Is the real estate market going to crash?
Demand substantially exceeds supply for housing right now in the United States.
People who have the ability to move out of high cost, high tax states like California are moving to states like Florida and Texas. They are taking advantage of historically low-interest rates and buying up anything that comes on the market.
The cost to build is skyrocketing
Housing is in high demand and supply is limited. Pandemic induced supply shocks have driven building costs up by as much as 30% in 2020.
According to McElroy, his lumber costs have already increased $1 Million on a recent apartment project.
There Is No Foreclosure Market
The government and Fed will continue to intervene and prevent any creative destruction from taking place in the markets.
State and Federal Governments are preventing foreclosures through forbearance regulation.
State and Federal Governments will likely continue distorting housing markets through ongoing foreclosure moratorium and forbearance regulation. Until this stops, expect inventory to remain tight.
Cash may not be trash (for now)
According to McElroy, he's seeing bigger firms move into cash.
Take advantage of historically low-interest rates and equity strip any locked-up cash in your real estate portfolio.
Now is the time to refinance into a 30-year fixed-rate mortgage since investors can often get a sub 3% interest rate.
If you do refinance and equity strip (pull cash out), then make sure you put the cash to work. You want to own investments that pay you to own them.
Parking cash in a savings account for the short term isn't necessarily a bad thing. However, if you leave it in the bank for too long, inflation will erode away your purchasing power.
Rental properties that cash flow and dividend-paying stocks are two examples of investments that pay you to own them.
Affordable Housing Likely To Get Worse
Affordable housing has been a problem for a long time and affordability will continue to be a problem.
States with affordable housing problems are typically heavy on rent control regulation and tax heavy. Rent control caps income and taxes increase expenses.
Expect to see more capital flow into States that are business-friendly.
Overly regulated, anti-business, police States such as California and New York will continue self-sabotaging their affordable housing problems until a regime change forces those States to become business-friendly again.
Where to invest your cash
If cash is not your thing, and you want to put it to work instead of letting it rot away in a checking account, then consider these tips from George Gammon.
According to George, commodities are poised to do well. Historically, they've always done well during times of economic uncertainty.
Consider parking your purchasing power in the energy and precious metals sectors. Uranium, copper, nickel, metallurgic coal, gold, and silver.
Watch the Full Discussion
This short article is just a taste of what came from the discussion between George Gammon, Ken McElroy, and Jason Hartman.
If you are an avid investor, regardless of real estate, I encourage you to click play above and watch this great discussion between three Real Estate pro's so you can get a feel for what's coming and what you can do to protect your wealth.