PLP-137 Is This The New Normal?

Is This The New Normal?

Hello Private Lender nation and welcome to episode 137 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today.

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If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending.

In today’s episode, I will bore you and discuss some very recent conversations I had while on a trip to San Francisco and the Bay Area, and I heard some interesting insights from some friends of the show. But before we get to the heart of the matter, first I need to do a little housekeeping.

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OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: Are we normal?

I took a short trip and flew to San Francisco earlier in August and spent a few days catching up with some friends of the show as well as a few dear old friends who call the Bay Area home.

And I caught an A’s game against the Rangers, so I’ve now ticked 3 Major League Ballparks off my bucket list.

I’m glad I was able to take the trip before the government tries to lock us down again, which brings me to the question I have for you, dear listener: Are we in the new normal, or are we simply in a bubble in the housing market cycle?

I won’t name any names yet as I haven't asked whether I could mention names (you know, in case they are wrong) and I had the idea for today’s topic and wanted to get this episode recorded and distributed so here we go:

One position I heard, especially in the case of the Austin, Texas market, is that we are in the new normal. Austin will mimic housing in the Bay Area historically speaking, which means high prices are here to stay (at least in the Austin area) and they will only continue to rise.

Then, I heard the belief that we are long in the tooth for this market and a correction is coming – a very popular opinion that many investors share. Especially those investors who lived through 2008 and the mortgage crisis.

In the case of the Houston area, I did a little reading and have found the following:

•  Average house price up 14%
• 1 month of inventory (6 months is considered a stable market)
• 500,000 people move to TX every year
• Construction material shortage, lumber up 250%
• Days on Market are almost non-existent

So, which side are you on? Are we in the new normal with prices continuing to increase? Or is