Transcription
One of the reasons why I track this information is not because I'm looking at buying a home for my family or my friends trying to buy homes for their families. I'm looking at it from the investment landscape: what are the opportunities in the marketplace right now?
I'm going in heavy and buying as much real estate as I can because I personally believe in the next 18 months we're going to see a $100,000 price increase.
It's 2024. Should you buy real estate or should you build it? Because let's be honest, rates have already started coming down for almost three months, and they're going to continue through 2024. So, as people are gearing up to get into the game of real estate—build or buy—let's dive in.
So, let's address the elephant in the room right now: everything has become incredibly unaffordable. The median price of real estate is sitting at $436,000, which means for the average person buying a home, it's super expensive.
Right now, I'm in the middle of a 28,000 ft² addition on my home. Building looked one way; it was already expensive then, and the project has ended up costing a couple more million dollars than we certainly originally planned.
Well, it's not just your imagination. The cost of material has jumped by an average of 19%. Nineteen percent is like my mortgage is going to be 19% higher. But that's just now. The question is: what's going to happen to building in the future?
Well, demand for construction will probably keep those costs elevated through 2024 and 2025. According to industry experts, by the end of this year, prices could be 25 to 28% higher than they would have been compared to the pre-2020 trajectory.
So, all of a sudden, it's like, "Okay, Chris, if I'm going to build a home, are you saying it's going to cost me 25 to 28% more money than just buying something?" That's exactly what I'm saying.
Okay, so what's costing so much? Well, wood on average is up 16%, concrete masonry is up 15%, insulation is up 11%, steel is up 22%, and electrical conduit is up 12%. That's where we get this average.
A lot of people are thinking, "Okay, Chris, why are all of those things going up in price?" Well, it's supply and demand. In 2024, most experts believe that the Fed is going to have six additional major rate drops. What that's going to do is stimulate the real estate market.
So, what's going to happen to the price of commodities and building materials? Why would it come down when all of a sudden there's going to be a massive increase in demand? If anything, it's only going to increase.
The other problem is just going to be securing builders. Do we have enough builders, let alone reliable ones that can actually take on projects? There's a high likelihood that you can't even secure a builder in all of 2024, which means this is definitely going to extend into 2025.
Check this one out: the CBR construction cost index highlights the industry's ongoing struggle due to an aging workforce. Twenty percent of construction workers are 55 and above. In other words, we don't have a lot of young people wanting to get into the game of construction. We're aging out our workforce.
So, it's like, can I find a builder? Can you find people that the builder needs to actually build stuff? Because building costs more, my guess is a lot of people are going to say, "Hey, we need to transact real estate that already exists."
And there again lies the problem: we're missing 6.8 million homes. So, people are going to be forced to buy the new stuff, or we're going to have to hope that people existing in real estate are going to buy the new stuff. Their homes go on for sale for less.
But it's not just building costs; it's what's happened to the price of land. The location significantly impacts these costs. Check out Rhode Island: an acre of land in Rhode Island right now costs $350,500.
So, it's like, okay, building materials are up, they're only going to go up even more, and land's also gone up. So right now, the shakedown is: if you plan on buying something that's being built, something new, it's going to be a lot more expensive than it will likely be in coming years.
Let's check out the flip side: what happens when you buy existing real estate? Well, when rates come down, a lot more buyers enter the market. There are going to be a lot of people saying, "With rising house prices, now is a great time for me to exit and take a big chunk of equity and say I'm good to go. I'm going to make some different life plans. Maybe I'm going to go rent, do something different, but really I want to pull the equity out of my home."
In 2023, sellers hesitated to list their homes due to low mortgage rates. Remember, they had bought their homes and secured 3% and 4% interest rates when they were high. They were like, "Why would I sell my home if I'm just going to trade up for another home with double the interest rate?"
Well, with rates coming back down, that's definitely going to add some inventory. And the question is: how much? Lawrence Yun, Chief Economist at NAR, anticipates a 30% increase in overall inventory. That, my friends, is not a small number.
That means we're going to have a lot more real estate hitting the market. And because there's huge pent-up demand, we may see this summer getting back into the bidding war games that we saw in 2020 and 2021.
For those of you that are like, "No, Chris, it's time for a bust, right? Isn't the real estate bubble going to burst?" Well, let's take a look at what Redfin and Zillow have to say about that. They foresee in 2024 a huge turning point in the real estate market, offering a more favorable landscape for those looking at buying or selling a home.
We're definitely going to see a lot more inventory move. We're going to see a lot of new builds hit the market. But with rates coming down, people are going to see some net savings across the board. That means we're going to see a lot of stimulation in the economy.
Real estate is one of those games where if you can count to one—meaning I did one house and 18 months, 2 years later I sold it for a $100,000 gain—it doesn't take a math wizard to think what would happen if I did 10 of those: $100,000, $200,000, $300,000, $400,000, $500,000, $600,000, $1 million.
This is why 90% of all millionaires get in the game of real estate. Most humans don't; they play the loser game of 401(k) hiring. They'll do it their entire life.
In other words, this is a very exciting time to be in the game of real estate. If you do have any kind of money, even a 3% down payment for a primary residence, you should be asking yourself: how do I take these assets, these hidden assets, and mix them up so that I have a portfolio of rentals?
If I do, if over the next couple of years, or maybe it's three or four, I make $100,000 on each one of those homes, you literally might do more for your retirement in the next 5 years than your last 40-year working life.
For me, this is an unprecedented opportunity. I'm so grateful that I have three mentors who, when I was in my early 20s, said, "Chris, if we put ourselves in your shoes, this is what you should do." And I listened to their advice; I followed their advice, and it meant that I was financially free at the age of 26.
You have right now a better opportunity than I had all the way back then, but you need a mentor that can give you a game plan. That's what I'm offering you for free right now.
In fact, there's a link below, and it'll basically say, "Alright, if Chris, if I were in your shoes, what would I do to take advantage of 2024 and 2025?" This is something you need to move fast on. Click the link below, get with a member of my team, and here's what we're going to do: I'm basically going to rearrange your assets and say, "You know, if you moved what you got, even if you have nothing, around differently, this is how you make money out of thin air."
Or, "Here's how you take the little or something you got and multiply it into something bigger." In some scenarios, I could literally partner with you and just do it for you. In other scenarios, I can show you how to have it turnkey, passively, completely done.
Either way, get a fresh perspective on your finances. Don't make it just about your own family's wants and needs when it comes to real estate. Be thinking bigger than that, which is my retirement. I'll probably have more money for it through equity and real estate than a traditional retirement plan has.
So, why not own more real estate? If you want to get that game plan, click the link below. Let me show you how I would grow your assets as fast as possible.
"Chris, you don't seem to be a fan of 401(k)s." In fact, I think I heard that right: you referred to it as a scam. What are you talking about?
This video right here will show you why the 401(k) is a scam, was never going to work for you, and the real stats that you need to know on why that match is a dirty little secret.