A Quick Look at the Current Real Estate Market US-Wide 

Thanks to a perfect storm of Fed-directed low interest rates, rising crime, and escalating taxes in states like New York, New Jersey, and California, property values in Florida and Texas are surging. Along the coast, from Miami to Delray Beach (where I live) and all the way to Jupiter, prices are as high or even higher than they were in the early 2000s.

From Bill Bonner’s Diary:

“Rents in Miami have been rising at the fastest pace in the nation. The South Florida Business Journal reports that landlords, in neighborhoods such as Delray Beach, are ‘making a killing.’ They’re raising rents by 30% a year… and more.”

As for sales, Norada Real Estate reports:

“It is a seller’s market with many sellers getting top dollar…. The Miami real estate market continues to break records due to pent-up demand and low mortgage rates which continue to fuel real estate transactions.

“Miami’s hot housing market, fueled by domestic and international homebuyers, ended 2021 with 39,394 existing total home sales, up 49.5% from the 26,345 transactions in 2020 and 31.1% from the previous annual record of 30,041 transactions in 2013. Miami’s dollar volume of sales will reach $30.3 billion in 2021, a 103.4% annual increase.”

If, like me, you are an income investor, rising property values is a not an automatic win. It’s nice to see your net worth grow due to increasing real estate valuations. But if rents don’t increase as well, your current ROI in terms of your current assets is a diminishing percentage.

That’s what happened before the crash of 2008. This time, for several good reasons, things are different. The most important are these: (1) Banks are not making completely frivolous loans any more. (2) Rent rolls are rising, too.

What this means is that my son Patrick (who manages the family’s real estate) and I are not worried about the rental properties we currently own. We aren’t worried about another 2008-like collapse. Even if there is a correction, these properties carry little debt. And because rents are also on the rise, we can gradually adjust our rents to compensate for rising maintenance and management costs. That will ensure a healthy bottom line.

But we aren’t able to find any more properties to buy in the area. The prices are prohibitive. So, in partnership with my brother Justin, I have been looking at properties outside of Florida, where the numbers are better.