Episode 413 - The Housing Market Just Got WORSE for Airbnb Investors... *Breaking News*

Um, [clears throat] rate hikes.

Warsh is expected to almost, uh, I, I...

The, the reports I saw, almost a 90% chance we're gonna get a, a quarter point increase because inflation is increasing.

We got CPI going up.

We got, um, it accelerated .3% this, uh, month over month, and so we are anticipating a rate hike.

I'm not a huge fan of this, and obviously in the real estate game we don't like to see rate hikes, but, but fundamentally, I actually am of the camp that we should be lowering rates, not rising, raising them.

I know that rates are the tool that the Fed uses to slow inflation.

However, a lot of our inflation is due to the energy prices, and when you have a supply strain or a s- like, um, a short-term supply like, like w- with oil prices going up and we have what's going on in the Iran war and all that kind of stuff, that's not [clears throat] fundamentally, in my opinion, inflation across the board.

That is, that's a supply strain that is causing inflation in, uh, a lot of sectors.

Obviously energy, but then if, uh, it affects our food, our lumber, our building materials, all those different things that are trucked across the country.

And oil is a, is a massive part of what i- and energy is a massive part of what inflation is.

But raising rates is not going to stop the war, and so I don't, I don't understand why we would make it harder for businesses to, to borrow, um, harder for i- investors to build.

Um, and, and really the cost of capital going up, in my opinion, does not solve the reason we are seeing inflationary times.

But that's, uh, that's from our seat, um, outside looking in and, and giving our opinions on it.

But those of us in the real estate game as, um, as bland and as blah as it has been for the last two or three years with all the things going on, is it's about to get, um, m- even murkier for us because the cost of capital is going to likely go up.

And so we, we've al- already seen a lot of the mortgage markets and the 10 year, which, which follows the, the 10 year, um, bonds, and it is, they've already gone up.

They've been going up, and so I think we're hitting over 7% in most, um, uh, most loans right now.

The highest since we've had, or the highest we've had for a c- a year and a half, I think.

And so we're kind of already anticipating that.

It is something we need to think about on the buy side.

Obviously, there's three things we've always been talking about.

I feel like a broken record.

The challenges we've had in the real estate market, we've had high prices, high interest rates, and low inventory.

All three of those things just compound to make it more and more difficult to find properties that actually underwrite and perform the way we want them to perform.

And so you have to be very, very diligent and understand that now when the cost of capital is m- likely going up again, today, this afternoon, we're probably gonna hear that rates are going up.