BiggerPockets’ David Greene Says We’re Not in a Real Estate Bubble: Here’s Why
David Greene is the co-host of the “BiggerPockets” real estate podcast, author of “Buy, Rehab, Rent, Refinance, Repeat” and “Long Distance Real Estate Investing: How to Buy, Rehab and Manage Out-of-State Rental Property,” and a California-based real estate agent.
Recognized by GOBankingRates as one of Money’s Most Influential, here he shares the best real estate investments to make in 2022 and why he doesn’t see home prices crashing anytime soon.
What do most people not know about real estate investing that you wish they knew?
Real estate investors build wealth in more ways than people may think. While they obviously make money when the prices of their properties rise, they also make money when the rental income is more than the expenses associated with owning the property. This tends to happen over a longer period of time as inflation pushes rents higher while expenses stay relatively fixed. In addition to this, there are tax benefits associated with real estate investing, and paying down the loan balance on a property creates equity too.
What are the best types of real estate investments to make in 2022?
With the “work from home” movement gaining in popularity, Americans are moving more frequently than they have in the past. As technological advances create new career opportunities, there are more people moving for new jobs in new career fields as well. In 2022 and beyond, investors need to think about which markets are creating the most demand for people to move to. Investors should consider which states have superior weather, tourist attractions, low state income tax and high-paying jobs moving to the area when deciding where to own real estate.
What should real estate investors avoid?
The assumption that properties will continue to increase in price at the level they have in the past. As quantitative easing measures have increased the money supply, inflation-sensitive asset classes like real estate have enjoyed above-average performance. If the Fed is able to slow this process down, real estate growth patterns should return to a healthier and more sustainable level.
When do you think the real estate bubble we are in will burst (if ever)?
Bubbles “burst” when assets become overvalued and investors realize this. The majority of real estate is purchased through financing, and as long as lenders are holding to responsible guidelines, the majority of real estate owners will be able to make their payments.
While home prices have continued to rise, this is largely due to the demand for real estate outpacing supply, NOT a “bubble” scenario. In order for prices to crash, we would need to see a huge influx in supply — which does not happen overnight — or a huge reduction in demand — which is unlikely with the current inflationary environment and people needing a place to store their money. In my opinion, people should consider if the rise in real estate prices is actually tied to increasing value, or if the properties may be holding their value in a neutral position, but inflation is creating the price to rise as our money supply is diluted.
Jaime Catmull contributed to the reporting for this article.
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