2023 Housing Market Predictions (ENCORE Episode!)

Dave:
Welcome to On The Market, and happy Thanksgiving to everyone. I hope you enjoyed a wonderful Thanksgiving, and I hope that you enjoyed the day after Thanksgiving even more where you get to eat all those delicious leftovers, hopefully piling everything onto a giant sandwich and then going into a food coma for the rest of the day. For today’s episode, we’re actually going to be replaying an episode that we recorded last year where me, Kathy, Henry and James made predictions about 2023. Now that the year is winding down, we wanted to be accountable and share with you what we thought was going to happen in 2023, and you can see for yourself what we got right and what we got wrong.
We’re choosing to do this right now because next week we are going to be airing our 2024 predictions. So listen to today’s episode and you can evaluate our credentials for making predictions, see how well we did last year, and that should give you some context for our predictions episode that is coming next week. Okay, so hopefully you enjoy this replay episode and join us again next week for our 2024 predictions. Hey, everyone. Welcome to On The Market. My name’s Dave Meyer, I’ll be your host, and I am joined by three wonderful panelists. First up we have Henry Washington. Henry, what’s going on?

Henry:
What’s up, Dave? Glad to be here, man. Good to see you again.

Dave:
You too. We also have James Danner. James, how you been?

James:
I’m doing well. We have a sunny day in October in Seattle, which is very rare, so it’s a good day.

Dave:
Cherish it.

James:
I am.

Dave:
Kathy, how are you? Probably sunny and enjoying Malibu ’cause it’s always nice.

Kathy:
It’s been foggy, but you guys, I’m still recovering from BPCON. I don’t know about you, but trying to keep up with all these youngsters.

Dave:
Kathy is completely lying, by the way. She was leading the charge. There’s no way. You were hanging in with us. You were absolutely driving all of the fun we had at BPCON. All right. So today we are going to talk about… this show gives me a little bit of anxiety because we are going to try and make some forecasts about the 2023 housing market, which normally housing market years, it’s not that hard to predict. It usually just goes up a little bit, but the last couple of years have gotten pretty tricky, but we’re going to do it anyway because even though none of us know exactly what’s going to happen, this type of forecasting and discussion of the elements of variables that go into housing prices could help all of us form a investing hypothesis for next year and make better investing decisions. Sound good to you guys?

Kathy:
I should have grabbed my crystal ball. It’s in the other room.

Dave:
I know. Mine is very broken right now, unfortunately.

James:
I think everyone’s is broken.

Dave:
All right it’s time to make these very frightening predictions for the 2023 housing price. Who is bold enough to go first? Henry, I’m looking at you man.

Henry:
Absolutely not.

Kathy:
Are we talking rates?

Dave:
No. I want you to guess year-over-year, one year from today, where are we? What day is this? It’s October 12th. One year from today, year-over-year housing market prices on a national level where are we going to be? Right now, we are at about 7% from 2021 to 2022. Where are we going to be in 2023? What do you got, James?

James:
I do believe that we are going to slide steadily backwards and that we’re going to be looking at about a 9% drop. We’ve just seen too much appreciation. I think we were up what, nearly 10, 12% last year? Then from 2018 to 2020 we saw over 30% growth in home prices, and so the growth has just been too large. I think it’s going to pull back and we’re going to see about a nine to 10% year-over-year drop from where we are at today.

Dave:
All right. Henry, I’m going to make you answer this.

Henry:
No, I want to answer it. I think that’s aggressive. Maybe it’s because the Seattle market is the one having the largest pullback right now compared to the rest of the markets in the country. So but not joking, you’re feeling it more than everybody else is, ’cause you’re So heavily invested in that market where I’m the opposite. We’re still seeing… sorry, we’re still seeing home price growth here, so I don’t know. I think on a national scale it’s probably going to come down, but I don’t know, 5%, I feel like it’s still even a lot, but that that’s my guess.

Kathy:
Wow. So if I came in around 7.5, I’d be right between you two? I’m going to stick with my 7.5. I played this game on car rides, you guys.

Dave:
Isn’t there a movie about that, the number 24 or number 23 where it’s like everything comes down to that number? That’s you, Kathy.

Kathy:
There it is, 7.5. I don’t care what the national number is. I really don’t care because look at Henry, he’s like, “I don’t care.” I’m not in those markets that are going to have a pullback. If you got into Boise or Austin or Seattle a year or two years ago, you made a lot of money and some of that’s going to get pulled back. It’s not the worst thing in the world for the person who owns the home because if you hold it long enough it’ll rebound eventually. It’s obviously really hard for people who are trying to sell right now, better price your property right. But if you are in markets, Tampa’s another market where prices went up a lot, but there’s still so much demand they’re not really seeing the pullback that some of the other cities are that saw such massive gains over the last year.

Dave:
Kathy, you’re absolutely right, and we do want to allow you to have your public service announcement that there is no national housing market, which is true. You’re absolutely right, but just to clarify, ’cause I have to hold you to this, was that a +7.5% or or a -7.5%

Kathy:
It was a -7.5 nationwide.

Dave:
Just making sure.

Kathy:
Nationwide, and then I think that’s going to come from certain areas going down 20%-

Dave:
Totally.

Kathy:
… where other areas might go up a little or stay flat, but overall, I think it’ll be a national number will be negative. So let’s say 7.5% ’cause I’m right in the middle, and it’s a safe place.

James:
One thing that I think everyone should know is typically when housing starts sliding backwards, the more expensive markets actually start going first and then it does catch up across the board. Because at the end of the day, rates going to be up 75% of cost of money from where they were 12 months ago. It’s just something to pay attention to because when money gets increased that rapidly, nothing is protected. They’re doing that on purpose. If they’re trying to put us into a recession, it’s going to have impact across the board, ’cause Seattle used to be a more affordable market. We were actually always one of the last markets to get hit.
In 2008, we were one of the tail end areas to start deflating, but now it’s became an expensive market, so we were one of the first to go off. So always check the trends in your historical trends too in your neighborhoods. What Kathy said was completely right. Look at where you’re investing, not the national. National will throw it way off, and then just check those trends. See what it’s done in other prior recessions during that time, and it will give you some predictability. Then just check the growth, and if the growth was rapid, it’s probably going to come back a little bit quicker.

Dave:
Well said, and there’s never been more data available for people too. You can go on just regular websites like Zillow or Redfin or realtor.com and see what’s happening in your market in terms of inventory, days on market, pricing. So there’s really no excuse not to do it, it’s free. You can get a lot of this information right there and look up just what Kathy and James were saying.

Henry:
I think what throws a wrench in those plans, though, is that there’s going to be less competition out there, but there’s still going to be people who can afford to buy single-family homes, and there’s still going to be a shortage of those homes. So even though the interest rates are higher, there’s still going to be a subset of people who can afford to pay those interest rates and who are going to want to buy homes because they can get a little bit better price and there’s less competition out there, which is going to help the sales numbers.

Kathy:
Right. That’s such a great point. 552,000 homes sold in August. We’re still on track for over 5 million this year, which was the average over the last decade if you take out COVID, so homes are still selling. It’s definitely down from the crazy frenzy of the last couple of years, but it’s down to somewhat normal. Would you guys agree with that?

Henry:
Absolutely.

Dave:
I think as soon as mortgage rates get a little bit more stable, people will do it. It’s just like every day it’s just so volatile right now I think that probably is people a little afraid. But at some point, people are going to have to get used to it cause personally, I think even if the Fed starts cutting rates, we’re not going down to 4% again anytime soon. We’re going to have to live with something in the fives probably. So I think people are just going to have to get used to it at some point and start buying again. Okay, I am going to make my guess. It’s right in the middle. There’s not that much variance. I think we also of think it’s the same thing, so I’m going to just go with 6%. Since Jamil’s not here and-

Kathy:
6% negative?

Dave:
6% negative, yes, I definitely think that national housing market’s going down. I’m going to give Jamil a +12% as his estimate because he declined to be here. He’s on the record saying he thinks the housing market’s going on 12%. All right. Well, that’s all fun. As Kathy said, listen, the national housing market, totally agree. It doesn’t really matter. It’s for the headlines, and it is fun to just guess and see how we do on these things. But I’m curious in moving on to some more anecdotal things that you all are thinking about. I want your hot take for 2023. This can be about the housing market, the economy, the state of the world. What’s a unique thing that you think is going to happen next year that will impact the lives of investors I guess I would say? Anyone want to go first?

Kathy:
Oh, my gosh, I’ll jump in.

Dave:
Yes, Kathy, go.

Kathy:
[inaudible 00:10:32] Do you think?

Dave:
Yeah.

Kathy:
Oh, you guys, you guys, you got to understand. You understand the difference between a seller’s market and a buyer’s market and people, they mess this up all the time buying in a seller’s market and selling in a buyer’s market. Oftentimes, I’ll talk to a room and say, “Do you know what a seller’s market is?” They’ll say, “Yeah, it’s a great time to buy!” So I just want to be super clear that a seller’s market means this seller has the power. They can do whatever they want. They can put a house on the market with nothing fixed, with all kinds of problems to say, “You know what? You don’t even get to do inspections. This is the price,” and then get people overbidding.
That’s a seller’s market, the seller has the power. That’s what we’ve had for two years. It was a tough market. If you’re a savvy investor, you could still work around that, but man, if you were flipping houses, what a time. You’ve got the power. If you’re a home builder like we’ve been, wow, got people lining up for your homes. It is shifting. It’s shifting to a buyer’s market, and this is the time to buy. It’s so funny ’cause people are freaking out. It’s like it’s your turn.

Dave:
That’s such a good way to put it.

Kathy:
If you’ve bought and you’re holding on and rents are solid, you’re good. This is the time to get in there and not have all that competition. You have the power. You get to negotiate. It’s a buyer’s market. I don’t know how long that’ll last because I do think eventually, the Fed’s going to get what they want. They’re going to slow things down, and that’s going to, again, bring potentially mortgage rates down. I really think they will, not lower than 5%, maybe slightly or if you pay points, but as soon as those rates come down, what do you think’s going to happen? People are going to come pouring in again as buyers. So you have this window to take advantage of what might be a small opportunity to play in a buyer’s market as a buyer.

Dave:
I love it. That’s a good way to put it, Kathy. Yeah, I think it’s just crazy that people are yearning for what was going on last year. No one wanted to buy last year and now they’re like, “Oh, but interest rates are high, and now it’s going down?” It’s like everyone was completely about it last year. So I think a lot of people are just scared to get in the market at all, and that’s the problem. But as Kathy said, good opportunity right now. Henry, what’s your hot take?

Henry:
My hot take is surprise, surprise at me being a single family and small multifamily investor. I think single-family homes become a very, very hot commodity and something everybody wishes they kept more of or could get at the prices they’re able to get them at right now because of the supply and demand issues. So you look at the interest rate hikes and you look at inflation, at some point, I think those things either level out, maybe start to come down. I don’t know if it does in this year, but at some point, it’ll become normalized. Like you said, the people will continue to buy. But our supply and demand problem didn’t get fixed through all of this, right? There’s still a need for housing. I got approached by a hedge fund just last week asking me if I had any deals, anything in this area that I would be willing to sell them.
I think their thought is the same is that these single-family homes are going to be in need and that over the next, I think a year is tough to predict to say, but over the next couple of years, I think definitely they’re going to be more valuable and in a commodity that a lot of people want to be able to get their hands on. You’re right Kathy, it’s your time to buy, and so we are doing just that. We’re buying, and I’m more bullish on single-family homes than I have been in the past. I’ve typically been flipping all of my single families, but just today we closed on… literally right before this, I had my title company here in my office.
We closed on a single-family home that we’re going to keep. We may start to look more aggressively at not flipping all of the singles and keeping them because the people who own the single-family homes are going to be in the best position to make the profit as well as… The interest rates right now, there are some people who aren’t buying maybe because they can’t, maybe ’cause they don’t want to. But then they have to live somewhere so they’re renting and rents are still doing well here. So I think owning that single-family home, you’re going to be able to get outstanding rents, and I think it’s going to be a more valuable asset to everyone than it seems that it is right now.

Dave:
All right. I like it. James, what do you got? Something controversial maybe?

James:
So I think 2023 is going to be a pretty big shock year for people, and I am actually predicting that defaults are going to be extremely high,

Dave:
Really?

James:
Not percentage wise, but in a different sector. I actually think it’s going to be in the investment sector, not the residential homeowner sector. I think over the last 12 to 24 months, we’ve seen a lot of FOMO and greed in the investment space, and there’s been a lot of purchasing of bad assets or assets that had artificial performance. What’s going to happen is if the market corrects down, which I believe will happen, you’re going to see people needing to bail out of these deals because they had bad practices, they did the rust investments. They were packing performance because they just wanted to get into the market, and I do think there is going to be a graveyard of investment properties and opportunities out there, and that’s really what we’re gearing up to buy.
We’re actually gearing up to buy half-finished town home sites, fix- and-flip projects that are red tagged and stuck and tore apart. I think you could see in the short, short-term rental market, people walking away from properties ’cause they were putting 3.5% down in markets all for the appreciation and those investment engines are slowing down. The high-yield investments right now are not yielding the same growth. Flipping is not doing that well. Development is not doing that well on the margins in a lot of markets. Short-term rentals are down too. These high-yield investments are going to deflate backwards and I don’t think people accounted for that, or they had all stars in their eyes rather than balanced look at portfolios.
I think this is going to be a massive opportunity for investors to purchase bad investments that need to be stabilized and turned into profitable ventures. I think this is going to be a big deal in the next 12 months and I know personally I’m geared up for it and gearing up for it because it’s just the writing’s on the wall for a lot of people. Bad underwriting, greedy underwriting, bad plans, and that equates to inexpensive money in a lot of these deals. That creates a recipe for disaster, but they will need to be purchased and that’s where investors are going to have a lot of opportunity If they have the right plans, right systems in play and the right capital in the door, there’s going to be a lot of opportunity out there.

Kathy:
100%.

Dave:
All right.

Kathy:
Yeah, multifamily particularly. Yeah, there was just insane underwriting.

James:
Oh, talk about stacking performance. They were just stacked. People were just pumping every little yield into these deals, and if you do it that way, that’s where the risk is and it’s going to hurt on the way out the door. It’s all market time at that point and you have missed the market. That game is over.

Dave:
That’s really interesting ’cause when you said that you were going to see a lot of defaults, I was surprised because when you look at home buyer positions like American home buyers are in pretty good position to service their debt right now, but what you’re saying makes total sense. There’s a lot of people who got pretty greedy. We did that show a couple of months ago, Kathy, you said you were looking at two multifamily, right? Syndications that were just crazy with some of the assumptions that we’re making. That was like people were still doing those types of deals even after the writing was on the wall, and you could see that the market was changing gears.

Kathy:
It’s still happening. It’s still happening. On this last one, again, I won’t say who it is, but it’s somebody who’s on a lot of podcasts and they were using… I don’t know if you know-

Henry:
And their initials are…

Kathy:
… who it is, and when we underwrit it… underwrit, is that a word? Underwrote, they were using the reserves as a return, not a return, a return on capital, not even a return of.

Dave:
What?

Kathy:
Basically saying that was profit. Well, first of all, you’ve got reserves set aside ’cause you’re probably going to need them. If you have an older building, I guarantee you’re going to need those reserves. But to put them in the proforma as if it’s profit, oh, boy, I was just like, oh, boy.

Dave:
Yeah.

Kathy:
It’ll be interesting.

Dave:
Wow. Yeah, James, so that actually goes well with my take, and I was going to be a little bit more specific. I’ve said this a little bit, I think there is a storm brewing in the short-term rental market, specifically. If you look at the way those markets grew, it was even faster… I’m not necessarily saying short-term rentals in cities, but in vacation hot spots have gone absolutely crazy over the last couple of years. We saw a demand for second homes go up 90%. So that combined with the increased demand from investors just sent those prices through the roof. Like you said, people put 3.5% down and they were seeing this perfect storm where the supply of short-term rentals has continually gone up. I think it was up like 20% year-over-year.
So there’s way, way more short-term rentals than there have ever been at a point where if we hit a recession and we continue to see this inflation that’s hurting people spending power, we’re discretionary spending things, and going to a short-term rental is probably going to go down. So you could see the whole industry have more supply but less revenue, and that could put really people in a bad spot. I’m not saying this is going to be everyone. I think people who are experienced operators, people who have good, unique properties that stand out can still do well. But I personally believe there’s going to be very good opportunity in these markets over the next couple of years like James said, and so I’m excited about that. The other thing I think that’s happening in the short-term rental market that is this slow-moving freight train is all the regulation that’s going on in short-term rentals.
More and more big cities are starting to regulate, like Dallas just regulated. I think Atlanta is starting to put in regulations, and I think that trend is really going to continue, and we’re going to see an erosion of opportunity in the big cities. People who have grandfathered in will probably do really well ’cause there’s going to be constrained supply. But I think that’s going to be a really interesting thing to watch. If housing prices stay this high, more and more municipalities are probably going to be tempted to try and solve the housing problem with regulating short-term rentals, which makes no sense to me, but I think they’ll try and do it anyway.

Henry:
Well, it might make no sense in some smaller… but we just got back from San Diego. There’s tons and tons of Airbnbs out there and they’re starting to impose more restrictions. The same reason why Atlanta’s doing it is because tons of people were buying property, they’re turning them into Airbnbs. Again, there’s a supply and demand problem. So the best way they can think to get more housing on the market, the quickest is you impose these taxes and rules and things and only allowing people to have a certain amount of Airbnb property that they own, and that frees up housing almost immediately. Is it the best move, the right move? I don’t know. That’s not for me to say, but it is absolutely happening, and that’s why I think people need to be careful. Just as an education piece, we’re not saying that Airbnb’s bad don’t do it. I always say if you’re going to buy an Airbnb property, you want to be able to buy it and have more than one exit in the event that some regulations change.
We just bought a property that we bought solely to use as Airbnb, but we also bought it at a point where if we renovate it and we don’t get the return that we want, we can sell it and still make a profit. So I have two exits there, but not everybody’s doing that. Especially what we saw over the last year-and-a-half to two years is people had all this extra money. They didn’t have all these restrictions on where they had to live. They started buying second properties and Airbnbs in all different places, and they weren’t really evaluating what the numbers were going to do if they didn’t have to do it or use it as an Airbnb if they had to pivot and do something else because they were just like, “Well, it’s appreciating. It’ll appreciate. It’ll be fine,” and that’s not what we’re seeing anymore. So just be careful about the markets you’re investing in and be careful about the numbers and have more than one exit, cause if you’ve got a second exit and that exit is positive, then you’re fine.

Kathy:
Yeah, a great hack around that, by the way, is buying short-term rentals just outside of that perimeter of where they’ll be illegal. That’s what we have. We’re two houses away from where those rules are, so we’re still slower. It’s definitely still slower right now. Then also if you are stuck with a short-term rental that’s not performing and you’re upside down, really consider some of the shared vacation ownership because it makes vacation home purchases really cheap if you split it between eight owners. Some municipalities don’t want that either because then you’ve got all these vacation homes with multiple owners. But again, if you just stay right outside the city perimeter, then you’re usually allowed to do it.

Dave:
That’s good advice, and places that need it to survive the economy, I think Avery said that on a recent show too. It’s like if you’re in a tourism-dependent destination, I have a Airbnb in a ski town where there’s very few hotels, which makes no sense, but they need to drive the economy. They absolutely need short-term rentals. So while they’ve raised taxes, which is fine, they’re not eliminating it, but just to want to say, Henry, I get the logic of why they’re doing it. But short-term rentals, even though it’s gone up so much, make up less than 1% of all the housing stock in the U.S., so it could help, but it’s like it’s a short-term fix. Maybe it will help short-term, but it’s not going to address the long-term structural issues with housing supply in the U.S.

James:
That’s hotel lobbyist money going to work. [inaudible 00:25:26] Hotels don’t like losing money.

Kathy:
Yep.

Henry:
It’s the Hiltons [inaudible 00:25:31]

James:
Airbnb needs their own lobbyists.

Dave:
Oh, I bet they do. I bet they’ve got [inaudible 00:25:36]

Kathy:
I’m sure they have it.

Dave:
All right. Well, we could talk about this all day, and I’m sure throughout the next year we’ll be talking about the 2023 housing market. But we do have to wind this down because Kathy, we have a special request of you.

Kathy:
Oh.

Dave:
A listener reached out with a question just for you, which we will get to after this quick break. All right. Well, Kathy, you are on the hot spot. You’re in the hot seat right now. We had a listener named Gregory Schwartz reach out and said, “This question is in the title.” The title was, “Will Increasing 10-Year Treasury Yields,” we talked about this a little bit, “decompress cap rates?” I’ll let you explain that, Kathy, but he said, “The question’s in the title. I’d like to hear from the panel, but mostly Kathy Fettke, you’re the favorite. I believe she mentioned something about this relationship in the most recent podcast. I read an article that the historical average spread between 10-year cap rate and multifamily… 10-year yield,” excuse me, “and multifamily cap rate has been 2.15%.” Kathy enlighten us.

Kathy:
Well, it’s such a good question because if you could get 4 or 5% if wherever the 10-year ends up, like you said earlier, that’s a pretty safe bet. You’ve got the U.S. government backing your investment and they haven’t failed yet. I think at one of the conferences I was at, someone was selling a 2 cap in Houston, so that’s going to be a lot harder to sell.

Dave:
Basically, a cap rate, it’s a formula that does a lot of things in commercial real estate, but basically, it helps you understand how much revenue or income you’re buying as a ratio to your expense. So basically, the easiest one is like a 10 cap. If you’re buying 10 cap, you’re basically getting… it will take you 10 years to repay that investment. If you get a 5 cap, it will take you 20 years to repay your investment, generally speaking. So when cap rates are low, that’s good for a seller because they’re getting way more money. When cap rates are high, it’s good for a buyer because they’re buying more income for less money relatively.
So I think what they’re asking, and just generally speaking, cap rates are very low right now, and no one sets cap rate. It’s like this market dependent thing where just like a single-family home, a seller and a buyer have to come to agreement. Right now, I don’t know what the average cap rate is in the country. It really depends market to market, depends on the asset class. It depends on competition, what rents are. It depends on all these things, but generally speaking, they’re pretty low right now. Just like everything, it’s been a seller’s market. So my guess is that what Gregory’s asking, is will it become more of a buyer’s market in the multifamily space?

Kathy:
Yeah, and that’s what I was saying earlier is exciting is when you’re in a seller’s market and everybody’s bidding for the same property and prices go up, your return goes down. Your cash flow is down. So for the past few years it’s been really hard to find properties that cash flow or the cash flow has definitely gone down and the cap rate has gone down. In single family at least, as prices come down generally then you have more cash flow except the interest rate is a problem. So I would say that in commercial real estate, the biggest factor to focus on is the interest rate because generally, that is tied that if interest rates go up, your NOI, your return goes down, and that will affect pricing more. So I think more commercial investors are worried that cap rates will increase, which again, if you’re a buyer, that’s great, but if you’re trying to sell, that’s awful. If you bought it at a low cap rate, which is a high price, you got to sell it at a higher cap rate, it’s a lower price. You’re going to take losses.

James:
We’re seeing that in the market right now. Locally in Washington, we are apartment buyers. We typically have been buying 20 to 30, 40 units at a time. That’s the space we’ve had to hang out in because the big hedge funds have been buying these properties. If it was above 40, 50 units, the hedge funds were buying, they were buying it like a 3 cap, which is Filesadmin.coarre to me. I don’t understand why anybody would want a 3 cap. But as the rates have increased and their cost of money’s increased and now the bonds that they can also redeploy into and get a good return, we’ve seen them really dry up. We just recently locked up an 80 unit and we got a 5.6 to 5.7 cap on that, which was not in existence the last 24 months. So the cap rates are definitely getting better, especially in the bigger spaces.
We’ve been getting good cap rates in the small value add for the last 10 years in our local market, but we had to put in a lot of work to get it there. Now we can buy a little bit cleaner in that space because it’s less competitive and the opportunities are definitely there because, again, we could not touch that product. I think that the property that we’re in contract on, it was pending twice prior to the rates really spiking for 2 1/2 to $3 million more than we’re paying for. So as the rates come up, pricing comes down, gets way more opportunities out there. Then also to think about too, the debt coverage service ratios are changing rapidly right now too. So investors have to leave a little bit more capital in the game too. So it’s really slowing everything down, but it is creating a lot better opportunity in a way healthier market to invest in because you should not be getting into a 3 cap, or at least that’s my firm. I just-

Dave:
It’s crazy.

Henry:
It’s insane.

James:
It’s disgusting.

Dave:
Yeah.

James:
It grosses me out. I don’t know, earn some money. But now the investments are more balanced into they’re there to buy, which is great.

Dave:
Generally, I think, yeah, there’s a lot of factors that go into the cap rate that something trades for, but I think generally speaking, they’re going to expand and it’s going to become more of a buyer’s market. But we have to remember that multifamily, at least multifamily, excuse me, that commercial specifically multifamily is based off rents. If rents keep going up, I don’t think we’re going to see cap rates expand too much. They probably will just because of interest rate, but there probably will still be fair demand from investors if rents keep going up because it’s still going to be one of the better, more attractive options in real estate, I think.

Kathy:
That’s going to be a big if because Yardi Matrix just came up and said rents were unchanged and then Apartment List said there were actually declines.

Dave:
Did they?

Kathy:
Mm-hmm.

Dave:
Okay. That’s really good because we had a production meeting before this, and that’s going to be one of our upcoming shows. I saw some headlines about that, and we’re going to do some research and dig into that. So thanks, Kathy. All right. Well, Kathy, great job, Henry, James also great job. I guess we’re not as cool. We don’t get the specific questions asked for us, but it’s okay. I’m not that offended. But thank you all for being here. This was a lot of fun. We’ll come back to this and check out how our predictions and forecasts did in about a year, but in the meantime, it’ll be very fun to… or at least very interesting, I don’t know about fun-

Henry:
We’re good to go.

Dave:
… to see what happens over the next couple of months. Obviously, for everyone listening, we will be coming to you twice a week every week with updates on the housing market. Before we go, if you like On The Market, if you are so impressed by our incredible foresight and ability to predict the future, please give us a five-star review. We really appreciate that either on Apple or on Spotify, and we would love if you share this with a friend. If you know someone who’s interested in real estate investing, someone who just wants to buy a house and is trying to understand what’s going on in the housing market, please share this podcast, share the love.
We work really hard to get this out to all of you. We know that a lot of you at BPCON were telling us how much value you get from it, so share the love with your friends and your community as well. Kathy, Henry, James, thanks a lot. We appreciate you. I’ll see you all soon. On The Market was created by me, Dave Meyer and Kailyn Bennett. The show is produced by Kailyn Bennett, with editing by Exodus Media. Copywriting is by Calico Content, and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.