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