Texas Housing Crisis - Episode 164

Investing with GoodLife

Investing with Good Life Episode 164:

In this episode of the Good Life Housing Partners podcast, Rohan and David discuss several key topics impacting the housing and real estate markets as they head into the final months of 2024:

1. Economic Update: They start by covering the latest Personal Consumption Expenditures (PCE) Price Index report, which showed inflation figures better than expected. The core PCE, a key measure for the Fed, came in at 2.6% year-over-year versus the anticipated 2.7%. This data is viewed as favorable and could influence the Fed's decision on interest rates, with potential rate cuts being considered.

2. Stock Market Insights: The hosts mention a recent dip in the NASDAQ, partly due to a DOJ investigation into Nvidia. This has heightened interest in upcoming job reports, which are expected to impact market stability and possibly lead to further rate cuts or market volatility.

3. Real Estate Trends:

a. Apartment Market: Brad Sumrok, a real estate investor, suggests that lower interest rates and sidelined equity might signal a rebound in the apartment market, with increased transaction activity expected by 2025.

b. Bascom Group: The podcast highlights Bascom's recent $57 million acquisition of an apartment complex in Bakersfield, noting its strong performance and potential for growth.

4. Regulatory Changes: The hosts discuss new rules from Fannie Mae and Freddie Mac requiring landlords to provide advanced notice for rent increases, lease expirations, and grace periods for late payments. They view these changes as manageable but note the possibility of more stringent regulations in the future.

5. Lending Forecasts: The Mortgage Bankers Association predicts a 20% increase in multifamily and commercial lending by the end of 2024, with even more growth expected in 2025. This optimism is tempered by the fact that it comes from an industry group with a vested interest in lending.

6. Texas Housing Crisis: The podcast addresses the severe housing shortage in Texas, particularly in the Dallas-Fort Worth area, where home prices have surged and there is a significant deficit in housing units, especially affordable ones.

7. New Federal Regulations: A new rule from the Financial Crimes Enforcement Network (FinCEN) will require reporting of cash purchases for residential properties up to four units to prevent money laundering. The hosts discuss the implications and challenges of this rule.

8. FinCEN and Enforcement: There's concern about the strength and effectiveness of the Financial Crimes Enforcement Network (FinCEN) in tracking and enforcing regulations related to financial transactions. The host questions whether FinCEN has enough resources and staff to enforce rules and whether they will actually pursue violators in court. They express skepticism about how well FinCEN can manage the vast number of transactions and whether it will be effective in preventing financial misconduct.

9. Office Real Estate Market: The podcast provides an update on the office real estate market, noting record-high vacancy rates and a shift towards smaller leased spaces. The host mentions that office real estate now accounts for a smaller percentage of transactions compared to before the last crisis, with significant discounts on properties, particularly in downtown LA. They discuss the challenges facing office spaces, such as decreased demand and the shift in preference towards remote work, especially among younger generations.

10. Medical vs. Traditional Office Space: The podcast contrasts the office market with medical office spaces, which are viewed as having different dynamics due to their client-facing nature. The host