Is the Housing Market About to Crash? with Jason Hartman
Oct 11, 2023
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Real estate expert Jason Hartman analyzes the state of the housing market, debunking the perception of a housing bubble. The podcast discusses the impact of the 2021 housing market crash, insurance adjustments, and debt on the market. It also explores inflation-induced debt destruction and its application in real estate investment.
Focus on conservative real estate markets that offer good cash flow and stability.
Institutional buying of single-family homes has limited impact on the overall market.
The fear of an Airbnb apocalypse is unsupported by evidence and exaggerated.
Deep dives
Real estate market outlook
Nationwide real estate market outlook is complex with various factors influencing different areas. The United States has diverse real estate markets, categorized as linear markets (consistent and stable), cyclical markets (booms and busts), and hybrid markets (in-between). The focus should be on conservative markets that offer good cash flow and stability. Affordability is a concern in the current market, but people adjust their expectations and make adjustments accordingly.
Institutional buying of single-family homes
While institutional buying of single-family homes has increased, it remains a relatively small force in the overall market. Approximately 20 million single-family homes are owned by mom and pop investors who are still significant players. Institutional buyers may raise rents, optimizing their portfolios, which benefits individual investors by setting higher rent comps. However, the impact on the market is not as significant as portrayed, and large-scale dumping of properties by institutions is improbable due to self-interest.
Concerns about an Airbnb apocalypse
The fear of an Airbnb apocalypse is not supported by evidence and often exaggerated. While Airbnb properties have increased, their impact on the overall housing market is minimal. Many Airbnb listings are unique properties or do not make sense as long-term rental properties. The notion of all Airbnb properties flooding the market at once is unlikely due to varying situations and motivations of individual owners. Adjustments and shifts in the market may occur, but it is not a cause for widespread concern.
Impact of taxes and insurance adjustments on mortgage payments
Taxes and insurance adjustments can lead to an increase in mortgage payments, impacting homeowners. It is a real concern, particularly for individuals facing financial pressures from various sources such as credit card debt, student loans, etc. However, individuals make adjustments and adapt to changing circumstances. The long-term benefits of real estate investment, including inflation-induced debt destruction, can help mitigate the effects of increased expenses and provide a hedge against inflation.
Inflation-induced debt destruction
Inflation-induced debt destruction is a strategy that leverages real estate investment to benefit from inflation. Income properties, with their tangible assets and rental income, offer a hedge against inflation and transfer wealth from lenders to borrowers. By using leverage and having tenants pay off the debt over time, investors can take advantage of inflation to reduce the effective debt amount. The approach mimics strategies such as leverage buyouts and is a powerful wealth-building technique.
Real Estate expert Jason Hartman discusses the real data about the housing market and what investors should expect going forward. See more of Jason Hartman at https://www.jasonhartman.com and on his YouTube channel, Jason Hartman.
