Residential real estate in focus; A great investment sector just gets better

Residential real estate; the best of all worlds

The best investment sector since 2000 keeps getting better

Despite any talk to the contrary, the Fed’s ostensible hawkishness will be window dressing. The objectives of Agenda 2030 will be built on cheap money, and all the major central banks, including the Bank of Russia and PBOC are in on it. This provides us with the most auspicious conditions for real estate in human history. These trends should persist and magnify until at least mid-decade (below I provide a list of pros and cons).

While inflation should fade from current lofty growth levels, if only to mollify the bottom 90%, even with inflation rates half of what they are currently, low interest rates and elevated costs of living will be a tag-team of destruction for prospective homeowners. If you heeded my warnings over the past eight to nine years, and invested in this sector, it has turned out to be the best investment sector by far – even more profitable than stocks and cryptos, especially when we consider the cash flows, leveragability, and superior tax benefits RE affords its holders.

Despite earlier fears, there doesn’t seem to be any apparent calls for ownership restrictions or expropriation. The reason here is simple; institutional investment and sovereign wealth funds with the backing of official government channels know where future gains lie, and that’s with RE investments. Houses still yield about 5%, and in a world of ever sinking bond yields, the decision here is clear.

We knew about the need for ever-sinking bond yields to keep things moving along under QE, and we knew that the central banks had the situation well under control all along, so those who agreed with my assessment have cleaned up. Those who listened to the others in the alt-media over the past decade have largely stayed on the sidelines.

Though cap rates have come down, they are still higher than those from the height of the RE bubble in the mid-to-late aughts. Those cap rates back then were about 3%, but the UST 10-year also was yielding that much or higher.

Source; CoreLogic

Despite the Cassandra calls, rents for single-family homes never fell nationwide last year and actually grew YoY in 2020. As of April 2021, these rents are up 5.3% on an annual basis, according to CoreLogic.

As a result, investments in single-family and multi-family residential real estate will still operate with strong tailwinds. I predict that rent rates will continue to post strong growth going forward, and apartment building owners and operators will be able to easily pass along the higher costs of ownership and operating to the tenants. The residential RE collateral backing loans will still be viewed as less risky than other forms of RE; thus financing terms will reman favorable. Even private lenders offer easy money to investors for between 4-5%, which is about 300 bps lower than in 2015.

Catalysts for the upside:

  • Low interest rates to persist forever. The Fed cannot raise the Fed funds rates to more than 1.25-1.5% this time around, before fears of a general market collapse once again gain steam. The last time around in 2018, the Fed could barely raise it to 2.25-2.5% without the system coming unglued.
  • Social and racial justice fiscal and monetary programs, which will attempt to make loans more freely available to the disenfranchised, will continue drive up housing costs in the most needy areas. Housing costs in minority and working class areas will be ever-more punishing for these people, and investors will continue to clean up.
  • Institutional and sovereign investors are here to stay, and the sovereign wealth funds are in on the cheap American RE game. What took them so long? I guess these entities know where the world is heading.
  • Rising Construction costs and zoning restrictions will keep a lid on supply at the worst time for prospective homeowners.
  • Rising homeowner costs provide investors with a great opportunity as rents will keep rising in tandem with government inflation data, if not higher. This will help to ameliorate rising housing prices and will keep the cap rates from falling too quickly.
  • Unrestrained immigration from the 3rd world nations continues to punish Westerners, as this low-end demographic chews up Western resources, overwhelms natives with ever rising demand, and pushes out the demand curve on just about everything, especially housing. This demand is highly inelastic, and the ones who claim to be the most supportive of the NWO agenda are the ones getting crushed.

Risks to the downside:

  • An unforeseen blowup in monetary policy. This possibility is remote as all the major global governments are in on it, including Russia and China.
  • Higher than expected morbidity rates from the covid vaccines or from any resulting variants that incapacitate a large percentage of the investor or homeowner population.
  • Risks from global conflict. This should not be a problem until at least mid-decade.
  • Call for ownership restrictions or expropriation; increasingly remote as  institutional and sovereign money funds gets involved. Thus, I doubt this will be a strong possibility, however.
  • Onerous taxation policies for investors. Very likely over the next few years as the small investor gets the blame for rising prices.

Conclusion:

Residential real estate should  hold up here as the large institutions are loading up at ever-higher prices. The affordability issue of housing is a direct result of fiscal deficit spending and the enabling of the Fed via QE.

Those who were spooked by the alt-media “analysis” of rental non-payment and covid collapses fell for another red-herring. We knew that with the Fed and government responses to covid, rent delinquencies wouldn’t even matter, and I have to assume that many investors will not even bother to depreciate their properties by having some ungrateful tenant causing wear and tear to the house. If cap rates drop to 2-3%, the rental income will become an ever-smaller component of the property investor’s experience, thus it would be easier for some hands-off investors to keep their residential properties vacant rather than have to remediate any property deprecation caused by a tenant occupancy.

Now that we have had time to assess the results of the post-Covid monetary and fiscal stimulus, the results are trickling in. It is becoming clear that housing will be viewed as a luxury item and we will be living in a world in which the lower 80% will be either renting debt slaves or severely cost-burdened homeowners.

While the blacks are celebrating their supposed triumph by having a new national holiday dedicated to overcoming slavery, the old slave-owning families have been replaced by an amorphous, institutional slave owner, and they operate a form of debt slavery in which the plebes of all kinds don’t know what they’re up against. They have no idea who owns them. At least with slavery, the slaves had meals, medical care, and accommodations, and they knew who owned them.

Today, the debt slave gets $15/hour and is left twisting in the wind on their own, while they surf their porn, indulge in self release, smoke dope, and play video games. But, hey, pornography is now a protected first amendment constitutional right.

The elites needed to placate and soothe the useless masses during this rough adjustment process, and this is why they engineered the supposed grassroots movement to legalize marijuana. The elites need to make sure there is enough liquor and marijuana to assuage the dumbed-down plebes and keep them from realizing just how terrible their lot is in life. They lost all the rights that matter, so they are left fighting for the right to be as degenerate as possible. I digress….

The residential real estate market has been reengineered in the post-covid world to conform with the Agenda 2030 objectives. Housing will be too expensive to afford, the masses will rent, and they will love it. They will view housing as a costly burden.

THIS IS WHY I WARN ALL TO HOLD ONTO INVESTEMENT PROPERTIES. IF YOU SELL, DO A TAX-FREE EXCHANGE INTO ANOTHER ONE WHERE YOU WISH TO EVENTUALLY SETTLE.

The masses have been educated in the public schools to believe hell is heaven. We get the world we choose.  The great unwashed are increasingly becoming incapable of even owning a home of their own. That takes discipline and temperance and the average person no longer has the self-restraint. Welcome to the NWO – only made possible with societal consent.

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7 thoughts on “Residential real estate in focus; A great investment sector just gets better

  1. Hi Chris,

    I’m a recent college grad on a starting salary of $45k. Do you have any advice for those entering the world at this stage? Seems property will be very difficult for me to access as investment. I’m also concerned about a mid-decade force majeure you previously referenced. What would you do if you were a young man now?

    God bless you for your truth telling. There are none like you.

  2. Here’s an excerpt from the latest Joel skousen’s World Affairs Brief, telling us how President Trump was not given the correct information and made ignorant decisions regarding hydroxychloroquine’s efficacy regarding covid and the vaccine push.

    “Dr. Gold exposes Mike Pence duplicity:

    During the Covid crisis, Dr Simone Gold informed VP Pence about the dramatic effectiveness of hydroxychloroquine on the virus, and how almost all cases would go to zero if President Trump bypassed the medical restrictions on it and made it available “over the counter” so that everyone could buy it without a prescription. Of course, had Pence relayed the info to Trump the president would have looked like a hero. Instead, Pence buried the report and Trump ignorantly got on the vaccine bandwagon.

    A similar ban on considering Ivermectin happened despite tons of positive evidence of its effectiveness over Covid 19, here.”

    Perhaps it’s time for these Patriot alt-media analysts to stop running cover for Donald Trump and admit he was a charlatan, change agent, and Judas goat. Skousen will never admit that Donald Trump was purposely picked to blow up what was left of the Patriot movement and nationalism.

    Now that Trump has been humiliated and is no longer in the picture, Alex Jones is back on the Patriots bandwagon, looking out for us. He speaks a lot of exaggerated truth now, and that’s because his job has been completed; he was the facilitator of the massive Delphi technique to get the Patriots behind Trump.

    What was left of nationalism and the Patriot movement collapsed and we now have Marxists fully running the government who will throw the citizens under the bus in the next global conflict.

    If the Patriots never aligned with Trump and didn’t pray to God to help Trump, we wouldn’t be in this mess right now. God help this country if Trump tries to run again in 2024. That will allow Harris to take this country out to mid-decade when it becomes vulnerable to losing the upcoming global conflict.

    Imagine President Biden or Harris at the helm when that happens. We will have the previously unelectable in the White House, gratis Donald Trump.

    Trump got that massive windfall and refinance recently, so he can live his nice lifestyle for the next few years. Look for him to re-emerge and for Jones to start pumping him once again. Skousen will proclaim that we just need to get like-minded people close to Trump, so he can see the truth.

    Pray that the Judas goats Jones and Trump go away.

  3. A fantastic article, Chris. Five star. Construction costs are killing me, and I paused a few weeks on a project, expecting prices to come down. But prices haven’t come down, and a friend who knows told me they’re not going to.

    Can you explain how we got here, in the broadest terms. Thirty percent of the population was put out of work for a year by this virus emergency. They stopped paying their bills. They were eliminated from the consumer rush. Should I be crude and call them “deadwood”—for purposes of analysis? Now millions of people who were just two weeks ahead of insolvency have been warehoused.

    Same for small businesses. The zombie indy businesses went under as well. Their assets forfeited into pools. Now cartels have their assets. With less competition, these cartels can jack their prices. Is this accurate?

    And what about rumors of Black Rock buying up blocks of forefeited homes?

    1. These large institutions are in fact buying up large tracts of single family RE. I have been predicting that the new home builders will begin to gear their production toward the large institution, which will be the ultimate end user. They will turn this new home construction into rentals.

      These large institutions and sovereign wealth funds previously stuck to apartment buildings, as they were easy to manage and much more predictable with cash flows.

      Now that interest rates have been suppressed for so long, they are moving down the food chain to single-family residences. This is why they are buying all of the houses. It’s not just Blackrock, it’s foreign government sovereign wealth funds, pensions, large REITs, and private-equity firms.

      I personally like apartment buildings, but I never really recommended them too much because small investors have to compete with the large institutional money with their superior financing.. The cap rates on apartment buildings were always too low for me and required me to tie up too much capital in a lower yielding asset, because this was the area that attracted the REITs.

      The cap rates on larger apartment buildings we’re typically about 5%, depending on their condition and age, and the cap rate on a single-family residence was about 8%. For the small person like you and me, the choice is clear.

      I am dealing firsthand with the exorbitant cost of rehabbing. I am currently gutting and rehabbing three full bathrooms in one of my single family houses, and the costs have increased tremendously over the past year. Granted, this is all tax deductible, but it is disconcerting nonetheless. On the bright side, the price of the house is up about $150,000 since the beginning of 2020, so the $20,000 I’ll be out is not a big deal. It would be if it were an owner-occupied house. I also saved a lot of money on this, as I used my truck to buy all of the materials. If I relied on the contractors, the cost would have been close to $30,000. Contractors are charging a lot, because they know how much the properties have gone up. It’s that pure and simple.

      I talked to a fellow investor yesterday and Lowe’s was quoting them $5,000 to install 750 square feet of flooring in three bedrooms in a vacation rental. The contractors are just making up numbers as they go along. They know the people have money and are just gouging.

  4. Great article Chris — thanks for calling this trend early and repeating your observations often…. your analysis and insights have proven profitable and remain very much appreciated!

    1. If China is coming out and saying they are going to control the prices of commodities, and especially gold, I would take that as something bearish.

      Indeed, I would suspect that gold has responded more to China’s warning than to the US Fed. We just have to admit that gold is a manipulated asset and the latest smackdown coincided with the US Fed’s announcement. I would have to suspect that they let gold run up this last time around, so they could bang it down again and send a message to the markets.

      Once again the small investor got hammered. I even thought it was going to follow through, but I was incorrect as well. I notice how it is having a tough time getting above that 2011 high.

      Already, it seems the bloom is off the rose in the commodity cycle. It remains to be seen, but the Dow Jones commodity index has broken below its trend line.

      The best thing for high prices is high prices. Demand contracts significantly in many of these more elastic commodities. While I am not saying we are out of the woods, I suspect that the Fed began to talk tough on Wednesday, as a preemptive strike against rising commodity inflation. I duly note the coincidence in timing regarding the US Fed and the CCPs warning.

      The gold bugs need to understand that China does not want a high gold price either. It doesn’t matter how much gold China holds, if gold prices rise too high and remain unchecked, China’s debt Ponzi scheme collapses as well.

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