06-03-22 Tech in Real Estate News | Worst Markets for Real Estate Crash

Is your state's economy in danger from crashing because of the real estate market? Check out this week's episode of the Tech in Real Estate podcast where we discuss real estate economic impact, appreciating rental areas in the U.S., and IoT in Commercial Real Estate.

Ariel Herrera 00:00

Today in attacking real estate news, we're going to be discussing the worst markets that could be affected by the real estate crash of transactions. And we're going to be talking about how the home sales affect the economy in the job market in your state, the cost of rental properties across the US, which is super useful if you're looking for new market that has a lot of appreciation. And lastly, we're going to be covering the Internet of Things in commercial real estate. My name is Ariel Herrera with analytics aerial channel, we bridge the gap between real estate and technology. If you want the latest data, tech and news within real estate, then please join the Facebook group. We're having more and more people join the community every day. And we get to share a lot of fun insights. All right, let's get to it. So the first article was published by NAR, which is a realtor website. And they looked into how to home sales affect the economy and the job market in your state. And why this is interesting is that currently in June, we're seeing a huge decline in real estate in terms of transactions. Because of rising interest rates, a lot of buyers have backed out of the market. And a lot of people who would normally have sold their home are not because they can't actually move up into another property. Beforehand, when interest rates were low, people were able to move from say, a three bedroom to a five bedroom house and pay almost the same exact in their mortgage because of lower interest rates. But now we see an environment where moving would drastically impact the expenses for a family. So both sides less transactions. And after less transactions, you don't need as many lenders you don't need as many mortgage brokers real estate agents, and the list goes on. So how does real estate actually impact different markets? This is the aspect of this article, they have found that real estate accounts for nearly 17% of the GDP for the US economy, which is pretty huge. They break this down into a total economic impact into four categories. So first new home construction, second multiplier of housing related expenditures, expenditures related to home purchase. And lastly, income generated from real estate industries. So sometimes from the investor perspective, we just think of the transactions of people buying and selling homes. But there's so much more that goes to it for the real estate industry. There's also buying appliances that are related to a home as well as fixing up or property upgrading and real estate related sectors like the online mortgage businesses. So what's nor does that they look at the top 10 states that generated the highest income from home sales and 2021. And the highest is Hawaii, followed by District of Columbia, next, California. Now just because Hawaii is number one doesn't mean that because the real estate market is crashing, that Hawaii is going to crash as well. But it is definitely a metric we do want to look closely into. And I highly suggest for you to check out the link below for this article. So you could see your own state and see the total impact that real estate has. And that can help to gauge whether if we go into a recession or if transactions remain low for a long period of time, if that's going to have a major impact in your state's economy, the next article comes from rootstock. And roofstock is a great place to start. If you're an investor, you want to be hands off and you want to evaluate properties, but have someone else do all the work for you of looking into cash flow, as well as property management. roofstock also has a whole learning sector. And they have a podcast out there. So highly suggest to utilize their resources. But ultimately, what they looked into is the cost of rental properties and looked at different markets in the US. And this is really good if you're looking to get into a brand new market as well. So in the US, there's 19,500 villages, towns and cities. So sometimes we think that everything is saturated, there's too many investors out there, we're never gonna get a deal. But in reality, there's so many different neighborhoods and sub towns that there's a lot of opportunities still in the US. More than 75% of these municipalities have populations under 5000. So there are only a few select that have over 100,000 amount of people. But sometimes these niche really small populations could do really well in towns that cater towards Airbnb and travelers want to go towards many of these cities where home values have less than 250k have actually had the highest appreciation rates. So areas with properties that have lower costs have seen a lot of appreciation year over year of the article. There are several different

Ariel Herrera 04:58

focuses but I want to focus on Sunday. Sunbelt is my region, which is the smiley face of the United States. So Florida hits that as well. And the factors that roofstock looked at is population population growth, median home values and home value growth. So there's three different cities that caught my attention here. First, Las Cruces, New Mexico, which has a population of about 110,000. And the population growth over a 10 year period has been 14%. Meeting home values around 240k. And the home value growth has been 17%. Year over year, we also see that there's two other cities here, Greenville, Texas and Baton Rouge, Louisiana, that have also seen a lot of growth with median home values around 200k. So even if you live in a market that's really expensive, and you feel like you can't actually invest in it, and look at some of these markets that are having a lot of growth, and have lower costs to entry. The third source that I looked into was a YouTube video, a podcast called how the Internet of Things impacts commercial real estate, by disruptive technologies. And it focuses on interviewing Eric Folsom, I found this interview fascinating, I don't really have that much knowledge of how Internet of Things is impacting real estate. So a lot of this was brand new. But one of the main focuses is sensors. So Eric goes to detail of how sensors are going to disrupt the entire industry, because instead of us making certain changes based on frequency, we could actually do it based on demand. So for example, say if you have a commercial real estate building, perhaps you have cleaners come every week to clean the entire building, and they clean every single room, as well as maybe the desk and also vacuum the floors. Well, that's going to cost money. And it's also going to be time, as well as managing. So in this case, Eric goes into why not optimized cleaning times, you could put sensors on doors and track every time a door is open. So for example, if there's a meeting room, a big boardroom that's rarely used, because most people are working from home, then why should you be cleaning that on a weekly basis. If it's only used monthly, you could track that and based on the demand of needing to clean up is when you actually have cleaners go in there. He also talks about sensors for occupancy, which I think could be really relevant for Airbnb, let's say if your Airbnb is allowed to have six guests, but someone decides to throw a party. And you there's 20 guests there. How would you ever know you could put cameras outside the house. But you could also put sensors to see how many people are in a particular room. The other points that Eric touched were air quality and being able to set the ambient temperature for facility management, as well. One of my favorites that he mentioned was property damage protection. So a lot of the times in real estate we are reactive instead of being proactive when something breaks is when we go to fix it. But if we have sensors in the right place, we can catch things ahead of time. He mentioned sinks and faucets. We could have sensors there to check for any water leakage. That way we could have a plumber go out maybe automatically once her sensors are able to gauge how much water leakage there is. The podcast itself is super interesting. And I think it's very forward thinking but not in the sense of Will this ever happen. I definitely think it will probably be more imperative in the commercial real estate first before it comes to residential properties and also short term rentals. But it's definitely good to think ahead. And if you want to build your own business of maybe consulting others of how to use internet of things for their businesses, this is something that you can definitely make your niche. Great. So what's coming for upcoming content. So I've been trying to make my push to have a lot more of my internal tools external and I was able to publish a month or two ago, the property details bulk upload tool, which allows you to upload a CSV file or Excel file of properties and get Zillow information back.

Ariel Herrera 09:21

I'm also working on a Buy Box trends tool, which is mostly done, I just need to actually publish it and then finish the course aspect of it. Here's a quick preview of what it looks like. So you'll be able to have your particular Buy Box and actually see its performance day over day. So how does that differ, say from Redfin? I had a video a couple of weeks ago on how to analyze markets and Redfin. But the thing is Redfin looks at an entire neighborhood or entire city. But what if you're only focused on three bedrooms, two bath 1500 square feet like you have a lot of rameters that you look into, you're not going to get that from this macro view. That's why the Buy Box market trends app. The idea is that you set your criteria and then you're tracking that criteria day over day to see how is your market changing? Are there more listings coming onto the market? are a lot of things still going over asking? What's the median price per square foot? And ultimately, how many properties do we see that are expired are back on market? I think that's one of the things that I've heard a lot of people try to assess, how do we get expires back on market and for sale by owners, which this fully covers. So stay tuned for the course that will show you how to build this on your own. Or you could skip that option. And just subscribe to this app once it's available. Now we can plans love, love, love Fridays, and this Friday, I'm actually back in my home state New Jersey celebrate a family wedding. And I'll be here for about nine days or so celebrate my birthday as well. And while I'm here, I plan to see the current tenants that I have that their lease is expiring. I've sent them the binder strategy, which definitely check out Dion talks to learn more about that. But the binary strategy basically provides tenants whose leases are ending a view of what current rentals are going for in the market, and you're able to tell them, hey, I'm going to raise the rents. But if you were to leave, you're going to be paying X amount more. So I want to show you that even though I'm raising rents, it's still fair market value and a lot of tenants actually don't know what fair market value is because why would they actually even be checking it while they're comfortable in a home. So this helps to get clarity on both ends. And I'm hoping I'll be able to retain the current tenants so we'll see. Stay tuned and thanks so much for watching.