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What real estate investors are telling us
Plus, the state where development is booming
Rinku Mathew
May 23, 2023
A shot of good advice
We know you come to this newsletter for real estate, but right now we’re going to give you some golf advice.
Now… we’re not golfers. In fact, the only clubs we ever hit back in the day were the ones that opened after 9 pm. BUT that doesn’t mean we can’t all learn something from the game.
The best golfers say they focus on only one shot at a time. They don’t think about the previous shot they missed or the next shot they’re going to hit. They stay completely in the moment.
We need this mindset in real estate. As agents, it doesn’t matter how well or how badly we performed yesterday. Each day is a new opportunity to go for the green (in our case, that’s $$$)!
With that, let’s all jump into today’s edition of The Blueprint!
- James and David
Investor purchases reach record levels
Source: Unsplash
The percentage of homes purchased by investors in December 2022 was the highest on record for any end-of-year measure of investor activity. That’s according to Realtor.com’s latest report. Here are the other major findings:
Investors purchased 8.2% of the homes sold during December 2022, up from 7.8% in December 2021.
The largest share of homes purchased by investors ever was set in February 2022 at 8.9%
Southern metros experienced the greatest share of growth in investor activity, followed by the Midwest.
Small investors have now edged out large investors in investment purchases
Our take
This is the kind of confidence-building news we like to hear. There is a lot of talk right now about investors pulling back from real estate. But it’s not true. Sure, large institutional investors are waiting for mortgage rates to drop before they jump back in. But that is only part of the story. On the whole, investors are still deeply interested in this market, and these numbers back that up.
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Active inventory was up in April
Source: Unsplash
In the top 40 markets, active inventory was up 38% in April compared to last month. That’s the major conclusion reached from an analysis of the latest data released by the National Association of Realtors.
Here are three other important takeaways:
Inventory in the top 40 markets was up 21% year-over-year
NEW listings were down 23% YoY
Potential sellers that are locked into their current homes with low mortgage rates have pushed down new listings.
Our take
We’re happy to hear this news, but we’ll take more, please! Many potential sellers aren’t putting their homes up for sale because they feel locked into their current mortgage rates. This is leading to an unbelievably low number of listings on the market, and the return of fierce bidding wars among buyers. Keep a close eye on the number of active listings throughout the year. We need it to grow!
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Apartment construction is thriving
Source: StorageCafe
Despite all the problems caused by the pandemic, the construction of new apartments is thriving. That’s from StorageCafe’s latest report on real estate construction trends.
Here are some key stats:
Almost 5M building permits were issued for multifamily units in the last 10 years
This is a 47% increase from the previous 10 years (2003-2012) and a 37% increase from 1993 to 2002.
Texas is home to all the top 5 cities where real estate development is happening the most (Houston, San Antonio, Austin, Fort Worth, Dallas).
Our take
We couldn’t be more thrilled by what’s happening in apartment construction. The housing market is massively imbalanced right now. After the Great Recession, builders became extremely cautious and NIMBYism (Not In My Backyard!) took root in a lot of cities, especially on the coasts. Unfortunately, that led to a slowdown in building. So, all we can say is build, baby, build!
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Schematics
The news that just missed the cut
Source: TMZ
Jay Z and Beyonce own the most expensive house in California’s history
Real estate investing tips from a 31-year-old self-made millionaire
Even Goldman Sachs is surprised by how well housing is doing
Instagram blogger turned agent now has $200 million in sales
This is where home prices are going according to Fannie Mae
Foundation Plans
Advice from James and David to win the day
With so much information available now, a lot of potential clients sometimes question whether having an agent is worth it. We could give them a million reasons, but if someone ever brings that up, we suggest presenting these three main reasons:
Knowledge – To really make a keen deal in real estate, you need to know the latest news and key players, and how they are impacting both sellers and buyers. Surfing the net won’t cut it. Plus, real estate is a heavily regulated industry. You need someone to navigate all the hurdles that might pop up.
Actionable Guidance – Knowledge isn’t enough. You need agents to put that knowledge into concrete actions and decisions. Should you structure your deal as a joint venture? In today’s elevated mortgage rate climate, should you buy a home with an assumable loan? These are questions that aren’t easily answered just by Googling or using AI.
Negotiating – Making an offer and negotiating with a seller can be one of the most difficult and stressful parts of the home-buying process. There are many factors and variables that you must take into account. There’s also the emotional factor that no online bot can understand. Buyers and sellers need seasoned pros who can help them come together to close the deal.
This is just the tip of the iceberg on the value we add as agents. Start here as you hone your case on why agents matter.
Q+A
You ask, James and David answer!
Q: How do you deal with time suckers. Do you ever walk away from a client because you feel like they decrease your momentum?
A: We walk away from clients all the time. The more experienced you get in the industry, the quicker you’ll see the patterns of a client who will waste your time. Your time is your most valuable commodity, so it’s crucial to use it wisely. Don’t beat yourself up if a client wastes your time. Just learn from it and avoid the trap in the future!
We’ll be back next week with another answer to a real reader question. Submit yours here!
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Rocket Mortgage
“Develop into a lifelong self-leaner through voracious reading; cultivate curiosity and strive to become a little wiser every day.” – Charlie Munger
Thanks for reading, and we’ll see you Friday!
