What the Numbers Reveal About Today's Rents, Prices, and Top Cashflow Markets | BP Podcast 379

TL;DR

Dave Meyer discusses current real estate market trends and data insights.

Transcript

this is the bigger pockets podcast show 379 you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the Heights you're in the right place stay tuned and be sure to join the millions of others who have benefited from bigger pockets calm you... Read More

Key Insights

• Dave Meyer, a data scientist, provides insights into current real estate market trends amidst the COVID-19 pandemic.
• Current data shows that while housing prices haven't significantly dropped, the volume of transactions is decreasing.
• Mortgage applications have decreased by about a third year over year, indicating a drop in demand.
• Rents have not significantly declined, but new listings are down, indicating landlords are adjusting expectations.
• The podcast discusses the importance of using data to make informed real estate investment decisions.
• Dave Meyer shares his methodology for identifying the best cash flow markets using vacancy-adjusted metrics.
• The podcast emphasizes the importance of investors setting their own strategy rather than relying solely on agents.
• There is a potential shift from urban centers to less densely populated areas due to COVID-19.

Questions & Answers

Q: What is the current state of the real estate market according to Dave Meyer?

Dave Meyer notes that while housing prices have not significantly dropped, the volume of transactions is decreasing. Mortgage applications are down by about a third year over year, indicating a decrease in demand. Rents have not significantly declined, but new listings are down, showing landlords are adjusting expectations.

Q: How does Dave Meyer suggest identifying the best cash flow markets?

Dave Meyer uses a vacancy-adjusted rent-to-price ratio to identify the best cash flow markets. This metric helps determine what percentage of the investment is covered by annual rent, adjusted for vacancy rates. He emphasizes the importance of using this data as a starting point and conducting further analysis for individual properties.

Q: What is the impact of COVID-19 on the rental market?

The rental market has seen a slight decline in new listing prices, indicating landlords are adjusting expectations. However, rents have not significantly declined. The data suggests that cheaper units are being rented out, while more expensive ones remain on the market, driving up the national average.

Q: What should investors consider when choosing a real estate market?

Investors should consider vacancy-adjusted rent-to-price ratios, income-to-price ratios, and historical data on market performance during past recessions. These metrics help assess the potential for cash flow and market stability. It's also important to consider local economic drivers and employment sectors.

Q: How does the current economic climate affect real estate investing?

The current economic climate presents both challenges and opportunities for real estate investors. While transaction volumes are down, there are still opportunities for those prepared to identify good deals. It's important to conduct thorough research and use data-driven strategies to make informed decisions.

Q: What role does data play in real estate investment decisions?

Data plays a crucial role in guiding real estate investment decisions. It helps investors understand market trends, assess property values, and identify potential opportunities. Using data-driven insights allows investors to make informed decisions and reduce risk, especially in uncertain economic times.

Q: How might COVID-19 impact urban housing demand?

COVID-19 could potentially lead to a shift in housing demand from large urban centers to less densely populated areas. Factors such as remote work capabilities and concerns about density may drive this trend. However, urban areas still offer job opportunities and amenities that attract residents.

Q: What is the importance of setting a clear investment strategy?

Setting a clear investment strategy is crucial for real estate investors. It allows them to focus their efforts, make informed decisions, and avoid relying solely on agents for guidance. A well-defined strategy helps investors identify target markets, assess property values, and achieve their financial goals.

Summary & Key Takeaways

• Dave Meyer, VP of Growth and Analytics at BiggerPockets, discusses the current state of the real estate market amidst COVID-19. He highlights that while housing prices remain stable, transaction volumes are decreasing, and rent prices are adjusting.

• The podcast emphasizes the importance of using data for real estate investments and identifies top cash flow markets adjusted for vacancy. Dave Meyer shares his insights on the best practices for identifying these markets.

• The discussion covers potential shifts in housing demand from urban centers to less dense areas, the impact of COVID-19 on rental markets, and the importance of setting a clear investment strategy.