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April 26, 2022

What Should We Expect From the Housing Market? w/ VP of Data/Analytics for BiggerPockets Dave Meyer

What Should We Expect From the Housing Market? w/ VP of Data/Analytics for BiggerPockets Dave Meyer

Dave Meyer Serves as the VP for Growth Data and Analytics for Biggerpockets.
Today we cover the data and the details on the following:
-Emerging markets
-best markets for cashflow
-best for appreciation
-outlook on market
-where do we see interest rates going?

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Transcript
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Back in the early 2000s 10s, we used to have about 2 million houses on the market at any given point. And when I say inventory, the way it's measured, or the data I'm citing is like, how many houses are for sale at the last day of the month. So like last day of March in 2012, are somewhere around 1.8 million to millions. Unlike that pre pandemic, we were at about 1.5 ish million on a seasonally adjusted basis, something like that, we were at 560,000. Now, we're at 1/3 to one quarter of the amount of inventory on the market that we used to be at. And so until that changes, the housing market cannot reverse it can't. Welcome to the action Academy podcast staring back Well, I celebrate freedom, the show where we help you achieve financial independence with the mindset methods and actionable steps from guests who've already earned their freedom, the freedom fly. Choose to do what you want, what you want, with who you want, when you want when you want when you want with another episode today. Now, here's your host, Brian Luebben. What's up action Academy family this is your host, as always, Brian Luebben, bringing you the mindsets, the methods and the actionable steps from guests who have already earned their freedom in life and business baby. If you're new to the show, we are doing solo shows every Monday and Friday and Tuesdays and Thursdays are going to be our guest interviews. So today we have an amazing guest for you in Mr. Dave Meyer. Dave Meyer is the VP of data and analytics for bigger pockets. bigger pockets is the largest online resource for learning about real estate investing in the BiggerPockets Podcast is the largest podcast on real estate investing. So Dave is actually starting up a separate affiliate BiggerPockets show called on the market where he talks all things data. So Dave is constantly spending his entire day looking at different data trends and answering questions that people are asking from the BiggerPockets forums, which leads to a freakin awesome podcast episode for you today on the action Academy. We talk about market forecast where we see the market heading, what we see happening with interest rates, what can we predict? What are some of the markets that are best for buy and hold? What are some of the ones that are best for cash flow and the best ones for appreciation. So we are going and answering all the burning questions that you have. And you're asking on the internet, we answered today in this episodes. So as always hit that five star rating and review so we can share this with as many people organically as possible. And also, if you would like a detailed breakdown from Dave with the top takeaways and top markets that he's got with his data, I'm starting up that email newsletter, go into the link in the show, subscribe, and you will get sent every Thursday you get sent the top three of the five tips from each guest. So it's broken down very simply for you to read and digest about a minute. So it's gonna be the top takeaways from each guest. So go hit the email letter five star rating and review. Dave Meyer. Dave Meyer, how are you my friend? I'm great, man. Thank you for having me. Glad to have you, man. Because we almost had the wrong Dave on the podcast. Dave OSI is another employee at bigger pockets. And he is one of the founders of the original BiggerPockets Podcast. So he probably actually would have been a great guest as well. Yeah, I was messaging back and forth with Dave here. And then we were going and his name is actually David. And so we were going back and forth. And I sent the calendar invite we had the the interview booked, and it was accepted by the email address and I'm looking at him like this does not look like and then the morning of I'm like, Hey, man, are we on for this? No, I didn't get a calendar invite. So we made it happen just two days later, your class of professionalism over here the podcast representing Yeah, buddy. So let's start with your story. Tell us who you are, what you do, and what you're about to do with the new show because this ended up being ironically, the perfect timing to plug the show is great. So my name is Dave Meyer I in my full time job and the Vice President of data and analytics at bigger pockets. And I'm also a real estate investor. Of course, I've been doing that for about 12 years and most recently, as you're alluding to thank you for allowing me to do the shameless plug. And now the host of bigger pockets newest podcast which is called on the market. And it is all about data and news and trends that impact real estate investors and our goal in this new show is to help real estate investors or people who maybe not are not even investing yet but are thinking about investing. gain the confidence and info nation I need to make sound investing decisions. Yeah, we're we wanted to go ahead and start with that. Because a I know everyone that listens to the show, for the most part has a concept of bigger pockets or they listen to whatever they've heard of it before. And be they just got sincerely turned on by that they are turned on. i Oh, man, I love talking data. I love talking about this. Because in every single Facebook forum and every single group, what do you see? What do you think the markets gonna do? What do you think the markets gonna do? And it's just opinion, opinion, opinion. Cut that crap out. We look at numbers here. And we're gonna look at the numbers, the data, the analytics, I was just telling him this. For people listening, I'm trying to turn down a little bit, we'll bring you because I am excited to talk to Dave here. And then B. I'm excited because we just announced that we have left our corporate jobs, and we're gonna go travel the world. So I'll chop it up. Me and Dave, we'll do a little live interview whenever we're over. And yeah, it's gonna be an Amsterdam for about two weeks in August. So that's gonna be fantastic. So to begin here, you said you are a real estate investor? What kind of verticals are you in in real estate. I primarily invest in long term buy and hold rentals. I personally like having my full time job. I love working at bigger pockets. And so for me, doing flips, or a lot of value add stuff is just not in the cards for the amount of time I have to devote to real estate right now. And so I try and buy things that I can buy, give them to a property manager and hold on to them for 30 plus years is my is pretty simple. I have house hacked before I do have one short term rental as well. Since I've been in Amsterdam, it's gave me the impetus to start looking at and investing in syndication. So I've been doing some more passive stuff as well. Just because I you can invest from abroad is actually really not that complicated. But once I moved over here, I was like, Man, I should really figure out how to do this a little bit more passively. That would be fun. And there's all sorts of great operators out there who are doing good deals that you can put money into. So I've been doing that as well for the last couple of years. Okay, yeah, as an LP. Yeah, exactly. I'm not finding the deals or doing anything, I'm just contributing cash. And I love that you said that because personal finance is personal. So while is starting to get very sexy for people to be like, oh, I want to quit my job to travel the world, which is my thing for me personally. Also, I hope people have w two jobs that they absolutely love. That's the goal, right? So the goal isn't to retire, and then just lay on a beach, you're going to be hungover and sunburned after two weeks. It's to do whatever you want to do. And what fires you up in for you. It's Doc and data. Yeah, I love doing this. It's fun. I like working. Being on a team and working at a software company is fun for me before I worked at bigger pockets, I worked in software, and I've always just really enjoyed it. It's a fast paced, fun environment, you get to solve problems and help people bigger pockets has helped millions of people understand personal finance, try and pursue financial freedom. And that is very motivating to me. So I like it and totally agree with what you said that. I think a lot of times in this industry, people prescribe a certain type of asset class a certain type of path that they believe in, which is great if you if that's what you want to do, you should. But for me, I'm doing something I already like so I'm not trying to quit. But I am. I would like to be work optional in a couple of years is my goal is to have the option to not work. And I'm well on track for that goal. So that's exciting. Awesome. So let's kick off. Let's kick off the day that man, what are some of the questions because I know that you are both flooded with questions constantly. To say the least. And I know that this has been a main focus for your show. So what are some of the top questions that you're getting from people? I'm sure just general market outlook if you want to start there. Yeah, most people just want enough the markets gonna crash that actually yeah. The most common question I've been getting, man for four years, two years. Yeah, for as long as I've been doing this. And I've only really been doing this publicly for the last few years. But since you know, the questions just get more frequent and more urgent, given the climate we're in. And it's a good question, because it is we're in a very strange economic time, and I do my best to answer that. And I assume you want me to try and answer that. Yeah. So what we'll try to do, let's so what we're not going to do is we're not going to sacrifice leprechauns whip out a Ouija board and a crystal ball and tell you all what's going to happen. What we can do is we can look at historical trends of data, we can look at current data, and we can look at forecasted data. And that's the information that we're going to give you guys on the show today. So let's speak to two different people from two different perspectives, because we got, and we'll start at the ground floor first, and then we'll work our way up. So for a person, that's a personal buyer, that is just not even from an investment standpoint, they're looking for a primary residence, let's speak to that person first. The one that is like, hey, I want to either buy my first deal, or I want to buy a primary residence, and I'm getting either priced out of the market here, or I'm sitting on cash, and I'm waiting for a crash. What kind of data are we seeing here? What are we looking for? What can we tell that person as best practice based off of what we see in the data? Specifically? I think I personally, do ever recommend that people wait for a crash, because it's uncertain if that will happen. And again, as you said, we don't know I'm just, but I'll just say that it is uncertain if a crash will happen. And if so, we definitely don't know when it will happen. And we don't know how severe it will be. And, to me, the more important thing that's happening right now is that interest rates are rising. And if we're looking at interest rates going up, that to me is definitely going to keep going for the next two or three years. I personally agree, or at least they're gonna stay at least this high or probably a bit higher, I don't think we're getting to 10% mortgages or anything like that. But I don't think we're, it would be unreasonable to see investor mortgages, or receivable, or we're talking about sorry, single family owner occupant mortgages, hit five and a half or 6%. And if you were waiting, you are just going to pay more interest on your mortgage. And it's true, if there is a crash, then you might save some money, but you will be paying, in many cases, and I've done some analysis to look at this. In many cases, if there's a crash of only three or 5%, for example, which I should say it's not really a crash is like a correction as a normal market. So it'd be almost healthy. Yeah, yeah, exactly. So if it goes down three, or 5%, you're actually better off buying now with lower interest rates than waiting for the market to go down 5% and buying at a higher interest rate. And I'll assume it goes up a full point. So I think that's something people should just really think about is that it's not all about the purchase price. Because if you're using debt, the cost of that debt, which is reflected in your interest rate is super important. And that is something I think people should think about. And then maybe even more importantly, is what I try to do as a data analyst is caution people from focusing too much on short term trends and ignoring long term trends. And to me, the outlook for housing price appreciation in the five to 10 year period is extremely strong, and is not really in my mind, it's not really much of a question, I think it's going to keep going up. So if you're looking for a single family home, you're trying to buy into the market, if you're going to stay in that home for at least five years, I think you could buy now you could buy in six months, like it's probably not even gonna matter all that much, because housing prices five to 10 years from now, when you go to sell that praying are going to be up. And in that case, I would personally advocate for trying to get the lowest interest rate possible. But that's more of a personal choice. So that's what I usually tell people is to do that. And, of course, all of this is to say, I'm not saying just buy anything, don't go out there and just act emotionally and bid over asking on something that's not worthwhile. But if you can find a deal that makes sense for you, I don't think timing the market really makes that much sense. But if it's a good deal, now, it's going to be a good deal in six months, you know, if it's a good deal, just go for it. In my opinion. Yeah, time in the market is better than timing the market always. And that's in stocks. And that's in real estate. Can you talk a little bit about the economic levers that they're pulling to do the interest rates, because then raising the interest rates is actually a good thing. It is good people see this as a negative thing. But it's part of a healthy market cycle. And it's a part of the economic machine working as it's supposed to do, because whenever you have a limited supply, everyone's just gonna It's like crabs in a bucket. Like they're just going to keep going up and up. So they've got to have some kind of levers. Can you speak a little bit about these levers that they're pulling with the interest rates and where we maybe see these going? Because, yeah, I see the same maybe six to 10%, especially for the investor loans over the next couple of years. I so basically, interest rates as the Fed controls them, doesn't directly impact mortgages. Is but has this, you know, trickle effect where eventually impacts mortgages. But they've been stimulating the economy in two ways for the last two years, and that's with interest rates, their interest rate, which is what they, their target rate is about zero right now, or it's now at point two 5%. And I've also been doing quantitative easing, where they buy bonds and mortgage backed securities. Both of these are really strong stimulants for the economy. And people have different opinions about this. But I personally believe that in March of 2020, it was needed, there was economic, there was a need for this, they have allowed this to go on for a very long time. And hindsight, is 2020. So it's easy to say this. Now, looking back on this, it seems like we've had too much stimulus. And that is what's causing all of this inflation. Inflation is basically defined as too much money chasing too few goods. And so we had all this stimulus, which is increasing the amount of money, and we have supply chain issues, which is decreasing the amount of goods. So that is a perfect storm for inflation. And as you said, That's really bad. And so the Fed needs to raise interest rates, they have to do this because that is the only way only logical way to get inflation under control right now. And that is part of a normal economic cycle. And yes, that is going to that could potentially decrease asset values, it could increase unemployment, both of which are negative implications, no one wants that to happen. But runaway inflation is a really bad problem for the economy. And it is, in my opinion, important that inflation gets down as soon as possible. That's just my opinion, other people think differently about this, but that's how I see it. And I think that rising interest rates, actually has benefits for people across all walks of life, not just investors, if you could get back to a place where normal people could put money in a savings account and could earn three or 4% and can save for retirement, there's there are benefits to it as well. It's not just negative. So I think that those are important factors. And then the other thing is, if your interest rate is always at zero, then next time there is an economic downturn, the Fed has nothing to do to stimulate the economy to help it. And so that is another reason why they need to raise interest rates. It's not just inflation. But they want to be prepared in case that there is another economic situation that needs stimulus that they have some ammunition with which to stimulate the economy. And if their interest rates are at zero, they've already played their best card. And so they are trying to restock right now, so that they have more cards to play in the case that they need them because frankly, we don't need stimulus right now. The economy is growing, we are at near we're basically at full employment, that we do not need stimulus. So the fact that they are scaling back on that is the only logical thing to do in my mind. Yeah, it makes a lot of sense for them to be able to do this. And then what you're saying it makes a lot of sense. Because if we ever did get into another black swan event, that would happen, then if the interest rates are already low, then what the heck are we like, there's nothing that they can pull what we're going to do negative 5% interest rate here will pay you to borrow money. It's not going to work. They did that in Europe, and after that financial crisis. And it didn't work at all. They went into a second recession in 2011. When they tried to raise interest rates out of that, I get why they did it was this unprecedented thing. And it it sort of makes sense. And again, everything is easier to look at in retrospect, but that didn't work well. And so again, like, yeah, we get we were talking about rising interest rates in the housing market, like a 5%. Mortgage is crazy. Like, before 2008. There was never a time in the US that I know of that mortgage rates were under 5% ever. So the fact that we're now paying 5% Like people are like, Oh, my God is so crazy. It's so expensive. In historical context, it's not. And yes, it does have an impact on housing valuations, like going from three to 5% does have that impact, that the cost to borrow, relatively speaking is still very low. Yeah, because that's just a recency bias that everyone has. We have a recency bias that we're like, oh, 4% 3% I got this last house that I'm in right now at 2.5%. Wow. Yeah, I know. But it's gonna be difficult to ever do a refi. Right, can pull massive levels of equity out and be able to deploy that. So before you alluded to long term trends in the market, and right now, we are seeing the one of the probably the one of the longest bull markets in real estate ever. Correct? Yep. Yeah, so let's hit on what we see in the long term trends in the data. And then we can maybe try to poke holes and see what would cause in a black slide, what Black Swan event what even occur to crash the market, because for me, I can't even I can't even see it. Because we're so low on inventory. And we're not even building single family homes as much anymore. We're building multifamily. And it's just I don't see how the supply and the demand is going to be able to take I think people are hoping and praying that the recreational people on the sidelines that are trying to just buy a house that aren't investors, they're praying up to the sky to say, Oh, can't wait for another 2008. But I just don't see that happening at all. Can you speak on that? Sure. Yeah. I generally think that the, the market will flatten or go down like in the next two years, like, again, a couple of percentage points. I do not see a crash scenario, like we have in 2008. And I've talked about this a lot recently, because I've dug into it. And really like when you look historically, the financial crisis in 2007 2008 was by far the biggest retraction in housing market prices in the US that I have data from that happened in the 1800s. I don't know. But going back in the last 60 years, where we have reliable government data that's been collected in the same way. It's never happened. Normally, when the housing market corrects, and it does happen every couple of years. It goes down somewhere between two and 8% per year, does it? It happens for a year or two. It's not like the seven year thing where it went down 30%, which is what happened, and it's crazy. And that's because of the fundamentals of the market were unhinged at that point. They were doing these what are they called? Like Nina loans? No. What was the names of loans? No, yeah. Oh, no. Yeah, no income, no job. Yeah, it's, that's just unreasonable. They're giving away money. And people had no equity in their home. So when the price of assets went down, they were all underwater. And that's what created the foreclosure crisis. And it created this whole spiral effect. Right now, people have tons of equity in their home, people have so much equity in their home, they have more equity in the home effort. So even if prices went down, 10% No one's getting foreclosed on, like people are still going. If you couldn't pay your mortgage, you could still sell your house at a profit. So to me, there is no risk of these underlying issues with lending. That happened to just ain't happening again. That being said, the market needs to cool like that that needs to happen. And it likely will. And I do think it will become big, it will happen because of rising interest rates have like long been correlated with negative housing prices. And I think there is some confusion about that, because they are correlated. But really what how is it what rising interest rates does is decrease demand, it puts downward pressure on the housing market. But there's this whole other side of the equation that you alluded to, which is supply and interest rates can impact supply. But in this market, we are still even despite rising interest rates, we have the lowest amount of inventory ever recorded. That was March, can you put some color? Can you put some color to that? Do you have the data on the inventory now based off of what it was before? Yeah. Oh, yeah. Back in the early 2000s 10s. Like, we used to have about 2 million houses on the market at any given point. And when I say inventory, the way it's measured, or the data I'm citing is like, how many houses are for sale at the last day of the month. So like last day of March, in 2012, I don't know the exact numbers were somewhere around like 1.8 million, 2 million, something like that pre pandemic, we were at about 1.5 ish million on a seasonally adjusted basis, something like that, we were at 560,000. Now, we're at 1/3 to one quarter of the amount of inventory on the market that we used to be at. And so until that changes, the housing market cannot reverse it can't because the only way that prices go down is when houses sit on the market longer when inventory builds up. And there is equilibrium between supply and demand. But right now there is no equilibrium demand is way, way too strong for the amount of supply that there is. And so even though rising interest rates will decrease demand. The cold question is will it decrease demand so much that all of a sudden we're seeing inventory and days on market start to go up and so far we haven't and that can change and I expect we will start to inch up. But I think that's the real key is that there's not going to be this cliff that you fall off of because interest rates are going to go up in In, in little steps, and demand is gonna go down in little steps. It's not like all of a sudden we're gonna say like, all these housing, people are going to be like, No, I don't want it, we're gonna see inventory go spike, at least I don't think that's what's going to happen. And so, to me, if you're listening to this, and you want to forecast what is going to happen with housing prices, keep an eye on inventory and days on market. If those start to approach where we were pre pandemic, or exceed where we were pre pandemic, that's probably when they will see the market go flat or negative. But we there's a lot of demand that needs to fall off before we even approach that point, is exactly, and let's hit a little bit about it. Another driver behind all of this, especially in some of your tertiary and ancillary markets here, hit me with some migrational data, me with some data that you've got your New Yorkers, your Californians, their the mass exodus, is this something that's going to still be sustainable with the Exodus? Or do we see that kind of flattening off here? Because that was such a problem in the tertiary markets like, like Phoenix, Arizona, Texas, Georgia, we're getting slammed by Florida, get hit us with some data here and about what we're seeing right now. And then what we can maybe forecast? Is this slowing down? Or is it staying pretty consistent? I do think that it is slowing down. There is some data, Redfin puts out data about this that shows that relocation information, like people who are looking to relocate, dropped, like before the pandemic, it was like, they track it in this way, where it's like the percentage of people looking on Redfin, who are looking in a different market than the one there are now. So it's not like perfect, it's really hard to get perfect data on that. Sure. I think it's a pretty good indicator, at least used to be about 25% of people were looking at a new market. In the pandemic, it went up to about 32%, which is pretty, pretty significant increase. And now it's back down to about like 30%. So it is starting to come back down. But it's still well above where we were pre pandemic. So my just personal feeling about this is that it will probably start to level out, I think, you know, we see, the pandemic changed a lot for a lot of people, we see people moving cities, and we see a lot of people changing jobs like this great, reshuffling the great resignation that's going on as well. And I do think we're not out of the woods there. And I think we're still going to see some reshuffling of how people where people want to live, what kind of jobs that they want. But eventually, a couple of years they'd have I kind of think it has to settle back down. But I think that, generally speaking, the South East has been really popular because it's it was relatively inexpensive. And the question in my mind is like, it's not relatively inexpensive anymore. It's pretty expensive now. And yeah, I just want I wonder, just out loud. I don't have data about this. But the question is, like, is there going to be a new migration destination based on where if people are motivated by inexpensive housing, good quality of life is are they going to turn away from these places, Lana's seen insane appreciation looks like crazy. So the Midwest is relatively inexpensive. Are people going to start moving there? I don't know. But it's, I think it's something definitely to keep an eye out for. Yeah, it's been a wild ride in Atlanta, because I'm in the tertiary markets of Atlanta and the path of progress. And it's been fun, I'm not gonna lie as an asset owner as a real estate owner, because that's what we're doing. So before you own real estate, to capture what's called appreciation, right? That's where your home appreciates, like two to 3% each year. Now it's more so how do I capture the appreciation in the inflation? Because the way that the homes are appreciating, you can even call that 100% appreciation anymore? Because now you're like, it's five 10% a month. And now, it's just bananas. How it's going. So let's take a small pivot here. Let's go into investor language. Let's get let's talk to the investors here. Guys. Got you. I got you. You're you're sitting, you're already buzzing off your coffee. We're warmed up shops are warm. Where do you see the best opportunities for investments right now in the real estate market? This could be market or this could be class like buy and hold long term. It could be short term rentals, wherever you want to take it. I'm just curious to hear from your because you receive all this data. I'm curious to see what's peeking your interest. Yeah, I personally believe I'm primarily a residential real estate investor. So I'm probably not the best person to speak on commercial retail office. That kind of stuff will stick there late. It's not really my game. But in terms of residential, I just think that the area is value add any type of asset class where you're buying distressed assets and can renovate them, remodel them repurpose them is good. And I think construction costs have this double edged sword where construction costs have gone up so much that people are shying away from value add, I think. And that leaves more opportunity and short you need to be able to underwrite your deals and understand costs are likely to be and you probably want to pad those in today's day and age. But I think that's the best area of opportunity, because deals on the MLS, for example, are pretty hard to come by. It's possible that they're hard to come by in most markets. And I think you have to make your own deals and make your own value in this market. Do we have any markets that you're seeing that are very attractive right now or advantageous to take advantage of here? I think it depends on what you look for, actually the most recent episode of our podcast on the market, me and three other very experienced real estate investors each pick our favorite two markets and cite why. So if you want to listen to that, you can get a couple of Kenyans about that. But let's find your opinion, Tampa, and San Antonio, and loved ones I like it depends what you want. Some people are pure appreciation, investors, they just want to be in a hot area, find a good location, hold on, and they'll be fine breaking even. And they'll be fine. Maybe just getting a little cash or even negative cash flow. And to me, if you're in for that game, Austin, like every big tech companies move in Austin. Prices have gone up like crazy, but it's the new San Francisco prices. Maybe they'll fight in the next couple of years. But they're going up in the long run. In my mind. I just went. I just went there. I wanted to see for myself. I drove around for a few days. It's crazy. What's going on there. Love there, too. Yeah. All right. Yeah, we went over there. And we were hanging out with the abundance guys. And it was a wild man. Yeah, it's, yeah, it's different. It's a fun city. I like hanging out there. Great barbecue. And I had a good time. But yeah, so if you're like looking for long term appreciation, it's hard to beat a city like that, in my mind. If you're looking for cash flow, the Midwest is like really the best place to find cash flow right now, especially if you want non competitive bidding process like pretty good. Like you want to go to big cities like Chicago, strong economic cities like Chicago, easier to find cashflow than you would think Indianapolis, those kinds of places are pretty solid. And then I like Tampa because I think it's a good hybrid, which is what I personally look for. I am not a pure cashflow investor. Like I said earlier, I'm not trying to retire right now. So I don't care as much about like finding this number. I investor IRR. I just want the most return possible. And I like a city like Tampa because it gives you some cash flow, good long term appreciation prospects. And I think it's like a good hybrid, basically not going too far in one direction where you have a lot of cash flow. But the appreciation prospects are bad. Not too far in the other direction with appreciation prospects are great, but the cash flow is garbage. I like finding those ones that are in the middle. Yeah, and in today's environment and ecosystem is if you're not looking for both of those, you can easily find both. I know people I know somebody that's maybe that's maybe listen to this, that's not really an investor, but you can find both, especially when you're looking for the value add. You can find cash flow and appreciation. But yeah, okay, cool. So that's great to hear. So yeah, Tampa off here I hear has been booming. Yeah. And like you said Atlanta has been going crazy. I see a lot of the guys by and still in the southeast. A lot of Birmingham, say a lot of Alabama. I see a lot of Midwest, Kansas City has been bought up a lot. And yeah, I see so crazy. Yeah, I still see that quarter going. I still see the southeast. And yeah, like you said, San Antonio, the tertiary markets in Texas are going crazy. But yeah, it's just all it's just all a game of figuring out, you know, where people are moving to where the jobs are moving to. And then you just plant your flag there, like you said, and then just find some of the value add. That's where you create your cash flow. We buy for appreciation and we create cash flow. So I've got a question for you that I can let you run with because I want to be able to let you steer a bit here. Because you get a lot you get a lot of information. So it's like sometimes you would be able to get it a bit better than me. So for Mark for you. My question is, out of all the data that You're getting in, you're looking at and you're researching for your shows, and you're researching for your position. What is some of the most interesting data that you're seeing in real estate in general? It could be good, bad, ugly, just what are you what's, what's data sets are really firing you up, you're like, Whoa, this is interesting. Let me look for it. I think there's a few things. So this is boring. You asked about long term trends easier and earlier. And I wanted to get back to this. And one of the data sets that I think is the most compelling and we already talked about this is just interest rates in general. I think, even though that they are rising, we have been in this 15 year period of easy money, interest rates are low. And even though they're going down, I don't think we're going to back to a policy where we're going to see really high interest rates and the 90s, we had interest rates by the Fed at 789 percent before that it was in the double digits. And I think that to me, even though the Fed is raising policy, it is it raising rates, it is really, the long term prospects of real estate remain high as long as the Fed is trying to keep interest rates relatively low. And so that's something just in the long term thing that I think is really important. In terms of immediate data. I think affordability data is something that I pay a lot of attention to, because we are reaching a point in the United States where housing is becoming really unaffordable for people. And a lot of people blame real estate investors for that I personally, I'm sure investors do play some role in that 80% of home purchases are still by primary homebuyers. And I do think that it is really important, though, to invest in places where average people can afford the rent, that you're trying to give and can afford homes, because I look at some of these houses. And if there is a correction, I think the places that have become extremely unaffordable are the ones that are probably going to have the biggest dip. And again, I'm not a crash guy, I don't think we're gonna have this huge crash. But I do think that affordability is going to be the biggest challenge for investors and for American society in some respect over the next few years, because the course we're on is not sustainable. And so something I look into, and I think, I don't know what's going to happen there. I think something needs to change, because people can't be spending 50% of their income on rent. At the same time. There's not enough housing units, so rents gonna go up. So something has to happen. And I don't know what happens there. But I recommend people if they're investing look at affordability in your area. I personally think can safe investments or investments into places where the rent to income ratio is not too far above 30%. People are not rent burdened, they're not going to be struggling to pay rent, like you can make cash flow, they can live a good life. To me, that's a win win, win. That's what I personally look at. And there's some really interesting data from Nir, there's a couple of different sources if you just Google like housing affordability data that you can check out. Yeah, and that's not even economically, that's also morally because, yeah, we all want to make a profit, we all want to we want to be good in the game. But at the end of the day, we also don't, the people that are listening to this show, we're not the scumbag landlords that are trying to scrape every single last dollar. Like for me, personally, I keep B class houses, and I keep my rent below market to a degree. But as I've got long term tenants that I'm about to raise the rent on them, but I'm not going to, I'm not going to take them from $1,600 to $2,400. I'm just, I'm not gonna do it. They're great tenants. They're great people, and I'm gonna make sure I'm gonna literally work with them. And I know that in this guest, guess what, guys, that's what happens when you screen the hell out of your tenants. You and you have relationships with them. I know some of y'all may not know him at all. But like, for me, I screen my tenants to the tee. And they're good tenants. They've been with me for years. I can have that conversation be like, hey, look, property taxes are going up rents going up. Let's work something out here. And then we can work something out. My My people are engineers at Lockheed Martin. That's it. So they're there. They're good people. Good to see you again, buddy. Yeah, sorry about that for people. My apartment is very hot and buy like a fancy DSLR camera and it overheated. So now I went to the webcam. It's all good people. Listen, I've just been looking at like this screen while I'm talking about Hey, me and Dave are professionals. We're gonna get rolling. Yeah with it. Yeah, but I love that. I love looking at the affordability. So when you're looking for that, so Did you say and you're looking at income to rent ratio? Yeah, most budgeting experts recommend that people don't spend more than 30% on their house, their income on housing. So I like to look at that in the neighborhood. If you look at a place where people are spending 50% of income on housing, that's unsustainable in my mind, it's not good for the tenants, it's not good for you, they're going to be rent burned, and they're going to be struggling to make rent every month. So gonna be fun scenario, just know. So when No, I personally just wanted buy real estate in places where people want to rent, and they can afford that rent, that's a win win situation, they want to rent in this neighborhood, they want a nice house, and I can provide that product to them. That's, to me, the, like you said, the moral and the responsible way to invest in real estate, and a profitable way to do it, because you're gonna have people who are, that's what it all comes down to. It's like a win win situation. So if I see a market where it's under, if it's 20%, to me, that's an indicator that rent might actually go up. So I think that's a there's room for rent to go up, people could bid up the price of a great apartment, because they're only paying 20%, they could probably afford a little bit more if you have a great product. And so I think that's a really nice indicator. If you find something when rent is undervalued, then you might have some room to grow in the future. Do you have any markets off the top of your head that you're seeing for this? I actually don't I know that like New Orleans is like the opposite 50%, which is ridiculous. I don't know any of them that are really low off the top of my head. I'll next time we do this. I'll bring that data there. But I guess my next question would be you may not have as much information on this. But I'm curious to see about the cost of supplies and construction, because we're talking about value add. I'm curious to see where that goes. Because what I think will happen because I talked to obviously, my bulk portion of my week is spent talking to seven figure and eight figure investors who are majority in real estate. And I see the interest rates causing causing a flattening of the market, like you said, and maybe we'll drill dip down two to 3% by seeing more of a cooling off than anything than a crash more cool than a crash. But the construction prices are scary to me because I have a lot of friends that are super, super over over project on their value ads right now with their flips, are with their apartment complexes, the price of construction is going absolutely crazy. And it's going up and up and up of construction, labor and goods. Do you see anything with this? I don't even know if this is data that you're looking at. But I'm curious. I know about it. James Daenerys, who's a big flipper and Seattle's a panelist on our on the new show, he was saying that his construction costs he estimates have gone up about 25%, which is crazy. I don't do a lot of value add personally right now I invest in syndications that are doing that. But I think it's a big problem. I do think that inflation in materials is going to start to go down a little bit. Because it's a whole other question we probably don't have time for but I just think it's going to start going down relatively, I do think inflation will peak in the next few months. That's not saying we're gonna get back to 2% this year, but I think we'll hit peak inflation sometime in the fall. But that being said, I worry about this because like we were saying there's just a shortage of housing units in the United States. And we need construction. And if housing prices flatten, and construction taxes go up, that just squeezes the margin for builders, and they're not going to build they're not going to build and they're not much risk. Yeah, that they're trying to right now. But they can't complete houses. It's crazy, because there's not enough materials in the the permit process is a freaking nightmare. I've got a lot of friends that construction and the the local and the state and the county permits are a nightmare to build. Yep, absolutely. But they're like permits are going up or you're we're approaching back to it's 1.8 million units on an annualized basis, which is where we were in 2004 2005, which might scare some people, but remember that from 2008 to about 2000 And you know, 1516 we're under building. A lot of people believe that we need more houses and this rate of construction is good. If people aren't willing to pay for new construction because they're generally more are expensive than existing homes, that's going to that could create a problem in the housing market in my mind, because we'll have new construction coming online at inflated prices and to get to get their money out. A lot of builders need prices to keep going up. And I'm not sure they're going to go up at the rate that construction costs are going up. And so that would squeeze margins and maybe a couple builders are going to be overextended right now. And I will probably prevent, or dissuade them from building more which could you know, look for long term for the housing market? That's not good in my mind. Yeah. And follow like further exasperate the problem is pouring gasoline on the fire? Cool. Yeah. Yep. At the end of the day, in this game, it's about resources. It's about resourcefulness, not resources. So all we can do is just look at the data that's presented, forecast the best that we can and operate within our margins. And then also big margins. And so if you're doing a value, add maybe a just an extra 25% cushion, to have an inflation cap on there. We have to underwrite the deals differently, people, we just, I know we already are. But we just need to be careful with this and keep going to treading lightly because that controls how we acquire the deals and purchase deals that acquires your buyer that that influences your buyer price. So as we finish up here, maybe one last piece of advice for people that are looking for their next investment property that you can give just in general, to close us out. I guess my last piece of advice would be similar to what you just said, figure out what your Buy Box is and understand what you're looking for out of real estate investing, and then don't worry too much about the market. If you're like me, it sounds like you employ a similar strategy. But if you're in this for the long run, and the housing market, it always it's always kept pace with inflation. And given some of the fiscal policy in the US some of the construction trends, I don't really try and think about things more than 10 years out. But for the in the five to 10 year timeline, I feel very confident that things are going to be good for people who are holding real estate. And so as long as you can find deals, that makes sense, and you're not going to be exposing yourself to excessive risk, like it's always a good time to buy if you can find a good deal. You know, so at the end of the day, everyone remember, I don't think there's many people in the retirement home that would ever say that they regretted buying real estate and traveling. Yeah, there's just not, they all say I wish I would have traveled more, and I wish I would have bought more real estate. And when they were in our shoes, it was the same thing. They're like, how am I gonna make this happen? So let's make it happen. So let's do one last final plug for your new show, Dave? Who is your listener? Who would get the most value out of this plug for your new show? Yeah, I think anyone who is remotely involved in the real estate world or just wants to improve their financial position would benefit from the show. There are a lot of other shows out here that talked about the nitty gritty how to invest in real estate, what you should do for particular deal, we're taking a high level approach where you were talking about strategy. And if you're, what type of asset classes you should be buying, and we use data and information and have a whole group of very experienced real estate investors who you know, probably 50 years, 60 years combined on every show, talking about their experience, how they're adapting to new changing market conditions. So if you're a real estate agent, your real estate investor, I think it's it really honestly works for everyone. And we try and make it really fun. We play games, we joke around a lot. It's not like this super dense, data driven show. It's fun and light hearted, but we give some really practical advice that I think almost anyone would benefit from. Well, and we will obviously include that in the show notes. And then I think that show won't have that much problem finding it outside of the show notes. It's gonna be around it's bigger pockets. People like they're gonna put. Yeah, yeah, we'll find it. We'll have the tall bearded guy coming on here in a little while. After his kind of Exodus, but yeah, man. Yeah, it's been. It's been awesome, man. This is this has been fantastic. Thank you for coming on. Thank you for having me. Yeah. And I will come see up when we're in Amsterdam. We'll give you a ring and then we'll get out there brother. All right. Thanks, man. Dave Meyer, not Dave Sonya. With bigger pockets, the VP of data analytics and the host of the action Academy podcast started off. You've been listening to the action Academy podcast helping you to choose what you want with who you want. When you want. You've been given the gift of freedom. Don't turn your back on that. We hope you've enjoyed the show. And we hope you've gotten some practical and useful information make sure to like rate and review the show. We'll be back soon. But in the meantime, look up with us on social media. Remember, financial independence is freedom. Red flags of freedom fly