‘I wouldn’t touch [them] with anybody’s money’: Grant Cardone says these two big US cities are some of 'the worst markets to be in right now' for real estate investors — here's why - Yahoo Finance | Canada News Media
‘I wouldn’t touch [them] with anybody’s money’: Grant Cardone says these two big US cities are some of 'the worst markets to be in right now' for real estate investors — here's why – Yahoo Finance
‘I wouldn’t touch [them] with anybody’s money’: Grant Cardone says these two big US cities are some of ‘the worst markets to be in right now’ for real estate investors — here’s why
Prolific real estate investor Grant Cardone has singled out two U.S. property markets he wouldn’t touch with a 10-foot pole: Austin and Seattle.
Cardone shared this hot take — and many others — in an interview with Moneywise after he prompted an AI chatbot to answer the question: “What are the 10 best markets for investing in rental real estate in America?”
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The AI Smith response started with: “The best markets for investing in real estate in America can vary depending on factors such as population growth, job opportunities, rental demand, affordability and potential rental income.”
Up until that point, Cardone — who performed the task live on camera — was pretty happy with the response. But when the AI listed Austin, Texas, as the best market for investing in real estate, the investment guru blew up.
“Austin, Texas is one of the worst markets to be in right now,” he exclaimed. “Of all the markets in America, it’s probably the most overbuilt.”
The top 10 American cities for investing in real estate AI Smith listed for Cardone are: Austin (TX), Dallas (TX), Nashville (TN), Atlanta (GA), Raleigh (NC), Phoenix (AZ), Tampa (FLA), Denver (CO), Charlotte (NC), Seattle (WA).
But he wasn’t happy with that response.
“Those [top] four markets are all on the top five list of the most overbuilt markets,” he said, suggesting that AI chatbots sometimes give out-of-date information and require fact-checking.
“Real estate is a very fluid thing.”
Cardone didn’t give a source for his “most overbuilt markets” claim but a report earlier this year by Redfin also listed Austin, Seattle and Denver among the fastest cooling property markets earlier this year.
What’s wrong with Austin and Seattle?
Austin was one of the boomtowns of the pandemic. It soared in popularity in 2021 and early 2022, with out-of-town remote workers moving there to take advantage of the historically low mortgage rates.
However, the capital of the Lone Star State is now experiencing the quiet after the storm. Home sales in the first half of the year dropped by 22.4% year-over-year, while the median price fell by 10.7%, according to Norada Real Estate Investments.
Over the same period, new listings in Austin decreased by 2.7%, while active listings surged by 170.2%, and pending sales were down 14.8%.
Redfin described Austin as “a victim of its own popularity.” The surge of affluent home buyers during the pandemic pushed up property prices, and then the rapid rise in mortgage rates priced people out of the market, leading to a drop in demand.
Read more: Want to invest your spare change but don’t know where to start? There’s an app for that
Meanwhile, Cardone said he “wouldn’t touch Seattle with anybody’s money.”
The Emerald City has suffered a major blow to its job market. A huge surge in tech layoffs in the wake of the pandemic — similar to that experienced in San Francisco — has shaken the Seattle economy and has resulted in a drop off in home buying demand and competition.
In June, the number of homes sold in Seattle dropped 23.3% year-over-year, according to Redfin, and home prices were down 5.7%.
What this means for real estate investors
When a property market is overbuilt — whether housing or commercial properties — this can lead to an excess supply, which can drive down property values.
As a real estate investor, this supply and demand imbalance can reduce your rental income (and potentially make it harder to find suitable tenants) and it could even lead to diminished profit margins.
Overbuilt markets also tend to see an uptick in vacancy rates — like we’ve seen in the office sector in saturated markets like New York City — which can cause financial difficulties for investors, who must keep up with mortgage payments, maintenance fees and other costs.
If the hassles associated with picking the right market, buying a property and becoming a landlord don’t appeal to you, but you’re still interested in real estate investments, there are other options.
You can invest in a residential real estate investment trust (REIT), which are publicly-traded companies that collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.
You may also consider crowdfunding platforms — a process championed by Cardone — that allow everyday investors to pool their money to purchase property (or a share of property) as a group.
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
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