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Published Feb 9, 2023

State of Play: Real Estate Markets and Investing — with Dave Meyer

Scott Galloway delves into the implications of population decline on economic growth and climate issues, proposing pro-family policies, while Dave Meyer offers a deep dive into the shifting landscape of the US real estate market, analyzing investment strategies and reacting to changing interest rates post-pandemic.
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Episode Highlights

  • Residential Trends

    The US residential real estate market is undergoing a significant correction, though not a crash, as affordability reaches a 40-year low. notes that pandemic hotspots like Austin and Seattle are experiencing the steepest declines, while traditionally stable markets such as Chicago and Boston remain resilient 1. He explains that sellers are hesitant to lower prices, leading to fewer new listings and a standoff in the market 2.

    Eventually, sellers will get the memo, and that will probably push inventory up, it will push days on market up, and that will eventually lead to declines in prices.

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    This situation is expected to improve for buyers as sellers adjust to the new market conditions.

       

    Interest Rates

    Interest rates play a crucial role in shaping the real estate landscape, with recent fluctuations impacting market activity. highlights that mortgage rates have decreased from their peak, but future movements depend on economic conditions 3. If the economy avoids a recession, rates might rise again, but a recession could lower them, benefiting buyers.

    Mortgage rates are nothing tied to the federal funds rate. It is tied most closely to the yield on a ten-year US treasury.

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    This dynamic underscores the importance of understanding interest rate trends for real estate investors.

       

    Luxury Market

    The luxury real estate market, particularly in vacation hotspots, is facing a downturn as demand for second homes declines. observes that areas like Aspen and Napa, which saw rapid price increases during the pandemic, are now experiencing a pullback 4. The oversupply of short-term rentals and reduced investor interest contribute to this trend.

    Second home demand is down below pre-pandemic levels. So if you just believe in supply and demand, you have to think that that's coming down.

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    While these markets may not return to pre-pandemic levels, significant declines are expected.

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