INVESTOR RESOURCES
INFLATION
Why It’s Time to Move Beyond BRRRR
by Andrew Syrios, Stewardship Properties
ack in April of this year, I saw a statistic I would have nev-
percent from a year ago and break- ing the previous record set the month prior, according to the latest data from the National Association of Realtors.” That is something else to say the least! While many believe the real estate market is on a precipice in the same way it was near the end of 2007, things appear different this time around (although that’s not because the economy is healthy). For one, the United States didn’t face a housing crisis back then. Now it does. As CNBC reports, “Growth in housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis, creating an ‘underbuilding
gap’ of 5.5 million to 6.8 million housing units across the country since 2001.” In addition, inflation is beginning to pick up and is unlikely to be “transi- tory” as Federal Reserve chairman Jerome Powell optimistically spun it a few months back. The annual inflation rate is up to 5.4 percent, the highest it’s been in decades, and likely to go even higher. What this means for real estate investors is that while the market is likely to cool simply because housing is becoming unaffordable, it’s unlike- ly it will crash anytime soon. It also means that the popular BRRRR model of real estate invest- ing (Buy, Rehab, Rent, Refinance, Repeat) that we have grown our
B
er believed possible. In Jackson County, Missouri where I live, the months of inventory on the market was a mere 0.6 months! This means for every 10 sales in April, only six properties remained on the market going into May. A balanced market that favors neither the seller nor the buyer is six months. While things have cooled off a little since then, the market is still red hot with rapidly increasing pric- es and very little inventory. As Fox Business reports, “The median price for an existing home in the U.S. hit a new record high at $363,300 in June, up 23.4
58 | think realty magazine :: december 2021
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