AAA335 Think Real Estate is Overpriced? Think Again!-Bob Fraser
Jan 22, 2020 •
In this podcast, you'll learn
6 metrics to check if the market is looking strong right now:
- Mortgage Rate
- It will stay low for an extended period of time it is primarily driven by the global money flow.
- Money is Global
- Money flows. Its driving down global bond rates and US interest rates
- All interest rates flow together
- Inflation. Are we at the peak?
- For the largest markets right now prices are at the peak
- Smaller markets prices are right above the peak
- Price to Rent Ratio
- Price to rent ratio are 25% below the peak.
- The best way to buy a real estate is called a discounted cash flow basis. Look at the cash flow that you're going to receive from the investment and that determines the price you will pay.
- Supply and Demand
- Multifamily massively recovered since the crisis and above where they were pre crisis
- Single family homes shortage. It never recovered from the crisis. There are fewer single family homes.
- Consumer Debt Services
- US consumer's debt service is lower than anytime in the last 30 years
- The percentage of their income are used to pay their debts
- Consumers are in great shape today!
- Mortgage Underwriting
- In 2006 only 50% of origination are above 700 FICO score
- Today 80% origination are above 700 FICO score
- Underwriting is still very conservative
- Having been to many crisis, people are now very aware and concern of not repeating the last crisis
- "The way to make money is to buy when blood is running in the streets" - JP Morgan
To connect with Bob, visit https://aspenfunds.us/creative-real-estate/
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