5 Main Reasons Why the Real Estate Market Won't Crash

[Michael Keith]

The real estate market is often the subject of speculation and forecasts, some predicting downturns or even crashes. However, based on my extensive experience and observation in the field, I believe there are strong reasons to maintain confidence in the stability of this market. Here are the five main reasons:

1. Strong Housing Demand

Demand for housing remains robust, driven by factors like population growth and demographic shifts. The National Association of Realtors' studies indicate that this consistent demand, particularly in urban and suburban areas, underpins the market's resilience.

2. Limited Housing Supply

The current housing inventory is notably low. This trend, highlighted in reports by the U.S. Census Bureau, helps maintain property values by preventing market oversaturation – a crucial factor that differentiates today's market from those of the past.

3. Stringent Lending Standards

Since 2008, lending practices have significantly tightened. The Mortgage Bankers Association points out that higher credit score requirements and larger down payments are now the norm, leading to a healthier market with fewer risky loans.

4. Diversification in Real Estate

Investors and homeowners today often have diversified real estate portfolios. According to the Harvard Business Review, this diversification helps mitigate local market fluctuations, contributing to the overall stability of the real estate sector.

5. Supportive Economic Indicators and Policies

Current economic indicators, such as low unemployment rates, along with supportive fiscal policies, favor a stable real estate market. Government interventions, like those during the COVID-19 pandemic, also demonstrate a commitment to sustaining the market.

Conclusion:

While no market is without its cycles, the real estate sector shows strong signs of stability and resilience. These factors, coupled with my professional observations, reassure me that a market crash is not imminent. Real estate remains a viable and valuable investment.

Michael Keith is a seasoned professional in real estate, leading the Michael Keith Team with a focus on delivering expert advice and insights into the real estate market.

[Russell Brazil]

I'll just go with that we printed $5 trillion in 90 days during the Spring of 2020. That causeD an inflation problem, which is the opposite of a price crashing problem.

[Carlos Ptriawan]

whenever there's inflation, real asset is usually going up except in situation in the local market where there's oversupply into the market.

what would crash , however, is usually ground up development, real estate that requires short term financing, volatility in cap rate, and so on....residential real estate is actually not sensitive to interest rate but ultra-sensitive to inventory.

[Carlos Ptriawan]

although residential real estate is not crashing but we lost most of our friend during boom times, while many MF syndication failed now due to oversupply/rent reduction/vacancy issue and cap rate contraction, office is primarily going to 2013 cap rate , retail has no vacancy ; and lot of property technology startup is closing down as well from veev modular home to better.com mortgage to zeus living to wework. It seems strange we're the only one surviving. Strange world.

I remember in 2001 was also like this. Most business can survive only with cheap money.

[Eliott Elias]

Here is where your statement is flawed. Supply and demand is at an all time low. The only thing likely to increase with this coming recession is supply. Only then will we see the rapid decline in the housing market.

[V.G Jason]

Demand will pick up as rates retrace. That'll negate the supply. The reason prices went up in 2023 YOY is because supply was lowered even more than demand was crushed(via rates).

We'll see a smaller YOY, but not a "rapid decline". Fundamentally, Russell is right. Couple that with the lack of home building post GR and that's made a 1+1 combo equal 5.

[Carlos Ptriawan]

Quote from @V.G Jason:

Demand will pick up as rates retrace. That'll negate the supply. The reason prices went up in 2023 YOY is because supply was lowered even more than demand was crushed(via rates).

We'll see a smaller YOY, but not a "rapid decline". Fundamentally, Russell is right. Couple that with the lack of home building post GR and that's made a 1+1 combo equal 5.

 The best thing that should happen in 2024 is for home appreciation to rise similar to PCE inflation rate which is 3%. If we only move by 3% then the market is still healthy, I checked over and over even during QE times, the spread between healthy home appreciation and inflation is about 30% from inflation rate. If we rise more than 3% that would trigger more supply-demand issue ; in contrary to what popular belief. 

The imbalance between Supply and demand seems more like chicken issue rather than the causation of an issue. 

I guess if the Fed is still not buying MBS until 2026, re appreciation would be much more controllable. Funny right lol

[Carlos Ptriawan]

Quote from @V.G Jason:

Demand will pick up as rates retrace. That'll negate the supply. The reason prices went up in 2023 YOY is because supply was lowered even more than demand was crushed(via rates).

We'll see a smaller YOY, but not a "rapid decline". Fundamentally, Russell is right. Couple that with the lack of home building post GR and that's made a 1+1 combo equal 5.

also in last 60 days, there're bunch of SFR funds liquidating their houses unsure why, but this month the top secret narrative that everyone already know is we are in GFC 2008 situation in CRE fantasy-land ; so it seems lot of funds in trouble and there're lot of redemption request from investors, maybe it's forced selling of the good performance asset to help recover the bad asset.
 
2024 is extremely interesting Jason, there're lot of factors that keep driving the dynamic of single family, and it's not employment per-se.

[V.G Jason]

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

Demand will pick up as rates retrace. That'll negate the supply. The reason prices went up in 2023 YOY is because supply was lowered even more than demand was crushed(via rates).

We'll see a smaller YOY, but not a "rapid decline". Fundamentally, Russell is right. Couple that with the lack of home building post GR and that's made a 1+1 combo equal 5.

also in last 60 days, there're bunch of SFR funds liquidating their houses unsure why, but this month the top secret narrative that everyone already know is we are in GFC 2008 situation in CRE fantasy-land ; so it seems lot of funds in trouble and there're lot of redemption request from investors, maybe it's forced selling of the good performance asset to help recover the bad asset.
 
2024 is extremely interesting Jason, there're lot of factors that keep driving the dynamic of single family, and it's not employment per-se.

I know some funds that are liquidating single family to bid into CRE, there's also some funds that are divesting their real estate exposure and putting it more into other cyclical things(like oil & preparing for bitcoin) these are more macro funds not REI funds.

[Carlos Ptriawan]

what it seems would happen, it seems the Fed and gov would let the recession happened per sectoral basis, so they don't care if office or multifamily collapsed because that would drive down the inflation anyway. As long as the bank sector is healthy, no credit event in 2024 and there's no collapse like 2008 for residential, that's what matters.

So we see market crash in some sectors but for most people we are just fine...

The fact that RRP has reduced a lot is also indication that bank sector is more liquid these days.......

[V.G Jason]

Quote from @Carlos Ptriawan:

what it seems would happen, it seems the Fed and gov would let the recession happened per sectoral basis, so they don't care if office or multifamily collapsed because that would drive down the inflation anyway. As long as the bank sector is healthy, no credit event in 2024 and there's no collapse like 2008 for residential, that's what matters.

So we see market crash in some sectors but for most people we are just fine...

The fact that RRP has reduced a lot is also indication that bank sector is more liquid these days.......

The fed let the Tech industry aggressively trim payroll, and has let some banking entities collapse and also do some large payroll cuts. They've also destroyed the logistics business. The Fed is totally okay with letting CRE fail, look at some of what is happening to some of Starwood's stuff. They're urging to fed to re-do it. But they will not. This is an acceptable fall, but that is where some massive SFH syndications and equity funds are now selling to buy into. What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed. But retail has trimmed physical footprint to defeat that. I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise.

The prices of houses have gone up YoY, yes if its going up YoY= inflation it effectively is going to be balanced and this is more or less the "crash" people are waiting for it. Obviously every regional market is different.  I am curious though if people are selling within 3% of their original purchase price if they're willing to even list the house because after all concessions they are under water on their house? (this is for all 2022 buyers, needing to sell).

This is why in the other thread when people say amass cash then buy on the fall, I mean that happened in the GR it's totally apples to oranges here. We have a legit supply shortage, and the barrier to entry on supply will be heavily based off cost of capital, cost of labor,  cost of materials, and cities that these massive builders go(which is based off median income household: house price), industries, and population picking up.

[Carlos Ptriawan]

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

[Alan F.]

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

[V.G Jason]

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

So some folks are selling SFHs now in large masses to transfer into t-bills in the short period(4-8 week duration) then enter 2024 with funds to come into CRE to convert into storage, MFH(with better terms), and I think some other plays. These are players like invitation homes, american homes 4 rent, some even bigger institutional players like key points. We'll see if those intentions materialize, but lots on sale in sunbelt from KPC and that's the direction they are moving to from what I am told but obviously means nothing until it's secured. I've had KPC ask me directly to buy cash from them and I always show them a different bid than they want. I am willing to still get long this profile, as they pivot. Maybe I am on the wrong side, I do not know but our risk is viewed differently and more importantly our reward timelines are very, very different.

White collar jobless claims up, but we need to see not blue but retail get trimmed a bit. This q4 is the perfect punch of that with expected high sales but likely below expectations results. Unfortunately, the smartest people in the room have braced for it. The walmarts, targets, etc., are all fully expecting this. So they may not trim payroll, but likely won't be bid for new employees as one's leave. That's a number that's hard to calculate but important I believe. 

Retail footprint has trimmed because of Amazon, yes, that's contributing for sure. But I would say it's definitely also cause the carry cost would not be worth it(new wages, new nnn leases, supply chain issues, depending on area higher crime). I think to say 100% amazon would be the govt being wrong. I would say the current CRE conditions & remote world is way more responsible for it than people figure. Way more-- but there is opportunity here with CRE.

The 2020-2022 was a ton of smoke, but it does not mean there is a "crash". Just means the exuberance of the rise is not something we can take a snapshot of and say this needs to be in our how valuation on historical yields of house appreciation, rent appreciation, etc. Much like STRs should exclude it to do valuations, or people saying they've made 20% ROI in 2020-2022 need to realize that it's a lot of fluff. The reality will show by end of decade, maybe little longer like a full 10 years. We'll see much more inflation-esque growth in hard assets in 2024-2026 than we saw it in 2020-2022 where it heavily widened. It just destroyed it 1v1 against inflation. It's really when debt gets cheap again, do the people who bought in 2023-2026 now realize oh this is going to widen from inflation again. That takes more time to materialize.

Consolidation in these industries will 100% happen which give little me and little you less power at the day to day side. It'll be like the airline industry sort of. 

[Alan F.]

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

So some folks are selling SFHs now in large masses to transfer into t-bills in the short period(4-8 week duration) then enter 2024 with funds to come into CRE to convert into storage, MFH(with better terms), and I think some other plays. These are players like invitation homes, american homes 4 rent, some even bigger institutional players like key points. We'll see if those intentions materialize, but lots on sale in sunbelt from KPC and that's the direction they are moving to from what I am told but obviously means nothing until it's secured. I've had KPC ask me directly to buy cash from them and I always show them a different bid than they want. I am willing to still get long this profile, as they pivot. Maybe I am on the wrong side, I do not know but our risk is viewed differently and more importantly our reward timelines are very, very different.

White collar jobless claims up, but we need to see not blue but retail get trimmed a bit. This q4 is the perfect punch of that with expected high sales but likely below expectations results. Unfortunately, the smartest people in the room have braced for it. The walmarts, targets, etc., are all fully expecting this. So they may not trim payroll, but likely won't be bid for new employees as one's leave. That's a number that's hard to calculate but important I believe. 

Retail footprint has trimmed because of Amazon, yes, that's contributing for sure. But I would say it's definitely also cause the carry cost would not be worth it(new wages, new nnn leases, supply chain issues, depending on area higher crime). I think to say 100% amazon would be the govt being wrong. I would say the current CRE conditions & remote world is way more responsible for it than people figure. Way more-- but there is opportunity here with CRE.

The 2020-2022 was a ton of smoke, but it does not mean there is a "crash". Just means the exuberance of the rise is not something we can take a snapshot of and say this needs to be in our how valuation on historical yields of house appreciation, rent appreciation, etc. Much like STRs should exclude it to do valuations, or people saying they've made 20% ROI in 2020-2022 need to realize that it's a lot of fluff. The reality will show by end of decade, maybe little longer like a full 10 years. We'll see much more inflation-esque growth in hard assets in 2024-2026 than we saw it in 2020-2022 where it heavily widened. It just destroyed it 1v1 against inflation. It's really when debt gets cheap again, do the people who bought in 2023-2026 now realize oh this is going to widen from inflation again. That takes more time to materialize.

Consolidation in these industries will 100% happen which give little me and little you less power at the day to day side. It'll be like the airline industry sort of. 

Is CRE over its hump and more $ will start moving to it? What affect does AI have on white collar lay offs, or is that years to happen yet?

[V.G Jason]

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

So some folks are selling SFHs now in large masses to transfer into t-bills in the short period(4-8 week duration) then enter 2024 with funds to come into CRE to convert into storage, MFH(with better terms), and I think some other plays. These are players like invitation homes, american homes 4 rent, some even bigger institutional players like key points. We'll see if those intentions materialize, but lots on sale in sunbelt from KPC and that's the direction they are moving to from what I am told but obviously means nothing until it's secured. I've had KPC ask me directly to buy cash from them and I always show them a different bid than they want. I am willing to still get long this profile, as they pivot. Maybe I am on the wrong side, I do not know but our risk is viewed differently and more importantly our reward timelines are very, very different.

White collar jobless claims up, but we need to see not blue but retail get trimmed a bit. This q4 is the perfect punch of that with expected high sales but likely below expectations results. Unfortunately, the smartest people in the room have braced for it. The walmarts, targets, etc., are all fully expecting this. So they may not trim payroll, but likely won't be bid for new employees as one's leave. That's a number that's hard to calculate but important I believe. 

Retail footprint has trimmed because of Amazon, yes, that's contributing for sure. But I would say it's definitely also cause the carry cost would not be worth it(new wages, new nnn leases, supply chain issues, depending on area higher crime). I think to say 100% amazon would be the govt being wrong. I would say the current CRE conditions & remote world is way more responsible for it than people figure. Way more-- but there is opportunity here with CRE.

The 2020-2022 was a ton of smoke, but it does not mean there is a "crash". Just means the exuberance of the rise is not something we can take a snapshot of and say this needs to be in our how valuation on historical yields of house appreciation, rent appreciation, etc. Much like STRs should exclude it to do valuations, or people saying they've made 20% ROI in 2020-2022 need to realize that it's a lot of fluff. The reality will show by end of decade, maybe little longer like a full 10 years. We'll see much more inflation-esque growth in hard assets in 2024-2026 than we saw it in 2020-2022 where it heavily widened. It just destroyed it 1v1 against inflation. It's really when debt gets cheap again, do the people who bought in 2023-2026 now realize oh this is going to widen from inflation again. That takes more time to materialize.

Consolidation in these industries will 100% happen which give little me and little you less power at the day to day side. It'll be like the airline industry sort of. 

Is CRE over its hump and more $ will start moving to it? What affect does AI have on white collar lay offs, or is that years to happen yet?

Both questions-- time will tell. I cannot tell if CRE is over it's hump, I still think we got quite a bit more to go in the H1 '24. AI intervention on layoffs I think will take more time, but when it happens it's drastic. It's not like an integration, but a full-scale takeover with issues.  I don't think AI can takeover some main things yet though, or anywhere close so we got time.

[Carlos Ptriawan]

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

[V.G Jason]

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

 There's a hedge fund with a separate securities arm and total company, that is going to enter those two in these things. They see opportunity in this. There's also a very underappreciated fund that will be a distant 4th but likely the best of quality. Both of these funds have mentioned this direction to their private investors a lot since Nov 1.

[Carlos Ptriawan]

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

So some folks are selling SFHs now in large masses to transfer into t-bills in the short period(4-8 week duration) then enter 2024 with funds to come into CRE to convert into storage, MFH(with better terms), and I think some other plays. These are players like invitation homes, american homes 4 rent, some even bigger institutional players like key points. We'll see if those intentions materialize, but lots on sale in sunbelt from KPC and that's the direction they are moving to from what I am told but obviously means nothing until it's secured. I've had KPC ask me directly to buy cash from them and I always show them a different bid than they want. I am willing to still get long this profile, as they pivot. Maybe I am on the wrong side, I do not know but our risk is viewed differently and more importantly our reward timelines are very, very different.

White collar jobless claims up, but we need to see not blue but retail get trimmed a bit. This q4 is the perfect punch of that with expected high sales but likely below expectations results. Unfortunately, the smartest people in the room have braced for it. The walmarts, targets, etc., are all fully expecting this. So they may not trim payroll, but likely won't be bid for new employees as one's leave. That's a number that's hard to calculate but important I believe. 

Retail footprint has trimmed because of Amazon, yes, that's contributing for sure. But I would say it's definitely also cause the carry cost would not be worth it(new wages, new nnn leases, supply chain issues, depending on area higher crime). I think to say 100% amazon would be the govt being wrong. I would say the current CRE conditions & remote world is way more responsible for it than people figure. Way more-- but there is opportunity here with CRE.

The 2020-2022 was a ton of smoke, but it does not mean there is a "crash". Just means the exuberance of the rise is not something we can take a snapshot of and say this needs to be in our how valuation on historical yields of house appreciation, rent appreciation, etc. Much like STRs should exclude it to do valuations, or people saying they've made 20% ROI in 2020-2022 need to realize that it's a lot of fluff. The reality will show by end of decade, maybe little longer like a full 10 years. We'll see much more inflation-esque growth in hard assets in 2024-2026 than we saw it in 2020-2022 where it heavily widened. It just destroyed it 1v1 against inflation. It's really when debt gets cheap again, do the people who bought in 2023-2026 now realize oh this is going to widen from inflation again. That takes more time to materialize.

Consolidation in these industries will 100% happen which give little me and little you less power at the day to day side. It'll be like the airline industry sort of. 

Is CRE over its hump and more $ will start moving to it? What affect does AI have on white collar lay offs, or is that years to happen yet?

in CRE world it is dog eat dog world literally, everyone eat everyone, it's bad business by design as everyone doing the same and everyone is telling the same BS. The roof cause of all these is their financing is only 5 years by design with the volatility of cap rate touching 250 bps over period of 24 months. So whatever you do you would be guaranteed to lose money. The only way to make money is to just short these guys if possible lol

I read stupid argumentation yesterday by "xyz" that says hey our NOI is increasing 30% ; but what they dont tell you is their DSCR dropped 20% LOL LOL I meant come on... lol it's like flipping one mil house but the price gone down 20% YoY LOL

The fact is the volatility would be stopped only in Q1 2025, so while everyone saying there would be discount, it literally means they are waiting for their peers to file bankruptcy and maybe ask the same LP group to re-invest to the same asset.

[Alan F.]

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

 There's a hedge fund with a separate securities arm and total company, that is going to enter those two in these things. They see opportunity in this. There's also a very underappreciated fund that will be a distant 4th but likely the best of quality. Both of these funds have mentioned this direction to their private investors a lot since Nov 1.

For small businesses holding high liquidity, many are spread out amongst the big banks, where would you suggest they $ go?

[Carlos Ptriawan]

Quote from @V.G Jason:

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

Both questions-- time will tell. I cannot tell if CRE is over it's hump, I still think we got quite a bit more to go in the H1 '24. AI intervention on layoffs I think will take more time, but when it happens it's drastic. It's not like an integration, but a full-scale takeover with issues.  I don't think AI can takeover some main things yet though, or anywhere close so we got time.

AI layoff is already happening Jason,  especially in tech sector, but not because of the job is replaced by the robot but because lot of tech company is moving direction from traditional business to AI sectol. Also Covid and AI is interlinked very closely. 

Lot more job in tech now requires AI knowledge. All new growth is coming from AI only, lot of money being poured into this industry.

In tech industry our sub sector is getting hit by new innovation every 24 months so we just need to be very agile by these innovation disruptor , looking at realtor that doesn't want to reduce their traditional commision due to business rapid changes make us just smile ;-)

[Carlos Ptriawan]

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

 There's a hedge fund with a separate securities arm and total company, that is going to enter those two in these things. They see opportunity in this. There's also a very underappreciated fund that will be a distant 4th but likely the best of quality. Both of these funds have mentioned this direction to their private investors a lot since Nov 1.

For small businesses holding high liquidity, many are spread out amongst the big banks, where would you suggest they $ go?

 so what really happened is unrealized HTM loss doesn't need to be recorded in the book so they dont have to sell it EXCEPT if there's massive withdraw from customer AKA bank runs.
It's the bank run that causing the bank to collapse.

So in theory you can avoid issue by saving the money that has the smaller holding of HTM paper or invest in the bank where there're more incoming asset coming-in. I would say JP Morgan is the safest now as they're the pseudo goverment LOL

here's the paper to know which bank is safer:
https://crsreports.congress.gov/product/pdf/IN/IN12232#:~:text=Unrealized%20gains%20and%20losses%20on,not%20intend%20to%20sell%20them).

[Alan F.]

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

 There's a hedge fund with a separate securities arm and total company, that is going to enter those two in these things. They see opportunity in this. There's also a very underappreciated fund that will be a distant 4th but likely the best of quality. Both of these funds have mentioned this direction to their private investors a lot since Nov 1.

For small businesses holding high liquidity, many are spread out amongst the big banks, where would you suggest they $ go?

 so what really happened is unrealized HTM loss doesn't need to be recorded in the book so they dont have to sell it EXCEPT if there's massive withdraw from customer AKA bank runs.
It's the bank run that causing the bank to collapse.

So in theory you can avoid issue by saving the money that has the smaller holding of HTM paper or invest in the bank where there're more incoming asset coming-in. I would say JP Morgan is the safest now as they're the pseudo goverment LOL

here's the paper to know which bank is safer:
https://crsreports.congress.gov/product/pdf/IN/IN12232#:~:text=Unrealized%20gains%20and%20losses%20on,not%20intend%20to%20sell%20them).

 Link doesn't work on phone, brief synapses?

[Carlos Ptriawan]

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @Alan F.:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

 Remember when James mentioned lots of consolidation in a different thread, it also seems like there may be more small banks going under. Anecdotally look how many BofA branches are closing in the Bay Area 

Yea.... this is all getting very interesting :
- we know all American banks going to collapse if they have to sell their HTM bonds tomorrow
- BofA and Citibank has them most riskiest position, as well as Schwabb.
- Lot of layoffs in those companies 
- Do you read the news that Signature Bank that collapsed in March is actually the largest asset holder of core-stabilized asset ? And blackrock is leading purchase of their loan :-) LOL LOL So blackrock maybe buying with 30% discount ;-) again, consolidation by Blackrock and JP morgan
- rather than going to TARP 2.0 , the gov. would just ask JPM to purchase those banks and Fed would inject free liquidity.
- 8% years from now, everything is owned by Blackrock and JP Morgan. More consolidation by the biggest banks and asset management company.

 There's a hedge fund with a separate securities arm and total company, that is going to enter those two in these things. They see opportunity in this. There's also a very underappreciated fund that will be a distant 4th but likely the best of quality. Both of these funds have mentioned this direction to their private investors a lot since Nov 1.

For small businesses holding high liquidity, many are spread out amongst the big banks, where would you suggest they $ go?

 so what really happened is unrealized HTM loss doesn't need to be recorded in the book so they dont have to sell it EXCEPT if there's massive withdraw from customer AKA bank runs.
It's the bank run that causing the bank to collapse.

So in theory you can avoid issue by saving the money that has the smaller holding of HTM paper or invest in the bank where there're more incoming asset coming-in. I would say JP Morgan is the safest now as they're the pseudo goverment LOL

here's the paper to know which bank is safer:
https://crsreports.congress.gov/product/pdf/IN/IN12232#:~:text=Unrealized%20gains%20and%20losses%20on,not%20intend%20to%20sell%20them).

 Link doesn't work on phone, brief synapses?

 try again :

https://crsreports.congress.gov/product/pdf/IN/IN12232#:~:text=Unrealized%20gains%20and%20losses%20on,not%20intend%20to%20sell%20them

as summary what would happen in 2024 is dictated by the bank that listed in page 2. 

usually, bank crash/run occured when gov/Fed think slow to react to something (like in SVB/Signature bank case), since they also don't know what will happen, we also don't know, but what we know now is we know who would be in trouble. And who would save them.

[Bob Stevens]

Quote from @Michael Keith:

The real estate market is often the subject of speculation and forecasts, some predicting downturns or even crashes. However, based on my extensive experience and observation in the field, I believe there are strong reasons to maintain confidence in the stability of this market. Here are the five main reasons:

1. Strong Housing Demand

Demand for housing remains robust, driven by factors like population growth and demographic shifts. The National Association of Realtors' studies indicate that this consistent demand, particularly in urban and suburban areas, underpins the market's resilience.

2. Limited Housing Supply

The current housing inventory is notably low. This trend, highlighted in reports by the U.S. Census Bureau, helps maintain property values by preventing market oversaturation – a crucial factor that differentiates today's market from those of the past.

3. Stringent Lending Standards

Since 2008, lending practices have significantly tightened. The Mortgage Bankers Association points out that higher credit score requirements and larger down payments are now the norm, leading to a healthier market with fewer risky loans.

4. Diversification in Real Estate

Investors and homeowners today often have diversified real estate portfolios. According to the Harvard Business Review, this diversification helps mitigate local market fluctuations, contributing to the overall stability of the real estate sector.

5. Supportive Economic Indicators and Policies

Current economic indicators, such as low unemployment rates, along with supportive fiscal policies, favor a stable real estate market. Government interventions, like those during the COVID-19 pandemic, also demonstrate a commitment to sustaining the market.

Conclusion:

While no market is without its cycles, the real estate sector shows strong signs of stability and resilience. These factors, coupled with my professional observations, reassure me that a market crash is not imminent. Real estate remains a viable and valuable investment.

Michael Keith is a seasoned professional in real estate, leading the Michael Keith Team with a focus on delivering expert advice and insights into the real estate market.

Hmm well I will tell you the reason why it will and is going to in FL. 1k a sq ft is insane!! The condos are all having to pass inspection in the next 12 months, many will and have failed. Assessments on my building are 25k PER unit. Many cannot afford it. My good friend is a realtor her clients building just had 150k PER UNIT!! assessments they are going to dump. This will spill over to the housing market. Right around the corner from me on Boynton Beach Blvd, busy road, 3500 sq ft house, just sold (to some ignorant idiot) 4.5 MILL, that's more then 1k per sq ft, again, INSANE. Byrd rd in the Gables extremely busy road. 1400- 1700 Sq ft nothing of homes withOUT a garage so the kids have to park om the lawn, sold for 1.5 mill, do the math, these numbers are never before seen. Insurance has tripled or more, HOA fees are through the roof. Maybe I am wrong IMO cash will be king in a year. I see price reductions daily.

All the best 

[Jay Hinrichs]

Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @V.G Jason:

 Man I really need to pin down your reply here as everything is the accurate trend. @James Hamling may want to read it as well.
So in summary :

- The fed let the Tech industry aggressively trim payrol --> (this is happening from MSFT to startup level)
- let some banking entities collapse and also do some large payroll cuts --> (from Schwabb to Citibank)
- They've also destroyed the logistics business. --> (lot of layoffs in trucking biz)

- The Fed is totally okay with letting CRE fail (yes, as written by therealdeal)
This is an acceptable fall, but that is where some massive SFH syndications
and equity funds are now selling to buy into----> if you could describe this more?? it would be the best


What the Fed hasn't done yet, or what hasn't happened yet is retail payroll getting crushed-->correct.
But retail has trimmed physical footprint to defeat that---> yes, lot of store closing, but gov would say it's
retail/walgreens issue or Amazon issue


I think people look at the wrong numbers sometimes, but yes in general jobless claims need to and will rise---->
yes, more white collar job is affected but since they are rich in cash and rich in equity, that's not translate
into home price reduction so far.

More and more evidence is showing that home price appreciation occured because of migration or transfer of wealth
rather than the strength of local economy. If there's local boom in industry we should see the effect in immediate
term not in short tem, so what really happened in 2020-2022 is really big mistake by Fed.

Also it seems very natural that in the next ten years we see lot of consolidation in the big business, much less small biz owner, and everything is owned by the conglomeration of some very powerful big names that generates cash from their operation.

America is going to be more controlled by big company regardless who is in power in the goverment.

So some folks are selling SFHs now in large masses to transfer into t-bills in the short period(4-8 week duration) then enter 2024 with funds to come into CRE to convert into storage, MFH(with better terms), and I think some other plays. These are players like invitation homes, american homes 4 rent, some even bigger institutional players like key points. We'll see if those intentions materialize, but lots on sale in sunbelt from KPC and that's the direction they are moving to from what I am told but obviously means nothing until it's secured. I've had KPC ask me directly to buy cash from them and I always show them a different bid than they want. I am willing to still get long this profile, as they pivot. Maybe I am on the wrong side, I do not know but our risk is viewed differently and more importantly our reward timelines are very, very different.

White collar jobless claims up, but we need to see not blue but retail get trimmed a bit. This q4 is the perfect punch of that with expected high sales but likely below expectations results. Unfortunately, the smartest people in the room have braced for it. The walmarts, targets, etc., are all fully expecting this. So they may not trim payroll, but likely won't be bid for new employees as one's leave. That's a number that's hard to calculate but important I believe. 

Retail footprint has trimmed because of Amazon, yes, that's contributing for sure. But I would say it's definitely also cause the carry cost would not be worth it(new wages, new nnn leases, supply chain issues, depending on area higher crime). I think to say 100% amazon would be the govt being wrong. I would say the current CRE conditions & remote world is way more responsible for it than people figure. Way more-- but there is opportunity here with CRE.

The 2020-2022 was a ton of smoke, but it does not mean there is a "crash". Just means the exuberance of the rise is not something we can take a snapshot of and say this needs to be in our how valuation on historical yields of house appreciation, rent appreciation, etc. Much like STRs should exclude it to do valuations, or people saying they've made 20% ROI in 2020-2022 need to realize that it's a lot of fluff. The reality will show by end of decade, maybe little longer like a full 10 years. We'll see much more inflation-esque growth in hard assets in 2024-2026 than we saw it in 2020-2022 where it heavily widened. It just destroyed it 1v1 against inflation. It's really when debt gets cheap again, do the people who bought in 2023-2026 now realize oh this is going to widen from inflation again. That takes more time to materialize.

Consolidation in these industries will 100% happen which give little me and little you less power at the day to day side. It'll be like the airline industry sort of. 

I have been on a cruise the last 10 days and met and have been having dinner with a board member for AHR . I wont go into to much detail of what we have discussed but from what we did discuss they are moving into being totally vertically integrated and building and managing their own product. No mention of selling at least in our discussions. But  cost of capital is constraining their growth . I think part of what they want to do is start to compete with the other bigger builders Horton lennar etc.