Keith discusses the paradox of falling home prices and rents in Austin, Texas, despite it being the fastest-growing city. He highlights the over-supply of apartments, with new towers next to old bungalows, and notes that apartment rents are down, while single-family home rents are up.

He also explores societal attitudes towards wealth, noting the double standard of admiring celebrities while vilifying entrepreneurs like Jeff Bezos.

The over-supply of apartments has slowed down rent growth, affecting single-family home rents.

Wage growth has outpaced inflation, potentially boosting rents.

Millennials are increasingly renting due to the inability to afford homes.

Show Notes:

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold, I just walked one of America's most interesting real estate streets. I'll tell you what I saw then what it takes to get rents to increase in the US more real estate investing content, then it's about jealousy and envy. Why we hate Amazon founder Jeff Bezos for his wealth, yet love performers like LeBron James and Taylor Swift for theirs. It's a case study on wealth, entrepreneurship and celebrity today on get rich education.

Speaker 1 0:39

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit getricheducation.com.

Corey Coates 1:25

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:41

Welcome to GRE from sinking spring Pennsylvania to Manitou Springs, Colorado and across 488 nations worldwide. I'm Keith Weinhold, and you are inside episode 530 of the GRE podcast. What's the minimum wage? I don't even know. Around here, we don't talk about how to live below your means, but grow your means, and you're gonna learn how to earn maximum wage. Austin, Texas is the fastest growing city in America. I've got some really interesting real estate observations for you, since I walked it two weeks ago and well, touring the Texas State Capitol Building was cool. And then on Austin's Sixth Street, I hadn't seen that much beer pong since college, but you know, rainy street, R A, I N, E Y, just south of the downtown, near the river, that was Austin's interesting Real Estate Street, the fastest growing city in the United States has falling home prices and falling rents. What a paradox that is in the fastest growing city. I mean, how do you balance that weirdness? Yes, the census tells us that Austin is the fastest growing and even as a gentrified hipster Haven with murals on the walls, street corners, there food trucks, coffee shops. You know the coffee shops that make you feel like you're in an indie film. It doesn't matter. They simply built too much there in Austin. So all of that that cannot compete with classic supply versus demand dynamics, old fashioned Milton Friedman stuff. And really, what I saw in both San Antonio and Austin is emblematic of the new apartment supply surge. What's going on on rainy street? I mean, that's what I call America's apartment over supply ground zero. Cranes are in the air all over the place. They're building 500 foot apartment towers right across the street from one story bungalows there on Rainey Street. It's a weird scene. Well, the apartments, they're going to be vacant for a while, and part of the weird scene is that there are outdoor live country music acts on the east side of rainy street, and they're playing out of these old one story bungalows converted to bars. It just feels like they're going to be raised and knocked over anytime and then country music, that's something that you associate with, like cows grazing within a mile of you. But that is not going on here, so these huge, new, shiny glass and steel apartment towers are right across the street from it. So it's this weird cultural mix of both country flare and urbanism in Austin and now there were also some clubs with DJs playing. There something more modern. I mean, like 20 year old R and B songs that everyone knows the words to by artists like Usher and Akon. Remember. Or a con or Ja Rule. Remember Ja Rule? Maybe they were playing Jay Z and ice cube too. But, you know, maybe shabu Z would have made more sense on that scene. In any case, it is an unusual scenario there in Austin. So a lively place, a growing place, but apartment buildings got out ahead of the growth. And yes, it all comes back to supply versus demand. Yep, that age old rivalry between what we've got and what we want now broadly, America has an overall lack of housing supply and the under building that is the most prevalent in northern states. And of course, under building, what that does is it increases the number of buyer bids on the few available properties. Well, in turn, that pushes up their home prices faster than the rest of the nation. Now the states with the most appreciation, they generally have the least new housing inventory being built. And of course, conversely, states with the highest available housing supply have the slowest home price appreciation. Austin is ground zero for that. So with the eclectic rainy street there, it's really representative of how you have some cities that are over built with apartments. You have a lot of apartment completions, but not very many new starts of apartments like I mentioned before. No, in fact, let's zoom out nationally. Here. Apartment list tells us that apartment rents are really flat. In fact, they're down seven tenths of 1% over the past year, available single family homes? Well, they're in more scarce supply than apartments, and the CoreLogic single family rent index tells us that their rents are up 2% annually. All right, something that completely makes sense for a change. The overbuild of apartments has slowed down their rent growth even more. But here's the thing, the overbuilding of apartments that's actually slowed down the rent growth in single family homes somewhat. And you might think that those two things aren't related, apartment rents and single family rents, but they're a little related. Just say a tenant they might ideally want a single family home, but there just aren't many of them out there for rent nationally. So then if a good new apartment is substantially cheaper, well, some proportion are going to accept an apartment as an alternative, and that's one reason that single family rent growth is just a modest 2% rather than a more normal 4% or so that you might see as a historic average. But yeah, I mean, really, the story is all these apartment completions, where a lot of them are going to be vacant for a while in some cities now, long term, apartments are going to be fine. I'm totally confident of that the demographic demand for apartments is going to be there because our population is growing and because there aren't many new apartment starts. So really that means over the next couple years, apartment supply versus demand is going to come more back into balance, while we could keep having this ongoing deficiency, though over for the single family rental homes. Perhaps the best thing that you and I can have happen to increase real estate profitability is to get rents up. So let's take a look at that. Let's look at the prospects for getting rents up in, just say, the next year or two. And there is a real bright spot here for that, and that is th...

530: Why We Hate Jeff Bezos