2024 Housing Market Predictions and three Underrated Actual Property Markets to Watch

Dave:
Hey, everybody. Welcome to the BiggerPockets podcast. I’m your visitor host at this time, Dave Meyer. Me and my associates from the On The Market podcast are taking on the BiggerPockets feed.

Kathy:
Woo-hoo!

Dave:
Yeah. That is going to be very enjoyable. We’re right here taking on the BiggerPockets feed to offer you a bit style of what we do on the On The Market podcast the place we give attention to actual property identical to this present, however extra on the economics, extra on present market situations. Our entire objective is to offer you, the investor, with information and data and information to make knowledgeable selections based mostly on what’s going on available in the market at this time. So what methods are working greatest, what markets are seeing the very best situations, that sort of knowledge. Immediately, we’re going to get into all of that. We’re going to start out with a recap of the primary half of 2023 and discuss what’s been happening within the financial system and the housing marketplace for the primary six months of 2023. Then I’m going to pressure our panelists in opposition to their will to make predictions, regardless that it’s very tough, about what’s going to occur on the second half of the yr. Don’t maintain us to those predictions, however I promise we’ll have dialog about what would possibly occur over the remainder of this yr.
Then we’re going to enter a dialog about completely different markets throughout the US. If you recognize something concerning the housing market proper now, you recognize that sure markets are doing rather well, sure ones are doing poorly, and we’re going to interrupt this down for you that will help you perceive which markets are going during which route, which of them work with what sorts of methods to be able to adapt your technique to the correct market situations. In order that’s what we obtained for you at this time. It’s going to be an superior present. In case you’ve not listened to the On The Market podcast earlier than, we’re a visitor panel sort of present. I’m joined by three co-hosts. I’ve obtained Kathy Fettke with me. Kathy, how are you?

Kathy:
Nice.

Dave:
Are you able to introduce your self to everybody listening?

Kathy:
Positive. It’s Kathy Fettke. You in all probability don’t know, Fettke, I feel, means little fatty in German, however anyway.

Dave:
I didn’t know that. How have we performed 100 exhibits collectively and also you’ve simply advised me that for the primary time?

Kathy:
You simply should know German, I suppose.

Dave:
You’re simply dropping bombs like this proper out the gate, wow.

Kathy:
Proper there.

Dave:
All proper. Properly, now everybody’s going to recollect you.

Kathy:
Yeah. Always remember that title. I’m a co-founder of RealWealth the place we’ve been serving to traders purchase funding property nationwide for, effectively, truly 20 years. That is our 20-year anniversary. After all, I’m a BiggerPockets big fan and simply tremendous completely satisfied to be right here.

Dave:
Good. We additionally obtained James Dainard. James, how are you?

James:
I’m doing good. I’m excited to be again on the BiggerPockets predominant channel.

Dave:
And for individuals who haven’t listened to the episodes you’ve been on to date, inform us a bit bit about your investing expertise.

James:
I’m a full-time investor out of Seattle, Washington. We’ve been investing since 2005, very lively repair and flipper operators, builders, multifamily consumers, however we’re yard traders in Seattle, very lively, hooked on the deal guys, deal junkies up there.

Dave:
Superior. Properly, thanks for becoming a member of us. Then Henry, I do know you’re on this present rather a lot, however we additionally obtained Henry Washington. Are you able to give us a bit intro?

Henry:
What’s up, guys? Sure. I’m Henry Washington and Henry truly is German for giant fatty.

Dave:
I didn’t know that.

Kathy:
I didn’t know that both. Wow.

Henry:
Yeah, simply magic. Yeah, I’m an actual property investor. I’m based mostly out in Northwest Arkansas. I’ve been doing this since about 2017. Received a couple of hundred rental properties. We focus primarily on single households and small multi-families.

Dave:
All proper. Properly, thanks for becoming a member of us. My title is Dave Meyer. I host this present with David as a visitor host each from time to time, however when you don’t know me, I work full-time at BiggerPockets. I’m the vp of knowledge and analytics. I additionally host the On The Market present with these wonderful folks and I’ve additionally been investing in actual property for 13 years or so. So first up for the present at this time, we’re going to recap what’s been happening within the housing marketplace for the primary half of the yr. To me, the most important story is that housing costs have corrected a bit, however regardless of numerous information and media consideration to a possible crash, they’ve positively not crashed. It will depend on who you ask. There’s numerous completely different information sources. You’ll be able to take a look at the Case-Shiller or Redfin or Zillow, however most of them agree that housing costs are down yr over yr, someplace between 1% and three%. We had been all speaking earlier and noticed that the median residence worth within the US dropped from 449,000 to 441,000.
So it hasn’t been an enormous adjustment and truthfully, it is a little bit of shock to some individuals who thought with rising rates of interest, we’d see a giant correction or probably even a crash. I’m curious, Henry, what are you seeing in your market? Are you seeing this correction sort surroundings or one thing else?

Henry:
Yeah, Dave. I’m truly seeing the precise reverse. Once I take a look at housing costs during the last six months in Northwest Arkansas, we’ve truly been seeing a rise to the tune of $10,000 to $15,000 month-to-month. So the other is true right here.

Dave:
Yeah, that’s tremendous fascinating. Why do you suppose that’s happening? Is there something explicit about your market that you simply suppose is exclusive?

Henry:
Yeah. I feel one of the vital distinctive issues about my market is the firms which are right here. The financial system is predicated round about three or 4 main companies who occur to be fairly recession-proof companies they usually’re truly butts in seats companies as effectively. So that they’re requiring all people who works for the corporate to relocate again to the realm and so there was this trickle of individuals transferring again right here, plus they’re persevering with to rent via this. So we’ve obtained new folks transferring and that’s growing demand and that demand is basically growing in that mid-tier residence, to that luxurious residence worth as a result of you could have excessive salaried people who’re coming they usually don’t wish to begin a house. They need one thing a bit nicer.

Dave:
I’m positive you’re seeing this in your market, Henry, however to me, the key cause that we’re not seeing housing costs crash they usually’re extra in a correction mode is due to low stock. We discuss this rather a lot, however there’s not numerous properties on the market. We truly noticed the latest information in Might say that stock was truly down, which is the other of what usually occurs. Often when rates of interest go up, there are much less consumers and there’s extra homes simply sitting available on the market, so there’s greater stock, however we’re seeing the other of what usually occurs. Kathy, do you could have any ideas on why that is likely to be?

Kathy:
So many ideas.

Dave:
Lay them on us.

Kathy:
It’s actually stunning to lots of people who thought that stock would completely spike when rates of interest went up final yr, however whenever you actually take a look at the larger image and return say nearly 18 years to 2005, there was about 4 million properties available on the market. Quick-forward to 2015, about 1.2 million. It’s been on a decline for a very very long time, however in 2020, wow, stock simply tanked. Clearly, folks weren’t enthusiastic about placing their properties available on the market throughout a pandemic, however then it actually hit backside in 2022. Oh, my goodness. It was 240,000 properties in stock and that’s an all-time low. Now we’ve gone up since then. As soon as charges went up, stock ranges have gone up as effectively, however nonetheless traditionally low. What we simply noticed in direction of the tip of June was that once more, context is every part as a result of numbers don’t imply an excessive amount of except you recognize what to check it to.
In 2022, lively listings grew by 30,000 on the finish of June. In 2023, that is simply final week, lively listings grew by solely 5,848. So why? What’s going on? It has a lot to do with the lock-in impact when rates of interest are actually near 7% not less than whereas we’re recording this present. That retains folks of their properties. However markets transfer when folks trade issues, when folks promote and purchase and all that. However when you’ve got an enormous group of people that simply are usually not prepared to promote as a result of they’re not going to seek out one other home that is smart at 7% once they’re in a 2%, 3%, or 4% charge and doubtless a a lot lower cost as a result of many individuals purchased properties some time in the past, not simply final yr. When there’s folks not promoting, that’s additionally folks not shopping for as a result of individuals who promote normally purchase. They nonetheless want a spot to dwell. So it’s simply locked. It’s simply the housing market is locked and if rates of interest come down, we’ll see that loosen up, however within the meantime, we’re not there but.

Dave:
Yeah. I feel in all probability the most important factor that’s impacting the housing market proper now’s simply this low stock that nobody appears to wish to promote and it looks like we’re getting again to the purpose the place we had been final yr the place there may be numerous competitors for properties. I used to be anticipating issues to be sitting available on the market right now of the yr, however I simply noticed one thing that days on market, which is a very good measure of the stability between provide and demand, had been going again up as you’d count on given these financial situations. However then they peaked at 27 days, which can sound like rather a lot, however can be low throughout a traditional time and have come again right down to 14 days. Meaning the common home proper now, even with greater rates of interest throughout the entire nation is sitting available on the market for simply two weeks, which is extremely low in historic context.
James, I’m curious, are you seeing these ranges of competitors? As a result of when you don’t know, James invests in Seattle, which has seen one of many greater corrections within the nation, comparatively talking. I’m curious when you’re additionally seeing an uptick in competitors.

James:
Yeah. 12 months in the past, it was wanting fairly furry. The market was dropping quickly. We noticed a 15% to twenty% drop off-peak and days on market skyrocketed from beneath eight to it went as much as 42 days in January. What we’ve seen is that this, within the final six months or final seven months, days on market have dropped right down to eight days within the Seattle market. That’s an enormous change in turnaround and we’re positively seeing it. Virtually each property that we’re itemizing proper now we’re promoting within the first 5 days, except it’s in that basically higher echelon pricing and the consumption charge’s there, the consumers are there. To Kathy’s level, I didn’t suppose the lock-in impact was going to be that impactful, however it’s a actual factor. There’s nothing on the market and the stuff, truthfully, if it’s reworked product, I feel the times on market can be even lower than eight days. It’s like there’s bizarre junks available in the market that’s truly bringing that eight days up.

Dave:
All the way in which as much as eight days, yeah.

James:
Yeah, it’s outrageous, proper? There’s not sufficient product for folks to purchase. That’s the underlying issue proper now, however we’re positively seeing a turnaround in our Seattle market.

Dave:
So there you could have it. I feel these are a few of the main tales for the primary half of the yr within the housing market. Costs are coming down a bit bit yr over yr, however they haven’t crashed. Stock is extremely low, which is contributing to why costs are doing what they’re doing, and competitors is heating again up. On a macroeconomic stage, I’ll simply say that clearly, you’re in all probability conscious of this, however rates of interest, the Federal Reserve had hiked charges three completely different instances. We’re now at a federal funds charge above 5% and that has pushed mortgage charges up as of this recording, like Kathy stated, to the low sevens. As of proper now, the financial system continues to be rising. We solely have GDP numbers again from Q1, nevertheless it did develop 1.1%, which isn’t tremendous thrilling development, nevertheless it did develop. There’s one thing truly known as GDPNow which helps you estimate what GDP is in actual time and it’s predicting 1.9% for Q2, so we expect to not be in a recession not less than at this level of the yr.
Now that we’ve recapped what’s happening, it’s time for you guys to do some predictions. It’s our prediction dependancy sport as a result of everybody loves listening to folks make predictions and we’re going to see how good you all are at it. Our first query is in mortgage charges. We’re sitting proper round 7% right here at first of July. The place will they be by the tip of 2023? Take into consideration the brand new yr and we’re heading into 2024. The place are mortgage charges going to be? James, begin with you.

James:
I feel they’re going to finish about six and a half %, which is greater than I assumed originally of the yr.

Dave:
Okay.

James:
I’m not seeing the charges slide as a lot as I assumed they might be at at this time.

Dave:
All proper. Kathy.

Kathy:
I’m swinging on the market with 5.9%.

Dave:
Whoo!

Kathy:
Perhaps it’s wishful pondering, however we’ve got seen inflation development down and I feel by the tip of the yr, will probably be trending a lot additional down. Fingers crossed.

Dave:
All proper. I like your optimism. Henry.

Henry:
Yeah, I’m not as optimistic, not as a result of that’s what the info is saying, simply because the Fed has stated they’re going to proceed to lift charges till inflation will get beneath management. They’ve indicated that they could do two extra charge hikes and I’m going to take them critically as a result of they’ve performed every part they stated they had been going to do up to now. So I’m at 7.75, seven and three quarters.

Dave:
I’m with Henry. I’m within the greater for longer camp now. They’ve stated they’re going to maintain them greater for longer and I don’t have any cause to imagine them, so I’m saying 7.5. So Henry and I are shut right here, however we’ll should steal this present once more on the finish of the yr and see who’s proper. Okay, so we obtained a fairly widespread there. There was extra variance between the 4 of us than I assumed there was going to be. All proper, how about yr over yr housing costs? Simply as a recap, proper now, we’re at about damaging one, someplace between damaging one and damaging three relying on who you ask yr over yr housing costs. Henry, begin with you. What do you suppose?

Henry:
My intestine tells me I feel we’re going to proceed on the identical path, so I feel we’re going to remain flat and possibly come down 1% if that. I don’t suppose it’s going to return down a lot in any respect.

Dave:
All proper. Kathy, are you going to be optimist once more?

Kathy:
I’m. I do truly suppose that we’re going to see yr over yr costs enhance, however ever so barely. I’m going to only go together with 1% for enjoyable, however I truly suppose it’ll be greater than that. If certainly my prediction of mortgage charges comes down, then we’d see extra folks coming available in the market and bidding. They’re already bidding proper now. There’s bidding wars once more, guys, it’s loopy, even at 7% charges.

Dave:
James, what do you suppose?

James:
I truly suppose with the traits which are happening proper now and the truth that we’re having a number of provides with a 7% charge and if charges do come down to 6 and a half like I feel, I’m truly predicting about 5% development.

Dave:
Whoa.

Kathy:
Wow.

Dave:
Okay. You suppose we’re going to stay-

Henry:
Wow.

Dave:
… on this trajectory, okay.

James:
That is weird world to me, however I’m simply going to go together with the weird.

Dave:
Properly, I used to be pondering earlier at this time that I used to be going to revise my forecast, however about, not a yr in the past, in September 2022, I stated I assumed in 2023, the housing market would go down 3% to eight% and I’m simply going to keep it up. There’s a lot complicated information, I’m simply going to stay to my weapons and say I nonetheless suppose the housing market goes to say no barely on a nationwide stage by the tip of the yr. All proper, for our final prediction, it’s GDP development. In case you guys don’t know what this implies, it’s simply gross home product that’s principally the combination sum of all the financial manufacturing of the complete nation. You need it to go up usually. If it’s down for 2 consecutive quarters, that’s what many individuals imagine to be a recession. So I’m curious as a result of I wish to know when you suppose we’re going to be in a recession principally the place you suppose GDP development can be. Kathy, the optimist, what do you bought?

Kathy:
Properly, I feel the primary quarter was like 2% or one thing and it was very stunning that the financial system was rising regardless of all of the efforts of the Fed to kill it. So I’m going with 1.2% as an annual, because the GDP of the yr of 2023. So I feel there’ll be no recession in different phrases.

Dave:
Okay. I simply wish to make clear that after we’re speaking about GDP, I’m speaking about “actual” GDP, which accounts for inflation. We’re saying that the financial system will develop even in extra of the inflation that’s happening. Henry, what do you bought?

Henry:
I’m just like Kathy once more and just like my final. I feel we’re going to be flat or up about 1%. In case you take a look at the components feeding into GDP, the roles report got here out. That appears nice so far as there’s extra jobs out there. The customers are snug and are spending cash and I simply suppose that that’s saying that the financial system is powerful and it’ll go up a bit bit.

Dave:
James, are you going to dissent?

James:
You realize what? I’m truly within the herd on this one. I feel there’s no recession, however minimal development at 1%. I feel persons are nonetheless consuming proper now. It’s slowing down. I simply suppose folks have a troublesome time turning off the tap proper now. All of them activate the tap throughout COVID. It’s like I’m going to purchase every part. A wise man advised me one time, he’s like, “Don’t ever flip that faucet on as a result of it’s actually laborious to show it off. Hold management your bills.” I really feel like America’s having an issue turning it off proper now.

Dave:
I like how James is telling us to not flip the tap on whereas he’s recording on his yacht and that’s actually what he’s doing. That isn’t an exaggeration. He’s actually sitting on his yacht telling us to not flip the tap on.

James:
You realize what? Final yacht, I turned the revenue on, Dave.

Dave:
Okay.

James:
After three years, I offered it for greater than I purchased it for, so-

Dave:
That’s fairly good.

James:
… I’ll flip something.

Dave:
Good. Properly, I’m with you, guys. I feel it’s a bit early to say there gained’t be a recession, however I feel if it’s going to occur, it’s in all probability not going to occur in 2023. We had a fairly well-known economist named Mark Zandi on the On The Market present a few months in the past. He coined this time period the gradual session the place it’s principally like we by no means truly see that damaging GDP development, nevertheless it’s this anemic, actually gradual development that we’re technically not in a recession, however some folks, not less than, can be feeling like we’re in a recession. As of proper now, it does really feel like that, so I’m sticking with that. All proper, so these are our predictions. Please don’t maintain us to them. These are for leisure functions solely. No. I do suppose it’s actually useful to only not less than speak via why we expect these various things are going to occur. Clearly, we’re all simply making our most knowledgeable, educated guesses and we’ll simply should see what occurs on this very complicated financial system.

Kathy:
Educated guesses, however the jobs report was 497,000 new jobs, double what was anticipated, doesn’t sound like a recession.

Dave:
Yeah, it’s wild. If there’s going to be a job loss recession, it’s going to be some time. We’re seeing it go in the other way. It will take, in my thoughts, fairly some time for the unemployment charge to stand up to even 4% at this level. It’s going to take not less than a number of months and 4% continues to be comparatively low unemployment.

Kathy:
Yeah.

Dave:
All proper. We’re going to maneuver on to our subsequent a part of the present the place we’re going to be discussing completely different markets. In preparation for this, I did some evaluation over the previous few days to only assist everybody perceive what’s going on within the housing market as a result of the stuff we had been speaking about earlier is all nationwide stage statistics. These are aggregations about what’s happening with days on market stock, however the actuality on the bottom could be very completely different relying on what market you’re in.
So I appeared on the high 137 markets simply because these are those I felt had sufficient information for us to make some inferences about it and 41% of them declined during the last yr and 59% went up. So there’s an actual break within the nation proper now the place it’s not precisely 50/50, however there’s a sizeable portion which are going in a single route and a sizeable portion which are going within the different route. The unfold between them is truthfully loopy. The worst performing market during the last yr, I’ll truly provide you with guys a guess. Anybody obtained a guess? Single worst during the last yr?

Kathy:
San Francisco.

James:
Boise

Dave:
Henry?

Henry:
Yeah. I’d say Boise or Seattle’s been rebounding, however that may’ve been my guess.

Dave:
All proper. Boise was second worst of the highest 137 largest. Austin, Texas was the worst with 15% decline in sale worth in Austin, which could be very vital. Boise was the second worst with 14% and Oakland got here in there, however San Francisco, Sacramento, Phoenix, Vegas, these are all up there, numerous West Coast cities.

James:
And Seattle got here off. We had been like quantity 5 for a second.

Dave:
Yeah. Seattle is doing a bit bit higher now, nevertheless it’s nonetheless positively… Yeah, Denver’s moved up a bit bit, however they’re nonetheless not doing the very best. They’re nonetheless damaging. However on the opposite facet of the equation, we’ve got Fayetteville, North Carolina is up 16%.

Kathy:
Wow.

Dave:
So the unfold between the worst and the very best market is 30% proper now. Because of this it’s so vital to grasp what’s happening in your native market and hearken to exhibits like On The Market the place we let you know all about this type of stuff. Due to this unfold, and we’ve got this actually dramatic distinction between markets, I requested every of our panelists to offer us an beneath the radar market that they wish to share with the remainder of you. Everyone knows what’s happening. Quite a lot of us understand it was fairly straightforward for them to guess what’s happening in large cities like Austin and numerous the pandemic darlings like Boise and Reno are having the massive retractions, whereas numerous the southeast is understood to be going up proper now.
However we wish to offer you markets that you simply don’t find out about, possibly you’ve by no means even heard of those locations, which you can look into in your personal investing or it’s additionally helpful to only go take a look at what are a few of the underlying components which are driving the conduct and the situations on this market and see in the event that they relate to the locations that you simply make investments as a result of that might actually assist you to perceive what route your market is likely to be going. So Kathy, I’m going to start out with you. What market are you bringing to us?

Kathy:
There’s no probability anybody’s heard about this market.

Dave:
All proper.

Kathy:
Very a lot doubt it. Are you prepared? Thackerville, Oklahoma. That is my-

Dave:
What?

Kathy:
Sure.

Dave:
Is that a spot? No offense to anybody from Thackerville, however I’ve by no means heard of that metropolis. Is it a metropolis, a city?

Kathy:
It’s simply over the border from Texas. A lot development is spreading out out north of Dallas. The core is getting costly. DFW is getting costly, so companies are transferring out and so our folks to extra inexpensive locations. One of many areas that has grown a lot is Gainesville, Texas the place residence costs had been truly up 10% yr over yr, median worth is 305,000. Thackerville is simply over the border, 12 miles. So lots of people will dwell in Oklahoma and commute to their jobs in Texas as a result of in Oklahoma, the property taxes are a lot decrease. They’re 0.85 versus double, triple and even quadruple that when you simply go over the border into Texas. And residential costs are decrease. The issue is there’s no stock. There’s hardly something there. I feel there’s 16 properties available on the market. So we’re truly beginning a construct to hire fund there and constructing some new provide simply over the border in Oklahoma to seize these decrease costs, decrease constructing prices, decrease taxes, and but rents are fairly excessive as a result of it’s Texas cash going there.
Anyway, that’s my little hack for 20 years, 25 years now have been looking out the place the puck goes, so to talk. When you’ve already heard about an space that’s rising, it’s in all probability too late, so I identical to to see the place the roles are going, the place inhabitants is rising and get proper exterior of that. Proper in entrance of the trail of progress is my favourite.

Dave:
That’s an important lesson, Kathy. Only for everybody listening, why did you choose this explicit city, to begin with, and of all of the locations the place Dallas can increase, Texas is a fairly large place, why this route? What about it do you suppose is so compelling?

Kathy:
Properly, Dallas is rising in all instructions and like many locations, the city core has develop into very costly and there’s greater regulation, whereas whenever you get out into the suburbs you may get extra work performed and your staff can dwell cheaper so companies transfer there. However that specific space, we’ve simply seen a lot development with companies transferring north that we expect that the following frontier is simply over the border in Oklahoma. In order that’s why. There’s additionally a on line casino, WinStar On line casino with 3,500-

Dave:
Oh, I’m in now.

Kathy:
… staff.

Dave:
Okay.

Kathy:
These staff don’t have any place to dwell, so that they’re truly residing in Texas. If there’s housing close to them, they’re going to be stoked about that, not should make that commute and it’ll be cheaper. You even have distribution facilities for Walmart, Liberty Power, Lowe’s. It’s, once more, a lot of development, a lot of area to develop and for firms to return in and have the ability to have an inexpensive headquarters or industrial area or warehouse area and nonetheless have a large metro close by.

Dave:
I prefer it. Henry, I feel I owe you an apology as a result of I used to suppose that the place you make investments is obscure, however Thackerville, Oklahoma would possibly beat you on the obscurity index. However that’s what we requested for, so Kathy, A+ on the project. That is nice. Properly, with that, let’s transfer on to Henry. Inform us about what beneath the radar market you wish to discuss.

Henry:
Yeah. Clearly, guys, I’m going to speak about my yard. I make investments right here. I’m speaking about Northwest Arkansas. It is a small, I name it a bit bubble up right here within the northwest nook of Arkansas. We’re about three and a half hours northwest of Little Rock. So we’re sitting proper on the border of Missouri and Oklahoma. This space, for a number of causes, makes it an outstanding actual property market. So to speak about a few of the economics, we’ve got very giant companies right here, recession-proof companies like Tyson Meals, JB Hunt transportation, after which Walmart all headquartered proper right here in Northwest Arkansas. These are firms which are going to do effectively if we do go right into a recession. Walmart is the place folks store when cash will get tight and you need to get stuff to locations, so transportation’s at all times going to be a factor, and all people eats hen.
So that you’ve obtained simply these recession-proof firms, however the important thing there may be these firms are butts in seats firms. They need folks residing in the neighborhood the place these firms are headquartered and so folks have been transferring right here at a loopy alarming charge. I feel the final statistic I noticed was about 35 to 38 folks per day-

Dave:
Wow.

Henry:
… transfer to Northwest Arkansas. What that does from an actual property perspective is it creates the issues that you really want as an investor. You get cashflow and depreciation. You get cashflow as a result of we’re nonetheless Arkansas. So you should buy on the decrease finish of the housing worth scale, however you possibly can hire on the upper finish since you’ve obtained individuals who have giant salaries which are transferring right here. Some don’t wish to purchase a house right here, so that they’re renting and so hire costs are excessive. You should buy low after which stock is so low. So when you’re going to show properties or flip properties, you’re in a position to seize fairly good income doing that. We’re getting a number of provides. However to offer you a few of the numbers from the actual property perspective, we’ve got about 1,500 properties available on the market proper now. We might have to be at about 5,000 lively listings for our market to be thought of a purchaser’s market.

Dave:
Wow.

Henry:
The typical days on market appears excessive at 94 days, however we’d have to be at 120 days. However when you take a look at the median eight days on market, the median days on market is 56. So which means between when a home is listed after which when it goes beneath contract, it’s usually about 21 days. So it’s fairly fast. Now, issues which are rehabbed and are rehabbed effectively are buying and selling rather a lot sooner. Issues which are crap are buying and selling a bit slower, however that’s only a signal of a wholesome market. That’s what needs to be taking place. Our hire emptiness throughout Northwest Arkansas, 1.5%. So there’s demand for something that’s out there to dwell in. When you have a rental and it appears midway first rate, any individual’s going to be residing in it and we’re at about, for an condo, common hire is a thousand {dollars}. However that’s an condo. In case you’re single household properties or duplexes and issues like that, common hire someplace between 1,200 and 1,500.
I name it an actual property investing unicorn. There’s nice economics. There’s affordability. You get appreciation. You get cashflow. We have now simply been seeing a rise in consumers getting into the market, lower in days on market. It’s not performed what numerous these markets appear to be doing throughout the nation.

Dave:
Wow. It’s unbelievable. Each time you discuss it, I wish to fly over there and test it out for myself. All proper, let’s transfer on to James. What market are you bringing? You’ll be able to’t say Seattle as a result of that’s positively not beneath the radar.

James:
No, it’s positively not beneath the radar. I’m so impressed with Kathy’s choose although. The inhabitants is 440 folks on this city. I like her strategy although as a result of it’s like, oh, the inhabitants grew by 20%. It’s like, okay, nevertheless it’s obtained upside in right here.

Henry:
One household moved in, 20% enhance.

Kathy:
Yeah.

James:
I truly picked a spot and it type of caught me off guard once I was researching this was Inexperienced Bay, Wisconsin.

Dave:
Titletown.

James:
Yeah. The rationale I choose Inexperienced Bay is as a result of it was ranked on quite a few locations the primary, greatest place to dwell within the US and that’s what they’re predicting for the following yr. One factor that I’ve realized, the pandemic has modified all people’s mindset a lot is they simply wish to dwell the place they wish to dwell and be snug. What it did is it took People off this grind mentality that we had earlier than the place it was like go, go, go, go, go. Individuals have realized they simply wish to dwell in a pleasant place that’s inexpensive. So I do suppose that’s a giant think about my choice. Proper now, the median residence costs are nonetheless up 9% yr over yr, so it’s continually rising. The typical residence sells for five% to 11% over checklist proper now.

Dave:
Wow.

James:
The 11% is extra like these scorching properties which are renovated and those which are extra duds are nonetheless promoting for five% over checklist. The sale of the checklist is at 105% proper now. I just like the affordability of the market. One factor I’ve discovered is when charges began skyrocketing, I truly thought the extra inexpensive markets had been going to have extra points as a result of it’s going to essentially have an effect on the underside line, nevertheless it’s been doing the other for the final six months. The median residence worth is 240,000. It’s an inexpensive, inexpensive place. It’s an important place to dwell apart from the climate. That’s why it caught me off guard. That chilly, chilly climate can be my solely grasp again. One sneaker stat is it’s an enormous cheese trade and the common worth of cheese is 32% greater on a five-year common. So the cheese-

Dave:
Did you simply go and search for cheese futures or one thing?

James:
I did as a result of I used to be struggling to seek out the financial system in there. I used to be like, effectively, I do know they like cheese and I do know they produce numerous cheese. I do suppose we’re within the shift of globalization slowing down and we’re going to be shopping for numerous stuff. Hopefully, we’re shopping for much more American-made merchandise and that’s what the practice may very well be and cheese may very well be a think about that. However I’m coming again to it. It’s inexpensive. It’s a top quality place to dwell. I do suppose a few of these metro cities in Milwaukee, Chicago, the livability has dropped a bit bit and other people simply desire a easier, simpler life-style. There’s numerous migration from these two metro cities going up that manner and we’ve seen that throughout the board in all these markets is just like the metro cities, persons are getting a bit bit away from them proper now.
It’s nearly just like the ’80s the place persons are beginning to depart the metro they usually wish to be extra within the suburbs. They need peaceable residing and that’s why I’m basing my prediction on that. However it’s at present rising. It’s rising and primary livable place to dwell,-

Dave:
Wow.

James:
… aside from me, as a result of I need no seasons. I like solar solely.

Dave:
Yeah. Properly, I feel we’ve hit the height of this present now that we’re speaking about cheese pricing on it. I’m very happy that is how this has developed. Properly, it’s nice. James, I do wish to name this out as a result of I agree. Considered one of my investing thesis is that inexpensive cities are actually going to pave the way in which for the following couple of years, however I feel it’s vital as a result of folks ask me on a regular basis, they’re like, “Oh, this so-and-so metropolis. It’s actually inexpensive.” You’ll be able to’t simply purchase something simply because it’s inexpensive. There must be a draw to that space. When Henry’s saying it’s inexpensive, however there’s an enormous financial engine. James is saying, yeah, possibly cheese costs are going up, but in addition, that it’s a very prime quality of life place to dwell that’s going to draw folks.
So I do suppose there may be some logic that affordability goes to drive some future housing market traits, however clearly, you could make sure that whether or not it’s financial, high quality of life, climate, taxes, one thing that’s going to attract folks to the town as a result of on the finish of the day, all of it comes down to provide and demand and also you want to have the ability to measure the place demand is coming from.

Kathy:
Properly, keep in mind, Thackerville has a on line casino.

Dave:
Okay, Thackerville, it’s. I really feel like we must always go on a roadshow and go to all these locations. I wish to see Thackerville. We’ll double the inhabitants. Properly, just-

Kathy:
That’s proper.

Dave:
… the 4 of us present up. Properly, thanks all for bringing these beneath the radar markets. A few of them, Kathy, a bit bit extra beneath the radar than different, however that is actually useful and hopefully it’s useful to all of you in making an attempt to grasp how you will discover your personal markets. You don’t clearly have to put money into these three markets, however I feel that the logic and reasoning and analysis you probably did is basically relevant to essentially anybody who needs to put money into actual property. That’s our present. I do wish to thank David Greene and Rob for permitting us to take over the present. Hopefully, you want this. In case you do, pop over to the On The Market podcast. You’ll be able to simply discover it on Apple or Spotify or wherever you hearken to podcasts. We come out each week on each Mondays and Fridays and produce the sort of information, news-focused data for actual property traders. So come verify us on the market. If you wish to join with the wonderful traders and host on this present, I’ll assist you to try this. Henry, the place can folks join with you?

Henry:
Yeah, Dave. Thanks. The most effective place to catch me is on Instagram. I’m @thehenrywashington on Instagram. Additionally, the identical on Threads now as a result of that’s a factor. So verify me out on Instagram or Threads or you possibly can take a look at my web site at henrywashington.com.

Dave:
James, the place can folks join with you?

James:
Finest method to join with me might be on Instagram @jdainflips or jamesdainard.com. I simply came upon about Threads, so I’ll attempt to determine that entire factor out.

Dave:
So James can be on it in two or three years given his tempo of technological adoption.

James:
That’s about proper.

Dave:
Okay. And Kathy, what about you?

Kathy:
You will discover me at realwealth.com or Instagram, Kathy Fettke. Keep in mind what which means.

Dave:
And I’m @thedatadeli on Instagram or you possibly can at all times discover me on BiggerPockets. Thanks a lot for listening. Hopefully, we’ll see you subsequent time on the On The Market feed.