THE HUGE Downside of No-Income-Tax States

Kathy:
Are no income tax states worth the hype? And what is the one market shifting real estate trend that no one wants to talk about? And finally, what does the analyst who predicted the 2008 housing market crash, think about today’s housing trends, all that and more on today’s episode. Hi, I am Kathy Fettke, one of your hosts for today while Dave Meyer is out. Welcome to On the Market. We’ve got Henry Washington and James Dainard with me today. Good morning. Good

Henry:
Morning.

James:
Morning. How are you?

Kathy:
Good. You guys excited to tear apart some headlines?

Henry:
It’s my favorite thing to do.

James:
I’m excited. I can relate with some of the articles. I’m currently California Ventures over. I’m leaving Kathy and we’re going to a cheaper state.

Kathy:
Aw, I’m going to miss you.

James:
More money, more benefit.

Kathy:
Yeah. Well, and I also might follow you someday, but today we are doing a headline show. This is one of our favorite types of episodes because we can look at the headlines meant to scare you and just dive a little deeper into it to the real facts and data. This is the show where we pull four headlines from the news cycle and discuss how they impact investors. So today we’re discussing climate change and whether or not that’s affecting population and migration patterns. We’ll talk about why almost 65% of homes are staying on the market for more than 30 days, and is this a problem? We’ll talk about the pros and cons of no income tax states. I’m sure that James will have a few things to say about that. And finally, we’ll look at the predictions from the analyst who predicted the 2008 housing crash years before it happened. Henry, are you worried about that?

Henry:
Some of these headlines, man, but seriously, between climate change and no income tax states, I’ve got some spicy opinions for y’all, so this will be a fun one.

Kathy:
Awesome. Well, before we get into it, make sure to hit that follow button on Apple or Spotify to make sure you never miss an episode. So let’s get into it. The very first headline, it’s called, nobody Wants to Talk About It, A Market Shifting Real Estate Trend is hiding in Plain Sight and these five states will benefit most. All right, this is kind of a controversial topic because some people agree and some people don’t agree with climate change, but the key points in this are the great reshuffling. During the pandemic saw people moving to warmer climates. The Sunbelt Southeast has been just booming and it’s still going strong with data from storage service pods showing North Carolina, South Carolina, Tennessee, Georgia, Alabama, Arizona, and Texas being the most moved to states. Some analysts say the heat and storms are going to drive people crazy and they’re going to be tired of it and move back to cooler areas like the Midwest within the next five years. And predictions are that the biggest states to grow will be Ohio, Michigan, Illinois, Iowa, and Wisconsin. Now, I just interviewed a climate change person from CoreLogic, and I know that there is so much controversy over this topic. Is it real? Is it not real? Is it politically motivated? James, what are your thoughts on this article?

James:
I thought it was an interesting read with climate change. I don’t know if it’s about the consumers thinking about climate change and the homeowners and the investors and the home buyers actually thinking about what’s happening with the climate. I think people are just really broke right now and things are expensive and over the last couple years they got used to having a little bit more free flowing cash. There’s a lot more money in the market. People are getting paid. Well, investments are rising and people learn to turn on the faucet. They are traveling more, they’re buying new things and they’re having an issue pulling back the faucet, which is now making them migrate to more affordable areas. And I think the reason climate change is affecting this is there’s costs rising across the Sunbelt states, whether it’s their insurance, Florida, those kind of states, insurance is two to three times higher than it was. The utility costs are higher in those states on average things like they got to run the ac, it’s hotter climates. That’s what people want. They want to be in the warmth, they want to enjoy these things, but they have to spend more money to keep your house cooler and to live. And I think right now what’s happening is people are just looking to not be stretched out and now they’re really relocating in different states.

Kathy:
Alright, Henry, you come from a very warm place, I think born and raised in Bakersfield. It’s called Bakersfield for a reason. It’s freaking hot. It always has been. So what are your thoughts?

Henry:
I don’t know, man. This is all whatever.
There’s always been hot states and cold states and people have moved. Look, here’s the thing, James is right. This is economic motivated. It’s money motivated. If people are moving, it’s typically because they can afford a better lifestyle somewhere else. Either they’re moving so that they can afford more or they’re moving to a more expensive place because they can afford to move to a more expensive place. I don’t think people who have a limited income are like, you know what? Let’s pick up my life and move to somewhere else. If you can move because of the climate, you probably have enough income to do that. And so I think this is more related to money than it is to climate. Having extreme weather in different states has always been a thing and people move because they can either afford to move or because they can’t afford to be where they are. It’s not that big of a deal to me. Well,

Kathy:
Summers are kind of hot, lots of places. I think even in Ohio and Michigan, it can get hot also. It can get very cold. I just know a lot of Californians have moved because it’s cheaper elsewhere and we’re weak. We can’t handle weather, we dunno, except of course if you’re from Bakersfield, you could live anywhere. But I couldn’t. I was in Austin, it was very hot. I couldn’t handle it, but at the same time, the people I hung out with love it. They just love it. They’re not moving because of the heat. They’re there because of the heat.

Henry:
I do think a financial consideration that people should think about is if there is climate change and you start experiencing things in states that people aren’t used to, so you’re getting more storms and causing more storm damage in a state, I think that that could impact insurance costs. And then those higher insurance costs could cause people to want to move because that could be maybe pricing them out of their homes or pricing you out of investing there. And so I think there are some ancillary things that could come if climate change is a big deal in a certain area, but for most states who are, if you move to Virginia, there’s hurricanes there, that’s already a factor and insurance is already pricing that. But if you’re getting climate change in a place that they’re not used to, then yeah, you could have some higher insurance costs than you were expecting and that might cost people to want to pick up and move somewhere where it’s more affordable to live.

Kathy:
Yeah, I mean, again, when I interviewed this climate change specialist, a couple of the places that the reports have shown are going to be less affected by climate change are Ohio and Michigan, the Great Lakes for some reason. So if that is someone’s concern. Also Ohio, we’ve been investing in Ohio for years for the affordability and the cashflow. They also have a lot of water, and water is an issue in California. It’s a huge issue. Not this year we got our water, but who knows how long that’s going to last. And people who are concerned about having water are looking at places like Ohio where there’s plenty of it. Well,

James:
And I think one thing to look at too outside of cost rising is businesses are leaving these states too. A lot of this migration that’s coming out like California, they’ve lost. I mean you’ve had Tesla, Oracle, bigger businesses are leaving for other states, which is also going to force the migration. And that has really, I don’t think a whole lot to do with insurance costs or anything else. It just has to come down to straight tax and regulation and they’re leaving. And that’s really what I think is driving the migration, not really the overall other costs that are racking up. There’s less jobs and it just costs too much to live there.

Kathy:
All right. We have to take a quick break, but don’t go anywhere. We’re talking about no income tax states right after this. Welcome back to On The Market. Let’s jump back into the latest headlines. Okay, let’s move on to Henry. What’s the second headline?

Henry:
Alright, our next headline comes from Redfin News and it states nearly two thirds of home listings have been sitting on the market longer than a month as buyers grapple with high costs. So some of the key points that this article discussed is that 65% of homes have stayed on the market for 30 days in June, that’s up from 60% just a year ago. 40% of homes stay on the market for 60 days, so buyers are holding out for lower rates and cheaper homes. Sellers are holding out for buyers who will meet their price. So we have a standoff stale inventory is growing fastest in markets like Texas and Florida and in Dallas, 63% of listings sat on the market for at least 30 days in June, which is up from 52% a year earlier. And that’s the biggest uptake for all of the US major metros. And in Florida, four markets are seeing the most stale inventory and that would be Tampa, Fort Lauderdale, Jacksonville, and Orlando. So Kathy, you invest in some of these markets. How do you feel about this?

Kathy:
Yeah, oftentimes cities do become more expensive and the cities are, what we hear about is where we get the data and we invest in the suburbs. So a lot of times we should include the metro area, not just a city when looking at these things or dive in a little bit deeper because our whole business plan at Real Wealth has been to invest in the suburbs where things are cheaper, where the businesses are moving. Like you said earlier, businesses, I think maybe James said it earlier, businesses also move to where it’s more affordable and their employees move there too, and that’s often not in a city, cities can get very expensive. So yes, I think Tampa is expensive. Things are on the market longer, but just go out a little bit like our project in just about an hour north of Tampa, things are moving very quickly. In fact there there’s tons of new development coming just around our area and commercial development and houses follow the businesses, rooftops follow the jobs, so it’s a little misleading. You just have to be careful and look deeper into the article and say, is it just Tampa the city or is it the outer lying area? And my experience has been it’s just the city. There could be obviously suburbs where maybe employers aren’t moving and there’s not as much growth, but we rarely invest in a city.

Henry:
James, how do you feel about this in your market? You have said recently that you see things slowing down for homes going on the market. Is that continuing?

James:
Well, yeah, and it’s also the season we’re in typically, at least on the west coast, the summers are slower. I’ve definitely seen things take longer for sale, but it’s just completely normal In Washington, our summer market comes at the end of May and once we hit end of June, July, August, it is flat. The amount of sales that are going on right now are always less than in that spring because you’re also kind of, it’s like when you’re driving on the freeway and you’re going fast and all of a sudden you exit and you feel like you’re going really slow and that’s what happens every summer. You get this pop of energy buyers want to lock in, get settled in for the summer so they can settle in for their school year In the fall this year it came about a month earlier because we have different things going on in the economy and it went from we were seeing 20, 30 showings a week down to four, and when you see that, you feel it too and there’s no reason to panic.
We are selling every house. It just doesn’t take five days and we don’t have 20 people coming through our house. I sold two homes this last week. One was on market for 45 days and we sold it for 8 75 and it was listed for 8 99. That’s not a big variance in there. 8 99 was also an extremely high list price. We were at the top end of the market. I wanted to push it. We had a better product. We knew it was going slower because it was going slower. We’d rather wheel and deal with the buyer rather than them price aggressively. If there’s less bodies in the market, we price things differently. Same thing with a house that we just sold for $4.5 million. It was on market for over 80 days at 4.5, we sold it for 4.3. Again, the percentage of list price, they’re about the same.
4.5 is pushing the price and so right now there’s inventory sitting because sellers are pushing the price because they can and if you have the right product, it will sell. There is also a lot of junk in the market that is not very nice that they are asking a full premium and if your payment is going to cost you nearly twice is what it would back in 2020, they want a nice house and if you are overpricing your mediocre house, you’re going to sit and that’s what we’re seeing in a lot of the inventory, but the stuff that’s dialed that’s priced right around the comps that have sold in the last five months that is selling is the people asking for too much right now and why it’s sitting

Henry:
Man these headlines, they frustrate me because it makes people believe something is wrong. That this headline says to me, this is exactly why you need to be paying a realtor what they deserve if they are good because a good realtor can help you navigate this. If you look at this, so there’s two lenses to look at this from. You can look at this from an investor’s lens or you can look at this from somebody who’s just trying to sell their house When you see these headlines, and so if you’re just somebody who owns their own home, they’re wanting to sell their home, they’re wanting to stick it on the market and to consider if you want it to sell and a good agent is going to be able to help you to figure out what those things are. There are certain products that are moving quickly and there are certain products that are sitting longer and that’s going to vary market by market.
You need to have an agent who understands these things so that they can tell you, Hey, your home falls into this price point category and in this price point category, these are the things that were listed for short period of times and what they had in them and what they offered to the market and they sold quick and these are the things that they didn’t have. Here’s what your house has. How can we add some of those things or highlight some of those things to get your home to sell faster, you have to be smart in any economy where there are less buyers because that means you have less eyeballs looking at your product. And so when you do get those eyeballs, you want to capitalize on them, you want to make sure that your product stands out the best that it can. You can’t just throw something on the market and hope for the best anymore. That might not work. That’s going to sit a little longer. This is what a healthy real estate environment looks like.

Kathy:
Yeah, people are shocked. What There’s stuff on the market, you

Henry:
Have to think about it. I can’t just throw a sign in the yard and sell this. No, not anymore. It’s not three years ago. And so you have to hire a realtor who understands the market. You have to do some analysis to figure out what looks like your house, what offers the same things that your house offers and what’s causing those things to sell. And then either try to add those things if it’s financially feasible or highlight them if you already have them. Sometimes you can do small things to put your house in those categories and get it to sell in a faster time period. For example, in our market, if it is a single family home, it’s got a decent yard and it is under $300,000. If it is done well, it’s going to sell very fast. We just listed a flip, we listed a flip on Friday by Saturday afternoon we had two offers above list priced and one of ’em with non-refundable deposit.
That’s because the property was in that first time home buyer range. It was just about the 300,000 mark, which is the price point where people are snapping homes up at and it was done well. You have to pay attention to the details and understand what you have and then how to price it. Now if you’re an investor, these are things to think about as well because if you’re an investor, that means you get to go choose what you’re going to buy and so understand what properties are selling the fastest because some of these properties, if the average is taking 30 to 60 days, there’s some things that are selling faster. So go figure out in your market, do the research to figure out what are the homes that are selling the fastest and then go target buying those homes so that you’re putting a product out there that offers a product to the most buyers that it’s just you have to work guys. It’s not easy anymore.

Kathy:
I was just going to add to that, that it just depends on what you’re trying to do in that market. If there’s more inventory sitting longer, this is a good buying opportunity. This means that you probably have the ability to negotiate and if it’s in a market that has solid fundamentals, this could be the blip they say or the dip you buy the dip in the stock market. This could be that dip that you’re waiting for and it may be a result of high interest rates. We’ve had some pretty nasty interest rates over the past month, but that’s changing. Rates have come down, so I do believe that the data we’re going to see in the coming months is going to be different. So it could be the dip that it is time to buy the dip. You’ve got more power as a buyer when there’s more things on the market, but that may not last forever. Again, depending if the market has the fundamentals. Alright, James, what is our third headline?

James:
Well, we are talking about why Seattle’s market’s so great. US states with no income tax aren’t as affordable as you might think. This article from realtor.com, it breaks down that there’s no income tax states like Florida, Tennessee, Texas, Alaska and Washington along with Nevada, New Hampshire, South Dakota, Wyoming, the states that had the lowest income tax or almost no income tax aren’t what they seem according to the article. And because of the housing price increase that we’ve seen over the last 24 months to up to five years, for example in New Hampshire, they saw an increase of 76.5% in cost of housing. South Dakota, 65%, Tennessee, 52.7%. And what the article kind of breaks down is just because you have no income tax doesn’t mean that it’s cheaper to live. Honestly, I’m kind of calling hype on this article because it’s like of course your cost of living is going to go up 65%. Your rates are also double right now. So if you look at the two data points, you’re going, okay, well yeah, it costs way more right now. Well yeah, once rates come down, actually that’s going to look a lot less so it’s going to being timed with those rates. So I’m not buying that hype at all. I do think you are seeing housing prices increase because guess what? Businesses like going to states that don’t have an

Kathy:
Income tax, you

James:
Can pay people more money. That’s why Seattle’s growing. And honestly, San Francisco’s kind of flat right now. The reason being is that that tech employer can pay that employee an automatic 13% more by them relocating from San Francisco to Seattle. The cost of housings more affordable in Seattle versus San Francisco. They’re making 13% more. And honestly, from what I can see, people that live in San Francisco also enjoy living in Seattle. It’s a very similar demographic that’s relocating up here and they seem to enjoy it minus the rain.

Henry:
I was going to say, don’t nobody want to live in all that rain.

James:
That’s why I moved out, but

Henry:
You don’t even live there. Look, James, I don’t even live there. Count on James to mama bear the Pacific Northwest. He will always defend the Pacific Northwest no matter what the article says,

Kathy:
But he’s moving to Arizona where, but he

Henry:
Doesn’t live there and he’s moved.

James:
Well, I do business where you want to do business where the money is and the money is and states. I mean you look at these states that I don’t think every one of them has legs on ’em like Wyoming. Yeah, it got more expensive because it’s a smaller market. It was very affordable and people were moving to Wyoming, not just for cost of living, for a lifestyle change. The people I know that moved there went there for numerous different reasons and

Kathy:
They’re rich. That’s why prices went up. A lot of people buying ranches up there.

James:
I mean once Yellowstone, the show came out, everybody wanted a ranch, right? But it’s true. It’s the same as with this climate change article. It’s like, oh, it’s climate change is pushing people to the Midwest. People want just more affordable and they want to walk with more, right? And as investors, this is important. I try to focus on states where people can walk with more. I’ve seen the positive impact for us, and this is where you can get some runway in your portfolio. If you have low cost of living with high business growth, that is how you can take a portfolio and two and three exit on a five and 10 year basis because the runway is there and when you have low cost of housing, that’s where you can get your runway.

Henry:
I like this article. This is one of the headlines I read and I’m like, yes, thank you. Draw attention to this. I completely agree with this, James. I think what this article says to me is don’t just take the fact that the income taxes don’t exist as the only reason to do this. There is a full picture here and the full picture is that there are other costs. Typically in these states, your property taxes are extremely expensive. That’s true. And so you’re not paying the income tax, but you’re getting killed on property taxes. Oh

Kathy:
Yeah. City’s got to get their money somehow,

Henry:
And so you have to look at the entire picture. I’m not saying it’s not a good idea to look to some of these states and potentially move there. I’m saying look at the entire picture before you just go, oh, no income tax, I should move there. They’re going to get it somehow. And most of these states compare the property taxes to some of the states who do have the income taxes and you might see that it all balances out. And yes, typically these markets where you get the lower income tax, you have higher real estate costs and you have a higher cost of living. Groceries are expensive in the Midwest, they’re real expensive in California. So just pay attention to the full picture before you go and decide that you want to move to one of these states because you think you’re going to be saving money. I bet you might not be saving as much as you think, but

James:
If you’re an entrepreneur that is in control, that can make their own income and you can, I mean that’s where it can really widen up because yeah, you’re going to pay a little bit more on property taxes, but if you’re a flipper in the Pacific Northwest, you only own that property for six to eight months anyway. So who cares about the property tax? Sell that thing and move it on.

Kathy:
And that’s what I was going to say. You’ve got to understand what you’re doing if you’re moving there because you make a bunch of money or you’re about to get a bunch of money, sure. That’s why so many people move to Florida. Maybe they’re going to sell a company and they want to get to Florida first before that company sells so they don’t have to pay that state income tax. That happens all the time. But if you are not moving to that state, if you’re an investor in one of those states, you are not getting those benefits. You get taxed on wherever you live. I live in California, I own properties in Texas, California don’t care. They’re taxing me no matter what and where I own property. But if you are a buy and hold investor, guess what? It hurts a lot because you are the one paying for schools in Texas.
It is the property taxes that pay for the schools. They have great schools in Texas. You are paying for it if you own property because that’s why taxes are so high. So you can feel good about it. I’m helping lots of kids in Houston. It can be as high as 4% in California. A lot of people don’t know this. Our taxes are, our property taxes are super low. That’s one thing California somehow got, right? We pay in every other way, but our property tax here is 0.07%, whereas in Houston it could be over 4%. Now the houses are cheaper. So I’ve told people, if you own a million dollar dump in California, but a $200,000 rental property in Houston, it’s kind of the same. You’re used to the property taxes at that point. It’s a good check. However, in parts of Texas, it depends on the county.
You’ve got to really run your numbers and double check your numbers before ever buying a buy and hold before closing on the deal. Make sure you’ve already got your insurance quote. Make sure you already know what those taxes are because we’ve had a lot of investors at Real Wealth come to us and say, oh my gosh, the taxes were one thing and now they’re another. Well, yeah, because in California our property taxes don’t change that much. They’re kind of set. They just go up incrementally a tiny bit every year. But in most other places there’s reassessments. And every year if you’re in a high growth area and your property went up a lot in value, so do your taxes and you need to put that in your calculations and your pro forma, not just what it costs today, but what it will cost next year for you. If you can estimate that,

James:
Kathy, I got to say I disagree with you on the property taxes because in Newport Beach, the house that we bought it was going to cost us $87,000 every year until I died.

Kathy:
Well, it was like a $7 million house

James:
Regardless though, but then look at that. So I spent two more million dollars on a house in Scottsdale.

Henry:
Your problems are unrelatable to

Kathy:
Nobody even knows what you’re talking about.

James:
I’m sorry. I spent 30% more on my house than in Scottsdale right now. The property taxes are 0.33. My expenses for my annual living monthly living went down nearly 28% to 30%, and I spent 30% more on the housing there because the cost, and that’s why I believe that the mixture of Arizona has got a good blend. It’s a lower income tax, low property taxes, 0.33 and a lower income tax. So there’s that sweet spot. But by just making that move and even spending more, I’m still saving nearly 20 to 30% monthly by doing nothing but moving and living in a better house.

Kathy:
Okay, James, you’re in your own bucket there. Our audience, they’re like, poor James, let’s move on before we really upset anyone.

James:
It doesn’t matter about the price of the house, it’s the percentage. And so regardless, I

Henry:
Think they think you got the 30% James. I think they think you’re going to be all right.

Kathy:
We do have to take a quick break, but we have one more headline from the man who predicted the 2008 housing crash. What about today’s market worries him the most? We’ll discuss this when we return. Welcome back investors. Let’s get back into this conversation. Henry, what is our fourth headline?

Henry:
Oh, our fourth headline comes from Fast Company and it says that the housing analyst who predicted the 2008 home price crash weighs in on the current market.

Kathy:
A huge crash is coming.

Henry:
Bill McBride, he’s an analyst who predicted the 2008 housing market crash years before it happened. Here’s what he thinks about this current housing cycle. Essentially he’s saying that the housing cycle will resemble a period from the 1978 to 1982 market where there was spiked interest rates and strained affordability, but no national crash with month over month increased home supply. We may see a decrease in prices before 2025. And he says that climate change disasters will cause migration from south to north. And the biggest headwind facing the housing market right now is restrictive policies that limit construction in desirable areas like California. So what do you make of this, Kathy?

Kathy:
Well, I get kind of scared when I hear headlines like this. Honestly, because I’ve been in the camp of we’re good. Housing is solid. Most people who own homes today are in the best position they’ve ever been in. They’ve ever been in. They have the lowest payment to their income ever. You just have to type in Fred and mortgage payment to income. And you’ll see it’s never been this good for the homeowner. They are sitting on trillions of dollars of equity, not just one, but altogether, there is so much equity in these homes with low payments. So I have just been in the camp of we’re good, we’re solid. There’s nothing that can shake the housing industry today in terms of homeowners. There’s not a housing crash coming because you have to have some form of distress in order for someone to sell their home for less than they owe on it, right?
Why would you do that? Why would you go through all that hassle of selling a house? But that’s not even an issue. People have so much equity prices would have to go down incredibly in order for them to be in any kind of trouble. So what could do that? What could cause home prices to go down? And in this article, it sounds like he’s not really predicting that. It’s more like he’s predicting that they won’t go up and that I could see. I could see where if interest rates stay high and wages slow down, it will be really hard for people to come in and pay more for houses in the future. However, if mortgage rates come down and there’s more affordability, then there would be that room for price growth. I think there’s a general consensus that mortgage rates will go down, but not by a ton, just by a little bit over the next year or so and probably remain in the 6% level.
And can home prices continue to rise with somewhat, I would say normal interest rates, but higher than what we’ve seen in the past? So this is a little bit of, again, a headline meant to scare you. Like all of the headlines, they’re all meant to be drama, drama, drama. Apparently humans love drama and we’re drawn to these kind of headlines, scared of everything. So if you really dive into the article, it doesn’t predict a housing crash, just that there could be some home price declines, minor, and then when you read deeper, it’s minor. It’s like no big deal. And it would just be in certain areas. While other areas may just continue to soar because of their affordability and because of their desirability, because businesses are moving there. That’s always the case. There’s always parts of the country where prices could go down. There’s always parts of the country where prices could go up. You want to be in the area that’s booming, and how do you find that you follow the jobs, you follow population growth and costs? Where is it most affordable? This is kind of the theme of this entire show has been people move because of their wallets. So what’s going to cause things to be more expensive and what’s going to cause things to be more affordable? That’s the metric. You got to follow

James:
These articles that always reference the guy that nailed the market crash. Hey, guess what? Bill’s also wrong. In 2023, he predicted a 10% decline on housing

Kathy:
Bs. They didn’t mention that. No,

James:
It’s just like, you know what? And I wouldn’t even disagree with Bill on that in 2022, I also thought there was going to be a 10% pullout with rates going up as investors and buyers we’re trying to forecast in and project. And so that’s what we’re looking at. Do we want to buy now? And what do we think that investment’s going to do? It’s going to go up, it’s going to go down. That’s just the market that we live in. You are never going to buy an investment and hit a home run every time or just see constant steady growth. If you do, it’s going to be a little bit lower return anyways, and things are going to happen. They’re going to go back and forth. But what we have seen is the market has been very resilient, way stronger than I thought. I mean, we saw the fastest rate increase that we’ve ever seen in a short amount of time, and the market did not break.
The market, in my opinion, should have broke and it did not. And so it’s pretty resilient. And what he’s really talking about here is he’s like, well, the market’s just going to be slower with consumption because cost of money is expensive, housing is expensive, and there’s less people that can afford it, but they will sell. And that makes sense to me. And that’s kind of what’s going on right now. People that are making a decision or making the decision, they’re buying the house and they’re plucking ’em off and it just takes a little bit longer, but that should also be expected. A normal market is not to sell things in five days and 10 days. That’s just not the way it goes. I think on the history the last 20, 30 years, I think the average market time is like 90 to 120 days. And so if you look at that history, it’s just going to take a little bit longer and it doesn’t mean that the market’s going to crash.
Now, could the housing market crash? Of course it could because anything can happen, but it’s probably not going to come from interest rates, and it’s probably not going to come from anything that’s going on right now. It’s going to be something off the radar. It could be numerous different things that cause the housing pricing to go down. And that’s a risk that you do when you buy real estate. It’s a risk that you have when you invest in anything. And if you’re a short-term investor that can’t handle that, then don’t buy it. Go do something else. We buy real estate for the long game, not the short. And no matter what we know it goes up and it goes down and then it goes back up again. That’s what you want to pay attention to and you’re never going to catch that perfect buy, but this guy who predicted the market crash also thought it would go down in 2023. They’re going to make predictions and they’re doing it based on data and they’re not going to be right all the time because no one is. So don’t get spooked by the headlines. Look at really what’s going on, and then find out what you want to do as an investor and then make those decisions.

Kathy:
Yeah. One of the things that is mentioned is the biggest headwind facing the housing market right now is restrictive policies that limit construction. That is so key. It’s a supply demand issue generally across America that’s keeping prices elevated. If there was a bunch of new supply brought on, then you could see potentially prices come down because there’s more competition. It’s going to be really hard to do that though with the way policies are today and the cost to build and just the labor costs to try to bring in enough supply. Unless we suddenly some new technology. I don’t know, just anything other than the process we have now that takes so long, we’re just not going to be able to bring on enough supply to meet the demand over the next few years. And as long as that’s the case, you’re not going to see prices dip very much. Alright, well that is our show, Henry James, so good to see you, James. I hope we weren’t too hard on you. We’re just joking.

James:
Hey, you know what? I’m going to be packing up and moving, so I’ll send you guys pictures of my new house.

Kathy:
I hope we’re still invited. All right, well that is our show. As a reminder, if you want to learn more about Real Estate investing, visit biggerpockets.com. There are so many resources there for you. If you haven’t been lately, go check it out. It’s changing all the time. The forums alone are a way to get lots and lots of input on deals that you’re doing if you want other investors to chime in and you’ll get all kinds of feedback. Alright, well, we will see you for another episode of On The Market Soon.

Dave:
On The Market was created by me, Dave Meyer and Kaylin Bennett. The show is produced by Kaylin Bennett, with editing by Exodus Media. Copywriting is by Calico content, and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.