane and good

friend of the channel dana how you doing

i’m great thanks for having me again one

of the things i’d love to do with my

experts which you are one of them is

play this game i call over under are you

ready for it i’m ready so we are going

to talk about 2022 we’re going to talk

about four metrics that are right in

kind of the domain of dana and mai’s

purview and we’re going to see how we do

so uh the first one dana is going to be

home values

we’re going to talk about national

numbers right it’s published by the

national association of realtors so

again this is not your state not your

city this is a countrywide um nationwide

and i’m going to say home appreciation

come december 31st of 2022 is 12

dana do you want the over or the under

and why

um i’m gonna do slightly

under okay

not not too much under um and and here’s

why i think um you know this past year

was a fantastic year

for um home appreciation

and i i wonder how much more it um it

can go up especially with new builds um

coming up um and so from like a total

perspective of looking year over year um

i’m not sure of course that would also

have to do with inflation which we spoke

about um which

with inflation maybe i should i should

should take that over um but i would say

maybe slightly under like twelve percent

is is what i’m predicting yeah twelve

that’s a good number yeah i think that’s

wise i mean you’ve heard me talk about

it i think we have a housing slowdown

coming i think there’s a lot of there’s

a lot of people now modeling kind of

year over year kind of like sameness and

i’ve been in this environment before it

just fundamentally can’t people people’s

dollars will be stretched and they’ll

make painful choices so i think taking

the under is a wise guess not much

and it’s a high number oh yeah about it

it’s still a high number compared to

like five percent um so from that

perspective yeah i would say around 12.

um i do think inflation plays quite a

quite a role with that oh i totally

agree all right so number two since we

are talking about inflation the greatest

i think the greatest contributor to

inflation in 2022 will be rent i think

the greatest under reporting of 2021 in

uh inflation is rent so i think there’s

going to be a catch-up so we’re going to

talk about rental growth again december

of 2022. let’s put the over under at

seven percent

okay i i’m i’m still doing this slightly

under oh really okay all right and and

here’s why um well a lot of it has to do

with because you always have to think

about um the supply and demand for

rental properties and that that goes

right into those home prices of whether

or not someone chooses to purchase

and then goes off the market for a

rental or whether they decide to stay a

renter and with that with home builds

that um we were talking about with um

home values um the question is hey is

there that affordability can someone go

out and and purchase a property or will

they stay as a renter um and so from

that perspective i i think it will go up

slightly however i think tenants have

more power now than they ever have

because companies came back and said hey

you can all work from home

and then suddenly or sorry they came

back and said hey you all have to go

back into the office and then these

companies were had their managers go to

the executive saying hey i’m going to

lose 30 of my top performers

if you require them to go back and so

with rent you can only increase it so

much without a tenant saying hey the

grass might be greener in another area

and it might not be a different state

like it’s hard to get people to move

away from family and friends but they

might say i might go to the other side

of town we’ve seen that a ton in san

francisco right they’re like

we’re out of here it’s too messy it’s

too whatever and they go to napa or

emeryville

and so i think tenants have more power

and right now we’re seeing

um also tenants move jobs more than

we’ve ever seen oh yeah

with that they’re actually having this

power like they have power even over um

their employers now saying hey i’ve got

five other job offers here

and um so from a rent perspective it’s

the same thing where um

they they have the power to leave if

those rents are raised too much i think

during covid people were a little bit

more concerned about job stability and

now we’ve come to a world that people

have just accepted how things are

and ex and they know in the future i

mean new strains but

people still feel much more comfortable

and they have that power so i think if

you raise it more than seven percent i

honestly think tenants are going to say

peace landlord see you later and and

another place yeah let me just say i

want you to be right i really do because

i think i again i grew up in an

environment where we were making choices

what bills to play and i still remember

those horrific feelings and also not

really understanding how close to the

edge we were um but my my experience in

this market is rents volume values and

we’ve seen values race ahead i think

unfortunately we have one more year of

unseasonally high rent growth and then

we flatten out i think we’ve sucked

forward a decade of rent growth

into two years it has to stop

i’m just afraid next year is going to be

over seven but again fingers crossed i

hope you’re right for all of the tenants

out there yeah number three inventory

the greatest bugaboo of the

single-family home market let’s say we

have 1.3 million units as we end 2021.

i don’t know let’s pick a number let’s

say 1.8 million units so an extra half a

million units become available next year

do you think we have more or less

available uh than 1.8 million units

again this is available for sale on the

mls

um i think and this is inventory um this

is total inventory um right not new

inventory so totally correct right

yeah so from a total perspective i would

say

um i would go slightly above and here’s

why um i think that a lot of inventory

i’m because i’m thinking of the new

inventory how that would affect

inventory on market

and um

we are seeing with obviously lumber um

lumber prices all that a lot of

construction was delayed oh yeah for

sure a lot of construction was delayed

and um also um

it’s now with things opening up more um

ability to get permits all these things

are are much faster so i think there’s

going to be a lot more development okay

we’re already seeing it like i’m seeing

in a lot of markets with this bill to

rent with institutional investors going

in um bill to rent i think that’s going

to be a huge huge um

uptick in the inventory for rental

properties okay sorry slightly above it

okay yeah

yeah you know this is i mean this is the

thing right i’m calling a housing

slowdown so i’m gonna agree i think i

think i think we go above 1.8 i don’t

think we hit 2 million but i think we go

i think yeah i think the over’s a good

guess okay number four and final one we

will talk about i talk about it in my

book one rental at a time the

affordability index i think too many

people talk about price too many people

talk about interest rate nobody talks

about affordability which is a

combination of price

interest rate and wages people don’t

realize that in 1970s housings doubled

rates went up because wages went up i

think we were in a huge wage cycle

so the question is will housing be more

or less affordable

at the end of next year what do you

think

you know this goes back to everything

else of the supply and demand

and tenants having more

um

power i think from that perspective

um and i’m going to give a couple things

and then

land on my final answer but i i think

from that perspective tenants have a bit

more power of where they live so things

become more affordable because they can

move to the outskirts like that and then

people and landlords have to be more

competitive with their pricing um for

cities and things like that however

however

i’m going to retract that statement and

go into my next point on affordability

that you’re just talking about um wage

growth and increase and you’re seeing a

huge gap there between those who are

making minimum wage versus those who you

know are on their salaries and their

track and

white-collar jobs and it’s usually those

blue-collar jobs that are fronters as

well um right or most of them are and so

from that perspective i think policy it

depends on policy because it depends on

what is that minimum wage

what um how how does that correlate to

the salaries that a ceo makes or anyone

else and understanding whether they can

afford it from that perspective like if

we’re seeing inflation at 10

and then we’re seeing the minimum wage

increase by you know 3 percent that’s

going to affect affordability and i

actually think

that’s going to affect it more than

tenants having that power to move so i

actually think affordability is going to

i i don’t see it getting any better um

unless with this inventory we can get up

to you know over 1.8 like you said um

i i do think affordability is a problem

and it’s been a problem for many years

and i think inflation is going to hurt

it even more

because of that very reason that

minimum wages do not raise

do not rise as fast as the inflation

rate

and has

yeah i uh

so i agree i i think i think housing the

affordability of housing is worse next

year than today i think that’s that’s a

safe guess but i would also argue that

it’s not going to be nearly as bad as

many people think right many people are

preaching that affordability how can

housing be affordable when prices are

higher than 06. interest rates are lower

interest rates are going up pricing has

to come down no that’s not true uh and i

do think wages will go up because again

i have more i’ve met the mortgage guy

who’s my wednesday expert and again if

if wages go up five percent you can

afford like an extra 150 a month in your

mortgage payment it’s even to you yes

prices are up yes rates are up but all

that so i think i think the wage cycle

is just starting i do think it hits uh

the minimum wage or the lower end of the

scale first i think it will ripple

through the entire stack over the next

year uh so i think affordability will be

slightly worse next year but not nearly

as bad

as a lot of people think so always fun

to talk about 2022 uh any closing

thoughts on 2022

um i i think justin i i’m excited those

who are in um real estate right now i

think um it’s going to be another strong

year for you um those with rental

properties if you don’t have them make

that the goal for the next one right

before 2022. yeah i totally agree with

you folks if you ever wanted to get in

the game you know 2021 was a hell of a

year even though there were a lot of

channels talking about crash they were

wrong i told you where they were wrong

they were really really wrong but do the

work right learn your market find a good

or great deal it’s always a great day to

do a great deal uh if you’re a lot of

you’re going to be self managers you

need to go to himlane.com take the 30

day trial use use the

materials the pdf in my free course or

watch the videos in the paid course

it’s all there all you got to do is do

the work thanks dana awesome thanks so

much

 

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