This article is presented by Walker & Dunlop.

Before buying any property, the investors should ask themselves: Is this a good market? Understanding the local fundamentals is critical if you want to avoid overpaying or investing in a declining area. 

In order to be successful, you need to know the economic health, tenant profile, rent trajectory, and market potential of an area before you ever run the numbers on a deal—whether you are buying a 5-unit property in Texas or a 100-unit apartment complex in Georgia.

Tools like WDSuite from Walker & Dunlop make that process easier. This free platform lets investors analyze institutional-level data with just a few clicks. Instead of researching multiple sources, WDSuite brings employment trends, tenant credit scores, and population shifts into one dashboard.

Here are five market analysis metrics every investor should be using, and how to find them in WDSuite.

1. Macroeconomic Indicators

Macroeconomic indicators include employment statistics like job growth, unemployment rates, and labor force participation. These reveal the broader economic health of a market.

Why it matters

Employment is directly tied to rental demand and tenant stability. If job opportunities are growing, people move in. If unemployment is rising, vacancies and missed rent payments may follow.

What indicates a strong market versus a weak one

• Strong market: Low and declining unemployment, steady job growth, expanding labor force
• Weak market: High unemployment, job losses, shrinking labor force

How to use WDSuite

Search for a property and the macroeconomic benchmarks are displayed directly in the property overview. You’ll find local job growth compared to the national median, labor force trends, and unemployment rates at the county level. This helps you assess whether demand for housing is likely to rise or fall.

2. Radius-Based Demographic Insights

This includes age distribution, household sizes, population growth, and income levels within one, three, or five miles around a specific property.

Why it matters

Demographics determine the type of housing in demand. For example, younger populations may favor apartments, while older demographics might prefer single-level homes. Income levels influence rent ceilings, while household size affects bedroom count needs.

What indicates a strong market versus a weak one

• Strong market: Growing population, rising or stable income levels, high renter population
• Weak market: Declining population, stagnant or falling incomes, aging or shrinking renter base

How to use WDSuite

Search for a property and navigate to the demographic analysis in the neighborhood tab. It will break down population changes, age brackets, household income levels, and size trends, all compared to the metro average. This is essential for aligning your investment strategy with local renter needs.

3. Tenant Credit Quality

This metric shows median credit scores and loan payment delinquency rates for renters, helping you assess the overall financial stability of residents of a property in comparison to renters in the area.

Why it matters

Credit scores are an estimate of the likelihood for a consumer to default on a loan payment in the coming 30 days.  If local tenants struggle with low credit scores or missed credit card payments, there is a risk that they won’t be able to make consistent rent payments. On the flip side, knowing renters have strong credit scores and low delinquency rates can support stable rent collections and low vacancy rates.

What indicates a strong market versus a weak one

• Strong market: Average credit scores above 650, consumer delinquency rates below the metro average
• Weak market: Credit scores below 600, consumer delinquency rates exceed the metro average

How to use WDSuite

Search for a property and navigate to the multifamily tenants tab. You’ll find renter credit scores aggregated at the property level and consumer loan payment delinquency rates all as recently as last month. This can help you minimize default risk.

4. Market Rent Trends and Forecasts

This measures historical and current rent levels in your target area.

Why it matters

Rent growth shows demand and pricing power. This directly affects your cash flow and projections.

What indicates a strong market versus a weak one

• Strong market: Steady or increasing rent growth and forecasts
• Weak market: Flat or declining rents

How to use WDSuite

Search for a property and navigate to the demographic analysis in the neighborhood tab.   The rent trend and forecast for the 1, 3, and 5 mile radius can be found in the housing section.

Why Easy Access to Market Data Matters

Successful real estate investing is about managing risk, which starts with having the right information. In the past, accessing this level of market insight meant hiring a research analyst or buying expensive reports. 

WDSuite removes that barrier. With just a few clicks, investors can assess market strength, tenant quality, rent potential, and resale comparables. WDSuite is free to use, so there is no reason not to use it.

Instead of flying blind, you can make data-informed decisions that protect your capital and guide your long-term strategy.

WDSuite is one of the best tools you can have in your analysis toolkit, whether you’re buying your first multifamily property or adding to a growing portfolio.

Dave:
This investor had no exit plan from a demanding and dangerous day job, working a full 30 years to vest. His pension just didn’t feel possible, but then he discovered real estate and now just five years later, he owns 16 investment properties and is on track to retire 10 years ahead of schedule. And he’s doing this while investing thousands of miles away from his expensive California hometown. This is the path to financial freedom. What’s up BiggerPockets community? I’m Dave Meyer, housing analyst, rental property investor and head of real estate investing at BiggerPockets. Welcome to the show. Today we’re bringing you the story of investor Brian Waters from Huntington Beach, California. Brian loves his job. He’s a firefighter, but he’s seen friends and colleagues struggle trying to reach retirement in a very dangerous line of work. So he started looking for a long-term backup plan and he bought his first rental property during the pandemic. Now he’s amassed a very impressive out-of-state portfolio that puts him on path to financial freedom well before his sixties. On today’s episode, Brian’s going to share what he’s been doing, why he started investing with a turnkey company instead of riskier value add properties, how documenting his journey on social media paid off huge when he needed capital to expand and how he’s proving every day that the burr is far from dead in Midwest American cities. Let’s bring on Brian. Brian, welcome to the BiggerPockets Podcast. Thank you for being here.

Brian:
Dave. Thank you so much for having me. I’m super excited. It’s good to finally get to meet you and I can’t wait to talk about some real estate.

Dave:
Let’s do it. Tell us a little bit about yourself first. Where were you in life when you first got the bug or started thinking about investing in real estate?

Brian:
I was in my early twenties. I became a medevac pilot in Hawaii, a commercial airline pilot. I was living at home and I wanted to buy a house. I live out in southern California. It’s super expensive. So we had talked to a real estate agent in the area and he kind of had the inside of this place, and I knocked on the door, a lady answered, and I asked her if she would be willing to sell her house to me, and she said, yeah, but I’m not ready to move. So we bought it, we’d rented it back to her for a year. And then for the next over 10 years, I had roommates. I was a pilot, I was gone. I flying all over the country, so who cares who’s in my house? So my mortgage was pretty much free, and that allowed me to build all that equity, which later became the golden goose to my investments.

Dave:
So what’d you do from there after a house hack? I think a lot of people either stick with just house hacking over and over and over again, but what did you do after that first deal?

Brian:
So it was years until I actually got back into the real estate game. So I let that property just increase in value. I’m lucky Southern California, the home prices go up over time, but that kind of fast forwards me to getting in the fire service and being a 33-year-old with brand new twin boys and kind of almost in panic mode like, Hey, I don’t want to work till I’m 63. And also I’m one injury away from actually having to retire.

Dave:
Wow, that’s scary. That’s hard.

Brian:
Yeah, I’ve been part of our peer support team for over 13 years and you see a lot of mental and physical stuff going on, and I just had to come up with a plan. So the very next property was, it was right around when COVID was happening. I had enough equity in my house that I was able to refinance. I don’t even want to say the rate because going to make people, it’s going to trigger some people, but it was very low.

Dave:
Does it start with a three?

Brian:
It starts with a two.

Dave:
It starts with a two. Oh man. Yeah, so

Brian:
Just don’t hate on me for that. But

Dave:
I

Brian:
Was able to pull out some money and I wanted to get in real estate because I love my children to death. And as a father, I didn’t want to have to have them live in Timbuktu and not be around me. So selfishly I was looking for property where I could buy early and kind of make them have to be around me forever. So as I was looking around southern California, I found a house that was for sale, and I call it the firefighter special because the realtor was a fireman. The seller was a fireman and I was a fireman. And so the seller, he was three years from retirement and he wanted to sell his house, but he wanted to live in it for three more years. His son was in high school and finish off. And so I was like, perfect. That was my first rental and that property stow one of my better properties today. But what happened eventually is I looked at my bank account and I was like, well, I can no longer afford houses in California.

Dave:
Yeah, I It’s crazy.

Brian:
Imagine my next journey was into the outstate

Dave:
Stuff. Now Brian, I want to hear how you scaled. I’ve sort of gone down a similar path where I started in a more expensive market. At a certain point it gets super hard, and so you have to come up with a new strategy. You don’t have to go out of state, but it sounds like you did. We’re going to hear about that, but we do have to take one quick break. We’ll be right back. Stick with us. Managing rentals shouldn’t be stressful. That’s why landlords love rent ready. Get rent in your account in just two days. That’s faster cash flow, less waiting, no need to message a tenant. You can chat instantly in app so you have no more lost emails or texts. Plus you can schedule maintenance repairs with just a few taps so you’re not playing phone tag. Ready to simplify your rentals. Get six months of rent ready for just $1 using promo code BP 2025. Sign up at the link in the bio because the best landlords are using rent ready. Welcome back to the BiggerPockets podcast. I’m here with investor Brian Waters who is just talking about how he turned his primary residence into a small portfolio in southern California. But Brian sounds like you hit the point most people in California do where it’s just not really logical to keep going, at least if you want to buy rental property. So what was your solution to that challenge?

Brian:
What I decided to do instead of going into the flips or the burrs, which I later got into, I decided to go the turnkey method. And for me, that has been an amazing transition to out-of-state properties.

Dave:
People call turnkey different things. Some people say a property that you buy directly that is just fixed up and nice is turnkey, but you’re talking about buying from a turnkey operator.

Brian:
Yes, absolutely.

Dave:
So maybe you could just tell our audience a little bit about what that entails and why you were attracted to it.

Brian:
So number one, this is a great strategy for an active, hardworking W2 super busy person. I’m a firefighter, I’m a dad, I coach full-time football for my kids. I don’t have a lot of time to go do this stuff. And those other strategies aren’t wrong. But what these turnkey providers are, there’s companies all over the country and they internally do everything. They go out and door knock, they market, they cold call, they find the houses. Once they do that, then they go out and have their own construction teams that fix the properties and they put in new flooring, new kitchens, new bathrooms, new water heaters, new roofs, everything. And then what they do is they turn around and they have a property management company that finds a tenant and signs a lease. Then they put it on their website. It never goes to the market and investors can go buy it. So I love this strategy because literally they give you the numbers. You already know what that it’s rented for. You already know that all the major CapEx items, like the roof and water heater is brand new. Those are going to be deferred for later. You have a good quality product and you could run the numbers because you know what the price is, you know what the insurance is, you know what the rent is, and you just have to analyze it. And that’s what I did, and I absolutely love that strategy for beginners.

Dave:
Yeah, I think what you said is so important that where you are, the kind of investor you are will usually dictate if this is a good strategy for you. If you’re busy and you’re out of state, this is a great idea. This just makes a ton of sense. Being able to go out and buy something, get the benefits of a value out opportunity, but not having to go out and source all of the contractors or subs yourself knowing that the repairs and CapEx and maintenance and all this stuff is going to be a little bit less is really appealing. But I have some questions. I think this is a really interesting option for our audience. I’d love to dig in on, so did you know the market you wanted to invest in? Did you go out and find the turnkey operator first or how did you find a deal that you were comfortable with?

Brian:
So what I did is I called multiple turnkey providers, and this is kind of a buyer beware for all the listeners. There’s some really, really good ones out there and there’s some really bad ones. So I am a big believer of follow the herd mentality. So I was talking to other investors through forum, through Facebook groups. The cool part about that is is you’re protected in a lot of senses here. You’re protected by the inspection report, you’re protected by an appraisal. You already have a lease signed, and people will argue, well, you’re not going to cashflow on these. I want to tell you a little bit about some of the incentives these people are offering, which is actually blowing my mind when I talk about it. So a few of the ones out there that are really good, they will buy the rates down to 5.5% 30 year conventional fixed, which is amazing. That’s awesome. They have a one year tenant guarantee where if the tenant moves out, they’re going to pay you that rent that was talked about. They often will have a lower incentive property management fees of 5%. We’re investing in these states that have low property taxes, and again, the CapEx items are all taken care of. So I am very conservative when I underwrite stuff, but every single one of these cash flows.

Dave:
Well, good on you for doing your due diligence. I think that’s the real thing that people get hung up on about, right, especially in 20 21, 20 22, everyone was calling themselves a turnkey rental company, and I would just encourage you all to look for people who have a track record. There are great reputable companies who do this. I am sure they’re frustrated by some of the people in the industry that give them a bad name, but there are very good reliable companies that do this, and I love that you called the investors too. These businesses, they’re different than traditional home sellers. And I think it’s similar to something we’ve talked about on the show recently, which is that new construction is becoming more appealing because builders just have a different business model. They need to move inventory. And the same thing is true with turnkey operators too.
They’re doing volume and they’re willing to buy down your rate to sell something a month faster, whereas home sellers, Brian gave us two examples. People are like, I’ll just wait three years. It’s just a totally different mindset. And so if you’re the kind of investor one who can move quickly, two might buy at volume, might buy more than one, people will potentially work with you and give you really great deals. So Brian, how did you actually ultimately pick a deal? Did you settle on the operator first or the market first, or what order did you go

Brian:
In? I settled on the market first, which was Memphis. And Memphis was a market that a lot of people were talking about. Never been there, still have never been there, but I asked around different people who had used them. Some of these investors had multiple ones, and when I interviewed them and talked to them, I mean these people sometimes are turning over hundreds of properties, and so I was using them as the subject matter experts in that area.

Dave:
That’s great. And have you scaled that up since then?

Brian:
Yeah, so I currently have a total of 16 properties. 15 of those are out of state, and I’ve kind of spread my wings a little bit to other markets as well. The first six properties minus the California one, were all turnkey at that point. I kind of opened the wallet again and was like, oh, where’s all my money? And so I had to start getting creative, and at that point, I felt like I’d really learned a lot about the industry, even though they were easier to do. I understood how to analyze stuff, how to find stuff. I started really digging into the BiggerPockets communities and understanding, and so then I transitioned into the B stuff.

Dave:
And so how many turnkey properties do you have total?

Brian:
Nine turnkey totals, and then the rest are all burs.

Dave:
And you’ve never seen any of ’em?

Brian:
Never even been to the state that That’s

Dave:
Incredible.

Brian:
I know.

Dave:
Yeah. I mean, you must have good reporting then. That to me would be the thing that I would be nervous about. I invest out of state too, but I’ve just hand selected. The property manage was clearly you’re happy with the property management

Brian:
And they use all the fancy online portals where they send you stuff, and truthfully, it becomes easier by the fact that it’s away from me. It have to have better systems, and I have to have a better team to do it so I can go to the fire department and take care of the community, or I can be on the football field coaching my kids’ stuff and not have to worry about, Hey, the tenant called me and first off, I’m not even good at that stuff. I’d go over there and probably break more than I would try to fix. Right?

Dave:
Oh, I know all about that.

Brian:
Right? So by the fact that it’s far away, I’ll wake up in the morning and like, Hey, you had a little plumbing link, don’t worry, it’s fixed. The tenant’s happy. We’re good. I’m like, cool, thanks.

Dave:
Yeah,

Brian:
On. That’s

Dave:
Incredible. Well, good for you. I know it is a big leap for anyone listening to this to invest out of state, but I completely agree with you, Brian. It forces you to just take a different position on the team. When I lived and invested in Colorado, I did so much myself just because I lived down the road and it just seemed silly to go hire someone to do that, and that worked well. I don’t regret doing that, but as soon as I started investing out of state, I’m like, oh, I could concentrate on what I am good at, which is finding markets, analyzing deals, doing asset management, and find people who are way better at property management that I’m, I wasn’t doing myself any favors fixing stuff. Absolutely not. And so I think it’s almost like this forcing function that allows you to just mature as an investor if you do things out of state, but it takes a certain personality, not everyone’s going to be comfortable with that. I do want to hear more about how you moved onto Burrs and what you’ve been up to recently, but we got to take one more quick break. Stick with us.
Welcome back to the BiggerPockets podcast. I’m here with investor Brian Waters talking about how he moved from investing in his own backyard in California to doing out-of-state turnkey properties in Memphis. Brian, what came next for you?

Brian:
So as I did a few of the turnkey properties, I kind of analyzed what these providers were doing and I had really started to educate myself. There was so much that I learned early on and it was less risky. Those turnkeys had a lot less risk, but I knew that I couldn’t just continue saving up for a property and buy, saving up for a property and buy. So I wanted to scale faster. One thing that was super, super important, and I had this discussion with this awesome couple at the BiggerPockets convention we just had is one of my friends early on told me is you have to start using social media when you first start, and I still to this day cringe when I watch my own videos. It’s just uncomfortable,

Dave:
Right? Oh, it sucks At the beginning. It’s so

Brian:
Hard. The reason I’m talking about this is because this allowed me at a certain point to raise over a million dollars in private money, which is I’m super, super happy about that. I have some amazing partners, but it creates that gap between that awkward conversation of me asking them and them coming to me when they come to me. I could just have a conversation. I won’t even talk about private lending until they say, Hey, I want to do this too, but I don’t want to put in all the work. And then it’s easier. It’s more of an organic conversation. So all my lenders have come from pretty much my warm circle, friends, family, aunts, uncles, people that came to me and I was able to take that money and now I’m like, well, now I got to start brewing, right? Because I have

Dave:
You better do something. People need a return.

Brian:
I learned about the private money process and I found a gem of a contractor in the city of Detroit, and I’ve been hammering Detroit, and I know you talked a lot about this on a few podcasts recently, and I love that market and I’ve in the past two years of bird, we’re on our seventh property there right now, and for those who say the bird is dead, I disagree.

Dave:
Yes, I love it. Brian, we’re just breaking down. Myth. Brewer is not dead. Your primary residence is not a bad investment. I love it.

Brian:
Lies.

Dave:
Well, I just want to commend you for the social media thing. I know from personal experience, it’s very awkward to get started, but it is a really powerful tool. It takes a lot of guts, man. So good for you. And I know not everyone’s going to do that, but it’s a really repeatable strategy that almost anyone can do. If you are willing to laugh at yourself the first couple of times you make it real, they’re not going to come out well. They’re going to be very cringey and then you’ll get better over time. Well, in the spirit of getting uncomfortable, tell me about doing the Burr long distance. I’m sure that was a little bit uncomfortable too.

Brian:
Oh, it was completely uncomfortable and not all of ’em went perfect. I will say that my last two were actually home runs

Dave:
In the last couple years.

Brian:
No, in the last couple days, the last week. Love that. Amazing. So I had heard about the Detroit market. I actually listened to episode 1, 3, 2, 5 on the BiggerPockets Daily where they read the articles out,
And I highly encourage all the listeners to go and listen to that one. It’s an article that someone wrote about the Detroit market, and it blew my mind. I was like, oh, here’s an opportunity. I had never been there, so this was one of the one markets that I actually went to. Everyone told me, this city is super dangerous, don’t go there. But you know what? I’ve learned not to listen to people that have not done what you want to do. The downtown area had people driving around on those beer cars, kegs on ’em. There’s rooftop bars, super clean companies like Rocket Mortgage have their headquarters there. They just bought Redfin, by the way.

Dave:
Yeah,

Brian:
All of those factories have been coming back up. The Detroit Lions are doing good go Lions if you’re a fan. It’s one of the only cities or one of 10 cities in the country that have all five major sports. They’re building a Detroit FC soccer stadium there.

Dave:
Oh, cool.

Brian:
And so they’re just putting, it was so bad for so long. So there’s only one way that it can go and it can go

Dave:
Out. Yeah,

Brian:
Great. So what I did is I contacted a realtor before I went again, interviewed a few, made sure they were investor friendly, asked them to give me some neighborhoods. I already knew a bunch of houses that were for sale and that had sold. And so I was kind of doing a little bit of detective work in that area and it just blew me away.

Dave:
People always generalize things about cities, whether it’s Detroit or Chicago or Indianapolis or whatever it is. Go there and decide for yourself. I have learned a lot. I’ve gone to a lot of markets. I love doing what you’re doing, by the way. I do the same exact thing. I have a map. I drive around, I just walk into random stores. I just try and get the vibe. It’s a vibe check. I don’t know how else to describe it, but you do that. I have gone to markets that people love and I hated them. I’ve gone to markets that people hate and I’ve loved them. It’s just depends on who you are, what you’re comfortable with, what you’re trying to accomplish, but think for yourself. I think that’s really the thing. And honestly, it’s one of the reasons why on this podcast, people always message me and they’re like, what markets do you invest in the Midwest? And I don’t tell them because I don’t want you to do what I do because what I do is for me and my strategy, and you shouldn’t just blindly listen to me or to Brian or to anyone else. You should come up with your own strategy and find the markets if you want to do out of state that work for you. So maybe walk us through one of your recent deals. What are the numbers on these look like?

Brian:
What I do is I go on to Redfin and I put little areas and that sends me a message right away when something pops up. So I knew where I wanted to go first. I already had a private lender ready to go, and when this property came up, we just struck on it right away and it was $70,000. And the scope of work on it was 40 grand.

Dave:
And so when you say you’re doing the private lender, are you just straight up buying a hundred percent of the acquisition price and the renovation with one private lender? Is that kind of the goal?

Brian:
Correct. I’ve mixed before, but I think it’s easier for me and for that lender just to do one-offs together.

Dave:
Okay. So you basically borrowed 110 grand. Do you mind telling us, is that hard money kind of terms? 10, 12% interest,

Brian:
No points. And I pay that lender 10%. Wow, that’s awesome. It’s a great deal. And again, getting back to solving people’s problems, my lender was on a fixed income. She’s an older lady that has, she had to have roommates and she’s in her seventies. And so I came to her and I said, you deserve to live alone and make some

Dave:
Money.

Brian:
How do we solve that problem for you? And I was willing to pay whatever, and we came to terms on that and the next month she moved her roommate out. She has her own space and she is loving our relationship and I take really good care of her because she deserves that.

Dave:
That’s fantastic. Yeah, that’s amazing. I love that. Again, always talking about this mutual benefit. Real estate is not a zero sum game. Your contractor can win, your realtor can win, your tenants can win, your lender can win, and you can win all at the same time. That’s when you’re doing it right.

Brian:
Not only can they win, I want them to win because I want to be their favorite customer when they’re coming back and they’re going to do better work for you if they’re winning with you.

Dave:
A hundred percent. I love that approach. So tell us, finish the deal. So again, one 10 is this one of the home runs that you’re talking about?

Brian:
This is one of the home runs. So they cranked it out. We ended up putting a Section eight tenant in there. The process was pretty simple because we put in new everything, and I’d planned to keep it for a while. Please don’t lipstick on a pig stuff. You guys, it’s important if you’re going to keep this for a long time. The tenant deserves a nice place to live, and if you’re going to keep it, it’s going to have less headaches for you later. So we’re all in for one 10. And when we got the section eight tenant in there, it was 1350 for the rent and it just appraised for 180 and I was able to pull out 75% of that. I paid back the lender all their money. I still have a ton of equity in the property, and I was able to actually put money in my own pocket. I know this is rare, but they’re out there still, so

Dave:
Wow, that’s unbelievable. And I’m curious, what is your deal flow? Are you having trouble finding these or can you kind of do as many of these as you want?

Brian:
Yeah, I could do as many as I want. I mean, in that market, there’s so many, just because a burr is not perfect and you’re not getting all your money out, I would argue that if you can get half of your money out, that’s still better than a normal deal.

Dave:
A hundred percent.

Brian:
If you can get a hundred dollars back, that is a win. I totally agree. You have to change your expectations of what is perfect. But to answer your question, I look for on market stuff. I also have now have a contact with a really good wholesaler out there. And third, my GC is always on the move looking for, because he is a realtor, he’s always sending me deals. So I have more deals than I could fund, but I also am a busy working professional. So I’m trying to start with my strategy. I don’t want to do a thousand, I’m a busy, busy person, so I’m doing five a year right now, and that’s plenty for

Dave:
Me. That’s plenty. And how much time does that take you on an average week or month?

Brian:
I think the hardest part is probably the underwriting, getting the property going. But once we do that, I’m using the same flooring, the same color paint, the same windows, everything. I literally have a spreadsheet and I do this in case I have to change contractors, but all the way down to the item number at Home Depot or Lowe’s where it becomes super simple for them to do it. Also, I could predict my costs better. Once I get that, I am spending a couple hours here and there. If problems come up, then obviously it takes me more, but it’s part of that who not how. Find that team member that’s going to be really good at their job and it’s going to be less work for you. It’s not passive it, it’s less work that I have to

Dave:
Do. Awesome. Well, I love it, Brian. Well, congratulations on your success. I really admire the way you’ve sort of adapted over the course of your career. I think a lot of people come into and say, I’m going to be this kind of investor. I’m not going to be this kind of investor, but you got to learn. I wrote the book star strategy. You have to have a goal, but the path towards that goal is going to shift and switch. And if you just educate yourself, work hard, you can absolutely do it. So congratulations on all your success.

Brian:
Thank

Dave:
You. And thank you for being here. I loved hearing your story. We’ll have to hear how you’re doing in a year or two. You have to come back and join us again.

Brian:
Thank you guys for the opportunity. This has been an amazing opportunity for me. And yeah, keep growing, keep learning, and I would love to come back at some point if you have me.

Dave:
And thank you all so much for being a part of this community and for listening to this podcast. We’ll see you in a few days for another episode of the BiggerPockets podcast.

Dave:
Housing demand is up, but prices are dropping. Mortgage rates have been a little bit better, but layoffs are all around us. The upside down economy that we’ve been in for years is rolling on, but we’re here to help you make sense of it. Everyone, welcome to On the Market. I’m Dave Meyer, joined by James Dainard, Kathy Fettke and Henry Washington today to talk about the latest news and try and instill some sense, some narrative that makes sense about what’s going on. Kathy, I think I’m gonna call on you first ’cause you got an uplifting story here about the housing market in the economy. Share it with us.

Kathy:
Yes. Everybody could use a little good news. So this is an article from Housing Wire. It is housing demand now reflects a positive trend. And this is written by Logan Mo Shami, who I know we all follow. He tracks weekly data. And what he says in this article is so much of the data that we see in headlines is dated. Mm-hmm . It’s two to three months old, especially the case index that gets headline news and people are talking about something that was three months ago and we’re not in that market now. So his weekly tracker is super helpful. It’s more volatile. ’cause week to week, if there’s a holiday or something, you’re gonna see skewed numbers. But still there is a lot of important information. Highly recommend it. The one I wanna focus on is the section of this article that’s housing inventory. Because the headlines are talking about all this inventory.
We’re constantly talking about it being a buyer’s market and the shift and so forth. But that is dated news. And what is more current is that the housing inventory data showed 33% year over year growth earlier in the year. And that’s the story people are talking about. But now it’s down to 16% year over year growth. So what we’ve seen in the last few months is obviously mortgage rates have come down a bit, and we’ve talked about this for a long time, that as soon as mortgage rates come down, there’s a whole bunch of people that can enter the market. It’s doesn’t make it more affordable for everybody, but it makes it more affordable to some people who were just on the edge and given the massive number of millennials out there in that house buying era in the mid thirties, give them a little leeway and they’ll take it. Right. So that’s what we’re seeing. And we’re just going into a season where there’s less inventory anyway because it’s the holidays. You don’t really wanna show your house, um, during Thanksgiving or Christmas. So inventory levels tend to go down anyway. And because mortgage rates are lower, Logan was kind of worried like, dang it, I’d liked the higher inventory. This is better, healthier for the housing market. And now we’re kind of going back to less inventory.

Dave:
Well I’m so glad you brought this story here Kathy, because it is probably one of the most misunderstood parts of the housing market right now is you see on social media all the time. Yeah. There’s no buyers, no one’s buying homes. That’s not what’s

Kathy:
Happening. Yeah.

Dave:
Actually we see that home sales is up a tiny bit year over year, but when you look at mortgage purchase applications, it’s up year over year. Yes. From this time last year. And it’s because rates have gone down. And I know it doesn’t feel like rates have come down that much, but they were at 7.2 in January and now they’re at 6.2. Like that matters. One full percent that matters, that’s hundreds of dollars a month. So people are noticing that and coming back into the market, the reason sales prices are dragging is because of inventory. But as Kathy pointed out, we’re getting that correcting kind of vibe where people are realizing it’s a bad time to sell. So they’re not selling. Uh, and so that’s why we’re probably in a normal sort of correction, but that is not because there’s no one buying. People are still buying homes at the same rate they have the last few years. It’s just a little bit different vibe.

Kathy:
Like you said, it’s increased a little bit. Um, I think, I think it was 4.02 million or something. Sales volume. Yeah. Which is up, it was, it was under 4 million.

Dave:
It was,

Kathy:
Uh, before. So yeah, just it, it’s different per market and that’s where people are like, in my market, my stuff’s not selling. I mean, I just talked to someone who said I’ve, he’s had his flip on the market somewhere on the East coast and for a long time and it’s not selling. Uh, so that would just tell me it’s not priced right. Right.

Dave:
. Yeah. It just feels draggy in a lot of markets and I think we’re gonna mm-hmm . We’re gonna, we’re gonna talk about that. But I do think that’s encouraging. And what we’ve seen so, so much in the last two or three years is that demand is way more interest rate sensitive than it is during normal times.

Kathy:
Yes.

Dave:
For most normal eras, interest rates fluctuate by 0.25%. Doesn’t really change anything. Or 0.5% doesn’t change anything. Now people are like, oh, I’m gonna jump in this week. You know, there’s inventory rates are down. Last week it was 6.1%, like if you jumped in, that’s the best rate we’ve seen in years. Yeah. You know, and, and there’s better inventory. You have better negotiating leverage. This is the buyer’s market. It’s not great for sellers, but buyers are, I think, gonna start coming outta the woodwork ’cause there’s gonna be better opportunities to buy.

James:
You know, one thing that does drive me bonkers is when people start talking about trends and it’s been two to three months. . Yeah. . Like, it’s like what trend is that? Like that’s, that’s a blip. Because what I do know is at the beginning of the year we were red hot that first quarter, lots of buyers and it wasn’t even just things were selling, there was just a lot of showings going on. We had some tariff news come out, market froze up. And now rates like Dave just said, is like nearly half point, three quarters point lower. Right. So like, it’s not just all rates, it’s, it’s also just, I think just a mental fear thing.

Dave:
Mm-hmm .

James:
But you know, I feel like inventory is going down because people are kind of in this panic because they’re like, I’m gonna miss the moat. I’m gonna throw my house up for sale. And then they’re canceling too quite a bit.

Dave:
Mm-hmm .

James:
And there’s a lot of canceling inventory coming off, but it’s just a slow thick in the mud grind market right now. But I mean, it just, for me, it’s not trend until it goes past. Like, like we have to see what if we go into first quarter in 2026 and it’s slow then that’s a trend to me. But I feel like with the seasonals and the three months of information, like they just kind of gotta ride the waves and to quit panicking because we don’t know what we don’t know.

Kathy:
Yeah. I just, I feel like, what I hear a lot and I see in the notes of, of these shows that we do is people saying, oh well you know, you’re giving bad advice and we’re in a bubble and there’s gonna be a housing crash. And the thinking is always, well, prices are so high, it must be a bubble. And that’s not the right thinking. It, it makes sense because in 2008, prices were high and then they crashed. But that didn’t have to do with high prices. It had to do with mortgage rates adjusting and they were on short term rates. All of a sudden their payment doubled in many cases and they couldn’t afford the payment. If that didn’t happen, we wouldn’t have had the crash. So we don’t have that right now. Mm-hmm . We have high home prices, similar kind of issue, but most people who own those homes are on fixed rates. Most people, the majority are in fixed rates. So they’re not having any of that price pressure in most cases. Of course, multifamily, commercial loans, different story. They did see their payments double. But that’s the difference. It’s not a bubble just because prices are high. And that’s what so many people are stuck thinking.

Dave:
All right. Well I I thank you for sharing this one Kathy. I think this is a really important context for everyone. Especially when we go into these correcting markets. People start to panic. But if, if you really understand, you know, markets and prices, they’re dependent on both supply and demand. And for a real crash you need to see demand deteriorate. You need supply to explode. That’s what, when a crash happens, we’re not seeing either of those happen. We’re seeing demand relatively stable supply has increased, but it’s already starting to level off. Uh, and so these are indicators that although we don’t know for sure, much more likely that we’re in a correction than in a crash like we’ve been saying for a long time. But the data does really bear that out. Let’s move on to our next story, which I’m going to share ’cause I think it’s kind of related here because I know a lot of people who are saying, I’ll get into the market when we get mortgage rates down to 5% or five and a half percent . And actually Zillow, John Burns real estate, they’ve done all this research that shows like when will the market like really get back to normal levels of volume, which is like five and a quarter million instead of 4 million. And they say five to 5.5%. So the question in real estate has often been when are we getting there? How are we getting to 5%? And Bank of America just put out a study saying they’ve understand they think there is a path to a 5% mortgage rate, but it’s not pretty . This is not a good looking thing right

Henry:
Here. Oh no.

Dave:
Yeah. They said the path to 5% mortgage rates is if the Fed does mortgage backed securities, quantitative easing. Oh,
And I’m gonna be honest, I feel pretty validated about this ’cause I have been saying this for a while. The only way you’re getting down that low is quantitative easing. Yep. If you’re not familiar with quantitative easing as it’s basically when the Federal Reserve buys mortgage backed securities or buy government bonds, which is for all practical purposes printing money, they take money outta thin air and they buy mortgage securities and they buy bonds. And this has been an important part, especially after the financial crisis of stabilizing the market. Like they’ve done this to good effect in the past. I think most people in retrospect would say they probably did a little too much of it following the COVID downturn, which contributed a lot to the unaffordable levels that we have in housing right now and inflation. And so I agree with this. I think it’s gonna be really hard for mortgage rates to get to 5% unless they do this.
I guess my thinking is the probability of this happening to me is going up. I’m curious what you guys think, but if the labor market deteriorates and President Trump has stated many times that he wants mortgage rates to come down, that’s a tool after he almost certainly will replace Jerome Powell in May of 2026. It might be a tool he can influence. And I think the likelihood of this is going up, which can mean more mortgage rates, but also comes with a host of other trade-offs. So curious if you guys think this is even in the realm of possibility.

Kathy:
It, it already is. The Fed has already said they’re going to stop their quantitative tightening.

Henry:
Mm-hmm .

Kathy:
Which is selling off the stuff that they already bought. They already did this. This is why rates were so low. It’s called financial engineering. It is funny money. It is not great for the population because the Fed goes in debt over this, which is basically, uh, US who has to pay it back. Um, but it is what they do behind the scenes and um, you know, it’s great for those who own assets.

Henry:
Mm-hmm

Kathy:
. Like it, it’s great for homeowners. That’s why we keep seeing housing go up and up and up from all this financial engineering and funny money and cheap money and just creating out of thin air. When you’ve got an asset that’s real, that becomes more valuable simply because it takes more money to buy it. So great for real estate, I suppose not great for the economy.

James:
i’ll, I’m always looking for where the juice is and for some reason I have a feeling next year all these things are gonna get pushed through and they’re gonna pump some juice in the economy for the elections.

Dave:
Yeah.

James:
And like I feel like we’re kind of in the mud right now and then we’re gonna take off and then I don’t know what’s gonna happen after that. I, you know, I think in the short term it could have a very positive effect for real estate investors in the long term. It’s probably not a good thing. It’s not probably, it’s not a good thing. like we can’t keep printing. We’re gonna keep devaluing the dollar and then I’m gonna be really wishing I listened to Dave about buying gold and Bitcoin and all these other commodities

Dave:
Stuff.

James:
But

Dave:
Dude, my gold portfolio

James:
Is crushing

Dave:
Right

James:
Now.

Kathy:
. Oh man. Me too. My fear portfolio is working. Fear portfolio

James:
Is on fire right

Kathy:
Now. . That’s

James:
Why I think like even right now I’m contemplating pulling some houses off the market because it’s just slow. There’s a lot of fear, a lot of weird things going on and then just dropping ’em in the hot spot because real estate’s about timing. Yeah. And honestly, I do think next year there’s gonna be some juice pumped in this economy and that’s when you’re gonna wanna dispo off anything you don’t want anymore.

Henry:
Yeah, that’s a good perspective. I’ve been considering doing the same thing because of the slowdown here and going into the holidays. Although the Fed did drop rates again, and I know that’s probably not gonna affect interest rates like people think it is, but I don’t really care what actually happens. I care what people think is going to happen . Right. And people think that the Fed dropped rates and that it’s, it’s gonna be a better time. And so hopefully that injects some buyer activity. So I’m gonna give it another 30 days and see what happens. I’ve got one house in particular that I’m considering holding off on selling. The rest I think are gonna do just fine.

James:
I got five ,

Henry:
I believe you ,

James:
You know what comes down to the sweet spot of the market ’cause things are moving. But yeah, if, if you’re outside that sweet spot, it makes more sense to pull it off and put it back on.

Dave:
I’ll just say, I, I, I agree with you what you all said, especially Kathy, like I think short term it could help real estate. I think long term this introduces some really significant issues. First and foremost, it’ll just make housing unaffordable again. Like this will make it affordable for a minute and then it will get unaffordable as soon as they stop mortgage backed securities, which they’ll have to do at some point because inflation will get out of control. The other thing that I think will compound that, and this is, I’ve been trying to say this for the last like three to six months, I’ve gotten increasingly concerned that long-term interest rates are going up long-term mortgage rates not a year or two or three years, but five to 10 years we might be in eight to 9% mortgage rate territory. I don’t even know buying mortgage-backed security and new monetary supply that in itself could do it.
But considering that we have such a high national debt, the temptation to keep printing money is gonna be pretty high to devalue the dollar to pay off that debt. And bond investors don’t like that. And if bond investors don’t like it, they’re gonna demand a higher interest rate that’s going to push up mortgage rates. And so one of the reasons I’ve been saying a lot and for my own portfolio really been focusing on fixed rate debt. Mm-hmm . And not trying to buy anything with variable rate debt. I’m actually been spending a lot of time looking at new deals recently. There’s better and better stuff out there. But I’m just trying to lock things in ’cause I don’t want that adjustable rate. Even if there’s a good commercial deal right now, I’ve been looking at fixed rate commercial debt even though you pay a higher rate on it.
’cause I don’t, I don’t trust that in five years when I have to refi or seven years when I have to refi that rates are gonna be lower. I think you have to hedge and assume that they might be higher. So this is something perhaps the biggest thing to watch next year. Honestly, I I think this is, would be an enormous shift in the housing market and would change my personal strategy a lot if this started to happen. So, uh, something I just kind of want to bring up and share with everyone and we’ll keep an eye on it. All right. We gotta take a break. But when we come back we have more stories about buying opportunities in different markets across the country and the impacts of some of those high profile layoffs that you’ve probably been seeing in the news. We’ll be right back. Welcome back to On the Market. I’m here with Henry, Kathy and James talking about the latest news. We’ve talked about housing demand, how it’s up the potential for quantitative easing. Now Henry, you’ve got some more housing news for us. What is it?

Henry:
Absolutely. So I wanted to talk a little bit about, uh, housing prices and when they will drop. So there is a sentiment that people think housing prices are going to drop. And the reality is in some markets prices have come down a little bit. And so, uh, I wanted to talk about this article from Yahoo Finance called When Will housing Prices drop Costs have already decreased in some major Metro areas. And I thought I would like to have a little fun with you guys. So we’re gonna have you guys guess you all get to pick two cities that you think are on the top 10 list for housing prices dropping and you can’t pick Austin ’cause I know you’re all gonna say that.

Dave:
And what’s the time period since last year?

Henry:
This is price decrease since September 24.

Dave:
All right.

Kathy:
Okay.

Henry:
So the article is essentially saying that, uh, the typical Home First sale spent 62 days on the market in September, 2025. And that’s a week longer than it took a year ago at this time. It also talks about, according to the US Census Bureau, that the median home price in Q2 of 2025 was 411,000. And it’s down from 423,000 at the beginning of the year. Uh, and so it is showing that the median price has come down and it’s also saying that the National Housing inventory is lower than before the pandemic. And it’s unlikely that we’ll see a huge jump in listings until mortgage rates fall a little more. It’s just telling us all the things that we’ve kind of talked about earlier on the episode. We’ve kind of debunked some of these things, but there are markets where housing prices have fallen and I know that there’s a lot of people interested in where those markets might be.
’cause this could be a place where there’s some opportunity to buy. ’cause a lot of these cities are big cities and they’re not gonna stay in decline forever. So we’ve talked about it with cities like Austin, like if you want to invest in Austin, this may be a time to get in because yes, prices are down. We know it’s a city where people want to live. And so I expect that markets like this rebound. So knowing where these cities are, if you either invest in these cities are interested, investing in these cities could provide you some opportunity to get in while prices are low. So you can monetize if and when values go back up. So with that being said, Dave, give me two cities.

Dave:
Okay. I’m just trying to think. I I gotta think that they’re in California, Florida, Texas, or Louisiana. Those are, those are like my, my big states for them.

Henry:
Okay. Okay.

Dave:
I know Cape Coral’s like big, but I don’t think it’s gonna be on this list ’cause it’s too small of a city. So my first thought was San Francisco or San Jose.

Henry:
Okay.

Dave:
Like that whole Bay Area.

Henry:
Okay.

Dave:
Then I think James lives in one of ’em. Phoenix is my other guess. And I think Nashville where like three of them I had up there. I would’ve said Austin. But those are my other ones.

Henry:
James,

James:
Gimme

Henry:
Two

James:
Cities. Ooh, two cities. You know what I’m going with the ones I do live in ’cause I’m feeling it the most. , dating might live in one of them too right now. I know. Oh yeah. If, if we’re going year over year. Yeah, because last September was hot in Seattle for sure. I think the median home price jumped like from like eight 40 to eight 80 during that time.

Dave:
Wow.

James:
So I’m going to Seattle and Phoenix. The, the two places I, uh, have most of my money in right now.

Dave:
So this is for personal

Henry:
Experience. . All right. Kathy, what are your two?

Kathy:
Uh, Seattle and San Francisco.

Henry:
Seattle and San Francisco. All right. Drum roll please. The winner is Dave Meyer. He nailed both cities. He got, he got San Jose specifically said San Jose and Phoenix. No, that’s not doing well. So you’re,

Kathy:
Wow.

Henry:
But San Jose was six on the list. Phoenix is number seven. Number one is San Diego with a 5%, 4.9% price decrease since last year in September 24.

Kathy:
Ooh. Buyer opportunity

Henry:
Number two, Miami, Florida, 4.8%.

Kathy:
Yeah, that tracks

Henry:
Number three. Kathy, I thought for sure you were gonna go hometown. Los Angeles, 4.8% decrease.

Kathy:
I did not know that.

Henry:
Number four Austin. Number five. New York City, New York, New Jersey.

Kathy:
Really?

Dave:
Yep.

Henry:
I

Kathy:
Didn’t

Dave:
Know

Henry:
That. 4.7%. San Jose, 4.6. Phoenix, 4% Dallas Fort Worth 3.3%. Boston, 3.3%.

Dave:
Boston. Okay.

Henry:
Boston 3.3%. And number 10 is Sacramento, California with 3%.

Dave:
Okay. All right. Well that was fun. Yeah. We should do more trivia.

Henry:
Absolutely. . So if you want a deal in a market that may be emerging, you might want to check out some of these places and see if you can snag yourself something.

James:
I feel like Austin has had zero rebound since the rates have spiked. Like it’s the only one that hasn’t gone like this. It just keeps just kind of going like this.

Dave:
Yeah. Even if you look at like the California markets, they’ve kind of been up and down the last few years. It’s like sort of random. Florida’s been sort of consistently down. Mm-hmm . But this, those are leveling out. Austin is just getting hammered. All right. We gotta take one more quick break, but when we come back, we’re gonna have more uplifting news about layoffs. That was a joke. It’s not uplifting, but we will talk about layoffs when we come back. Stay with us. Welcome back down the market. We got one more story for you, James. You’re bringing the, the fun stuff today talking about layoffs, but I do admit I’ve been following this very closely. It’s a little bit scary. So tell us what you’ve, what you’re uh, reading

James:
About news article from Yahoo Finance was all, all good things. It says layoffs hit Amazon’s up target and it’s fueling more cuts. And so Amazon announced over 14,000 layoffs. And this has been a trend with just all big tech right now is just slowly cut things back. And a lot of this is due to AI. And then also they were just being very frothy during that hiring process. You know, like during the pandemic there was like these tech wars going on where there was recruiters and they were stealing people and throwing money out. And I think there’s just a lot of bloat going on to where they’re starting to cut that back. And the reason I do feel like this is so important is because as investors, I’m really trying to get planned ahead for 2026. What do I wanna buy and what do I want to target?
And these are not like low paying jobs. Like a lot of people were speculating that it was gonna be like kind of lower tech paying jobs that were being replaced with ai. The average salary for these layoffs were about 110 to $135,000. And that does not include the vesting in the stock that these people also receive, which is on average around 20 to $40,000 a year. And so these are 150 to $160,000 jobs. And many of these tech cities, uh, Kathy, I think you would agree, like there’s a lot of dual income buyers out there. Like you got dual tech buying. So that’s a purchasing power of three to $400,000 that is really starting to get laid off. And not only that, it’s making that buyer pool very afraid to make any kind of decision because they don’t know what’s happening with the world of ai. They are very not confident in their job. Whereas in the pandemic, if you were talking to someone in tech, they’re like, oh, I’m getting offers everywhere. I mean, the amount of people I saw go from Microsoft to Amazon to Apple and like a two year period. Yeah. They’re just moving, moving now. No one wants to move. I can tell you that much. And so, you know, I, I’ve really been digging into where’s the buyer pool, you know, I’m in Washington, there’s a lot of tech going on that demographic of buyer, they’re typically buying 1.2 to $1.5 million houses. And that’s exactly where we’re seeing the gap in our market right now.

Henry:
Mm-hmm

James:
. And so as we go forward, I’m really trying to plan out 2026, okay, what price points do I wanna be in? And I might play in the uber expensive, but also just I wanna be below those ranges. And so I’m really trying to track who’s being laid off, what’s the income, what’s the affordability and shift my price points around for flipping or development. Same with rents. I do think there’s rent growth gonna happen in Seattle ’cause there’s gonna be less buyers in the market and the average rents are 25 to 3000 for that type of employee. And I don’t think they’re going to sacrifice quality. And I do think we could get a little bit of rent growth in that kind of b class type of rents too. So now I’m looking at, okay, well where can I get some rentals at? Pricing is down that will serve that buyer pool.

Henry:
Do you feel like this is gonna have an impact on inventory from people who may have already purchased and now may not be able to stay in their home?

James:
Um, you know, with that buyer pool, from what I saw, most of those buyers were trading up anyways. So their down payments were pretty hefty. They weren’t like your low down 5%, 10% down buyers that were buying these 1.5. So a lot of these buyers were putting 30, 40% down when they were trading up. And so I think their, their current mortgages are okay and they’re not gonna be selling unless they get transferred to a different region. But I do feel like the consumer spending’s gonna drop quite a bit. You know, it’s gonna go back to like, Hey, I need to pay my mortgage and then whatever I left over, I’m gonna go spend money elsewhere. And so I don’t think we’re gonna see a lot of inventory coming there, but I definitely don’t think we’re gonna see a lot of buyers in that range.

Kathy:
Yeah. We are experiencing something that our ancestors never had to experience and it’s going to be massive transformation over the next five years. And anyone who thinks things will be the same old same old is just not paying attention. AI is going to change everything. And this has been predicted, I’ve been new doing news stories on this for 10 years, that the, actually the white collar jobs are the ones at that the most risk. And it’s the blue collar job so far, not as much. We are going through major transformation and if you are not paying attention, you’re gonna be in trouble. That’s the bottom line. It’s a very interesting time that we’re living in.

Dave:
Yeah. I am simultaneously terrified by AI and also think it’s way overblown. I I just, you know, those are completely contradictory ideas , but I think it, yes, there is gonna be a lot of disruption in the labor market. There is no doubt about that. I think the idea that AI in its current state should be taking people’s jobs is also just wrong. Right? Like I use chap PT every day, it makes mistakes all the time. I would never trust PPT in its current state to do what a human can do right now. So I think companies are probably gonna over layoff right now and think that they can use AI for systems that they probably can’t. But longer term, I this is obviously going to make a huge change.

Kathy:
Yeah. Think about a year from now, five years from now, it’s, we can’t even imagine. But I think

Dave:
That’s good though, Kathy. ’cause I, I feel like it will drip in a little bit more than people feel like it’s gonna be this cliff where it’s like, oh my God, everyone’s getting replaced. It might happen a little bit more gradually, which hopefully will give time for the new jobs that will come in an AI economy to, to come in. But just in general, I think this is just bad for the economy right now. Even though like I was trying to pull together data. ’cause we’re not getting government data right now on unemployment because there’s a shutdown. But I was looking at state data and private data and like, it’s not that bad. If you look at the overall unemployment rate, it’s really not changing all that much from the data that we have. But it’s high profile, high paying jobs. And if you wanna go one step deeper, if you look at consumer spending right now, I think it’s 50% of all consumer spendings by the top 10% of earners right now.
It’s crazy. And so if you start to see pullbacks in spending from the top 10%, corporate profits are gonna start to see that. Like, you’re gonna start to see that reflected in the stock market, I would think. And so I I do think more than it’s really an emergency, it might have a psychological effect on the rest of the country. And as James said, a lot of it’s just done about uncertainty. It’s not like a lot of these people are necessarily, you know, they’re gonna get foreclosed on or they’re going delinquent, but they might delay making big financial purchases just given. There’s just so much uncertainty right now. It feels like it’s sort of inevitable for purchasing, especially on big ticket items like housing to, to start to feel it at some point

James:
When the people are getting rehired too. They’re just getting rehired from what I was reading. Like it’s just a little bit less too, right? So their, their income’s dropped 10% or so as they’re getting rehired. So it’s not like there’s just, they’re all at the food bank line looking for, you know, like Right. They can’t find work, right? They’re finding work. But that’s why it’s so important to pay attention to that kind of median income in whatever city that you’re in, right? And what’s going on around you. You can listen to everybody and the different strategies, but where are you investing? Where’s the job growth? Where’s the job cuts? And you really gotta pivot with that. And they’re everywhere, right? Midwest, Ohio, they saw 40,000 layoffs in 2025 manufacturing corporate cuts. That’s not the same income bracket, but where, how much are those people making? And then look at what do they buy? What do they rent? ’cause there could be a gap in the, in that market.

Dave:
All right. Well this has been a great episode. Thank you guys. I, I thought all these stories were really, uh, helpful. So just to summarize, Kathy brought us a story about how housing demand is actually up year over year, but despite that we are seeing prices decline in a lot of markets as Henry shared. We’re also seeing layoffs, which I think is a big thing to watch as we go forward. I don’t think it’s an emergency just yet, but obviously if this is the beginning of a trend that’s gonna impact the market. And then of course we have quantitative easing to look out for in the next six months, which is the big X factor that we all get to wait and see if that comes around again. But this has been a lot of fun. Thanks for listening. We’ll see you next time.

This article is presented by Connect Invest.

U.S. commercial real estate is under mounting pressure as vacancy rates hit record highs—first in offices, and now creeping into multifamily and industrial properties. A decade of cheap capital and aggressive development has caught up to landlords facing slower rent growth, higher refinancing costs, and rising delinquencies across several sectors. Moreover, both commercial and residential real estate is undergoing profound changes as large metro areas cease to be automatically attractive as job destinations.

Why are multifamily markets turning risky, and what strategic changes can investors make to mitigate the risks and protect their margins?

Warning Signs for Commercial Real Estate

According to CBRE, total investment volume is still expected to rise roughly 10% this year to $437 billion, but much of that activity is concentrated in distressed sales and recapitalizations. Meanwhile, the Mortgage Bankers Association reports that delinquencies ticked up across lodging and industrial assets in Q1 2025, signaling stress that could spill into housing credit next.

The market segment that is most obviously ailing is the commercial office segment. According to a press release from Moody’s Analytics, the vacancy problem faced by the office real estate market is severe enough to signal a “structural disruption rather than a temporary downturn for the multitrillion-dollar sector.” 

Office vacancy rates in major commercial hubs, notably San Francisco and NYC, have reached unprecedented levels (27.7% and 23%, respectively) as of the second quarter of 2025, according to recent Moody’s data. The pre-pandemic vacancy rate in San Francisco was just 8.6%.

The decline of office space vacancy is creating a tense situation for owners-investors and commercial building landlords. They are facing refinancing problems with lenders, who are increasingly viewing this type of investment as risky. This problem is exacerbated by the fact that many lenders of commercial space loans are smaller regional banks, which are even more likely to make these lines of credit more expensive in order to protect themselves from increasing default activity.

Adaptive reuse, aka apartment conversions, may solve part of the problem, with some success stories. However, this too is risky, since converting office spaces into apartments is fraught with structural and legal challenges. 

Multifamily Markets in Trouble

The most obvious answer for investors considering pivoting away from office space is multifamily real estate. But is investing in apartment new builds as safe a bet as it once was?

There are indicators that the multifamily market—long considered the safest corner of real estate—now faces its own headwinds. A wave of new apartment supply, softening rent growth, and stubbornly high interest rates have compressed margins for developers and owners alike. For lenders and investors, that means reevaluating credit exposure and shortening duration risk.

After nearly a decade of rent growth turbocharged by the surge in demand during the pandemic, the multifamily market is stagnating, with growth of just 0.2% recorded this year, according to RealPage numbers. The multifamily building frenzy in response to unprecedented demand for housing in popular relocation areas like the Sunbelt has finally caught up with this segment of the market. 

The situation is unlikely to improve in 2026 and beyond; with interest rate decreases to below-6% levels on the horizon, many renters will inevitably become homeowners in the coming years. 

These are normal market fluctuations that inevitably result from supply-and-demand imbalances and economic ups and downs. However, what investors must understand going forward is that there are larger shifts at play here—they are societal, not merely economic, and likely to be permanent. 

The fates of the office market and multifamily segments are profoundly interlinked. Both are suffering from a historic shift in how Americans work, and what is happening to urban areas as a result. 

A substantial majority of people are no longer prepared to simply rent an apartment close to where their office is; they no longer have to. Renters actively choosing multifamily developments are now likely doing so for other reasons, like great amenities or a walkable and exciting downtown area, where they can enjoy life outside work. 

Refining Your Portfolio Is Key

A multifamily investor’s biggest concern is no longer so much falling rents as uncertainty about long-term occupancy prospects.

The most obvious solution here is refining one’s portfolio-building strategy and shortening debt duration whenever possible. What does refining mean here? 

Think of the multifamily investing of years past as a blunt tool: You go wherever rents are currently the highest. Now, however, selecting where to invest requires a detailed understanding of the overall health of a specific metro area. What does it have to offer renters in the long term? 

A more refined portfolio cherry-picks multifamily investments that offer the best longitudinal occupancy rates. Going forward, this will be the best way for investors to mitigate risk, secure favorable financing, and protect their margins. 

Simply chasing rent growth just won’t do as a viable investment strategy in 2026. It’s all about choosing lower-risk, shorter-term investments in locations where multifamily real estate remains attractive for a plethora of reasons—not just the one reason (high rental yield) that was good enough circa 2019.

Connect Invest 

This is exactly where Connect Invest’s Short Notes come in. By funding diversified, short-term real estate debt investments, investors can earn fixed, high-yield interest while limiting exposure to long-horizon vacancy and rent risk. Connect Invest’s underwriting process actively stress-tests each project against occupancy and income fluctuations—so even if vacancies rise or rents fall, investor returns remain stable.

Instead of worrying about the next vacancy report, investors can keep their capital moving—and their returns steady—with Connect Invest’s data-driven approach to short-term real estate credit.

Buying a rental property isn’t only about how much money you earn, but also how much debt you have. If you plan to get a loan to finance your investments, maintaining a healthy debt-to-income ratio is essential. For investors, particularly those with several properties in their portfolio, carrying a lot of debt can be an issue, which is why offsetting it with high income is paramount. 

The Federal Reserve has just released its national debt-to-income map, which shows where the best-qualified buyers actually live. For fix-and-flippers and landlords looking to buy and hold, it provides an invaluable snapshot of what lenders look for in borrowers and the regional shifts at play. 

The map shows that most qualified buyers are not necessarily where you think they are.

What Is DTI?

A debt-to-income ratio, as the name suggests, measures a person’s debt when measured against their income. The highest DTI averages—over 2.0—mean residents carry $2 in debt for every $1 of income. 

When it comes to DTIs, less is more. The more income, the less debt wins. For example, if half your monthly income went toward paying off your recurring monthly debt, your DTI would be 50%, which is not good. A DTI of 35% or less is considered favorable by lenders.

Shifting Debt-to-Income Ratios: The 2025 Landscape

Historically, the wealthier states on both coasts have been renowned for both high housing prices and equally high buyer and rental demand. That’s because many of these areas are considered “barrier” markets, i.e., there is a barrier to land availability, forcing prices up. 

According to the Federal Reserve’s map, however, the most favorable borrowing environments are not found where the uber-wealthy live in New York and California, but rather in the Midwest—Pennsylvania, Wisconsin, and Ohio— here, DTI rates are lower, meaning that qualified buyers here are more likely to receive loans.

For flippers, it means these markets offer a greater likelihood of finding qualified buyers. For landlords, the lending environment here is more favorable for buying investments, assuming the prospective buyer falls into a favorable DTI category.

Mortgage Balances and Buyer Limitations: Local Trends

This might not come as a surprise, but debt in America is on the rise. The combination of low inventory and higher interest rates creates a toxic borrowing environment, pushing up house prices and mortgage balances, particularly in some coveted urban areas.

The Quarterly Report on Household Debt and Credit for the second quarter of 2025, based on the New York Fed Consumer Credit Panel, showed that total household debt increased by $185 billion from the first quarter to $18.39 trillion. There are now 67 cities in the U.S. where the mortgage balance averaged $1 million or more as of June 2025, according to the credit reporting bureau Experian. Here are the top 10, with the average balance:

• Golden Oak, FL: $3,627,594
• Gulf Stream, FL: $3,206,007
• Golden Beach, FL: $2,969,951
• Captiva, FL: $2,620,156
• Atlantis, FL: $2,585,199
• Montecito, CA: $2,487,787
• Hidden Hills, CA: $2,149,578
• Atherton, CA: $2,137,851
• Hunts Point, WA: $2,016,164
• Sagaponack, NY: $1,977,857

As the list shows, Florida, not California or New York, is the state with the top five cities with the highest mortgage balances. This means that here, investors must be prepared for tighter margins and increased competition, even as local incomes rise. Conversely, cities across the Midwest and the Rust Belt, such as Cincinnati and Cleveland, still remain attractive propositions for investors due to lower mortgage burdens and sustainable DTI profiles. 

Lower House Prices Can Offset Rate Fluctuations and DTI Ratios

“When people are staring at a 6% or 7% [mortgage] rate, they just start to get reluctant,” Rick Arvielo, chief executive and co-founder of mortgage lender New American Funding, told the Wall Street Journal in August. “Affordability is still a major issue.”

Since then, the Fed has cut interest rates twice, most recently in October, but rates remain volatile, hinging on every word from Fed chair Jerome Powell. His recent comments about halting rate cuts at the Fed’s December meeting sent rates back up after his recent cut. 

Favorable neighborhoods for mom-and-pop investors—flippers and landlords—boil down to lower prices and neighborhoods with buyers with favorable DTI, making it the best environment for investing and lending. 

Soaring National Debt Could Pose Big Problems

A homebuyer’s revolving monthly debt is tied to their interest rate, which in turn is tied to the national financial landscape. In May, the New York Times reported some analysis that predicted President Trump’s “Big, Beautiful Bill” could inflate America’s debt to more than 130% of the size of its entire economy.

“A crisis always feels far off until you’re in one,” Natasha Sarin, president and cofounder of the Yale Budget Lab, said. “We don’t know exactly where that cliff is, where you can’t breach debt levels” of a certain size. “But we know that we’re inching closer to whatever that point is.”

These sentiments were echoed recently by Tesla CEO Elon Musk, who told podcaster Joe Rogan, “It would be accurate to say that even unless you could go like super Draconian…on cutting waste and fraud, which you can’t really do in a democratic country, then…there’s no way to solve the debt crisis.”

Musk added that artificial intelligence (AI) and robotics could be a way out of debt. “We need to grow the economy at a rate that allows us to pay off our debt.”

Interest Rate Cuts Might Not Move the Needle

For real estate investors hoping that Fed rate cuts will have the desired effect if the national debt remains dangerously high, that could be wishful thinking. Musk’s comments from his appearance on Joe Rogan’s podcast earlier this year appear to hold in unpredictable economies: Tangible assets such as real estate become more valuable because people will always need a place to live, regardless of the economic environment.

“It is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high,” Musk advised.

Final Thoughts: Affordability and Long-Term Stability Are Keys to Sound Investing

The debt-to-income map is a blueprint that investors can follow to locate some of the most stable housing markets in the country, where traditionally conservative investing principles of low debt and paying bills on time prevail. They are not the most glamorous markets, but they also don’t have a large percentage of highly leveraged residents. In turbulent economic times, low debt-to-income states such as Ohio, Pennsylvania, and North Dakota are some of the most resilient markets in the U.S. 

Realtor.com and the Wall Street Journal named Manchester-Nashua, NH, as its top market for the second straight quarter in its Fall 2025 Housing Market Ranking due to its “sustained demand, brisk sales activity, and notable year-over-year price growth,” coupled with its balance of “desirability with relative value.” New Hampshire has a relatively low DTI ranking of 1.4.

In 2018, I started over with nothing. By 2025, I’m in spitting distance of the Two-Comma Club. 

When I first started investing in real estate in my mid-20s, I made some bad investments in rental properties. I never got a mentor—I learned every lesson the hard way. 

By my late 30s, I couldn’t afford to keep subsidizing those early investments with my income each month. I unloaded every property I owned. 

Every good investment I’d ever made got wiped out by the bad ones. I turned 38 with nothing to show for 16 years of working adulthood. It was like falling on the wrong square in a board game and being sent back to “Start.”

So how did my wife and I go from $0 to nearly $1 million in less than seven years? 

The Two-Pronged Attack to Build Wealth Fast

To build wealth fast, you need to save a huge percentage of your income, and you need to invest it for high returns. 

It helps to have a high income, of course, but my wife and I have never had that. Katie’s a school counselor (teacher salary), and my company SparkRental has always been more labor of love than cash cow. In most months, I earned more as a financial writer than as an entrepreneur organizing an investment club of peers. 

That didn’t stop us. 

Aggressive Savings Plan Part 1: Expat Life

For most of the last seven years, we lived overseas. That enabled us to live a comfortable life on my wife’s income and benefits alone, and save and invest all of my income. 

The international schools where my wife worked provided us with free furnished housing. We paid reduced U.S. income taxes due to the foreign earned income exclusion. For the last six years, we didn’t even have a car. 

And of course, we enjoyed a lower cost of living overseas. 

The bottom line: We enjoyed a savings rate of 50%-70% for each of those years, which we turned around and invested for compounding returns. 

Aggressive Savings Plan Part 2: Living Stateside Again

In June, we moved back to the States to be closer to family. We knew we’d take a financial hit, so we prepared for it. 

We still manage a 35% savings rate, even living in a major East Coast city. 

First, we negotiated a discount on rent. As a former landlord myself, I know my way around these conversations. “My wife and I each have credit scores in the mid-700s. We don’t have any pets. And if you’ll accept $____, we can prepay the first six months’ rent upfront.” 

Not every landlord was willing to take hundreds off the rent in exchange for prepayment. But we only needed one to agree. 

Second, my wife and I decided to try sharing one car. We bought a used Hyundai Tucson, and in over four months of living back in the States, we’ve only had one or two scheduling conflicts around the car. Sharing one car not only saves us on car payments, but also on insurance, gas, maintenance, and more. 

We use a high-deductible health plan, in conjunction with an HSA, to lower our tax bill. 

We contribute to other tax-advantaged accounts to further lower our tax bill. Plus, we score some great tax savings through our real estate investments—but I’m getting ahead of myself.

And yes, we go out for fewer meals and coffees than we did abroad. But so what? I know how to cook, as do many of our friends, so we still eat plenty of restaurant-quality meals. 

Aggressive Investing

I didn’t save $1 million worth of pennies in a jar over the last seven years. Our investments did a lot of the heavy lifting for us. 

As I’ve written about before, I invest about half of our portfolio in stocks, and the other half in real estate. 

Stock investing strategy

I keep my stock investments simple: index funds rebalanced by a robo-advisor. I personally use Schwab’s, which is free. I have it set to pull money out of my checking account every single week and invest it automatically as a form of dollar-cost averaging. 

I also buy a few index funds manually, including more international stock funds. 

It’s seriously that simple. 

Real estate investing strategy

I hated being a landlord—and that goes for the good rental investments I made later on, not just the early lemons. 

Today, I invest passively through the co-investing club. Every month, we meet on Zoom and vet a new investment together. Any member can invest $5K or more, and together, we invest $400K to $850K. 

In some months, it’s a private partnership; in others, a private note; in others, a syndication. Some investments are more income-oriented, like the land fund we invested in this month, paying a 16% distribution yield. Others are more growth-oriented, and others combine both income and growth. 

This lets me practice dollar-cost averaging with my real estate investments, too. Over time, the returns have compounded to drive my net worth ever higher. 

Want Extraordinary Results? Stop Being Ordinary

The average person will never build real wealth, regardless of income. As of last check, the average savings rate in the U.S. is a paltry 4.6%. 

On the investing side, the average American fares just as badly. A 20-year analysis from 1998 to 2017 found that while the S&P 500 averaged a 7.2% annualized return during that period, the average retail investor earned just 2.6%. 

Think you’ll get rich saving 4.6% of each paycheck and earning 2.6% returns on your money? You’ll barely keep pace with inflation. 

Aim for a 25%, 35%, or 45% savings rate. Then invest for 10%-20% returns. 

Do that, and you have a shot at becoming a millionaire within the next five to 10 years, even if you’re starting from scratch like I did in my late 30s.

Employment is down, and rental demand is up. That’s the narrative sweeping the country, and landlords are learning how to make lemonade from the lemons of low housing affordability.

As home sales collapse and inventory expands, a slow buyer’s market has turned into a hot rental one. Although an abundance of available rentals in the U.S. is “tipping [the market] in favor of tenants,” according to CREDaily, astute landlords can leverage demand in their favor.

Advantage: Renters

A surge in new apartments and slower rent growth (national average rents dropped 0.3% in September—the sharpest decline for that month in over 15 years, according to CoStar) follows years of steady rent increases. Apartment rentals are stagnant in many markets, according to CREdaily, with Austin, Denver, and Phoenix seeing the most significant rent cuts. In these and other markets, tenants are able to negotiate concessions like move-in specials, shorter leases, and upgraded amenities. 

For landlords facing delinquency and turnover from cash-strapped tenants, leveraging the need for housing means being flexible: balancing affordability for tenants with ensuring their long-term residency.

Job Anxiety

RentRedi data for October showed that 83.5% of tenants paid their rent on time; however, with greater economic uncertainty, including a prolonged government shutdown (now the longest in history), that could change. 

It’s already affecting the homebuying market, with over 15% of home purchases falling through in the summer, the highest rate for that time of year since 2017. This increase is boosting inventory in the Sunbelt.

“What you don’t forecast is job anxiety being as deep as I think it is,” Tony Julianelle, chief executive of real estate investment firm Atlas Real Estate, told the Wall Street Journal. 

Commenting on the recall of former Sunbelt renters back to the office, David Schwartz, chief executive of real estate investment firm Waterton, told the Journal:  “There was a saying: ‘Stay alive until 2025.’ We’re in the camp, ‘We’ll be in heaven in 2027.’”

For landlords looking for a fix in 2026, there are some options available. Not all Sunbelt cities are struggling. A RentCafé analysis from September shows Miami is the country’s most competitive rental market, even in the peak season of the fall, with the Midwest’s Chicago not far behind.

How Short- and Mid-Term Rentals Factor Into Higher Inventory

The evolving rental landscape means landlords need to adapt and be flexible to boost cash flow. Short-term rentals (STRs) and mid-term rentals (MTRs) create another avenue for diversification in the right markets, so long as an efficient management system is in place.

Short-term rentals 

STRs have been in the news recently due to tougher regulations. According to AirDNA, STR supply is expected to increase modestly by 4.7% in 2025. Demand for unique, experience-driven stays remains robust, as does demand from digital nomads.

To stay competitive, STR landlords are switching to direct bookings, becoming less reliant on platform fees, and leveraging artificial intelligence (AI) tools to offer premium amenities and designs, according to RiskWire.

Mid-term rentals

MTRs that offer one to six months of booking, appealing to traveling nurses, executives, and insurance claim clients, offer 10% to 30% higher rents than traditional leases, according to Rent To Retirement.

MTRs offer landlords a flexible middle ground between long-term tenants, providing a low-stress option in cities that prohibit STRs.

Candice Reeves, content marketing manager at Baselane Property Management, wrote in a recent report that analyzed information provided by 415 U.S. rental property owners:

“With more rental supply entering the market, landlords in high-supply areas face increased competition and declining rents. Property owners with newly constructed buildings in these markets have had to adopt aggressive leasing strategies to fill vacancies, including rent concessions and incentives.” 

The report provided key insights into the state of a shifting market:

• 82% of respondent landlords faced higher ownership costs, and 26% saw expenses jump by more than 20% in 2024.
• Major cost drivers included property taxes (60%), maintenance/repairs (57%), utilities (49%), and insurance premiums (43%)
• Changes in tenant protection laws, including rent control in several states, have made compliance a challenge for 17% of landlords.

Winning Strategies to Maximize Cash Flow 

Like any business, landlords need to pivot and adapt to a changing market, using every tool at their disposal.

Creativity is the key to longevity for landlords. Being able to move with the shifting currents of the real estate market and stay liquid to do so allows landlords to survive. 

A mistake many investors make is leveraging everything in their quest to attain more doors—only to find that when the market bottoms out or a black swan economic event, such as a pandemic or an earthquake, upends things, there is not enough cash to pivot and survive. 

Here are a few strategies to stay in the game.

Diversify lease terms

Large management companies have this technique down to a science, blending three-month, six-month, and 12-month rental models, or mid-term rentals. 

Adding 15-month and 24-month leases into the mix ensures leases don’t expire during tough rental periods, and are servicing the widest demographic possible. Some of this is covered in RABBU’s 2025 STR Rental Trends.

Optimize technology for efficiency

While AI can’t force a tenant to sign a lease, it can enable property management systems to work more efficiently by automating listings, maintenance, and rent collection. It can also track occupancy, tenant communication, and expenses.

Differentiate the property

This is a big factor in the short-term rental sector, but it can also help properties be leased longer by making them stand out from the competition. EV chargers, private office nooks, and innovative tech improve reliability and can justify tenants paying market rents.

Offset escalating expenses

Property insurance premiums are expected to have risen by 8% this year and 70% since 2019, killing rental cash flow. Energy-efficient upgrades, preventive maintenance, and diversified coverage are some ways to help offset these expenses.

Focus on retention

It costs approximately $4,000, on average, to replace a tenant, according to global payments company ZEGO. That’s around 30% to 50% more in additional costs than retaining an existing tenant.

TULU, a company that helps property management companies increase efficiency, suggests landlords do these things to improve tenant retention stats:

• Being proactive with maintenance
• Investing in security
• Simplifying move-in 
• Being pet-friendly
• Canvasing for feedback
• Offering early renewal incentives
• Having dedicated package lockers for Amazon deliveries
• Implementing robust screening
• Being responsive and supportive to tenants
• Offering renters insurance guidance 

Final Thoughts

Despite tough competition from other vacant apartments, landlords have one thing in their favor: They own real estate, and people will always need a place to live. 

The next step is calibrating their properties to attract the most tenants. The most crucial factor in doing that is gauging the rent people are willing to pay for your property, then going above and beyond with decor and amenities to give them great value for their money while covering expenses.

Successful landlords who have been around a long time will tell you real estate is all about the long game. The most money is made from equity appreciation, not cash flow. If, during tough times, you can cover your costs and minimize tenant turnover by offering outstanding service to highly qualified, meticulously screened tenants, you will ultimately come out ahead through appreciation and debt paydown, not to mention the tax advantages.

Investors should remain liquid to absorb unforeseen expenses. Invest without your ego demanding you keep accruing doors, but rather with a cool head that first questions whether you can keep the doors you have, even if it means dropping rents in the short term to gain an advantage over your competition and survive the long term.