Passive Impact: Real Estate Investing & Special Needs Housing
Welcome to "Passive Impact: Real Estate Investing & Special Needs Housing," where we explore how real estate investment can generate passive income while making a positive difference. Join host Robert Flowers as he shares strategies, success stories, and opportunities for investors looking to create financial stability and meaningful community impact.
Passive Impact: Real Estate Investing & Special Needs Housing
Tackling the US Housing Crisis: Overcoming Shortages, Regulatory Hurdles, and Investor Challenges
Is the American dream of owning a home slipping away? With a housing market squeezed by a shortage of 3.8 million homes over the past decade, we unravel the complicated web of factors behind this crisis. From the lingering impacts of the 2008 housing crash to prohibitive material costs and zoning laws, we dissect why millions find themselves locked out of the housing market. We tackle the controversial role of institutional investors wielding cash offers, sidelining regular buyers, and creating a battleground for affordable housing.
Turning challenges into opportunities, we explore a range of solutions to combat this housing shortage. Our discussion spans easing zoning restrictions to encourage diverse housing options, boosting smart urban planning, and streamlining permit processes. We also consider incentivizing developers through tax breaks and innovative financing models to pave the way for affordable housing projects. Addressing the labor shortage, we advocate for vocational training and skilled immigration to bolster workforce strength. Finally, we weigh the potential need for regulations on institutional investors to level the playing field for prospective homeowners. Join us as we navigate these thorny issues and propose actionable strategies for a fairer housing future.
Okay, so you know how frustrating the housing market is right now.
Speaker 2:Oh.
Speaker 1:It's like you can't catch a break. Right, we're going to dive deep today into the US housing shortage.
Speaker 2:Okay.
Speaker 1:To figure out. You know why it's so hard to find a decent place to live. Sounds good, we've got some great research.
Speaker 2:Oh, okay.
Speaker 1:Like expert analysis market data, even some historical context.
Speaker 2:Yeah.
Speaker 1:So we can connect all the dots Right and we'll uncover some interesting facts like how much the US has actually underbuilt in recent years Right and the role of, you know, those big time investors.
Speaker 2:Those institutional investors.
Speaker 1:Exactly, it's a big issue, it really is.
Speaker 2:What I think is so interesting about all this is that it's not just prices going up. Yeah, you know, we're actually dealing with like a genuine scarcity of homes.
Speaker 1:It's like trying to find a parking spot at a concert that's sold out. I like that, you know there just aren't enough places for everybody. Nope, and the US is facing this persistent housing shortage, yes, which means there's just aren't enough homes to meet the demand.
Speaker 2:Exactly Supply and demand issue.
Speaker 1:Exactly.
Speaker 2:At its core.
Speaker 1:And get this. We've underbuilt by an estimated 3.8 million homes in the past decade.
Speaker 2:Wow.
Speaker 1:That's a lot of homes.
Speaker 2:It's huge. That's like trying to put the entire population of Los Angeles into like nowhere Right yeah.
Speaker 1:Crazy.
Speaker 2:And on top of that you have, like, the crazy cost of materials and labor.
Speaker 1:Yeah.
Speaker 2:You've got those really strict zoning laws, and then, of course, you know the high mortgage rates we keep hearing about.
Speaker 1:It never ends.
Speaker 2:It feels like it's this like perfect storm in the housing market.
Speaker 1:A perfect storm.
Speaker 2:Yeah.
Speaker 1:So let's unpack this underbuilding enigma.
Speaker 2:Sure.
Speaker 1:I like how you put that. What happened after that 2008 housing crash?
Speaker 2:Well, a lot of home builders. They got burned really badly. A lot of them went bankrupt and the entire industry just got really risk averse.
Speaker 1:It makes sense. Nobody wants to go through that again.
Speaker 2:No, you don't want to be on that financial roller coaster, and so they're hesitant to like ramp up construction again. Makes sense Because they're afraid of another crash.
Speaker 1:I see so, but wouldn't building more homes help?
Speaker 2:In theory, yes, but then you have things like those interest rate hikes.
Speaker 1:Right.
Speaker 2:Which makes borrowing more expensive for everybody.
Speaker 1:For the builders and the buyers.
Speaker 2:Exactly. It's like trying to solve this puzzle, but the pieces keep changing.
Speaker 1:Right.
Speaker 2:It's tough.
Speaker 1:It's like a moving target. Yeah, speaking of navigating this tricky real estate market. Yeah, we've talked before about Flowers and Associates.
Speaker 2:Oh yeah, they're great.
Speaker 1:They specialize in special needs housing and property investment.
Speaker 2:Good people.
Speaker 1:If you're looking to make your money work for you in real estate, give them a call at 901-445-8148.
Speaker 2:Good advice.
Speaker 1:But back to those rising costs.
Speaker 2:Yeah.
Speaker 1:Like I remember when lumber prices went crazy during the pandemic. Oh man it was like if you wanted to build a tree house, you were spending a fortune.
Speaker 2:I know the pandemic really messed things up with the global supply chains and you know construction materials really took a hit.
Speaker 1:He did.
Speaker 2:I mean we saw lumber prices increase by like over 100 percent in some cases.
Speaker 1:Seriously.
Speaker 2:Yeah, and it wasn't just lumber. Yeah, it was steel, concrete, like everything got so expensive.
Speaker 1:Like someone hit the increase price button.
Speaker 2:Yeah, on everything I know it was wild.
Speaker 1:Yeah, and then, on top of that, we had the labor shortage.
Speaker 2:Yes.
Speaker 1:Which I'm sure didn't help.
Speaker 2:No, not at all. The construction industry has been dealing with a labor shortage for years, and the pandemic just made it worse. Of course you know, with fewer workers, wages go up, which drives up construction costs.
Speaker 1:It's amazing how interconnected all of this is.
Speaker 2:I know it's like a domino effect.
Speaker 1:Yeah, it makes you wonder if there's any way to break the cycle. Right, but before we get to that, let's talk about zoning laws, yeah, which I think don't get enough attention.
Speaker 2:Yeah.
Speaker 1:They play a big role in the housing shortage, don't they?
Speaker 2:Oh, absolutely. Zoning laws, you know. They dictate how land can be used. Right can be used and they often have unintended consequences when it comes to the housing supply. So in a lot of cities, zoning favors single family homes and it limits denser housing options.
Speaker 1:So like apartments.
Speaker 2:Yeah, apartments, townhouses, things like that Interesting. So it's not just whether developers want to build more, it's that sometimes they're restricted.
Speaker 1:By these regulations.
Speaker 2:Exactly.
Speaker 1:It's like trying to solve a traffic jam by making the roads narrower.
Speaker 2:I like that. That's a great analogy. Yeah, it really is, and you know, it impacts affordability too.
Speaker 1:Yeah.
Speaker 2:Restrictive zoning laws lead to higher housing costs, right, and they limit the options for people who are looking for more affordable places to live.
Speaker 1:Especially in areas with high demand.
Speaker 2:Exactly.
Speaker 1:Yeah.
Speaker 2:It's a tough situation all around.
Speaker 1:It really is.
Speaker 2:Yeah yeah, it's a classic supply and demand issue, but the regulations just add this whole other layer of complexity.
Speaker 1:Yeah.
Speaker 2:And then, on top of all that, you have those institutional investors. Have you ever wondered who's buying up all those houses?
Speaker 1:I have.
Speaker 2:Often paying cash.
Speaker 1:Yeah.
Speaker 2:Driving prices even higher.
Speaker 1:It feels like regular people can't compete.
Speaker 2:Right, it's tough out there.
Speaker 1:So are we talking about those big investment firms?
Speaker 2:Exactly.
Speaker 1:Hedge funds and all that.
Speaker 2:Yeah, hedge funds, private equity firms, even pension funds. Wow, all these big players are getting into residential real estate.
Speaker 1:Why are they so interested in houses?
Speaker 2:Well.
Speaker 1:Is it just about making a quick buck?
Speaker 2:Profit is definitely a factor, yeah, but it's not just that. So first you have rental income, and as homeownership becomes less attainable for a lot of people, the demand for rentals goes up.
Speaker 1:Makes sense, which makes it a reliable income stream for these investors, so they're capitalizing on the very problem we're talking about.
Speaker 2:In a way yeah.
Speaker 1:Wow.
Speaker 2:And second, real estate is often seen as a hedge against inflation.
Speaker 1:Okay, how so?
Speaker 2:As the cost of goods and services rises, property values and rents tend to rise too.
Speaker 1:Okay.
Speaker 2:And that helps protect their investments from losing value.
Speaker 1:So it's like a safety net for them, exactly when times are uncertain.
Speaker 2:Yeah, and lastly, real estate is generally considered a more stable investment Compared to Compared to, like the stock market.
Speaker 1:Okay, that makes sense.
Speaker 2:Especially during times of economic volatility.
Speaker 1:So it makes sense for them.
Speaker 2:Right.
Speaker 1:What about the rest of us? Doesn't seem fair.
Speaker 2:It's a valid concern.
Speaker 1:Yeah.
Speaker 2:These large scale purchases by institutional investors.
Speaker 1:Yeah.
Speaker 2:They can definitely drive up prices Right. It makes it harder for first time buyers.
Speaker 1:Yeah.
Speaker 2:And people with limited resources to compete.
Speaker 1:It's like trying to play Monopoly. When one person starts with all the properties, that's a good way to put it. Yeah.
Speaker 2:And there's another issue too what's that? When these companies turn single family homes into rentals, it shrinks the pool of homes for people who want to buy.
Speaker 1:Oh wow. So not only are they driving up prices, they're limiting our options too.
Speaker 2:It's a double whammy.
Speaker 1:It feels like we're in a maze with no way out.
Speaker 2:Well, I wouldn't say there's no way out. There are potential solutions, but they require a multifaceted approach. And I think the first step is increasing the housing supply.
Speaker 1:Okay, more houses for everyone.
Speaker 2:Exactly.
Speaker 1:But how do we do that?
Speaker 2:Well, one way is to ease those zoning restrictions, you know, to allow for more multifamily housing.
Speaker 1:So like townhouses.
Speaker 2:Townhouses, apartment complexes, even co-living spaces.
Speaker 1:I've heard of those.
Speaker 2:Those are becoming more popular.
Speaker 1:Yeah.
Speaker 2:So we need to move away from those sprawling suburbs.
Speaker 1:Okay.
Speaker 2:With just single family homes.
Speaker 1:Okay.
Speaker 2:And embrace more diverse more diverse and denser housing options.
Speaker 1:I'm all for that.
Speaker 2:But wouldn't that make some neighborhoods feel overcrowded?
Speaker 1:Yeah, that's a good point.
Speaker 2:It's a valid concern, but it's all about smart urban planning, you know, and creating a mix of housing types that fit the neighborhood. That makes sense.
Speaker 1:Yeah, and we also need to streamline the permit approval process.
Speaker 2:Oh yeah, I bet that takes forever.
Speaker 1:It can take forever, yeah, so if we can speed up construction, Right, because time is money. Exactly.
Speaker 2:Especially with construction.
Speaker 1:Yes.
Speaker 2:So are there other ways to incentivize developers to build more homes?
Speaker 1:Yeah.
Speaker 2:Especially affordable ones, absolutely Okay.
Speaker 1:So some cities offer tax breaks Okay or density bonuses to encourage developers to build affordable units Okay. Others are exploring innovative financing models Okay To make it easier for developers to get the money they need Right For these types of projects.
Speaker 2:That's good.
Speaker 1:Yeah, so there's a lot of creativity happening.
Speaker 2:That's encouraging. Yeah so there's a lot of creativity happening. That's encouraging, yeah.
Speaker 1:But what about the labor shortage?
Speaker 2:Oh, for real. If we don't have enough skilled workers, how are we going to build all these houses?
Speaker 1:That's a great point. Yeah, we definitely need to address that labor shortage.
Speaker 2:So we could invest in vocational training programs to give people the skills they need to succeed in these jobs Exactly, and they're good paying jobs.
Speaker 1:That's awesome.
Speaker 2:Yeah, we could also explore options for skilled immigration.
Speaker 1:To bring in workers from other countries.
Speaker 2:Yeah, exactly.
Speaker 1:Okay, so it's about making the industry more appealing to a wider range of people.
Speaker 2:Exactly and creating a pipeline of skilled workers.
Speaker 1:So what about those institutional investors?
Speaker 2:Yeah.
Speaker 1:Is there any way to kind of regulate their impact?
Speaker 2:It's tricky but, some cities and states are considering taxes or restrictions on corporate home ownership to prevent them from buying up too much.
Speaker 1:That seems reasonable.
Speaker 2:Yeah, the goal is not to ban them entirely, but to make sure there's a level playing field.
Speaker 1:Right.
Speaker 2:For everyone Exactly To have a chance. Yeah, the goal is not to ban them entirely, right, but to make sure there's a level playing field Right For everyone. Exactly.
Speaker 1:To have a chance.
Speaker 2:Yeah, and another idea is to incentivize selling to owner occupants rather than investors.
Speaker 1:OK, so like giving tax breaks.
Speaker 2:Yeah, exactly Like tax breaks for people who are buying a home to live in.
Speaker 1:Makes sense. Yeah, it feels like there's finally some light at the end of this tunnel.
Speaker 2:Yeah, it's a step in the right direction. Good, but finding the right balance is crucial. You know we need a healthy and equitable housing market. It's not just about building more homes, yeah, it's about building the right kinds of homes in the right places.
Speaker 1:Okay.
Speaker 2:And making sure everybody has a fair chance. I like that To access them.
Speaker 1:That's really good. So, this is a complex issue.
Speaker 2:It is.
Speaker 1:But it's really exciting to see so many solutions. I agree being explored.
Speaker 2:It feels like we have an opportunity to create a more inclusive and sustainable housing market for the future.
Speaker 1:Absolutely, and the more we understand this stuff, the better equipped we are to make a change.
Speaker 2:Exactly.
Speaker 1:And advocate for things.
Speaker 2:Advocate for change. Yeah, in our own communities, exactly.
Speaker 1:Yeah, it really shows how this affects everything.
Speaker 2:It does. It's not just about finding a place to live Right. It impacts the whole economy, our communities.
Speaker 1:Yeah.
Speaker 2:Even things like social mobility.
Speaker 1:So it's about having a good quality of life, yeah, and like the freedom to go after your dreams.
Speaker 2:Exactly when housing costs are high. It just puts a strain on everybody's budget.
Speaker 1:Makes sense.
Speaker 2:And that means less money for other things you need like health care or education, or just enjoying life. Exactly, and it can stop people from moving to places with better jobs.
Speaker 1:Or better schools.
Speaker 2:Exactly.
Speaker 1:It's like you're stuck, even if you want something better.
Speaker 2:And when there's not enough affordable housing, it really hurts lower income families and individuals.
Speaker 1:Makes it harder to get ahead. Yeah, it does, it's like housing should be a basic need.
Speaker 2:It should be.
Speaker 1:Not just something you buy and sell.
Speaker 2:I agree.
Speaker 1:So what role do you think technology will play in the future of housing?
Speaker 2:Well, we're already seeing technology change the real estate industry. Like those online platforms connecting buyers and sellers. Virtual tours.
Speaker 1:I love those.
Speaker 2:Yeah, you can view properties from anywhere.
Speaker 1:Yeah.
Speaker 2:And even AI powered tools Right, helping us figure out property values.
Speaker 1:I even heard about 3D printed houses.
Speaker 2:That's right.
Speaker 1:Is that for real? It is.
Speaker 2:That's crazy, and who knows what's next.
Speaker 1:Yeah.
Speaker 2:Things like modular construction could totally change how we build. What's that? That's where you build the homes off site in a factory. Oh and then you put them together on location.
Speaker 1:That's interesting.
Speaker 2:Yeah, it could be, a game changer.
Speaker 1:So it sounds like we're on the edge of a housing revolution.
Speaker 2:It does feel that way.
Speaker 1:But how do we make sure this technology helps everyone helps everyone. That's the big question.
Speaker 2:Yeah, technology can be used for good or bad. We have to be careful and support policies that make sure everyone benefits.
Speaker 1:So it's not just about having the technology, it's about using it the right way.
Speaker 2:Exactly For the right reasons. It's about empowering people.
Speaker 1:Yeah.
Speaker 2:Not leaving them behind.
Speaker 1:We've talked about a lot today.
Speaker 2:We have.
Speaker 1:From the history of the housing shortage to all the factors causing it.
Speaker 2:Yes.
Speaker 1:And some really cool solutions.
Speaker 2:There are some promising ideas out there.
Speaker 1:It's not a simple issue.
Speaker 2:No, it's not.
Speaker 1:But I think we understand it a lot better now.
Speaker 2:I agree.
Speaker 1:And I hope our listeners feel like they can do something to make a difference, it's important to be informed. Yeah, the more we know, the better we can navigate this market and advocate for a system that works for everybody.
Speaker 2:That's the goal.
Speaker 1:And don't forget, there are resources out there to help Right If you're looking for specialized housing, especially for special needs, or if you're interested in property investment. Our friends at Flowers Associates are the experts.
Speaker 2:They are.
Speaker 1:You can give them a call at 901-445-8148. Great people, and for those of you who want to stay out of the curve and learn about how technology is shaping real estate, robert Flowers has a new book out.
Speaker 2:I heard good things about that.
Speaker 1:It's called AI Strategies for Real Estate Entrepreneurs.
Speaker 2:Catchy title.
Speaker 1:And it's available on Amazon. Check it out. It's a great resource.
Speaker 2:It is.
Speaker 1:Well, this has been a fascinating deep dive it has Into the world of housing. Definitely I hope you learned something new today.
Speaker 2:Me too.
Speaker 1:And feel ready to join the conversation.
Speaker 2:It's an important one.
