\n<\/p>\n
JPMorgan Chase<\/strong>, America\u2019s largest bank, just made a big<\/em> bet on housing<\/strong>\u2014a $750B bet <\/strong>to be exact. At a time when most people hope home prices will fall, JPMorgan is gearing up to lend and invest in a huge<\/em> way. Could this be a sign that those who buy now will be thanking themselves in the years to come?<\/strong> We\u2019re getting into the details in today\u2019s show.<\/p>\n On the Market<\/em><\/a> is here with a housing market update! First, we\u2019re touching on whether or not the market has already peaked<\/strong> in 2026. We still have four full months left in the year, but with home sales falling in July<\/strong>, it could signal that the hot summer is starting to cool. But a surprising type of home is<\/em> still selling fast<\/strong>\u2014it\u2019s not the newly renovated house flip<\/a>\u2014it\u2019s the ugly, outdated home next door. Why? We\u2019re explaining in this episode.<\/p>\n JPMorgan Chase makes a $750B bet on housing<\/strong>, signaling that America\u2019s largest bank is bullish on a certain type of real estate. Finally, the latest <\/strong>inflation<\/strong><\/a> rate update<\/strong>\u2014the CPI (consumer price index)<\/a> stayed in check last month, but<\/em> is it enough to stop the <\/strong>Federal Reserve<\/strong><\/a> from raising rates?<\/strong><\/p>\n Henry: James: Henry: James: Henry: Kathy: Henry: James: Henry: James: Kathy: James: Kathy: James: Kathy: Henry: Kathy: James: Kathy: James: Kathy: James: Kathy: Henry: James: Kathy: James: Henry: James: Henry: Kathy: James: Kathy: James: Kathy: James: Kathy: James: Kathy: James: Kathy: Henry: James: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n
What\u2019s going on everybody? Henry Washington here and happy Labor Day. I hope you\u2019re all doing something super fun. On the feed today, we\u2019re sharing an episode of our sister podcast on the market that was originally published on August 20th. James Dainard, Kathy Fettke and I broke down a few big recent real estate news stories. We covered JP Morgan\u2019s announcement that they\u2019re investing 750 billion, that\u2019s billion with a B into the housing market, and also talked about whether the market has already peaked for 2026 and whether the latest inflation report could stop the Fed from raising interest rates. We\u2019ll be back with a brand new episode of the BiggerPockets Podcast in just a couple of days. Here\u2019s that conversation with me, James, and Kathy.<\/p>\n
So let\u2019s just jump right in. Henry, what do you got today?<\/p>\n
Well, I picked a story that was very near and dear to my heart, top of mind, something I am always thinking about. The headline is, \u201cThe market may have already peaked for 2026 and the summer isn\u2019t even over yet.\u201d This is an article found on usnews.com, and it\u2019s talking about what\u2019s happening in the real estate market in terms of sales. So the article goes on to talk about that existing home sales fell 1.7% in July to a seasonally adjusted annual rate of 4.06 million. Even as the median home prices have climbed to a record for the month, the national median existing home price rose 2% year over year. That\u2019s up to $434,000 in July, making that the 37th consecutive month of annual price gains. So housing prices have gone up and the market seems to have already peaked in terms of sales price. And now that we haven\u2019t finished summer yet, but we\u2019re moving into what would normally be a winter slowdown anyway, could be just a not pretty time in terms of real estate sales in the country.
And as I was researching this article, I came across another article that talked about how first home purchase sales are down, but luxury home sales are up. And I think all of this is tied to affordability. Interest rates peaked over the last month and that\u2019s caused a slowdown in the market for people who are just barely priced into the market. But there\u2019s also a lot of people who have made a lot of money or are making a lot of money in stock market gains. And so the wealth gap is pretty substantial. And so the people who have more money are buying more luxury homes. And in my market, I\u2019m seeing exactly that. And why do I know that? Because I\u2019m trying to sell my house right now, my personal house. And every house in my neighborhood in the luxury market, when it goes up for sale, it is under contract in less than 30 days.
Wow. But when I\u2019m selling my flips, I am seeing longer times on market. It\u2019s a little harder to sell them. There\u2019s more competition. And so I think all this just plays into affordability. But I was very curious, James, is that the same thing you\u2019re seeing in your market? Your market\u2019s substantially more expensive than mine, but you\u2019re doing deals consistently.<\/p>\n
Yeah, it\u2019s flat. Things are sitting on market. I mean, it depends on what it is. There\u2019s velocity in every city.
So I think one of the most important things that we\u2019ve been going over the last 90 days is where\u2019s the velocity at in every zip code? Because it doesn\u2019t matter if it\u2019s luxurious or it\u2019s a first time home buyer, there\u2019s a price point that\u2019s moving in that pocket. Everything is not selling, but there\u2019s a lot of things that aren\u2019t moving. And so we\u2019re really locking down by zip codes, price points, where\u2019s the velocity? And that\u2019s what we\u2019re really targeting. For example, in North Seattle, if you have a house that\u2019s 1.5 million and it\u2019s a good street, that is selling and it\u2019s going to sell on the first weekend. If you\u2019re 1.7 million, not selling, your market times are going a hundred days. And so you really got to look at every type of price point. Look in 10% blocks and then focus on that because it tells you where to be aggressive and not to be aggressive.
I mean, it\u2019s not enjoyable in the summer when you\u2019re sitting on, I think I got 18 for sale. I would say I\u2019m clicking off two to three a month. But one thing I do want to stress is this was no different last summer. Last summer was terrible. And so what I\u2019m hoping is we actually did see a little bit of an uptick in momentum the last two weeks. I think we sold five new construction of ours, a little bit more starter units. I sold a couple different flips. And it\u2019s funny, the ones I though wouldn\u2019t sell sold and the ones I though would sell.<\/p>\n
Story of my life. Same thing here. Just when I think I\u2019m a real estate expert and can predict what\u2019s going to sell and what\u2019s not, I am absolutely not that because I have houses that I\u2019m like, this one\u2019s going to be a tough sale under contract in 30 days. And I have houses that I\u2019m like, oh, this one\u2019s going to fly off the shelves. Sits. So don\u2019t ask me. Maybe I just don\u2019t know what buyers want anymore.<\/p>\n
It\u2019s crazy. I mean, we have a subdivision we\u2019re building in Oregon and we actually have the city come to us and say, we need more housing. We want to help you come up here. We\u2019ve heard your reputation. And we did. We got some land, we got a great deal on it. This is the one where we just optioned the lots. We didn\u2019t even have to buy them, built the homes and they\u2019re sitting, same thing. And the offers we\u2019re getting are brutal. It\u2019s something you and I would offer. They are low ball offers. We had one regular sale recently, but same thing, like five brand new homes just sitting on the market and it hurts. It\u2019s painful. But then we have a big subdivision, the one I\u2019ve probably talked about before. It\u2019s north of Tampa and that\u2019s where we bought 4,200 lots back in 2012, I don\u2019t know, for 10 cents on the dollar, but it\u2019s a lot of lots.
And that one has just been consistent. It\u2019s done great. Maybe because it\u2019s, I don\u2019t know, it\u2019s Florida, it\u2019s inland. Could be that people are moving from more expensive areas like Miami has gotten so expensive, they\u2019re moving inland where there\u2019s not as. I don\u2019t know, but that one\u2019s doing great. So as we always say, every market is different, but I also have my finger on the pulse of buyers and we just saw massive buying at Real Wealth, one of the best months that we\u2019ve had. So what\u2019s that? Just all over the place.<\/p>\n
Yeah. And it\u2019s so weird. James, you mentioned that we had a similar time last summer. And I agree with you from a velocity perspective, but this summer feels a little different. And here\u2019s what I\u2019m saying in my market because again, real estate is local. Last year when I put a good product on the market, it was done well and priced right, it\u2019s still sold. This summer, that\u2019s not always the case. Sometimes that\u2019s the case, but sometimes it\u2019s not. And I think affordability is really playing more of a factor this summer than it has last summer. Because the trend that I\u2019m seeing in my market is when we start comping these houses before we put them on the market again, and actually when we\u2019re buying them, because I comp them twice. I comp them when I buy them and then I comp them right before we put them on the market so that I can make sure that we price it right because the market shifts pretty quickly sometimes.
And what I\u2019m seeing in comps is homes that are unrenovated, but livable and clean have far less days on market than homes that are flipped and look super pristine. And I think that\u2019s just the affordability. I think people are much more willing to buy a unflipped home where they can put their own touch on it and get in for a lower price point than houses that are looking awesome because they\u2019ve been flipped. And so we\u2019ve had to adjust our strategy where we do kind of a two-pronged approach when we\u2019re buying deals right now. I comp deals where I can just clean them out, turn around and sell them as they sit and I comp deals as a flip. So I\u2019m using the flip as my plan B now. Plan A is just to get it clean and livable and get it on the market and see if we can get that deal churned faster.
And we\u2019ve done it a few times now and it\u2019s worked out really well, but all of that to me is just a problem with people\u2019s affordability.<\/p>\n
We\u2019re seeing the same thing. There\u2019s grandma\u2019s house, which is your clean, dated house, well kept and well taken care of, but these aren\u2019t like fixer properties. These are like the windows are okay, the roofs are okay. There\u2019s about a 20% delta on that price. If that house is selling for a million dollars in our neighborhood, it\u2019s going to trade for 850 as is in that kind of dated condition. And it\u2019s pretty consistent across the board. Same thing if it\u2019s worth 500, they\u2019re selling for like 380. And so we have problems making that pencil because we have to buy them so cheap that we just can\u2019t get them for that pricing.<\/p>\n
Yeah. Well, again, I think because real estate\u2019s so regional, my market doesn\u2019t have those kinds of spreads. For me, it\u2019s the percentage wise, it\u2019s not that big of a deal. So as an example, we just bought one for 130. Now original, the flip plan is to spend 60 on the renovation, sell it for 275. But instead of doing that, we\u2019re going to spend three to 5,000 on the renovation, just cleaning it out, cutting back some of the shrubs and the bushes in the backyard, professional cleaners, stick it on the market for $200,000. So yeah, I could sell it for 275 flipped or I can spend nothing, sell it for 200 and I\u2019ll actually make pretty close to the same amount of profit.<\/p>\n
Yeah. Look for the velocity because people are rain clouds rightnow. They\u2019re like, oh, market six. I got some messages from somebody like, \u201cHey, do you want to come to this conference?\u201d I was like, \u201cNo.\u201d And they\u2019re like, \u201cWell, it\u2019s just important to get everyone together to huddle and talk about what\u2019s going on with the market.\u201d I\u2019m like, \u201cAre we in the same market?\u201d The market\u2019s not, it\u2019s not like it\u2019s 2008 or nine. I mean, this is flat. And I think the key today is you got to reduce your holding costs on everything, whether it\u2019s new construction build, whether you\u2019re going to dispo, how can you get that monthly debt down? Whether you\u2019re refinancing them into DSER loans, can you refinance that product? Right now I\u2019m about ready to refinance all my flips into more DSER because then it just knocks two points off my interest carry.
And you just got to look at how can I stop the bleed? And it\u2019s not just for flipping. Any type of project right now, the bleed and the expense of the debt is what\u2019s really beating up the deals because it\u2019s just taking a lot longer to sell.<\/p>\n
Yeah. I mean, that\u2019s kind of why I love and probably will continue to do buy and hold so I don\u2019t have to worry about selling anything, just renting it.<\/p>\n
Well, Kathy, because you guys buy so much new construction for the buy and hold because some price points are dead in the new construction. I mean, you guys have been able to start talking to these builders about dumping off in bulk too,<\/p>\n
Right? Oh, we\u2019ve been doing it for years. I mean, builders are distressed. And when you\u2019re a buyer, you want to look for the distress. I mean, you guys know that. So why not? I know this sounds terrible, but why not look for a distressed builder because now you don\u2019t have to buy an old property and fix it up. You\u2019ve got a brand new property that you can get for a discount. So that is what we\u2019ve been doing. I literally just was looking at some properties that are highly discounted from builders and they don\u2019t want to reduce their price because then they\u2019ve ruined the comps for everything else they\u2019ve got to sell. So if they can spend a bunch of money and buy down your rate, you can get a really low rate, in some cases 3%, that really makes it cashflow well in a brand new home.
And a lot of people don\u2019t realize on the buy and hold side, if you have a new home, say in Florida where everybody\u2019s complaining about insurance, the insurance is not high on newer homes because they\u2019re built to hurricane standards. So it\u2019s just a lot lower insurance, a lot lower CapEx over time, and people love to rent new homes, so it\u2019s fairly easy to rent. So for me, it\u2019s kind of a set and forget type buy and hold and I love it. So yeah, to me it\u2019s a wonderful, one of the greatest opportunities out there. But this is only for people who don\u2019t like getting their hands dirty like me.<\/p>\n
No, but you know what though? The new construction, it\u2019s starting to become very attractive for value add investors because you can now buy for less than you can build it for.<\/p>\n
Yeah, in a lot of cases. And listen, I\u2019m on both sides of that. I\u2019m on the side of being a builder and trying to sell stuff and having a really difficult time, but that\u2019s kind of how it is for you guys. If you\u2019re in flipping, you got to be able to find the deal so you love a buyer\u2019s market, but then you got to sell it so you hate a buyer\u2019s market. That\u2019s the<\/p>\n
Game.<\/p>\n
When are you going to time it perfectly where you\u2019re buying in a buyer\u2019s market, then you\u2019re selling in the seller\u2019s market? You just have to figure it out, right? It\u2019s a balancing act, which is why if you are buy and hold, all you really have to focus on is the buy. And then the hold being what are the rents? How are rents doing? Are they going up or down versus I got to think about what I\u2019m selling because if you\u2019re buy and hold, if you want to sell, you just sell when the timing\u2019s right.<\/p>\n
Well, Kathy, I want to talk about some serious money getting put into the market, but before we do that, we\u2019re going to take a quick break. Welcome back to the On the Market Podcast. Kathy, someone\u2019s about ready to drop some serious money into the housing market. I want to know where the money\u2019s getting spent because I can go follow it.<\/p>\n
Yeah. My article today really contradicts the sort of doom and gloom we just talked about. This is an optimistic article, I guess you could say. It\u2019s from JP Morgan Chase and it\u2019s basically JP Morgan Chase is doubling down on housing. So they see something that maybe others don\u2019t see. Those who are sitting on the sidelines should probably sit up and pay attention. They are deploying 750 billion through 2035. That\u2019s up by more than $200 billion through their American Dream Initiative. This is nearly 40% more than the firm\u2019s housing capital deployment over the past decade. So again, we\u2019re seeing big companies like Berkshire Hathaway investing in builders. You\u2019ve got JP Morgan Chase upping what they\u2019re going to be lending and also kind of coming in as debt and equity to build affordable housing. And you\u2019ve got Japanese companies buying American builders. So these huge firms are a little more positive than we just were.
They see this demand coming, they see this lack of housing and they are all in. I mean, this is huge. My guess is that a lot of times companies will follow legislation and clearly we just had this new legislation really pushing for new housing and maybe they\u2019re getting incentives for doing it. Maybe they know something we don\u2019t know about the new housing bill getting tax credits, but there\u2019s more momentum towards bringing on that affordable housing and the big players are jumping in and taking advantage.<\/p>\n
You always want to follow the money, right? I mean, it\u2019s kind of like, I remember 2008, nine, and 10 when Blackstone started buying all the single. Or no, it was 2010 and 11 started<\/p>\n
Getting hard. It was 2012. It\u2019s when Warren Buffet said on national TV, \u201cIf I could buy a few hundred thousand houses, I would if I knew how to manage them.\u201d That was the second part, if I knew how to manage them. Instead, he went into creating Berkshire Hathaway and be on the real estate sales side. But a bunch of institutional investors at that time said, \u201cWell, golly, I\u2019ll learn how to manage them.\u201d And let\u2019s face it, they didn\u2019t know how in the beginning, but they figured it out and they brought in new systems. So I do feel like that\u2019s kind of happening right now. There\u2019s a lot of signals that we should be paying attention to because there\u2019s big money coming in and those people sitting on the sidelines waiting for prices to drop, do you think Warren Buffet\u2019s company might know a thing or two?
Do you think JP Morgan Chase might know a thing or two? Listen to them. Sure, it\u2019s probably easier for them to make bets, but to me, it does feel like a similar signal that we got in 2012 that we\u2019re getting now.<\/p>\n
Part of this is for financing too.<\/p>\n
Yeah, they\u2019re going to be lending. Being a lender is one of the more safe positions, but trying to be able to help more people get into housing, be able to buy their own home, but also building, bringing on new affordable housing as debt and equity.<\/p>\n
I was looking at this article and it got me thinking, so what does it really mean when JP Morgans are deploying more money into the single family real estate space? And when I was reading through it, it looks like it breaks it down in buckets. So it\u2019s saying one of the buckets is they\u2019re going to be lending more money to developers to build apartments. So that increases housing units, increases apartment units. There\u2019s another bucket where they\u2019re going to be writing more mortgages. So this is what I though the article was mainly talking about. So in other words, they\u2019re saying, \u201cWe\u2019re going to be writing more mortgages. More people should be able to buy a home, get a loan from us. We want to put money out there for people to buy homes.\u201d And then the third bucket is investments in affordable housing funds, which is interesting.
I hadn\u2019t thought this was something they do, but essentially putting their own money at risk as an investor and investing in affordable housing funds, which is pretty cool, but that\u2019s a lot of capital to be all thrown at one specific asset class. So I mean, I like it. That\u2019s good for me. I\u2019m a single family and small multifamily investor. So to me, that means that the asset that I own has some demand attached to it. Yeah.<\/p>\n
It\u2019s funny. There\u2019s so much weird bad taste in people\u2019s mouths about these big companies buying in real estate. They don\u2019t want hedge funds buying up all the housing, right? And when you really dig into this article, they\u2019re providing a lot of money for first-time home buyers, different types of financing options. And the good thing is, I always look at this as the banks are very quick to change their mind, the big banks. That\u2019s why as an investor, I only work with small banks because once the big bank gets sick of real estate, they don\u2019t really want to give you too much money on it.
The good news is when you are seeing bigger banks, they have a lot of money, they spend a lot of money on research, deploying that much capital into the housing market. They\u2019re not really predicting a massive crash because why are they going to provide so much financing for first-time home buyers that are putting down a low down payment if they think their asset\u2019s going to be worth 10 to 20% less in three years? They\u2019re predicting stability is how I look at that. So anytime they\u2019re providing this kind of financing, it makes me feel more confident, especially when you have a flatter market right now. And that\u2019s what you want, is you want confidence in this market because when the market is flat, you start to double guess yourself on everything. You\u2019re like, \u201cIs this a deal? I know what a deal is. I\u2019ve been buying deals a long time, but on paper it\u2019s a deal, but is it really a deal?\u201d And so these are important things to look at because it shows stability coming forward.
And so I like these things, just gives me a little bit of that spinach courage to where I\u2019m like, \u201cAll right, let\u2019s go buy some stuff.\u201d Well, we\u2019re going to dive into the CPI report and what\u2019s going on with inflation and what that could mean for rate cuts soon as we take this break.
All right, we are back on On the Market Podcast and we\u2019re going to jump right into the CPI report. So I pulled the article from Fox Business about the inflation. So CPI report came out yesterday, December 12th, and we had some good news. It didn\u2019t rise very much.<\/p>\n
That\u2019s real good news.<\/p>\n
The CPI report came out yesterday, August 12th in July. CPI rose just 0.1% for the month with an annual inflation down to 3.4% from 3.5%. The core CPI at two and a half percent is the slowest it\u2019s been since the post-pandemic surge. So we\u2019re finally starting to see inflation kind of slow down. Now, a lot of what this article does talk about is we\u2019ve seen some slowdown on inflation, but that\u2019s also because energy has fallen in July. The cost of fuel, gas, those things had all kind of dropped down, but they also are predicting that this could make the Fed keep their rates steady and we should not anticipate any sort of increase, which is the biggest thing because the last thing we want is increase going on. Stability works, but we don\u2019t need it to rise. And so we are seeing a little bit of good news on that as far as the inflation goes.
Now, I feel like every month it\u2019s just going to bounce around until this Iran conflict gets sorted out, but it is good news. And what I did see is we saw a flurry of activity the last couple weeks. We did sell more homes, I think in the last two weeks than we did in the month before. And part of that has to do with part of inflation hasn\u2019t. I don\u2019t feel like it feels as bad as it did 60 days ago, and consumers are really sensitive to that. When inflation is jumping up, when fuel and gas is at seven bucks a gallon, people get really nervous and the fear kind of locks in and they don\u2019t make a decision. And so as they\u2019re starting to see a little bit of stability in the energy market with food and groceries, that people are starting to move and actually start getting some activity going because even I saw the financial reports for a lot of these tech companies, they posted some pretty good earnings and people made some good stock bonuses and we\u2019re starting to see a little bit of stability, which is good because it\u2019s all about consumer confidence.
There is so many buyers on the sideline right now, they\u2019re just confused in what to do.<\/p>\n
Who could blame them if the market is so confusing?<\/p>\n
Yeah. What we\u2019re hoping for is just stability and inflation. If we can get it to where it stops going on this rollercoaster ride, I mean, what do you think, Henry? You sell a lot of property. When I see stability on those fronts, it\u2019s much easier to move a deal.<\/p>\n
Yeah. When people are comfortable with what\u2019s happening in the market, then the transaction volume goes up, people take action. And I think I\u2019m curious at how inflation is going to impact interest rates over time because the Fed just chose to keep interest rates where they\u2019re at. But if you look at the vote, it was actually voted on nine to three. So there were three people who voted to actually raise interest rates. And so that to me says that they\u2019re planning on rates going up as long as things remain the same. That\u2019s the forethought I\u2019m giving that. And that\u2019s again, going to cause more of an affordability problem and that\u2019s going to keep more people out of the market, which is going to seem like things are slowing down. But at the same time, housing prices have continued to rise. And so that\u2019s what I mean by it\u2019s confusing is because it\u2019s unaffordable, it\u2019s scary.
We don\u2019t know if interest rates are going to go up causing more unaffordability, but somehow prices keep rising. So somebody\u2019s buying and it\u2019s our job as investors to make sure we stay very local in the data so that we can have a clear understanding of who the buyers are, what they\u2019re buying so that we can position ourselves to be able to provide that product to them because transactions are happening. And I don\u2019t want everybody to listen to all this and think it\u2019s so doom and gloom in the real estate market. People are making money out here in real estate, but the people that are making money are the ones that are studying the data, they\u2019re studying their market, they\u2019re seeing who the customers are that are actually transacting. How are they transacting? Where\u2019s that money come from and what are they buying and how can I provide that to them?
It\u2019s business 101, but it\u2019s harder now. You can\u2019t just buy anything at a discounted price anymore, throw it on the market and make money. You used to be able to just say, \u201cHey, if I get something at a 30 or 40% discount, I\u2019m going to be able to make money.\u201d That\u2019s just not the case anymore. It\u2019s very, very niche.<\/p>\n
Yeah. Inflation is bad. It\u2019s still bad. It has come down, but what I want to really emphasize is that the growth rate of price increases has slowed. The prices haven\u2019t come down. So the consumer is extremely stretched. And even though oil prices, energy prices have fallen, they\u2019re still up 14% from a year ago. Now, how many people got a 14% raise? The inflation is still 3% above last year over that. How many people got a 3% raise? If companies aren\u2019t doing as well, then they\u2019re not maybe going to be giving the raises. Or if you\u2019re self-employed, it\u2019s hard to give yourself a raise if you\u2019re just trying to make ends meet. So I think if we look at the consumer, they are stretched. I see it every day. And when I say the consumer, there\u2019s a tale of two worlds, right? We have some people who are doing just fine and don\u2019t notice the difference in the cost of eggs.
They don\u2019t even think twice about it. But if you are on a fixed income or you are on an hourly wage, you feel it and it\u2019s painful. So just even the concept of buying a house is so out of reach, but they\u2019re focused on rent and that\u2019s hard too. That\u2019s hard too. And for those of us who are buy and hold investors, we\u2019ve got to pay attention to that consumer because that\u2019s our customer, right? That\u2019s who\u2019s going to be renting from us. And how are they doing? How is their health? It\u2019s tough. It is tough. So the more that we can find those properties, get discounts, find cheap properties and renovate them at a good price, be good at that and provide that affordable housing, we are helping people. We\u2019re solving a problem, which is living. So I like to put that message out there for landlords who are truly providing a service.
I could just speak for us in some of the properties that we bought, we got them cheap, so we\u2019re able to rent them for less. We\u2019ve always focused on that niche of the worker. How are they going to afford to live and how can we provide that for them?<\/p>\n
Why this is so important is we\u2019re trying to look, as investors, we\u2019re trying to look down the road, what is the market going to look like in 12 months? Because when you\u2019re buying deals today, they\u2019re really good buys. We\u2019re buying stuff for substantially cheaper than we were 12 to 24 months ago. And that\u2019s what we have to keep focused on as an investor is, okay, what do we think is going to happen in 12 months and what is that going to look like? And what this says is the July CPA inflation report shifted the outlook for the Federal Reserve next monetary policy meeting. They were saying that according to the CME FedWatch tool, the market now sees a 61.9% probability of rates remaining current, and that was only at 51% a day ago. And so we want stability. If rates were going to go up in 12 months, I\u2019m going to want to buy even deeper today.
But if I think there\u2019s stability, what I don\u2019t want to do is pass on deals that were great deals, but my fear dictated my decisions
Because fear will make us do bad decisions. It will make us sell something for too cheap. It will make us pass on good opportunities. And these are things that we want to pay attention to because we got to go, what is it going to look like? Because you can\u2019t stop buying when you\u2019re an active. Henry is an active operator. Kathy, you\u2019re in a lot of deals. If you stop and you go on the sidelines, I heard people say this for the last 24 months, \u201cI\u2019m taking a break. I\u2019m going to wait.\u201d You never time it right, ever. But if you consistently buy, you can get a consistent average through because you\u2019re going through all the waves. If you pull out, that\u2019s what I\u2019ve learned over 20 years investing is don\u2019t pull out. Be cautious, but you can\u2019t get all the way out the door because if you do, A, you\u2019re out of touch with the market, you\u2019re not in the market anymore, but then you\u2019re jumping usually back in when it\u2019s too late again.
I don\u2019t<\/p>\n
Know. It depends on the asset class. I have a lot of respect for people who just sat it out from 2020 to 2024, 25 even because they could just see the bubble inflating and then it was going to take some time for it to deflate and they\u2019re just now coming. I mean, I know a guy who just kind of sold all his stuff when he saw it peaking and he just went on vacation for a few years. I think that\u2019s okay, depending on your asset class, if you\u2019re really aware. But James, that\u2019s not for you. You can\u2019t stop. You\u2019re not stopping.<\/p>\n
James.<\/p>\n
We buy<\/p>\n
Everything, right? We buy apartments, we buy dirt, we buy houses. And so yeah, did we buy a lot of dirt the last two years? Absolutely not. We had already bought the dirt. We were getting through the projects, but there\u2019s an opportunity in every market and that\u2019s where you have to kind of pivot and go, \u201cOkay, well, what I was buying doesn\u2019t work anymore, so now I need to go buy this.\u201d And for us as investors, if you want to be a professional investor to stay in the market, you have to pivot and you got to shift things around. I\u2019m even starting to look at new construction now, which I\u2019ve never bought, but I\u2019m like, \u201cOh wow, there\u2019s some really good buys out there.\u201d There\u2019s some<\/p>\n
Great deals. Yeah.<\/p>\n
We don\u2019t have identities as real estate investors, right? It\u2019s like, I\u2019m the short-term rental person. I\u2019m the flipper guy. It\u2019s like, no, no, no. How do you spread the money out and balance it out? And you want to do that when you\u2019re seeing reports like this. Now, this is just one month. It\u2019s a blip in the month, but we have to see what happens in August and in September and what goes on with this conflict because I think fuel is up right now. So this inflation report could also look a lot different for August. And so I think these are things to just watch, stay in the middle of and make sure that you kind of adjust your buy box based on actual data like Henry\u2019s saying, not your gut. I\u2019m<\/p>\n
Going to be more positive now and say this is great. It\u2019s great that we didn\u2019t see inflation shoot up when it really could have. And that\u2019s what we were hearing in the headlines. That\u2019s why people are freaking out and scared because it was. I mean, even the Fed was saying we\u2019re probably going to raise rates for a couple times because inflation\u2019s looking bad. So I will end this part of the story saying, good, at least it is not runaway inflation.<\/p>\n
No, and hopefully it stays consistent. That\u2019s what we\u2019re looking for. Keep dropping. That\u2019s what we want. Well, we got JP Morgan spending a lot of money, inflation\u2019s settling down. See, it\u2019s all Sunshine and Bunnies going for.<\/p>\n
It\u2019s a good day. It\u2019s<\/p>\n
Always a good time to buy in my book, James.<\/p>\n
Yeah, exactly. You got to keep buying. You got to keep buying. So thanks for listening to On the Market. We will see you guys next time.<\/p>\n