Where to Buy Real Estate in 2021

hey guys it's ken as you guys know i've done a lot of videos about predictions and i predicted that in the fourth quarter of this year we're going to have a bit of a collapse and i do believe that and what do i mean by collapse what i mean is there's going to be a lot of listings that are going to happen in the summer starting in the summer and all the way through the year in addition to that we're going to have all these foreclosures and so there are going to be a lot of homes that are going to come to market that wouldn't normally be in the market because of the fact that they're behind on their mortgages there's going to be obviously the end of this eviction moratorium so all that's going to happen here during this year unless this can gets kicked down the road again for the foreseeable future but i don't believe that it will now that we have the vaccine rolled out now that we have these mask mandates coming out what i'm going to talk about now is probably the question i get asked the most is okay all that's well and good but where should i be investing in 2021 and by the way we are still investing this year we invested last year and we're investing this year so our company is still buying things so yes there are still opportunities and no the real estate market is not national it's regional so we have to take a look at what regional areas are going to boom and bust and try to go where we think that the market's going in other words where the migration patterns are going which is what i talk a lot about so in this video i'm going to talk about what i think are the top markets and why and hopefully you guys can make some good educated decisions on what you're going to do next with your hard-earned money or even your clients money so let's get right to it so the first thing that i want to just go back to the basics on and i talk a lot about this is basic supply and demand and i think a lot of you guys miss this the fact is right now there's such a low number of inventory out there and i just did a video on this that's why prices are going up there's low supply high demand and so these kinds of things you have to keep watching as you're starting to select your individual markets and so there's lots of things that could affect your home prices obviously interest rates are ultra low economic growth which is down right now but scheduled to boom again number of people in households availability of mortgages now this is an area that's squeezing down right now because it covered lenders are starting to put in some additional restrictions around lending speculative demand there's not a lot of that going on new builds they're trying but as you know guys the cost of construction all that stuff being really really high the supply of housing affordable housing all that stuff rolls into what a housing price is and what it could be and so i want you guys to always keep that top of mind because what happens is a lot of times you get really wound up in your own individual market you think next week or next month or next year even is going to be as good as this year and it doesn't necessarily mean that's the case and so what you need to keep your eye on is this real estate supply and demand here that where are we in this curve now nationally you're going to have a number in a county in a state in a city in a sub-market you're going to have a number and so i think that we're probably in a lot of the markets that everybody's really talking about you're probably somewhere right about in here where the prices are definitely going up and the quantity is definitely going down and that's just the quantity and the price and so you're always going to have to kind of monitor this and the reason i'm bringing this up guys is because as i said i predicted that there's going to be a million to a million and a half people that are going to list their homes and it's going to really jump on the number of listings and of course what will happen is the quantity then will go up and the price will then go down in those particular sub-markets and so i think you got to be really careful with the advice that you guys are taking because a lot of these people that are going through this right now have never been through a real correction before like i was in the 90s and like i was in the 2008. this is exactly what happened a little bit different obviously we didn't have coveted we didn't have quarantine but regardless the supply is going to hit the market at some point and it's going to disrupt some of this stuff and so you really got to be careful and i just want to remind you that what we know is that these are kind of the numbers in less than six months a seller's market prices will appreciate in a neutral market there's between six and seven months of inventory and in a buyer's market there's typically greater than seven months and this data goes way back so all you got to do is kind of take a look at the last video that we talked about because we have a housing supply shortage which is making it a seller's market right now which is very good if you own a home and you're behind on your mortgage because that's i believe is going to be the money that you're going to be able to need to be able to cash out and pay back that lender so now let's go to the next slide so i've talked about it before but it has to be in this video too these are the migration patterns where are people going this is the most important thing that you guys need to know because there are people leaving cities and there are people moving into cities and there's all kinds of reasons why now there's more than u-haul and more than north american van lines there's obviously ryder trucks there's all these different data points that you guys can actually find online but as you can see for for the u-haul they in in 2020 tennessee led the country with u-hauls and these are people that actually took a u-haul and drove it to tennessee and dropped it off texas was two florida was three ohio arizona et cetera you get the point with north american van lines the blue states are inbound the red states are outbound so the top inbound states according to north american van lines are idaho arizona south carolina tennessee and north carolina okay and the top outbound states were illinois new york california new jersey and maryland so you got to pay attention to this stuff guys now does this completely give you a full picture of where everybody's going no but it is a great picture the u-haul had 2 million moves in 2020 2 million so they had 2 million data points of people want going from point a to point b so this is information that you guys have to be following what this does is it puts a lot of stress on a particular economy from a supply and demand standpoint that's all it does and so if these people are moving to tennessee and tennessee doesn't have a lot of housing as an example it's gonna drive housing up so as you guys start to see these people move around the country then you'll get a better sense of this so no matter where you are most of you are probably in one of these individual areas or focusing on them be very careful because you definitely want to be where people are heading because real estate is very dumb real estate doesn't care real estate is sitting there waiting for people to come so now let's take a look at why people moved because i think that's really important and we're just now kind of getting the data around this but why did people move i think this is a big question and so what we found is that 25 of all moves moved due to the pandemic and 35 percent of the people moved because of financial in fact this data here which i found which is fascinating um this is on um it says obviously idaho was the top destination with twice as many people moving in than moving out five out of ten destination cities were in florida and four on the gulf coast so these are important things that you guys need to know 68 percent more people left new york city in 2020 than moved into it can you imagine that so all of a sudden that's creating massive disruption in some areas and actually very exciting things in other areas if you're owning or buying so the average move was 3.7 miles farther than the year before okay so this is really important what we found is ironically most people are actually moving within their own state so they're somewhere between 70 and 80 percent so let's take a look at covid here so as i said a quarter of americans moved in 2020 because of the pandemic 35 percent forced moves were out of financial hardship and nearly one third of those moves for family members that needed help during covet so let's look at the top reasons people moved in 2020 obviously they moved because of affordability they moved because of safety which talks about the coven numbers here they moved for family and they moved for weather if you go take a look online you're going to find all of that and the safety here is obviously covid related a lot of it so the next thing i want to talk to you about is as people start to take a look at affordability here and they're trying to figure out you know where do i want to be and there's more reasons that people move for affordability obviously but one of the big things that you have to consider is are people going to rent or are they going to buy so according to realtor.com these are the top 10 metros to rent a home and these are the top metros to buy a home and you can go right under realtor.com and find a lot of this information so people are going to be faced with do we rent or do we buy and how they figure this out is based on the average mortgage or the average rent that's how they figure it out so you can go in and take a look at the average mortgage in these areas like san jose is obviously very expensive at a million two so obviously it's going to be cheaper to rent it's going to be significantly less than the mortgage all the way over to cleveland ohio where the average home is 200 000. can you imagine that it's a million dollars less in cleveland ohio now obviously it's cleveland ohio too and so you're going to want to have to move there it's a very different area but the point is is you can start to take a look at people are starting to make these decisions based on affordability as there's a lot of people moving to sacramento as an example and home prices are going up it's going to force more people into the rental housing pool and so what you want is a big distance between the rent and the mortgage that's what you want as a real estate investor you want a big gap between those two because it's going to have a bigger pool of renters i can assure you if you took a look at the renter pool in austin or san jose it's going to be significantly higher than that in cleveland ohio as an example because more people are going to buy a home in cleveland ohio as opposed to rent so there's a lot of talk about prices going up and rents going up and that basically is all the headlines but what's not talked a lot about is what areas are falling because you can't have this stuff happening you can't have prices going up like crazy in some areas and not falling in other areas so it's important that you look at both sides of the coin and you got to be careful as i say not to catch a falling knife and so as you guys know the national inventory declined national inventory declined by almost 50 percent uh in one year and the inventory of newly listed properties declined by 24.5 percent and 23.5 for large metros the national median listing price was 353 000. this is up 13.7 percent compared to last year this is a big jump in housing prices and for those of you own houses congratulations for those of you that own rentals congratulations that's all good but what you really need to be careful of is these other things that i found here these are counties where rents have fallen the most so far so let's take a look so obviously number one san francisco 25 rents have fallen in san francisco 25 number two is new york at almost 20 number three is san mateo 18 honolulu is number nine at nine percent you get the point so the point is guys if you're in those markets i personally think that there's going to be a continued fall in rents and what that's going to do it's going to be good in a lot of areas it's people are going to move back into those areas at some point so keep your eye on this stuff because these are markets that are definitely going to be ripe for investment at some point in the future but again you want to be careful not to catch a falling knife this is another graphic that i wanted to show you guys these are where home prices are falling now nobody talks about this stuff but they're definitely falling in these markets destined florida they're falling honolulu they're following bloomington illinois erie pennsylvania i think that you guys just need to be cognizant the fact that these prices are falling now there's a multitude of reasons and we're not going to go into them now but that's why i started with the supply and demand piece clearly there's more people moving out of these areas and there's more supply that's the only reason that they would be falling at this time so now i'm going to talk to you guys about where i think you should be looking at in 2021 which is the question i get the most and that is what i'm calling the fringe markets these are the top fringe markets and what are i'm going to go over these in a minute but what are fringe markets fringe markets are this there are areas like think of san francisco a french market in san francisco is going to be one to two hours away there are going to be people that are going to be moving out of san francisco and moving into what i would call these fringe markets this is where the action is going to be this is where you're going to make money this is where people are going generally 70 to 80 percent of the people are moving within the state so what i want to show you here is one of the top fringe markets is stockton california as an example it's number one so you can find this on realtor.com they're gonna start talking about these fringe markets a lot more and this is where people are moving and when they're buying right now so the average median days on the market is 37 and the average home is 480 000 now that does seem like a lot stockton california is 70 miles from san francisco the average price we just showed you in in the san jose area is 1.2 million so these people are cashing out of a 1.2 million home or 2 million home and they're moving to stock in california which is not very far away maybe an hour hour and a half and they're living there and they're planting there and they're getting out of these big mortgage payments and they're getting out of these big rent payments the same thing can be tracked guys on the rent side as you can start to see as i showed you san francisco rents are down 25 they're definitely moving to other areas and they're going to create more demand in that area as the supply dwindles up then those rents will go up over time as well and so the whole point is where are people going you can also take a look at at vallejo california same thing 525 000 also a sub-market in san francisco so as you guys start to take a look at these markets what i really want you to pay attention to is what core markets are losing people let's just pick on san francisco and where are they going and those are the new bubbles those are the fringe markets that you guys want to take a look at you want to see where the people are heading now obviously it's going to be difficult to figure all this out but if you take the time and you're out in front of this you will make money in stockton you will make money in vallejo and as more and more people move out of san francisco as an example it's going to continue to drive these prices up so as i like to quote the the great wayne gretzky and i've messed it up a couple times i skate to where the puck is going to be not to where it has been and this is never more true than right now a lot of people are going to jump to an area like austin texas that is totally on fire and we already showed you is probably not a good place to buy it's probably a better place to rent you got to find out where is that next place going to be and that's why i showed you some of these markets here just shoot over to realtor.com do your own research figure it out for yourself check out where the migration patterns are you can drill down and actually take a look at what cities are undersupplied and where people are going where employers are going and that's what you want to be is you want to be in front of this and you definitely want to skate to where the puck is going to be and not where it has been so thanks guys you

Channel: Ken McElroy

Views: 123,677

Rating: 4.9233589 out of 5

Keywords: Rich Dad, Entrepreneurship, Investing, Personal Development, Get Wealthy, Earn Wealth, Ken McElroy, Entrepreneur, Rich Dad Advisor, Success, Business, Self-Help, Coaching, Real Estate, Real Estate Entrepreneur, Real Estate Investing, Freedom, Lifestyle Business, Hustle

Id: Kp67hlL622o

Length: 18min 30sec (1110 seconds)

Published: Fri Mar 12 2021