xhv8mzw7ge79waga35o97s2wbzpfr6 "The Problem With Big Bubbles" - MultifamilyU

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"The Problem With Big Bubbles" - MultifamilyU

Updated: Jun 19, 2019


The United States is not building enough housing to meet demand. The current annual rate of construction is about 370,000 units below the level required by long-term housing demand. And after years of low levels of building, a significant shortfall has developed, with between 0.9 and 4.0 million too few housing units to accommodate long-term housing demand.” – FreddieMac.com

One thing we appreciate most about Neal Bawa with MultifamilyU.com is the time he invests in data, numbers, extensive research, and the "meat" behind market trends.

Several days ago he released a great article on market bubbles and addresses a topic on everyone's radar no matter what time of year it is: When's the next bubble going to burst?

What is an Asset Bubble?

"An asset bubble is simply what occurs when the price of an asset , be it stocks, precious metals, or housing, becomes over-inflated. These kinds of price spikes can occur for a variety of reasons, including speculative investing, or they can arise as a result of naturally-occurring demographic shifts." - The Problem With Big Bubbles

The truth is, there are many factors that play into the formation of an economic bubble. So as much as we want to look at one single indicator and attempt to predict if a bubble is imminent—history shows us that it's much more complex than that.


Neal Bawa's Observations on the Multifamily Investing "Bubble":

  1. "The United States is behind in building enough housing to meet demand. There have been several years of low building levels and this has combined to create a significant shortfall. Reports from Freddie Mac and other sources contend that as of early 2019, there is a shortage of between 0.9 and 4.0 million units needed to meet long term demand.

  2. Vacancy rates, which are expected to increase slightly in the next few years, are still below the long term average.

  3. Rental rate growth, which has averaged slightly above the long-term average of 2.4% during the past three years, is expected to hold steady at the long-term average in 2020 and 2021.

  4. Government-sponsored initiatives, such as Opportunity Zones, could potentially increase the odds of success for multifamily investors.

  5. If you know the right data on which to focus, you can locate the best markets for investing- markets that will pay off in a good economy or a bad one."

.... Read more on Neal's article here: The Problem With Big Bubbles

About Neal

Neal Bawa is Founder and CEO at Grocapitus Investments, a commercial real estate investment company. Neal sources, negotiates and acquires commercial properties across the U.S. He is a sought after speaker at Multifamily events, IRA events & MeetUps across the country.

Learn more about Neal and MultifamilyU @ multifamilyu.com/about/

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