On The Market

The affordability crisis isn’t improving. Gas is above $4 per gallon, ⁠inflation⁠ just hit 3.7%, and paychecks aren’t keeping pace. This is a tough spot for the American economy, but why does it feel like we’re getting hit on all sides of the affordability spectrum? Today, I’m breaking down the American household’s affordability crisis, and whether it’s a modern spending problem or something much, much deeper. We’re going into each lever that’s curbing affordability in the United States: wages, prices, ⁠savings⁠ rates, which generations are being hit hardest (not much of a surprise), overconsumption, and subscriptions that used to be one-time charges. I’ll also track the progress from the past three decades (2019, 2009, and 1999) to see where we went so wrong. If you make more money than ever but are still shocked by how little you can save or how much necessities cost, you’re not alone. We’re breaking down why Americans feel so squeezed, which prices are hitting hardest, and why a ⁠pay raise⁠ (unless it’s colossal) may not be enough to solve this.

⁠Commercial real estate⁠ prices have fallen 20%-50% from their peaks just a few years ago—but the slide may not be over yet. A “second wave” of the commercial real estate crash is on the horizon now that ⁠interest rates⁠ are back around 7.5%, and struggling multifamily, office, and commercial investors who thought a long-term refinance would save them are now in a stickier spot. So…how much lower can commercial real estate prices go? He was right about past crashes, so we asked Brian Burke to join us again on the show for his take. Brian, quite famously by now, sold most of his ⁠multifamily⁠ portfolio at the peak of the post-COVID boom, took profits, and sat on the beach for a few years while strategizing when (and how) to get back into the market. But even Brian isn’t convinced this is the bottom for the multifamily market—rent concessions are plentiful, lease trade-outs are negative (new renters are paying less than previous renters), and ⁠cap rates⁠ haven’t expanded enough. But the time to strike could be coming soon. Today, Brian shares the game plan he uses to gauge when to get back into a bottoming-out market, and what buyers must do to get a great deal, great funding, and a great exit.

The housing market isn’t going back to “normal” anytime soon. In fact, it could take significantly longer than many of us thought. Rates are around 7.5%, median home prices hover near $400,000, but your salary is not keeping pace. Something needs to change: is it rates, prices, incomes, or a combination of all three? I did the math and have an answer for how long it will actually take for the housing market to recover. So first, what does a "normal" housing market actually mean? We’re going to look at two data sets: 1989-2026 and 2019 levels, the last year before pandemic-fueled ⁠inflation⁠ started to boil the housing market. Back in 2019, Americans spent only around 15% of their income on housing payments; today, it’s nearly 25%. So, how do we return to a market where homes are actually affordable? I’ll walk through each scenario: wages rising significantly, ⁠mortgage rates⁠ falling, and ⁠home prices crashing⁠, and then paint a picture of what happens if all of them (reasonably) move in the right direction. If someone is convincing you the market is about to get much cheaper, or much more affordable, or that you should just wait until it’s easier to buy…good luck.

A Fed official says what we’re all thinking: ⁠home prices must drop⁠—and sellers seem to have gotten the message. Per a recent Redfin report, 44.7% of home sales included seller concessions such as price cuts, ⁠rate buydowns⁠, covering closing costs, or even renovations, repairs, and expensive layout changes. So, if you’re a buyer, how do you get the most from your seller on the next deal? We’re back with this week’s headlines! We’ve brought good news for buyers, scary news for sellers, and strange-smelling stories about multifamily investors. Seller desperation is peaking as concessions offer buyers the biggest opportunity in six years. Even the Fed is taking note, as one official warns about home affordability and why prices need to drop to make progress. Now, what the heck is that black stuff behind the fridge? That’s the question multifamily investors are asking themselves as mold-based litigation ramps up and renters prepare to get paydays thanks to some severe spores. If you own a home in the Northwest, the South, or anywhere else that gets humid, here is what you should do to avoid a pricey repair.

America could enter what nobody wants—a “lost decade.” No huge gains, no massive price drops, just a slow, stagnating market where ⁠inflation⁠ eats away at the returns we once thought were normal. ⁠Stocks⁠ are already massively overpriced according to the CAPE Ratio and the Buffett Indicator, ⁠real estate⁠ is unaffordable and already seeing real price declines, and ⁠commercial⁠ has fallen off the proverbial cliff. Can we go up from here? The argument isn’t looking optimistic. So, if it’s about to be a whole lot harder to make a return on real estate, in the stock market, or anything else worth buying, what should you do? Today, Dave breaks down America’s “lost decade” and what to do to protect your wealth from inflation erosion that looks more likely by the day. There are ways to maintain strong real estate returns along the way, but most investors take the easy route and fail to profit because of it. You can escape this “lost decade,” but only if you’re prepared for it.