YT Live: Real Estate Demand Will Burn and Crash The Market? | Investors and the Housing Market 2022
Let’s take a look at what is happening overall.
The Fed raised the rates, and the following day, all of a sudden, we’re looking at the mortgage rates dropping slightly. That’s interesting, right?
We’re also going to talk about the demand for real estate. A lot of people claim that “the demand is waning” or “the demand may die out”.
But real estate investors are still buying and they’re getting creative. There’s a great company that’s backed by Jeff Bezos that is currently disrupting the real estate market.
Now, let’s try looking at the data from several articles. And from what I’m looking at, I don’t see the demand for real estate dying down.
According to Fox Business, the 30-year fixed rate went down from 5.375% to 5.125%, as of May 5, 2022.
Since they knew that the Fed was going to raise rates, the mortgage rates had already been planned in preparation for the raise.
They’re like, “Hey. I guess it’s not as bad as I thought. Thank goodness we kept on pushing the rates higher. Because now we’re okay with it.”
According to Nerdwallet, as of May 5, the overall 30-year fixed rate is 5.174%, 20-year fixed rate of 5.071%, and around mid-fours for the 5-year ARM. Nobody knows what’s going to happen with the rates. They may stay around there or go up a little bit over. People have mixed reviews on this.
The National Association of Realtors (NAR) released some data for the first quarter of 2022. These are some statistics according to the Realtor’s Confidence Index Survey:
Now, I like that. It shows that a good portion of the market is first-time homebuyers. And a good portion of those were millennials. I think it’s great that millennials will keep on driving the market.
On another PDF from the NAR, they showed some cool graphs of a lot of great data. What I want to note is the following: first, sales to investors rose from 15% for Q4 of 2021 to 18% during the first quarter of 2022. The second is, cash sales were reported at 28%.
That’s crazy! Because according to the statistics from Redfin, in Q4 of 2021, which is just a few months ago, investor market share has already reached a record of 18.4%.
Do you see where I’m heading here? I’m showing you stats where investors are finding ways to pick up properties in certain areas.
Now, this was a surprise to me. Somebody sent me the news about Jeff Bezos’s company. I want you to pay attention because companies are coming in to disrupt the real estate world, to take the opportunity from the first-time buyer to own a home. But maybe to invest in one.
This company is called Arrived Homes. You should check them out.
“This newest batch of offerings was the platform’s most highly anticipated release yet. The surge of traffic from investors when the properties were released crashed the website for nearly three hours. The properties funded in this round have a total of $4million and are located across four markets in Georgia, Tennessee, Alabama, and South Carolina,” according to Yahoo! Finance.
Pay attention to the markets because inflation is tied to the places people are moving in too rapidly, and it’s rising inflation even higher.
If you go to the Arrived Homes website, “The 100” is the only unit available (as of May 6) because all of the other properties are sold out. This is in Tennessee. They limited the investments to $1,000 per investor to ensure that the most amount of people could buy shares.
It is critical to keep an eye on what is going on. Because this affects the dynamic of you being able to buy or, if you're a real estate salesperson, understanding where the world is moving.
I looked at the metro areas with the largest percentage gain in existing single-family home prices in Q1 of 2022.
Number one is Punta Gorda, Florida at 34%, followed by Ocala at 33.8%. It is also no surprise that Florida holds the numbers four, six, and eight spots on the list.
The ones outside Florida are from Utah, with number three in Ogden-Clearfield, and number ten in Salt Lake City. Take a look at the rise here. This is incredible for me, to understand the largest percent gain in these areas because we’re looking at inflation targeting these areas more.
And it says from an article by New York Times, “In Charlotte and Atlanta, investors purchased more than 30% of the homes sold in the fourth quarter of 2021, according to Redfin. In Jacksonville, Fla., Las Vegas, and Phoenix, they bought just under 30%.”
“Housing industry representatives note that these numbers, which define investors as any institution or business, represent purchases by smaller, local owners, too, who may own just one or two buildings through a limited liability company,” according to the NY Times.
The point is, as we get into the rest of the year 2022, we’re not going to see the investors die out. Especially if they are getting creative and creating companies like Arrived Homes, where now they are gathering more money and saying, “Hey, we’d like to purchase over here. We’re just gonna take a look at where the opportunities are.”
It is simple. There is plenty of data from sources like CoreLogic, Adam, and Black Knight.
There’s some news from Housing Wire about what’s happening with Black Knight. The article titled “What will happen if ICE and Black Knight join forces?” says, in partnership with the Intercontinental Exchange, they are attempting to buy data so that they could make the mortgage process easier.
Now, think of what else they could do. If they have all of the data, they can now determine “Well, where else can we purchase? As investors, where else can we create a type of Arrived Homes and maybe target and start purchasing all of these properties, all cash, through companies like Arrived Homes. Where we’re now combining forces and buying it all cash and outbidding all of these first-time homebuyers.”
They are doing great homework. We can learn a thing or two from them.
The demand isn’t gonna die out, and all this data helps us fully understand where we’re going as a housing industry.
You saw the interest rates drop a little bit. The demand isn’t going anywhere. This market is here to stay for a while longer.
I don’t know what will happen next year. I don’t know what’ll happen until the end of the year.
But all of these people that are talking about the demand dying and “Oh my gosh! The housing market is going to crash! There’s a bubble.”
Pay attention. There isn’t a bubble. There isn’t a housing market issue, outside of affordability.
Remember one thing that investors are looking for. Investors are looking for places that continually are rising in rent. Because if the rents are rising, they can go in and purchase a home, all cash, rent it out, and play the long-term game.
Now they are winning in two ways: they’re winning in rent because inflation is going up. AND they’re winning because they’re getting equity over a long period.
So, as we get into this more, I’ll keep on bringing you information. Do me a favor, contact me on my socials, and comment. Let me know your opinion because I learn from them, too.
