STR Data Lab™ by AirDNA

Affordability, Mortgage Rates, and Housing Dynamics: What Investors Need to Know

Jan 30, 2025

In this engaging discussion, Dave Meyer, Head of Real Estate Investing at BiggerPockets, dives into the complexities of today's housing market. He offers insights into the recent volatility in mortgage rates and affordability. The conversation highlights the rental market dynamics, including stagnant rent growth and the rise of the 'build to rent' trend. Dave contrasts strategies for short-term versus long-term rentals, emphasizing small investors' advantages over large institutions. He also anticipates bullish trends starting in 2026, urging patience for savvy investors.

36:31

Episode guests

Dave Meyer

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Episode notes

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Quick takeaways

Volatility in affordability and mortgage rates has markedly influenced home values, leading to increased financial strain on many American households.

The pullback of institutional investors has created a more favorable landscape for small, methodical investors to capitalize on local opportunities.

Deep dives

Current Housing Market Dynamics

Affordability in the housing market has been highly volatile, with fluctuations in mortgage rates impacting home values. Although improvement has been slow, it was recently noted that affordability did not worsen last year for the first time in three years. Rising home prices continue to challenge potential buyers, as they find themselves dedicating more of their income towards housing. This trend raises critical questions about whether this new norm will persist or revert to previous affordability levels encountered in the past.

Intro

4min

Navigating the Housing Market Shift

13min

The Future of AI in Real Estate Investment

2min

Navigating Rental Markets: Single vs. Multifamily Investing

5min

Navigating the 2025 Real Estate Landscape

10min

Leveraging Local Insights in Real Estate Investment

2min

In this episode, Jamie Lane, Chief Economist at AirDNA, is joined by Dave Meyer, Head of Real Estate Investing at BiggerPockets, to delve into the intricacies of the housing market. The discussion touches on the dynamics of short-term rental investments and the broader housing market, highlighting why understanding these trends is crucial for investors. Dave reflects on the volatility of affordability and mortgage rates over the past year and the factors affecting home values. They also discuss the disparity between affordability and home values, noting that more Americans are spending a larger portion of their income on housing.

The conversation transitions to the rental market, where multifamily rents have decreased and single-family rents have remained stable, influenced by a surge in multifamily supply amidst a housing shortage. Dave suggests that while rent growth has stagnated, there might be bullish trends starting in 2026 as supply normalizes. They address the impact of institutional versus small investors in the current market landscape, pointing out a pullback in large-scale institutional investments, which opens opportunities for small, diligent investors. The concept of Build to Rent, where entire communities are developed solely for rentals, is introduced as an ongoing trend.

The discussion pivots to short-term rentals, emphasizing how small capital investments in amenities can yield high returns, contrasting with long-term rental strategies. Dave advises patience as a crucial strategy for 2025, as well as looking for properties with hidden value through creative improvements and zoning changes. The need for a localized approach in identifying investment opportunities is highlighted, along with the benefits of understanding infrastructural developments in certain areas.

The episode concludes with Dave encouraging listeners to leverage their unique advantages as small investors and emphasizing the importance of taking a long-term view on investments. For more insights, listeners are directed to BiggerPockets' resources and Dave’s podcast, On the Market.

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Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

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Connect with Scott on LinkedIn:

LinkedIn: https://www.linkedin.com/in/sagescott

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