Tax Smart Real Estate Investors Podcast

Episode 310: 2025 Real Estate Market Outlook with Dave Meyer from BiggerPockets

Release Date: January 30, 2025

Episode Overview

In this episode, hosts from Hall CPA (“Tax Smart REI Podcast”) welcome Dave Meyer, Head of Real Estate Investing at BiggerPockets, for a comprehensive discussion on the 2025 real estate market outlook. The conversation covers residential and commercial markets, forecasts for interest rates and transaction volumes, the future of tax legislation like bonus depreciation, and actionable investing tactics. Dave shares BiggerPockets community insights and highlights longer-term demographic and migration trends that will shape investing for years to come.

Dave Meyer’s Background and Perspective

[01:38]

• Dave Meyer oversees real estate investing at BiggerPockets, a 3M+ member community committed to helping everyday Americans achieve financial freedom through property.
• With 15 years’ experience as an investor and 9 years at BiggerPockets as analyst and host, Dave offers both data-driven and practical wisdom.
• Quote: “Our goal at BiggerPockets is to help ordinary Americans achieve financial freedom through real estate invest.” – Dave Meyer [01:41]

Current State of the Real Estate Market

[02:23]

• U.S. housing is in a drawn-out, sluggish phase, slowly approaching the bottom.
• Transaction volume is at a 40-year low, while prices have remained stubbornly high due to both demand and supply dropping.
• Quote: “Volume is going down, but prices have stayed pretty resilient… I have a hard time seeing it get much worse than it is right now.” – Dave Meyer [02:23]
• COVID “boom” (2020-2022): Sales peaked, prices surged; after rates rose post-pandemic, affordability plummeted, stifling both buyers and sellers and causing a rare double-squeeze on the market.
• The “kicking the can” dynamic means pent-up moves must eventually unwind, predicting a slow rebound in volume (maybe 5% growth in 2025).

Key Drivers and Macroeconomic Insights

Affordability Is King

[06:06]

• Affordability relies on: home prices, mortgage rates, wage growth.
• Wages are increasing above inflation (a bright spot), but Dave doubts mortgage rates will dip below 6.25% in 2025.
• Quote: “My whole thesis about the housing market is affordability… We need homes to get more affordable for both sellers and buyers.” – Dave Meyer [06:06]
• Most catalysts for substantial growth hinge on unexpectedly lower mortgage rates, which Dave thinks unlikely.

Residential Investor Strategies for the Current Era

[08:55]

• The 2013–2022 “Goldilocks era” (easy cash flow, rapid appreciation) is over; investors need to shift their expectations.
• Real estate is—and always has been—a long-term wealth-building strategy, not a get-rich-quick scheme.
• Quote: “If you’re in it for two or three years, you should probably invest in something else… If you want to build real wealth over the long term, real estate’s still the place to be.” – Dave Meyer [09:29]
• Dave's “Upside Investing” framework: Focus on strong assets in resilient markets, aiming for 8–10% annualized ROI, with upside over 3–7-year timelines.
• Short-, mid-, and long-term rentals all face tighter margins; the “easy” days are gone, but real estate still outperforms most alternatives long-term.

Short-Term and Mid-Term Rentals

[11:34]

• Short-term rentals (STRs) can still work, but are management- and capital-intensive. Property management fees of 30–35% make them less passive.
• The STR market is now highly competitive and trend/reputation-driven, so investors must underwrite for adaptability, not just top-end amenities.
• Quote: “The reason I am one and done [with STRs] is I don’t have the time to be a professional and expert at hospitality. And that’s what you have to do.” – Dave Meyer [23:35]

Commercial & Multifamily Markets

[13:26]

• Commercial real estate, especially office and multifamily, is in a crash—prices in some segments down 15–50%.
• Notable disparity between asking prices by sellers and bids by buyers (~10–12% gap); market remains “frozen” until debt maturities and forced sales increase volume.
• Survive to 25: Many owners are simply extending debt, betting on easier conditions ahead, but Dave is skeptical 2025 will improve meaningfully if rates don’t drop.
• Quote: “The one thing that’s in an actual crash is not being called that… I see a path to good buying conditions…more distress and more opportunities to buy.” – Dave Meyer [13:26, 14:06]
• Action item: Watch for upticks in transaction volume and commercial mortgage delinquency; both signal distress and new opportunities.

Bonus Depreciation & Tax Incentives

[18:53]

• 100% bonus depreciation, previously available to stimulate rapid real estate activity, expired; political talks continue about restoring it.
• Dave expects a big impact if reinstated, particularly in motivating professional and frequent investors to transact more aggressively.
• Quote: “I think it is a big deal and is going to create a lot of incentive for people… If it comes back, it will have a positive impact on transaction volume.” – Dave Meyer [19:16]
• Most substantial benefit is for real estate professionals and STR investors due to tax law qualification hurdles.

Long-Term Outlook: Demographics, Migration, and Macro Forces

[26:33], [30:25]

• The next 5–10 years show positive demographic “tailwinds”: Millennials at peak homebuying age, Gen Z following close behind, and a national housing shortage of 3–7 million units.
• Rent growth is set to outpace inflation, as low home affordability pushes more Americans to rent for longer.
• Real estate is poised to benefit from investment “purges”—less serious investors will exit, reducing competition for dedicated, professional landlords.
• Migration remains strong to the Southeast and Sunbelt, driven by affordability, business investment, and lifestyle. But as these areas become less affordable and more disaster-prone, Dave speculates migration could favor the Midwest/Great Lakes for affordability and climate resilience.
• Quote: “If [climate scientists] are right about their models…the Midwest Great Lakes region is relatively insulated…so you’re probably going to see people attracted to those… And I’ve started buying in the Midwest.” – Dave Meyer [30:25, 33:20]

Risks and Additional Considerations

• Replacement costs and insurance premiums are ballooning due to construction material inflation and disaster risk. This will further pressure affordability and suppress rebuilding in disaster-affected areas.
• Quote: “Even if you had the same number of buildings destroyed from a hurricane, the cost…is going up.” – Dave Meyer [35:28]

Notable Community Sentiment

[39:48]

• Professional investors and long-timers remain resolutely optimistic, focusing on adaptability and opportunity as the field ‘thins out.’
• Despite challenges, 75% of surveyed BiggerPockets members intend to buy real estate in 2025—higher than 2024.
• Quote: “People who are not that into real estate are very negative… People who are professionals…are all just kind of continuing on.” – Dave Meyer [39:48]

Bitcoin & Real Estate

[36:50]

• Dave is skeptical of bitcoin as an investment due to its purely speculative nature and lack of analytical fundamentals.
• Quote: “With Bitcoin, there’s just nothing you can do. You’re along for the ride. That’s just not how I would prefer to invest.” – Dave Meyer [36:50]

Where to Find Dave Meyer & Resources

[41:52]

• Find Dave at BiggerPockets (BiggerPockets Podcast) and on Instagram (@thedatadeli).
• For deeper market data: Dave’s “State of Real Estate Investing” report at biggerpockets.com/resources.

Episode Takeaways

• The U.S. residential market is bottoming, but recovery will be slow and steady, not rapid.
• Affordability challenges persist as the defining market factor; significant improvement depends on mortgage rate reductions, which are unlikely to be dramatic in 2025.
• Commercial/multifamily is entering or already in a phase of forced sales and potential “distress” deals—prepare dry powder and closely monitor transaction data.
• The short-term rental market is competitive and increasingly management-intensive; success requires sophistication, adaptability, and careful underwriting.
• Long-term demographic trends support a bullish perspective on both demand and rent growth in residential real estate.
• The landscape is favoring professionals and long-term thinkers, rather than trend-chasers or opportunists.
• Bonus depreciation, if restored, would likely spark professional investor activity without fundamentally altering market conditions for non-professionals.
• Midwest real estate may become more attractive due to changing climate risk and affordability shifts.

Timestamps for Key Segments

• Dave Meyer’s Intro & Credentials – [01:38]
• Current Market Cycle Status – [02:23]
• The Affordability Equation Explained – [06:06]
• Residential Investor Tactics – [08:55]
• Discussion on STR/MTR vs. LTR – [11:34]
• Commercial/Multifamily “Crash” – [13:26]
• How to Spot Commercial Opportunities – [15:49]
• Bonus Depreciation & Tax Dynamics – [18:53]
• Long-Term Market Forces/Demographics – [26:33]
• Migration Shifts & Climate Impacts – [30:25]
• Community Sentiment / BiggerPockets Survey – [39:48]
• Bitcoin as an Asset Class – [36:50]
• Dave’s Resources and Contact – [41:52]

This episode offers a nuanced, sober, yet optimistic roadmap for investors navigating 2025 and beyond—emphasizing patience, long-term thinking, and adaptability over chasing yesterday’s trends.