[Music] It's a good World good World welcome back to real estate Mindset rent is absolutely exploding as Investors continue to get squeezed from Quantitative tightening and they are Passing that expense on to renters now The good news is is incentives to rent Are absolutely exploding but the Question is is how much longer will Investors be able to survive through all Of this quantitative tightening before We start getting additional relief as Consumer and that's exactly what we're Going to take a look at today and Another question to all this is when Will rent start to go down it's super Frustrating I get it and we're going to Start with accessing a Zillow article to Help answer these questions now the First article today is the rental market Report so this is the once a month Report from Zillow on what's going on With the rental market you guys honestly I'm shocked I did not think would go up And go up at this trajectory when we Have so much building going on for Multifam so this is going to go over Those differences the rental landscape Is experiencing subtle yet significant Shifts National Rent growth remains Stable but a closer look shows notable Differences between markets and Rental
Types now according to Zillow the Typical rent Rose 6% month over Monon in March 2 1983 this they say subtle climb was only Slightly below the pre-pandemic seasonal Average of 7% continuing the back to Normal Trends rents are now 3.6% higher Than a year ago and I get it right it's Oh the rent growth is going back to Normal but the problem is is we had two Years of rank growth that was in the Double digits meanwhile real median Income and real household income went Down so you can't have a situation to Where you know price is Skyrocket where At the same time income goes down let's Read a little bit more now about the Differences on what's going on with Single family homes versus multifamily Rent growth and this is pretty Interesting you guys so single family Versus multif family War March witnessed The typical rent for single family homes Rising 7% now that's month over month to 2183 this sector's resilience with a 37.5% increase since the pandemic's Onset and that's why I'm saying that's Not sustainable now if that number was Maybe say 15% maybe it would be different but it's Not 15% it's 37.5% okay now let's read a few of these Bullet points single family rents fail However on a monthly basis in only two
Of the 50 largest metro areas the Largest monthly drops in single family Rents were surprisingly in Pittsburgh at 6% and also very interesting Salt Lake City Utah at. 3% now the smallest Monthly increases also very interesting Was Sacramento at 0 2% Kansas City at .2% and also Virginia Beach at 0 4% now Single family rents are up from a year Ago in 49 of the 50 largest metro areas not Sure how that's possible when the two or Anyway annual single family rent Increases were highest in Cleveland gez Sorry Cleveland you guys are in bad Shape and you know there's an overwhel Amount of speculation there but Cleveland's at 99.4% you guys Richmond's At 8.1% St Louis 7.6% that's crazy annual Growth Birmingham 7.5 no idea how that's Possible Cincinnati at 7.5 now let's Look at multif Family multif Family Rents fell on a monthly basis in six Versus two of the 50 largest metro areas The largest monthly drops in multif Family rents were in Oklahoma City Interesting at0 6% Memphis at 0 4% Cleveland at Point two and Columbus at Nega .1 followed by Austin as well at Negative. one now also interesting Multif family rents Rose year-over-year In 38 versus 49 of the 50 largest metro Areas annual multif family rent
Increases were the highest in Providence At 8.5 Lewisville at 6.5 Hartford At 6.3 Boston at 6.1 and buffalo at 5.9 now this is a chart here guys that's Basically going to show you the Differences in multifamily versus single Family so you can see the differences The Gap in single family versus multif Family so it's not good right single Family homes are it's not good it's Killing purchasers obviously apartments Are different and you can see the annual Change right here uh at 4.9 versus 2.7 So it's very very interesting now I Believe a big reason for that is is as You can see here from Fred we just have So many apartments or rather structures With five units or more being built I Mean we've never had in the history of The United States anywhere near the Level of apartment building going on Right now and this is active Construction what you guys see here so Look at this chart you guys and this Goes back all the way to the 1970s Actually back to January of 1970 so Never ever we got close in 1973 but still you guys whopping amount Sitting at 966 th000 units under construction as of March as of February of 2024 four now This is also interesting you see the Rent Dynamics shift based on where it's At in the country so this is very good
Again speculation all right investors Are investors going to cause the housing Market crash you know a lot of people Say that's what happened in the GFC they Say that investor speculation was Actually worse than subprime loans Investor speculation right now and Investor Demand right now is like Nothing we've ever seen let me read a Little bit of the regional information Now now Regional rent Dynamics a closer Look while over overall Trends Point Towards mild to modest growth the story Varies significantly at the Metro level Among the 50 largest metro areas again Pittsburgh stood out as the sole area to See decrease in typical rents at 0. 2% From February to March in contrast areas Such as Washington DC the New York City Metro area and San Jose each recorded a Significant 1% increase in rents on a Month-over-month basis that's crazy I've Been to Washington DC I don't know how People can afford there I mean the the They have like no land and super high Prices really crazy you guys know anyway Moving on rent growth Trends vary widely On the annual basis as well typical Rents and Providence were 88.2% higher year-over-year Lewisville Rents were up 6.9% year-over-year that Is awful okay now take a look at this Map here so this map is telling us what Areas have the highest year-over-year
Rent growth and I want you guys to pay Attention that the highest rent growth Is really on the East Coast right here So it's really on the East Coast right Here and a little bit on the west coast So you guys see that so it's a little Bit on the west coast concentrated Highly on the East Coast a little bit on The north now take a look at this guys This is a map of investor cap rates so First of all take a look at the West Coast this is basically saying that the Cap rates on the west coast are some of The lowest in the nation so investors Have some of the lowest cap rates you Guys can see here but yet rent growth is Some of the highest in the nation and to Me what this is spelling is investors Are starting to feel squeezed they're Passing that on to Consumers and so far Consumers are willing to pay that at Least for now even though again roughly Eight million Americans are behind on The rent again you guys eight million Americans I'll get through that data and Also you can kind of see that on the East coast East Coast you can see about Purple so that's on the lower end of the Cap rate uh very interesting the north However the north however has a high cap Rate and high annual rent growth so it's Probably a lot of investing going on in The north but again East Coast West Coast those investors are probably
Getting squeezed the most as well as Florida although Florida you can see Here is a little bit in the middle now Let's move on to incentives because this Is a great thing because again even Though they don't have price declines They're going to do everything they can Before they start cutting the prices so Even though you get two months free They're still going to say you're going To pay the same rent as everyone else You're just going to only pay 10 months Of it versus 12 months so is it really The same price no it's not the same Price but let's read this an increase in Deals sweeteners as the market adapts so Too do the strategies of landlords and Property managers in March 33% of Zillow's rental listings advertised a Concession like free months of rent or Free parking which is good in high Concentration areas like deep Metro Areas like downtown deep Metro areas the 0.9% increase rise in concessions in February to March as a slight upswing Since the rate concessions stabilized Last year the constant use of strategic Method to attract renters especially in Region with lots of choices due to the Recent surge of new apartment Construction suggest continued softness In asking rents in the future some Property managers may choose a Concession rather than fully drop the
Monthly asking rent price and again I'm Telling you guys it's a gimmick so on One hand we do have rent going up which Is and on its own is shocking but on the Other hand that's being mased by these Incentives similar to what we see going On with new construction again you guys They don't want to show us what's really Going on I mean this entire time of Quantitative tightening all of the data Has been manipulated and again and I Understand you guys I'm cautious but the Bulls only look at certain things so That you spend your money at least what We're talking about is save your money Be cautious love your family increase Your purchasing power they're just Saying buy or you're a fool that's what They tell us if we don't buy we're a Fool but the reality is that's how we Get ahead I can guarantee you the rich Normally they don't get rich by spending Their money foolishly would you agree Come on below let me know do the rich Get rich by spending their money Foolishly I don't think so now let's go Into how the rental market is actually Falling apart vacancy rates show a Stable Market however and this is According to Zillow again I'm not saying It's stable but zooming in shows Different storylines the Nationwide Rental vacancy rate was 6.6% as of Q4 of 2023 which was the most
Recent data available for context pre- Pandemic the average vacancy rate at the Time of year was the same so we're back At the vacancy rated pre pandemic Housing permits were on the rise and Experts were finally calling a full Recovery from the great financial crisis As far as housing was concerned now rent Affordability is a major Force at play Within the rental market again because Wages did not go up it wouldn't be an Issue if everyone's wages went up at the Same Pace as rent which didn't happen Okay they just made us pay for Everything we got nothing back but the Bill the typical asking rent in the US Reached 29.1% of median household income In maret insane that's what it should be It should be less than that to have a Mortgage that's crazy that it's that High you guys and actually mortgage is Even higher now this is closing in on a Common rule of thumb to avoid spending More than onethird of your household Income on fixed expenses like rent the Necessary income to afford rent in the US is now at $79,000 to afford rent you guys that's More than 6% higher than the typical Household actually makes and they're Talking about rent they are not talking About owning I'm telling you guys what's Happening investors are getting squeezed It's only going to be a matter of time
Before before we see more and more Investors become net Sal Ellers file Bankruptcy or distressed sellers that Bring down the comps and value of Subdivisions when investors start to Panic and they start to liquidate Because they don't want to deal with all This rent anymore because they can't Afford to they will liquidate and they Will liquidate their homes for under Market and that will help to collapse The market or at the very least we can All agree it will put pressure on prices To go down now let me show you what's Going on right now and this is without The increased interest rates that Happened today by the way way the Interest rates right now have exploded The tenure as the recording of this is Over 4.5% with interest rates on 30 year Fixed rate mortgages well over 7% nevertheless you guys according to This report from lending train this is a Little bit older report things are Harder right now 8 million people 8 Million people ages 18 or older in the US aren't caught up on rent payments put It another way that is 13.17% of the nation's adult renters Live in a household that charges them Rent are behind on a payment you guys 133% of renters are behind on a payment As of this and that was last year 133% domino effect Doom Loop you guys
Starting to get this now Nationwide 3.5% Of adults or 5.81% of renters live in a Household that doesn't pay rent very Very interesting also what's interesting Is this old report from last year that Goes into the speculation and again you Guys that was the biggest problem one of The major problems at the very least During the GFC was investor speculation Over 5 million semi vacant single family Homes in America are being used Exclusively for short-term rentals or For vacation homes now we also see that In the San Diego metro area which is one Of the most unaffordable Metro areas in The nation 75,000 homes in San Diego County are vacant and so what I think is Happening right now is consumers quite Frankly aren't able to keep up with the Wages and yes so far so far that hasn't Spiraled out of control which kind of Makes sense considering two years ago The government just printed US money as Consumers they've never done that before So I think we will continue to see Distressed for investors we will Continue to see less investing in the Housing market so long as interest rates Stay high believe it or not you guys we Want interest rates to stay high like This what we don't want is interest Rates to be cut too soon we need need to Get inventory back to the market we're Going to see inventory come back to the
Market probably at the same Pace as Existing homes because again as people Don't purchase homes they will start Renting but again they have to afford to Do that and so I think the bigger thing Here is you're going to see people Living with family or living with Friends to help them afford to live to Save money and to get ahead at least you Guys that's what I help people are doing I hope people are changing their Lifestyles right now to get ahead of This all of us still have enough time to Do that now in other words guys change Your spending habits be careful how You're spending money work on your Purchasing power keep your eyes open and Chill a little bit love some people and If you're out there investing in real Estate you guys already know I wish you Luck and I hope you win
