BiggerPockets Real Estate Podcast
Episode: Home Prices Could Stagnate for Years
Date: August 18, 2025
Host: Dave Meyer
Guest: Jay Scott
Episode Overview
This episode challenges the long-held assumption that “home prices always go up,” exploring the likelihood that home values may stagnate, or even decline, for several years. Host Dave Meyer and real estate expert Jay Scott break down why this shift may happen, its historical context, and actionable strategies for real estate investors to build wealth—even in flat or declining markets. The conversation is candid yet optimistic, focusing on fundamentals like cash flow, principal paydown, tax benefits, and creative deal structuring rather than speculation and appreciation.
Key Discussion Points & Insights
1. The Reality of Stagnant Home Prices
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Housing appreciation has slowed considerably compared to prior decades.
- Dave clarifies there’s no imminent crash, but a period of stagnation or mild decline is likely in many markets.
- Jay ties appreciation to long-term inflation trends and notes that, historically, real estate prices and inflation are closely linked.
- Notable quote:
"Housing has gone much higher than the inflation trend line...but my thesis is that, given where we are...real estate's going to stay flat and those two trend lines will meet up again at some point in the future."
— Jay Scott, [02:45]
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Affordability and Stagnation
- High prices and low affordability don’t necessarily require a crash. Instead, price stagnation plus income growth could gradually restore affordability.
- Dave:
"Instead of a market crash...prices stay flat and hopefully wages start to increase, maybe rates come down a little bit and then you sort of get this gradual restoration of affordability."
— Dave Meyer, [03:30]
2. Supply, Demand, and the Stagnation Thesis
- Jay explains that for prices to rise, supply must drop or demand must rise, but both are already at historic levels.
- A significant drop in prices would require a massive recession that scares buyers and stifles lending—an unlikely scenario.
- Jay:
"To see a significant drop in prices...we would have to have a major, major recession where people were too scared to buy and banks were too scared to lend. And I think that's unlikely as well."
— Jay Scott, [06:40]
- Jay:
3. Mortgage Rates and Economic Uncertainty
- Lower interest rates are unlikely without economic weakening; the Federal Reserve’s moves alone do not control mortgage rates.
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"If the Fed cuts their key interest rate...without a corresponding softening in the economy, it’s not going to bring down mortgage rates."
— Jay Scott, [08:50] - Dave adds that broader market uncertainty keeps rates higher regardless of Fed actions.
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"Mortgage rates are not controlled by the Fed...bond investors are going to need to see a lot more data, a lot more clarity...before the bond market is going to move."
— Dave Meyer, [10:21]
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4. How to Invest Profitably in a Stagnant Market
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Don’t Bank On Appreciation
- Relying on appreciation is risky and speculative.
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"Don’t pay $3 for an asset that’s worth $1 in the hopes that it goes to $5."
— Jay Scott, [14:42]
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- Instead, invest based on fundamentals and day-one intrinsic value.
- Relying on appreciation is risky and speculative.
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Key investment benefits independent of appreciation:
- Cash Flow:
- Ensure properties at least break even after expenses and debt service; strong positive cash flow is less common at current rates, but stability matters.
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"You want to buy properties that generate at least enough cash flow...You don’t want to be losing money each month."
— Jay Scott, [16:01]
- Principal Paydown:
- Tenants pay off equity over time, turning loan payments into future wealth.
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"One of the best benefits of real estate is the ability to get large loans...and your tenant is now paying that loan for you."
— Jay Scott, [17:04]
- Tax Benefits:
- Tax efficiency and deductions increase real returns and accelerate compounding.
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"A significant portion of what I’m earning is the tax benefits. It basically keeps money in your pocket so that you can invest in other things."
— Jay Scott, [18:20]
- Cash Flow:
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Inflation as an Investor's Friend
- Borrowing in an inflationary era means paying back debt in “cheaper” future dollars.
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"Now's a great time to be borrowing money, because that's another benefit...having a lot of good debt is going to be an extra benefit."
— Jay Scott, [21:10]
5. Forced Appreciation / Value-Add Strategies
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Forced appreciation—adding value through renovation or optimizing under-performing properties—remains a strong strategy even if the overall market is flat.
- With longer holding periods owners are less likely to have maintained properties, creating more distressed inventory and more room for investors to add value.
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"That distress is going to allow us...to add that value through renovations...so that we can force the value up there as well."
— Jay Scott, [24:15]
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In “sideways” markets, nicely renovated, move-in-ready properties often retain value or appreciate, while distressed properties may lose value—creating large margins for flippers or buy-and-hold investors willing to modernize assets.
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"...the premium you pay for a nice stabilized asset...we're sort of going back to that normal time where there's an appropriate level of discount on distressed assets."
— Dave Meyer, [25:00]
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6. Other Smart Strategies for a Flat Market
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Seller Financing & Loan Assumption:
- Look for deals where you can assume a seller’s low-interest mortgage, or arrange seller financing with owners who own free and clear.
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"Anytime you can inherit or take over a loan that's at 2 or 3 or 4%, where new loans are at 6 or 7%, there's a lot of value in that."
— Jay Scott, [30:26] - Older owners with no mortgage may be open to providing seller financing in exchange for a steady income stream.
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"...that kind of predictable income for someone who's retired is actually super valuable."
— Dave Meyer, [34:07]
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Option Contracts:
- Option to buy gives investors time to research and prepare, with minimal upfront risk—especially useful in uncertain times or commercial deals.
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"...you give the seller some amount of money to give you the right to buy that property at some point in the future."
— Jay Scott, [31:18] - Works best with sophisticated sellers or investor-to-investor deals.
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Find Creative & Willing Sellers:
- Flexibility and creativity are key—find sellers open to non-traditional structures.
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"...someone who's willing to get a little bit creative. It's almost even a more sophisticated seller..."
— Dave Meyer, [35:46]
7. The Unique Long-Term Strength of Real Estate
- Unlike stocks or crypto, real estate has exhibited long-term, low-volatility, reliable growth, despite recent booms/busts in other asset classes.
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"Real estate has been tremendously consistent...If you look at growth in real estate values over the last 120 years, there’s only been one or two times...where values have gone down."
— Jay Scott, [36:40] - Dave underscores the value of “floor protection” and real estate’s role as a stable, wealth-building asset.
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8. Multifamily Real Estate Outlook
- Multifamily values have already dropped substantially, but the sector looks poised for recovery as new supply diminishes and demand remains steady.
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"I think we're pretty much at the bottom for multifamily right now...I think multifamily is going to be a great place to be for at least through 2028, 2029."
— Jay Scott, [40:00]
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Notable Quotes & Memorable Moments
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"Don’t pay $3 for an asset that’s worth $1 in the hopes that it goes to $5."
— Jay Scott, [14:42] -
"You missed the biggest bull run in real estate, probably in history."
— Dave Meyer, [16:36] -
"Now is a great time to be borrowing money, because that’s another benefit that...having a lot of good debt is going to be an extra benefit."
— Jay Scott, [21:10] -
"That kind of predictable income for someone who’s retired is actually super valuable..."
— Dave Meyer, [34:07] -
"If you look at the growth in real estate values over the last 120 years, there’s only been one or two times...where real estate values have gone down."
— Jay Scott, [36:40]
Timestamps for Important Segments
- [00:00] – Opening theme and framing of the home price stagnation debate
- [01:50] – Jay Scott’s historical perspective: Real estate vs. inflation
- [04:23] – Supply, demand, and why sharp drops are unlikely
- [08:20] – Why lower mortgage rates are unlikely without a recession
- [14:08] – How to profit when you can’t rely on appreciation
- [16:01] – The trio of cash flow, loan paydown, and tax benefits
- [21:10] – Why inflation benefits leveraged real estate investors
- [22:55] – Discussion of forced appreciation/value-add strategies
- [30:04] – Creative strategies: Seller financing, option contracts, finding the right seller
- [36:40] – Real estate’s unique low volatility and historic reliability
- [40:00] – Multifamily: Is it time to buy?
Final Takeaways
- Don’t Plan on Home Price Growth: Investors should prepare for several years of flat appreciation and focus on fundamentals.
- Focus on Durable Returns: Positive cash flow, principal paydown, and tax benefits provide a reliable floor independent of price swings.
- Creativity Wins: Seek seller financing, assumable mortgages, or option deals—especially as more older, sophisticated sellers emerge.
- Value-Add Remains Powerful: Buying and improving distressed assets will likely offer greater margins in the current split market.
- Multifamily Looks Promising: While the last few years have been tough for multifamily, market dynamics are turning favorable.
- Stay Patient and Strategic: Real estate’s historic consistency still makes it a lucrative, low-volatility path to long-term wealth—especially for investors willing to adapt.
