This report indicates what part of the real estate housing market could get hit the worst in 2023.. we're going to talk about this now. I Want to give you my bias? Check up front: I Have launched a real estate startup. It's called Househack.

You can learn about it by going to Househack.com We want to buy the dip heavily in this real estate dip, which we expect will heavily happen in 2023, 2024 between the next two years. Basically, and when you hear me mention locations in this in these sorts of reports, know that I'm documenting this because there are going to be places I'm going to avoid and they're going to be places they look for. And I encourage you to subscribe and watch the journey because we are going to deploy tens of millions of dollars investing in real estate dip opportunities. In my opinion, it's going to be a really cool journey to watch.

In fact, you could even tag along and watch me explore real estate by either subscribing to the channel and watching the Vlogs or by clicking the link down below and shadowing me for a day in person. You meet me in California We'll hop on a private jet we will fly to check out real estate and then we'll fly back. We can grab a drink on the way or some dinner and I'd love to have you as part of the shadowing experience. So what's the news? Well, we'll go to this in just a moment.

Let's start with a couple charts. First, multi-family housing starts. Take a look at this. This is a chart from Morgan Stanley right here and it shows us that housing starts from multi-family which implies the pipeline of what kind of properties we expect to come to the market are actually substantially positive.

Over here, these are all at the bottom. You can see these are the last six months here of 2022 and we see a about 10 to 20 percent boost in housing starts from multi-families Now housing starts are a little different from permits. Permits are when Builders go buy some land and they apply for new building permits. or maybe those permits get issued.

Housing starts are when developers actually break ground on new construction. And what you're noticing here is a large uptick in the amount of ground that's being broken on multi-family construction. So I need to think about that for a moment. More construction and multi-family is going to mean over the next two years more supply of multi-family buildings, right? And these numbers can be volatile.

But the trend in the last about six months has been up for multi-family Starts Now How does that compare to single-family residences? Look at that massive difference in Trend single family consistently over the last eight months below zero and trending down to about negative seven to negative nine percent. In other words, a lot less new construction coming to single family relative to the opposite happening in multi-family Now, it's possible that Builders are looking at rents with a hindsight bias. that is, they look back and go. Oh, rents are so high, let's build some more apartments and milk.

High Rents Problem is, rents are projected to start plummeting. In fact, here is Bank of America's rent growth projection and what you could see is this blue line showing that inflation-based rents are rising. That's because they look at stupid data like owner's equivalent rent that lags about six months, but that yes, while actual rents have skyrocketed, they're already plummeting according to not only Zillow properties rented apartment lists, uh, website data, uh, rentals and yardies total rent equations showing that rents are substantially trending down. So even though Builders want to take advantage of these higher rents, they might not be able to if we see a substantial amount of Supply coming to multi-family which could hurt multi-family more than it actually hurts the single family market.

Now that's actually really interesting because take a look at this. This is is the property report in the Wall Street Journal Yes, I Still get the paper in addition to the electronic forms of research that I do, but I found this very interesting. Apartment vacancies are piling up. The biggest wave of new rental buildings in nearly four decades is expected to cut rent growth across the country.

In other words, we're already seeing a substantial flood of new supply of apartment buildings. Plus what you just saw on the housing starts: Morgan Stanley Report Right here: You're building way more multi-family than You're Building single family. So what you want to be thinking to yourself is, if you're thinking about getting into the real estate market, you might want to have a bias towards single family instead of multi-family going forward. especially when you consider household formation.

Okay, household formation is a little bit complicated to think about, but population hasn't actually changed that much. So it's not like you have some crazy substantially higher demand for housing than you did before the pandemic, but you did. So what changed household formation changed household formation is when you have young people, for example, move out of their parents' homes and go get their own pad. They get their own apartment or their own house or whatever.

Or maybe they move from an expensive area where they have roommates to buying their own house in Texas or Vegas because it's cheaper and they can have their own place, right? That's household formation. It's when you see maybe three individuals sharing a place each go into their own individual apartment. Now you have three households when previously you only had one. That's household formation, and during the pandemic, it exploded.

In fact, listen to this early lockdowns created pent-up demand for housing that exploded in the months after the introduction of Covid-19 vaccines in late 2020. many young people went out to rent their first home, and a sudden increase in people searching for apartments helped rents climb over 25 percent in two years now. However, that same thing is happening in Reverse It has gotten very expensive to live alone thanks to the crazy inflation that we've seen and wages actually growing at a negative Pace relative to inflation. That means even though it feels like we're getting paid more, our money is going less far and we're actually making less money now than we were in 2019 on average, of course.

Now that is leading to concerns that we're actually going to see more multi-family building at the same time as we see less household formation. That means you're probably going to see no guarantees, but probably going to see more pain multi-family real estate than you will in single-family real estate. Or potentially you see a delayed bottom, right? So what that could mean is single family real estate might bottom it at the end of 2023. For example, multi-family might not bottom until 2025 when all that new construction floods onto the market.

So that's a really interesting disparity. Usually we think of real estate as aligned, but no, you just have to look at the construction charts and you see a difference. Then you consider household formation and ask yourself this if people are going to move in together and be roommates because maybe recessionary times or inflation or whatever, are they more likely to be roommates in a single family or in apartments? In other words, previously we went from a house with three people to three. Apartments What if now we go from three Apartments to one single family.

That again gives you a little bit of boost to single family and more pain to multi-family now. I I Want to be clear I Don't really think I have a bias between either single family or multi-family I just want to buy the best deals I'm just trying to transparently share that I Believe my vision for House Hack based on the data that I'm seeing. uh, not just on this piece of paper, but elsewhere. Is it looks like single family is going to be the better strategy first and then as single family rebounds later, It might make sense to get into Multi-family Now, keep in mind we are looking for accredited investors for House Hack and now this video can't be a solicitation where you can go to Househack.com to sign up if you're an accredited investor and we're releasing the non-accredited round probably in March.

So if you're not an accredited investor and you want to be a part of what we're building with Househack at a one-to-one valuation which is crazy for startups to do a one-to-one valuation. Really, really good. Uh, take a look at the details. Obviously on Housesite.com you can learn all the perspectives and the fine print that PPM right? Private placement? Remember everything.

Read that, Be educated right? Um, go to Housesite.com Learn more If you have questions, email us at IR Househack.com But let's continue with this right here. Listen to this now. many of the same prices places that shot up in price are seeing slides in demand and rents are going down between April and October 2022. Rents fell three percent in Vegas Two percent in Phoenix One percent in Tampa Florida According to apartment list, all three of those cities saw rents rise more than 30 percent in the preceding two years.

On top of that, affordability is now becoming challenged. Of the 44 million households that rent in America more than 19 million, almost 50 percent of rental households spend more than 30 percent of their income on rent. And the more that level goes up, the less people are motivated to create their own households. Instead, they want to share places with other people.

right? Easier to do that in a house than an apartment obviously? then, uh, you have here. If migration and household formation continue to slow, Analysts said some markets could see a full 12 months of negative rent growth starting sometime this year 2023.. It also goes on to say here that according to an individual actually the VP of data of the data division AT Yardi Systems sites Miami Austin and Raleigh North Carolina as places with an especially large amount of new supply of multi-family homes expected to open this year and in 20. Oh, this is also interesting.

Now This actually changes the mindset for investors as well. I Saw this a lot with the Uh REITs like Invitation Homes and American homes for rent I Saw a lot of this: people would basically buy a single family home and rent it out and they do like no work to it. Listen to this. in 2021 and into early 2022, you could raise rents significantly without doing a lot of work to the property itself.

We don't see that happening going forward according to a group of landlord investors, blah blah blah. Whatever What this telling us. these facts so far are telling us that single family has advantages in that less new single-family construction, less household formation for apartments, potentially more consolidation into single families, and a requirement that people if they want actually to maximize rents, that people actually focus on renovating properties. Which is actually really interesting because that's also exactly what our plans are with: Househack to buy homes, fix them up to a high quality standard, and then rent them out to median to slightly above median tenants who are highly qualified to minimize our risk of eviction, knock on wood I've never had an eviction in my career, so very, very excited about the future.

But I Want to pay attention to these changes and Trends because as the stock market works, the real estate market fluctuates as well and we want to pay attention to those changes so we can make the most educated decisions. Consider subscribing and following me for more if you want to Shadow me make sure you you check the link out down below you can shout out me in person and we could chat about real estate. Thanks so much for watching and we'll see you soon! Thanks Bye.