2017: Real Estate Market Update: Strong Rent Growth and Resilient Buyer Demand, Conditional Value at Risk (CVaR)

Today, Jason is in Ibiza, Spain and provides updates on the real estate market. He discusses the monthly single-family rent report by CoreLogic, which shows a 4.3% annual rent growth, surpassing his recommended target of 4% for rent increases. Despite claims of collapsing rents, the rental market remains strong. Jason emphasizes the ongoing shortage of inventory due to homeowners holding onto their low-rate mortgages, which are considered valuable assets. He also highlights the resilient buyer demand, the high credit scores of borrowers, and the dominance of new home sales in the market. Overall, the real estate market continues to surprise and delight property owners while disappointing those waiting for a crash.

And in his third installment, Hedge Fund Manager Manny Kim discusses the concept of Conditional Value at Risk (CVaR), also known as black swan risk, and its application to investment strategies. CVaR is a measure that helps quantify the average loss in extreme scenarios or "black swan" events. By using CVaR, investors can assess the potential losses beyond a certain cutoff point in their investment distributions. Manny explains how CVaR is calculated based on the Value at Risk (VaR) and how it can be used to evaluate and optimize portfolios containing various assets. He also highlights the relatively lower black swan risk associated with income properties compared to the stock market.

Key Takeaways:

Jason's editorial

1:49 Greetings from Ibiza, Spain and follow Jason on Instagram

2:38 Corelogic's monthly single family rent report: it's up 4.3%!

4:11 Percent of Closed-End, First Lien Mortgages Outstanding by Interest Rate

6:20 Percent of Closed-End, First Lien Mortgages Outstanding by Loan-To-Value

7:19 Mortgage Originations by Credit Score

8:40 New Homes Make Up A Historically High Share of Overall Inventory

12:47 January report on new home sales

Manny Kim's interview

13:39 CVar and Black Swans

14:20 Conditional Value at Risk

17:19 Stock Market vs. Income Property

19:17 Black Swan risks in Stocks and Income Properties

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