Not Your Average Investor Show
Not Your Average Investor Show
387 | Q1 2024 Jacksonville Real Estate Market Update
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Join us for JWB's Q1 2024 Jacksonville Real Estate Market Update. We'll be joined by Gregg Cohen, Co-Founder of JWB Real Estate Capital.
Here's what we'll discuss:
• Current Jacksonville real estate market pricing, rents, and months of inventory (MOI)
* The big difference in residential real estate performance when you separate single family from multi-family
• JWB company stats and Key Performance Indicators
You won't want to miss this opportunity to spend some time with one of JWB's owners and learn more about how you can take advantage of the Jacksonville real estate market.
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Welcome. Welcome. Welcome everybody to the Q1 JWB Jacksonville real estate market update. This is our, quarterly tradition that we'd like to do here where we welcome our, community for the show. We welcome JWB clients and, we welcome Greg's biggest thoughts that he has for the quarter. So I'm your host, Pablo Gonzalez with me as always, as I, the guy that I like to call GC because of his genius concepts. Cause he knows how to generate cashflow. Cause he's a great co host. And cause his name is Greg Cohen. Say hello, Greg. Hello, everybody. Great to be with you. And, we welcome our usual community that shows up for the show. We welcome you if you're a client and this is your first time being here. We do this, Show every Tuesday and Thursday where we educate folks, we entertain a little bit. We come up with not your average insights. We show data with perspective, but today is our quarterly update and Because it is our biggest audience, this is the one that mostly gets downloaded. We want to talk about a little special initiative we've got going on. We've got a raffle going on for a really
Gregg Cohengood cause. We do. Do you see, you want to talk about it? It is that time of the year where we are rallying our entire network to come together and to be a part of the special mission, which is to raise money so that we can build a network. Build a brand new construction home and give that home to a very deserving member of our community. And we're really excited this year because that deserving member of the community is actually going to be one of our own. We're closing the loop this year. And through all of your help, what we are doing is building this brand new construction home. We're going to give it to a resident of JWB. So we're super excited. That's going to happen in the coming months, but what we're doing right now is our final push. It is our final. Fundraising initiative. And it is the JWB 50, 50 raffle. So I wanted to ask for all of your support. What you can do is go to JWB real estate. com slash raffle, and you can buy raffle tickets. That's a 50, 50 raffle at the end of the day, you're doing this because it's such an awesome thing to be a part of probably warms your heart a little bit to think about what you're doing and changing somebody's life. And so what you can do is buy tickets and one ticket costs 10. And 25 tickets cost a hundred dollars. So go for the a hundred dollar one. Go for the 25. It makes sense. It's economical. Just
Pablo Gonzalezgo for it.
Gregg CohenYeah. I mean, if you want to win, right? If you want to win, I mean, if you like winning, so you're doing it for a great cause, but you also do have the chance of walking away a few thousand dollars richer as well because the winner of the 50 50 raffle will receive 50 percent of all the donations that are raised. And, that will be yours to keep or to donate. Whichever you like, you know, you keep it. But regardless, we're all going to come together. So I do ask for your support. This is our big push of the year and would love for all of you to go there and to buy those tickets and support the mission here again, go to JWB real estate. com slash raffle. And let's show up in full force. At last I checked, we're over 5, 000 raised for the raffle, which is incredible to go and support the mission. And again, it'll be a nice, nice little bonus for, for one of you lucky folks out there who wins.
Pablo GonzalezThere you go. JWBRealestate. com slash raffle. You can take part in it and before we kick off our usual market update, you see, you know, we like to, we like to start with a little tradition when we're on the, we're on the show here that we do for the quarterly update. What is that? You see the roll
Gregg Cohencall,
Pablo Gonzalezbaby, baby. We got the ring master kicking us off today.
Gregg CohenDrew Barnett. We got
Pablo Gonzalezthe early bird checking in. Mr. Dean Curry. We've got the mystery man today. Danny Davis. Long, long live JWB. We got our leadoff hitter going forth today. John Henning. John Henning. We have the MVP in the house. Mr. Lee Bishop. Everybody knows Lee Bishop. We got Jeff Pettyjohn from Missouri. Jeff, welcome. Laura Colby from Washington State. Alright, Laura. Good to have you. We got our regulars, Gary and Rosalind Riley from Marietta, California. We regard you. We got the man of steel in the house. Vincent Barbarite. Vincent Barbarite. We got Mama Bear in the house. All right, Cody, Cody, I couldn't do it without you.
Gregg CohenI didn't know if you were going to say it or if I was going to say
Pablo Gonzalezit. Well, you know, usually the trick here is when I'm in studio, I'd say the nickname and you say the name.
Gregg CohenAfter four
Pablo Gonzalezyears,
Gregg Cohenyou'd
Pablo Gonzalezthink I'd catch on. We have got somebody rocking and rolling from Rockland, California, fellow Steelers fan.
Gregg CohenOh, of course. Lewis Hudnall. Lewis, I got to hear your thoughts on all the Steelers moves over the weekend. New quarterback room. Big
Pablo Gonzalezdeal.
Gregg CohenThere we go. Big deal.
Pablo GonzalezMy Michael McLeod from Michael McLeod.
Gregg CohenMichael McLeod. Yeah. Long time client. Another Pennsylvania
Pablo Gonzalezguy. Right along Raj in the house. All right, Raj. Raj Bantu. We got Jerry Rodriguez checking in with us today. We got Remya Warrior from New Jersey. We got the shaman in the house. Nadeem Shah. We've got our amigo with us. Que pasa amigos de esta duva? Bill Shields. Bill Shields in the house. Stanley Jocelyn is in the house. Some attendee. The man that everybody know us from California,
Gregg CohenNoah
Pablo GonzalezRendari. Got Kevin O'Brien from Rhode Island checking in. We got Big Papa in the house. We love it when he calls him Big Papa. Pops, how are you, my friend? The co founder of The Co Founder, Jay Cohen. Who else we got in here? We got Pamela Myers from Seattle. All right. Good to have you, Pamela. Who else? Mark Norman from SoCal. Good to have you, Mark. What else we got in here? All right, cool. This is a good, oh, my lady. Jack, Chad, of course, Jack, Chad.
Gregg CohenJack,
Pablo GonzalezChad, he's out here. Andrew Mencia from Jacksonville. My buddy Andrew, that's Oh, nice. Fantastic Andrew. Good to have you, man. Alright man. This is, uh, this is the, market update. I don't think you've been a part of one of these. Chad, from good old Florida saying Ola. Alright, Chad, have you Chad. Welcome.
Gregg CohenWelcome.
Pablo GonzalezAlright, cool. Do you see before we normally kick this thing off, you generally have a message to folks that you'd like to, that you'd like to share as we get started?
Gregg CohenYeah. You know, as I was just, reflecting and spending some time thinking about what you are thinking coming into this real estate update. The first thing I always start with as an investor, you know, many times on this show, I'm telling you, this is a great time to take action. This is the right time to invest. And I'm always thinking, okay, Why am I saying that? What is leading to that conclusion for me to share with all of you? Number one, we've got to be able to make sure that you're going to be able to profit from all five profit centers on this investment. Whenever I tell you, I think you should buy. I want to make sure that there's a really good reason behind that. And, you know, right now we're faced with a lot of challenges in the economy. But at the end of the day, we've got to be able to look at this. And if I'm telling you that you should buy number one, you should be thinking, okay, well, I'm going to be able to profit from. Rent's going up. Number two, I should be able to profit from home prices going up now in the near future and all five of those profit centers. So as I was thinking about that, I'm thinking about, well, what headlines are you reading today? What might be giving you some angst, even though I have been telling you on the show that now is a great time to buy, what are you thinking? What are you feeling? And those headlines, I understand why they cause some angst. I think what's on the minds of a lot of folks, as we start to share some of the headlines that I put together here, it's all about home price affordability. Right now. Yeah, and I think what people have the the progression that people have gone through over the last year is Outside of this show. I don't know many people that were saying that home prices were not going down And so last year Everybody outside of this community was saying home prices are gonna crash. It was like a known thing. Yeah In this community, we talked about how we didn't see that happening because of the data we shared. So people have kind of moved on from that belief that home prices are going to crash, but now they're in this state where they're like, I don't get it. How did that not happen? You know, and now the, the concern is much more about home price affordability. And so, whereas people are, you know, less on the fear on the cliff of fear of home prices crashing. Now they're just like, I don't think home pricing can go up anymore. Yeah. And so as I start to kind of come full circle about what you think and you feel as an investor right now, for me to sit here and tell you, you should be buying, I went into this showing you and trying to show you why my thoughts are that home prices still do have the room to go up, why I still believe this is a great time to invest. And so we're going to get a little bit more into that as we go through the slides here today.
Pablo GonzalezYeah. So it's a shift from this idea of like the bottom is going to fall out, right? Like we've been going through, I would say the last two years or so of looming recession of housing market crash people are talking about. And now Media still got to make their money. So there's still got to be alarmist and and now the now the answer is not now What they're talking about is okay. Well, maybe things are gonna crash, but there's no way things are gonna go up Right because we're in this like crisis of like home price affordability I can tell you, you know as somebody that Didn't grow up in Jacksonville. I've only been here for five years. I think it's normal that when a market reaches all time, whole price highs, and people that are local are thinking, man, I've never seen it be like this. It can't possibly get any higher. I know me, I know. My buddy, Andrew, who's on this call, who are both from Miami, we've seen these moments where it's just like, man, how could it possibly get more expensive, but it can continue to go up. Yeah. Right. Because this is a fluid us market. We're not just only talking about people who live in here in Jacksonville. There's people moving here from other places that are, that, that, that still see this as an affordable market. There is still this idea that. You know, JWB is developing downtown. We're recruiting companies. We're raising the median incomes. Life continues to go up in Jacksonville, but beyond the anecdotes, I think you want to put some data behind.
Gregg CohenI do, because all of those are reasons that, you know, I believe, but I think in the minds of many of our clients, they might think, well, Yeah, that's a little bit farther down the road, or that might not be like cause and effect like here today. But what I want to do is take it a lot more direct and show you what, what has happened in the past, given a certain set of circumstances and how you can take advantage of it as an investor who is trying to add properties to your portfolio.
Pablo GonzalezSo on this call right now, do you see before we go into these, these into the data and the stuff that you've put together. We're going to talk about number one, where we see home prices going right now and, and what's affecting that. Then we're going to review kind of like pricing historically. And then we're going to talk about the numbers at JWB because this is the quarterly update. Kind of crazy that the first quarter of year one's already gone. How about that? Huh? It's, it's fun. It's fun by, but that being said, anybody that wants to take action on this these are mostly clients that are here. So if you're a client, Talk to your, talk to your portfolio manager, right? If you are new to this call and you're tuning in because you want in on JWB's insights and Greg's brain you go to chat with JWB. com. That's your next step. or you should an email to info at JWB companies. com, right? That is if you want to get that going, but for now, just see, talk to me, man. Let's talk about the stats of home pricing and ownership and stuff like that.
Gregg CohenWell, yeah. So let's, Let's put ourselves in the, in the viewpoint of kind of like outside of JWB walls, normal passive rental property investor. You're hearing about home price affordability being a challenge, and it is with good reason to take stock of that. I put this chart together here. And it talks about the share of households that are spending more than 30 percent of their income on housing. And it breaks it down by both renters and owners, and it breaks it down by price ranges. And 30 percent of your income spent on housing is an important factor. You start to get cost burdened by your housing costs. If it goes north of 30%, 35 percent and 40%, then you start to get cost burdened. And we are there. Right. So if you look at every single one of those demographics, they're either owned owners and renters, and you look at the different amount of income brackets that they, that they, that those owners or renters have every single one of them has spiked up a lot really over the last two to three years. And it makes sense because home prices have gone up so dramatically. And interest rates have gone up so dramatically as well. So what everybody is feeling as far as home price appreciation is absolutely real and normal, but we need to ask ourselves. Over the last two to three years, you see that this percentage has gone up so much. Home price affordability has become a challenge. Why didn't housing prices drop? Why did housing prices continue to go up as they did in Jacksonville from 2023 from 2022 to 2023? And it's because it's not just about home price affordability. It's about our supply. We've been talking a lot about it here for years and years and years. The reason why prior to the pandemic, I shared with you all that I didn't think home prices were in for a a crash. And again, we were probably the only outfit that I saw that said that is because I looked at how much supply is on the markets, well, what I'm here to share with you today is that the supply problem, meaning the lack of supply of housing across our entire country. And in Jacksonville, that problem has only gotten worse in the sense that there is too little supply to meet the demand for housing. This is some great data that we're looking at here from John Burns Real Estate Consulting. And John and his team have found that U. S. housing is undersupplied by 2 million units. And the interesting thing here is In 2023, that was our best year of building in the last 15 years since the Great Recession. In 2023, that was our best chance to kind of flip the switch and actually start to produce more units than household formations. But guess what? We didn't. In 2023, we had 1. 8 million household formations, and we only built 1. 5 million units. So, the housing supply and demand imbalance only grew worse in the year that we built the most stuff since the Great Recession. Now there is more building coming in the future, but what you should take away from this is that low supply, given a high amount of demand, which we have in Jacksonville and across the country from household formations and population growth, that equates to a high floor on pricing. And this is the reason why, even as interest rates shot up to almost 8%, you did not see home prices go down. It's because that low supply keeps a high floor for pricing.
Pablo GonzalezGot it. So, what I'm taking away here is we need to build 1. 8 million homes per year. in order to make up for this birth in supply to, to catch up to the demand? Is that what you're saying?
Gregg CohenNo, we need to build 1. 8 million homes per year just to meet that year's demand for household formations.
Pablo GonzalezOkay.
Gregg CohenSo in order to start chunking away at this 2 million units, you need to build more than 1. 8 million. Okay. And that's a great question because I'm trying to share with everybody that This supply issue is not going to be solved overnight. It is going to be here for a while. So you as an investor are going to benefit from this if you own real estate, if you own the asset, right? It is going to take a long time for us to get to equilibrium when it comes to supply of housing.
Pablo GonzalezGot it. So when you say housing formations, what do you mean? Is that like new families that are being formed? Like somebody moving out of their parents house, somebody's getting married and having a kid, something like that.
Gregg CohenAnd, migration into the U S
Pablo Gonzalezin migration into the U S. And this is formations in Jacksonville. This is formation in the, this is the U S this is national,
Gregg Cohenthe slide that we're looking at here is national showing the big problem. But yes, all these same dynamics are in play in Jacksonville as well. And we'll take a look at some statistics to measure that largely we measure months of inventory when we start to measure Jacksonville specifically, but this is the macro sense of the entire country.
Pablo GonzalezGot it. So new housing needed, right? new units that need their own place to live 1. 8 million per year. Beyond that, there is also a lack of supply for the already existing people that need a place to live. And all we did was build 1. 5 million in the most active construction year that we've had in a really, really long time. So not only are we not keeping up with the increasing demand and the new houses that are being formed, but we are continuing to run a negative, we're running at a deficit of what we need a cat of, of just like new ones being built. So the. The, the delta between supply and demand just continues to get bigger.
Gregg CohenYes. And let's make sure we're using that every term that you use there is correct, but it comes off as negative. And what I want to share with people is you have the opportunity as an investor to acquire these assets today and put yourself in a position of strength. Right? While this is a deficit and a challenge for our overall country, not to have housing supply that can support the demand, you have the ability to make a choice to be in a position of strength and own the asset. So when we talk about a deficit or a demand supply and demand imbalance, what that should communicate to you is strength of the asset, consistency, reliability, profit potential from all five profit centers. That should be the takeaway here that you can put yourself in that position.
Pablo GonzalezLove that. Looks like Kevin O'Brien's doing that. He's putting, I've been working with Allie King over the last week and put two more JWB properties on the contract yesterday. Allie's wonderful. Partnering with my son on one of them. Congratulations, Kevin. That's a fantastic. And Sylvia Behringer puts here in the chat, prices are coming down after they went through the roof rents going down 7 percent over the last year on the upside home prices have fallen 11 percent according to Freddie Mac. What do you say about that?
Gregg CohenWell, Sylvia, I really appreciate the, the thought. You know, I'm, I'm hoping you stay tuned for the entire presentation. Cause we'll get into a little bit of a different thought track and a different perspective than what you may share there, but I will also just caution that some of those stats that you have right there do not reflect the Jacksonville market at all. I know that for, for a fact. And you know, those stats, I would check the source of those because, you know, A lot of times stats are thrown out in the news and in the media that don't accurately measure real estate the way historically it should be measured. Like for example, historically, when you are tracking home price appreciation rates or rent price appreciation rates, you want to take seasonality out of the equation. So what I often see is From one month to another, a news outlet will report rents were down 7 percent or something along those lines. But that's not the way that you really should be looking at real estate home price appreciation or rent price appreciation. You need to look year over year because otherwise you're going to be artificially you're going to be influenced by seasonality and that's not real. So I, I would just caution there. I don't know the source of that data, but I can tell you with certainty that that data that you're talking about, rents going down and home prices going down is not true for Jacksonville. They have gone up.
Pablo GonzalezGot it. And then Anthony Wallace is also saying, what's the data for Jacksville? National data is good. We're going to get into some of the data for Jacksville in a second, but right now we're talking on the national scale. Do you see, so if we can't catch up to building construction what other hope is there for, and for somebody to be able to afford a better house?
Gregg CohenYeah, exactly. So, we know that the supply issue is out there that, and when we say supply issue, that means that that it's not going to be fixed anytime soon, and it's going to take a long time for us to build more units so that prices you know, would have some flexibility to either go up or down. Right now, prices are just not going down because there's no supply. But what everybody needs to take into account is that the greatest way to increase home price affordability. for today's market is not just increasing supply. As we talked about, it's going to take a long time and there's lots of things that go into that that can help support that. You can make it easier to build houses. You can create more density on smaller spaces. All those are great things that many, across the country are implementing. We're seeing that happen in Jacksonville, but in terms of home price affordability, It's not going to get here quick enough, but what is going to potentially going to impact home price affordability is interest rates. So many of you have seen the positive headlines that have come out about interest rates, especially over the last couple of months. I pulled a couple just recently here, but interest rates were as high as almost 8 percent at one time. And they have fallen to below 7 percent last I checked they were at six and three quarters. And what you're also reading is like this headline is saying homebuyers rush to get mortgages as rates drop, right? It is all relative. When you start to see some declines in interest rates, what you also start to see are mortgage application rates increasing, which is an indicator of additional home buying demand, which is an indicator of additional sales. And so, and what that leads to again is home price increases given the same level of supply. So it's like the, it's like the most known thing by builders out there. If rates drop, you're expecting home applications to go up, which given the same set of circumstances, circumstances, Largely leads to home price increases.
Pablo GonzalezYeah, which makes a lot of sense. Like, I mean, if we're, if we're already short on the amount of houses that are needed to, for people to live in, and we've also been weathering this like super high interest rate environment, it, it's not a big leap to believe that there's a bunch of people waiting on the sidelines that are waiting to like, try to go get their home once this like mortgage rates go down. A hundred percent.
Gregg CohenYeah.
Pablo GonzalezRight.
Gregg CohenBecause if you, if you think about it, In Jacksonville, we've had over 2, 000 sales in January, which is a large number of sales for Jacksonville. We had over 2, 000 sales in January and February, and that was when interest rates for those buyers were at about 7. 5%. So interest rates were way up here for those buyers that closed in, let's say, January, and their payment was already here. If you already saw that validated, that there was still enough demand, that home price affordability was still good enough, that people are buying at that rate. Well, if you start to see that interest rates are going to come down, and you know that people are already buying here, interest rates coming down actually creates the ability for home prices to go up, given that that payment would stay the same. And many people aren't thinking about this, but what we see over history is that when interest rates go down a substantial amount, the following year you see above average home price appreciation. And it's because of that mentality right there. People make most of their decisions on buying houses based on a monthly payment. And if that monthly payment is here when your interest rate is high, And the interest rates come down, the demand for buying goes up, prices go up, and it still is affordable at that same interest rate that you had, you just have higher prices and lower interest rates to get there.
Pablo GonzalezMakes sense, which, you know, you put this data before and on on a pass show of just what home price appreciation does after interest rates drop. Right? So we looked at 1982 to 83, 84 to 85, 85 to 86, 92 to 93 2000, 2001, and 2008 to 2009. And it shows that when there is a interest rate drop, basically home price appreciation goes up.
Gregg CohenThat's what happened every single time. Yeah. As long as we've been tracking the data. That when interest rates dropped at least 1 percent from one year to the next, you saw home price appreciation, except for one year. And that was the year from 2008 to 2009. And the reason that you saw a decline in appreciation that following year, depreciation, home values going down, is the source of why that happened. Real estate caused the Great Recession, and that's the reason why I did not perform like other examples here. So, absent of real estate causing the issue, the other data that we have supports that when interest rates go down, home prices go up, real estate for sure is not causing the decline in interest rates that we expect to happen here.
Pablo GonzalezYeah. So we have the headlines, it's happening, right? Interest rates are going down. We believe home prices are likely to rise. And then you were just also mentioning this idea of like affordability and what one can pay. So you put some math behind this. You want to explain this slide here?
Gregg CohenYeah. Everybody, I think this is a really impactful slide to look at. So what I said is, okay, in January of 2024, just A couple of months ago the median home sales price was 343, 000 in Jacksonville. And the interest rate that those buyers that closed in January were closing at was roughly seven and a half percent. So those buyers had a payment of 2398, 2, 398 for their principal and interest. Well, I started to run a scenario and I said, well, if that same month, those buyers were able to get a 7 percent interest rate, how much would their monthly payment go down? And it went down, you know, about a hundred bucks. And then I started to run the scenarios. And if you believe that people are already buying at this interest, buying at this payment, and if interest rates go down, then that creates a space for home prices to go up. I said, well, how much could home prices go up? If interest rates came down to 6 percent and still keep that payment the same. And what do you know? If home prices at some time, and I'm not saying this is going to happen overnight, but I want you to think big picture because you are buying and holding for a long period of time. If you believe, like I believe, that that creates a space for home prices to go up, home prices could go up almost 17%. And interest rates coming down to 6 percent would equate you to that exact same monthly payment as what people closed at in January 2024 at a 7. 5 percent interest rate. So saying this again, interest rates right now are at about six and three quarters. If interest rates were to come down another three quarters of a percent, in essence, it creates the room for 17 percent growth within home prices at some period of time to keep that same exact monthly payment that people are already buying at thousands of times in the month of January. That's why there's room for growth. That's why there's room for home price appreciation, even though today we are facing challenges of home price affordability. The easiest solution to home price affordability is when interest rates come down. And you want to be in the driver's seat of owning the asset when that happens because it's highly likely that home prices will go up.
Pablo GonzalezI'm not necessarily looking at the price of the home as much as I'm looking at my monthly payment and what I can afford is really what's driving my decision. The residential home buying market is what ends up setting the price for homes, right, in general. So this idea that if homebuyers are going to get the same exact payment, even if prices go up 17%, it's going to make it very likely that prices are going to go up. Because people are going to want to buy and have that payment. That's already that monthly payments already been proven to be satisfactory to people that are in the market, looking for homes in Jacksonville.
Gregg CohenThere you go.
Pablo GonzalezYeah. That makes a lot of sense. So the flip side of that is this idea that If I am an investor then, and I believe that interest rates are going to go down residential, you know, like home occupant buyers are going to be in it at a higher price. That means that if I was to invest right now, I would be looking at. Potentially buying something right now and having the home go up that much as soon as interest rates rise. I would I would lock in that Appreciation which is essentially net worth for me and abilities to refinance and do all these different things down the line as well
Gregg CohenYeah, exactly, right. We need to keep in mind that when you buy the asset you lock in your purchase price There's nothing you can do about that but when you take out a loan, you are not locked into that interest rate. So if you're buying today and you say, okay, I, I think like Greg and I think that at some point over the coming years that home prices are going to go up, especially because of what we just talked about with interest rates going down, then you have the ability to lock in that asset price today. If the interest rate is higher today than it is a year from now, or six months from now, or two years from now, all you do is you just refinance. There's no prepayment penalties with the loans that you're going to have for JWB assets. All you do is you just refinance. So I wanted to put this in real numbers for you. Let's just say that the, the purchase price of the home is 300, 000 just to keep it somewhat simple. And let's say that home prices increase 4%. There's 4 percent appreciation next year. Well, that would mean that your home value is 12, 000 more one year from today. So if you wait a year to make that decision, in essence, it's costing you 12 grand to make that decision. Let's say that your interest rate today is 6. 75 on your purchase. And, you know, a year from now, it drops to 5. 75 or whatever. All you do is you refinance. And that refinance might cost you about three grand, somewhere around there.
Pablo GonzalezSo, so refinancing costs are much less than traditional closing costs. A hundred percent. Okay. A hundred percent. Yeah.
Gregg CohenWhen you purchase a home. right off the bat. You've got your taxes, your insurance, your, a whole bunch of other things that are included in your closing costs. When you're refinancing, you're already paying for those taxes and insurance. You don't have to pay for those again. You've already escrowed for it. So it's really just like the origination fee is what you're paying there. So it might cost somewhere around 3, 000 in that example.
Pablo GonzalezThat makes a lot of sense. I mean, when you were saying it's going to appreciate 12 grand, then I was just thinking, I just bought a home. There's about 10, 000 in closing costs. It felt like a wash. But if refinancing is way less, then that's why it becomes much more attractive to lock in that equity. If
Gregg Cohenthat's exactly right, you would have made 9, 000 on that trade. Yeah. If you bought today and refinanced in a year and wound up the exact same interest rate. And so that's why, especially in this forum, when we have this quarterly real estate market update, I want to share with you that if your plans are to acquire inventory, to acquire properties, to build a better retirement account. Through rental property investing, buying today, if you believe interest rates are going to go down, is a great move and likely to earn more profit for you and more returns on investment.
Pablo GonzalezGot it. So if you're new here, that means. Go on a chat with jwb. com or shooting an info info at jwb companies. com email so that you can get started and go on that. And if people are investing right now, we're going to go into some more numbers in a second, but if people are investing right now, there's a couple of incentives right now that they can that they can look forward to.
Gregg CohenYes, absolutely. So you get an incentive JWB. Literally contributes four to 6, 000 as a maintenance credit for you. And we do that for every property that is purchased, regardless of the number of properties you purchase could be one could be 10, you get four to six grand to go towards your maintenance cost. And that's delivered right there when you purchase the property. So you've got your first. you know, three to five years of maintenance costs taken care of right there for you. So that's a great incentive. And there's always the bundles incentive. You can be the MVB, the most valuable bundler out there like Patrick Mahomes. And if you purchase three or more at a time, we do take 5, 000 off the purchase price for each of those to help you build that portfolio.
Pablo GonzalezI wonder if Patrick Mahomes and the State Farm people are going to give us credit for the term bundle since we've started saying it on the Night Traveller. I mean, I think credit years ago. Credit is due. I'll give him a call. I mean, I'm not telling him that I'm great. I'm not taking his credit from winning Super Bowls, but as far as like bundling, I feel like our community has been doing. I mean, it might, it might translate there too. I mean, why sell ourselves short? All right. Anyway, so good time to buy right now. Based on this idea of. You know, the, the belief here is that interest rates are going to go down and prices are going to go up. That is what's happening right now with interest rates. Let's talk from a historical perspective. What we like to do on this show is just kind of like show you where we're at, and, give a little data with perspective,
Gregg Cohenright, GC? Love it, baby. We get into this, this zone of looking at prices and for those who continue to show up. So, every show and every quarterly real estate market update, we appreciate it. These, these slides will look pretty familiar, but I think there's, there's value in, in benchmarking quarter over quarter. So
Pablo Gonzalezspeaking of something that looks familiar, this chart, we've been, we've been throwing this chart up here for four years now. So
Gregg Cohentalk to me through it. You see, so this is the Jacksonville historical home pricing. And it goes back from 2001 all the way through present day, those blue jagged lines are all of the median home sales prices at different points in time. That red smooth line is what the projected median home sales price is for our market. And this is helpful to understand, are we in a normal performing real estate market? Are we in a bubble? Because this graph shows both. From 2004 to 2008, you saw what, what, what a bubble looks like. And if you take it from like what a, the feel of what a bubble might feel like, and you put it in objective terms. It's just literally what percentage above that median projected line are we at for real pricing today? Yep. And that's what happened due to the great recession. Mm-Hmm. and due to the mortgage, The challenges that we had in the lending market and the real estate market at that time, which caused the Great Recession. Well, what we see now is a very different perspective here. For many, many years, for most of the last decade and a half, we have been below that line. And that's why we have been saying, listen, home prices over the long haul are going to go up. And guess what? They did. And they hit the, the medium projected line, and they went above that line. Started to get questions from all of you, of, hey, does this mean that we're in another bubble? And my answer was, I don't think so, because we're looking at other metrics along the line as well, but what you're seeing now is that we were right. We weren't in a bubble. We expected the market to normalize and that's what we're seeing. So as we look right now, the median projected home pricing line is exactly where we are for home pricing, which is really interesting to note. I will share one thing, the projected. Line has gone up as it has over the years, as we've been tracking this, we always use real data to support what this line projects at. And from 1982 to 2022, according to John Burns that median projected home pricing line for Jacksonville is actually at 5 percent per year. Prior to this, it was 4. 8 percent per year. So that line projects 5 percent per year, which is the average of the home price appreciation. Again, all going all the way back from 1982.
Pablo GonzalezSo home price appreciation isn't just increasing, but the rate of increase for home price appreciation has increased.
Gregg Cohenwalk me through.
Pablo GonzalezI'll say that differently. The slope has changed, right? Like, like, it isn't just there is a, there is a regular year over year increase that has always happened, but Jacksonville, the trajectory of the Jacksonville curb, the slope has changed. The slope has changed. And now it's moving up faster than it was before.
Gregg CohenWhat the data is telling you is, is you as an owner of rental properties over the long haul, You should expect about 5 percent home price appreciation year over year. That's of course the biggest contributor to your overall profit and wealth that you generate from owning rental properties. That's about 5%.
Pablo GonzalezGot it. So then when it comes to what's next GC, I think we like to go to our favorite statistic that we made famous here on the show, this months of inventory statistic. And that essentially means if you divide the amount of homes available in the market by, I just blanked out. So it's like you divide the homes available in the market by the amount of time, by the amount of sales. Correct. So like how many, how, how long will it take for, if there's no new homes in the market for the market to sell out essentially. And historically for Jacksonville, what we talked about this idea that it had been 4. 8 percent home price appreciation. Now it's 5 percent home price. Appreciation is the standard average, but the normal months of inventory is between six and seven. So when it's between six and seven, you can expect it to be that 5 percent number. And that's how. Greg kind of like famously predicted when COVID hit and everybody's freaking out thinking that the bottom was going to drop out. Greg said, I don't know, because we tracked this number MOI and you know, like during the great recession, it was like 18 or something like that. That's why we knew it was going to drop out. But right now it's like three or four. So that means that not only do we not think that the bottom is going to drop out, but we think that home prices are going to go up.
Gregg CohenYes.
Pablo GonzalezSo we really hang on this home price on this months of inventory number in order to like predict the short term of what's happening. How'd I do there? You did pretty well.
Gregg CohenI would say this is one of a set of tools that we use to see where home prices go. So I will say that if you just look at one month after one month, especially in slow seasonal months, like around winter, you might find that months of inventory spike for one month. So I don't want to put And say that this is the thing we hang our hat on. This is one of a series of tools. The other another one being that price graph that we just looked at comparing what median projected would be over what actuals are. but you know, predicting where the market is going is. Never going to be just one tool.
Pablo GonzalezOkay. So that being said, let's go over the MOI performance here. We see that in February, 2019, we had 4. 3 months of inventory appreciation over the next 12 months was 4. 3%. We also see this number here. That's significant. The days on market, right? Like how much, how long it takes to sell the average house, February, 2023. We had 3. 1 months of inventory with 51 days on market. The next depreciation over the next 12 months was 3. 8%. And right now we sit at 4. 4 months of inventory with 46 days on the market. Do you see, am I, am I thinking about this right? When I'm thinking, okay, if we are in this low months of inventory, kind of like scenario that is right around where this February, 2019 was, plus we also have lower days on market than any of these two periods. It'd be pretty fair to assume that we're going to get somewhere between here or more between. 4. 3 percent and 3. 8 percent home price appreciation over the next 12 months, or maybe a little bit higher.
Gregg CohenYou know, I don't, I don't think anybody can get that specific and say, are we going to get between 3? I do want to caution us a little bit on saying, well, this is exactly what's going to happen because the status suggests this. But what I, but, but overall what you're suggesting is 100 percent accurate, right? Compare what you were thinking about real estate in 2019, in February of 2019. Were you saying to yourself that the market can't go up anymore? That this is something where I'm expecting home prices to go down or rents to go down? Or were you saying that houses are staying on the market so long and things aren't selling? No. Nobody was saying that in February of 2019, right? But we lack this perspective, especially when we start to read headlines out there, because right now people are considering comparing headlines of activity for what happened in February 2024 to February 2023. Or worse, February 2022 or 2021, which were just not normal, which were insane, which were insane years. And when you read those headlines, the conclusions they try to draw is that this is a slow real estate market or that home prices can't possibly go up anymore. And this data with perspective, I think helps all of us see what it really looked like prior to the pandemic. Remember what we thought of the real estate market at that time. Many of you were acquiring properties in 2019. And if we were doing the show in 2019, which we weren't, we started in January, 2020, I bet the questions that I was getting were not going to be Do I think the market, do we think the market's going down? Right? Do we think that it's taking too long to sell a house? But those are some of the questions that we receive on the show, and I understand why, and I love them, but those are the questions that we sort of have to defend why this is a good real estate market in today's day and age. But this data with perspective, I think just helps, right? February, 2019, everybody thought it was a really healthy real estate market. It had less sales than we had in February of 2024. 1842 to over 2000 sales just last month. We had roughly the same months of inventory, which is lower than historical standards, which would lead to expecting higher than normal home price appreciation. And we had more days on market. We had 57 days on market. We only have 46 in February of 2024. So yeah, so your general thesis here of, listen, the cards are stacked. The deck is there that If you're looking objectively at where we are for real estate market, and you think that we're on the precipice of potentially interest rates coming down sometime over the next year, very easy to conclude that you would think home prices are in line to go up. And that's what I think. And that's why I share it with all of you that if you're on the cusp, if this is the time that you're thinking about buying over the next year, this is the right time to do it. It's for all those reasons.
Pablo GonzalezGot it. So we look at the national data, this idea that there's a shortage in supply. We're looking at this idea that mortgage rates are going down, prices are going up. And then we're looking at the local data. We're looking at months of inventory. We're looking at days on market. And it's very reasonable to believe that prices will continue to go up. They will continue to go up at the typical average that they've been going up in Jacksonville or, you know, like somewhere close to there. Which when you do the math, which you just did a second ago, is this idea of like, okay, so if, if we're thinking about this reasonable number, that's going to go up, it's likely that a property over the next year or so goes up 12, 000. So the cost of staying in the sideline, if you want to get into real estate and you're waiting for like the right time to get in as people, you know, like to like to say if you're going to wait a year, you're going to be giving up that equity and you won't, you don't get that piece back versus if you get it now with interest rates as they are a year down the line, interest rates go down, you pay like 3, 000, you get the lower interest rate and you lock all that stuff in and you continue on your merry way.
Gregg CohenAnd we've only talked about the benefit of home price appreciation over that time. We haven't talked about. Principal pay down or tax savings or inflation hedging and inflation profiting. All of those profit centers you get by taking action and buying today. And just don't be scared about the interest rate today. It's going to be cash flow positive today. So you don't have to be concerned about it today. You are only there for upside if and when those rates go down in the future.
Pablo GonzalezOkay, cool. I was just reading something from Sandra Morales here putting, would you say that if months of inventory reach five to six, even if it is defined as balanced in terms of trend, it shows it would be a sign of recession in home buying. Do you know how much homes owned were acquired at rates below 6%?
Gregg CohenSo take the first question. if and when months of inventory get to five to six, would I call that a sign of recession? Absolutely not. And I go back to the data. The data says that a normal market is between six to seven months of inventory. Normal means that over time that has produced on average 5 percent home price appreciation in the following 12 months. So we're not even in the range of normal yet. We are under supplied of housing. So as it gets closer to five to six, I think that's something for us to note, take again, this is not one dataset that is going to drive my thoughts or one dataset should not drive your buying activity. I'm here to help put it in perspective over the big picture, but I firmly believe that over the course of the next year to two years, you're going to see months of inventory go up. because this building supply problem, the builders know this and they're building as much as they possibly can because this is a great market to be a builder. And, and so they're going to build as much as they can. They're going to build more than the number of household formations as a country. And that will lead to higher months of inventory. And so part of this is I don't want you to be scared that in over the next year, two years, we're going to see months of inventory get creep up. It's okay, right? But let's keep this in perspective. For a market that is actually crashing, the last market that actually happened was the Great Recession. As you mentioned, we had months of inventory at 10, 12, 14, 16 months of inventory. That's a very different equation than this getting to five or six months of inventory.
Pablo GonzalezYeah, I mean, it would just essentially get back into like normal, normal appreciation. Yeah, like it's not, it's not that even if it's even if it's between eight and nine, It still doesn't mean prices are going down. It means it would be below normal appreciation, which would be below 5%, but not zero, not negative. Exactly. Right. Yeah. So that's, that's, that's the nuance to understand. As we all know, the asset is one part of the equation. We're going to get into some questions. We've got some good questions here in the Q and A. Asset's one part of the equation, but when you are investing in rental properties, it's really all about the team because you only buy the asset one time, but you. really do marry the team. They're going to be taking care of it. So we also, during these quarterly updates, we like to go over the health of JWB and their business operations. So do you see you put some numbers together here? You want to talk to me?
Gregg CohenYeah, absolutely. This is, these are the same numbers that we benchmark every single quarter that I share with you all. And I try to give you a picture of beyond just the lens of you as the investor, but how is every part of this vertically integrated machine Operating. And so we start with acquisitions. We'll work our way down. So, properties purchased. How about that? Eight properties purchased. I
Pablo Gonzalezbet. Does
Gregg Cohenthat sound like a lot to you? Uh, no, it doesn't sound like a lot at all. I know. Again, going back from years and years and years now, we've been doing the show for four years. And so if some of you were here four years ago and I was sharing this information with you, you would have seen. Hundreds of properties purchased, you know, a couple of months. We, at our, at our height, we purchased 700 and 900 properties a year. So we have really scaled back that purchase decision. Now, why are we doing that? Has absolutely nothing to do with us not being confident in the market. We're more confident in the market today than we were even back in the day because of. some things, especially our activity with downtown and especially about interest rates, as I've shared with you. What this is reflecting is that JWB for years and years and years built up an inventory surplus. We have years of runway of lots that we have already in our possession that we already own that have not been built out yet. And so this is about being prudent and being in a position of strength as a company to make sure that the properties that we do purchase now. We can be very picky and choosy, but you never have to worry about having enough inventory as a client. There's over a thousand lots that we still haven't even developed as a company here. So we're just in a great spot and we don't have to we don't have to extend ourselves to buy anything that we don't want to which is a great thing as a company.
Pablo GonzalezYeah, and again, we talk a lot about this idea that JWB is different, right? Like the, the, we, our, our investor is not the average investor that's like, oh, I see real estate and I wanna do real estate. They're just thinking, they're thinking long term. They're thinking about the future. They're thinking about retirement. They need to have an asset that they can depend on that, just like any other thing that you put in retirement, if you build a plan around it, you got to be able to purchase it, right? So this idea that you all have stocked a whole bunch of lots, you have secured your supply of you being able to bring to market these assets that people can match their plan to. And that's the only way you're going to get them to retirement, right? So, you have that well stocked. Talk to me about these other numbers.
Gregg CohenYeah. So, that leads right into this private lending number, right? So, again, this is where our clients have the opportunity to become private lenders of JWB. And that's, in essence, that's how we do so much volume as a company. And so, You know, those lots that I just described that we, we sit on and we monitor and we decide how many to build each year. Well, then we go to you as a private lending client and we use those funds that you lend to us to go and build out those properties. So this year we will build roughly 400 brand new construction homes in addition to doing the renovations that we do. And so you can see that our, our money raising Arm has continued to, to hum along in a, in a wonderful fashion, you know, we're on pace to set a record this year for the number of private lending dollars that will raise at 5 million only two months of the way through.
Pablo GonzalezTo me as a, as an investor, I think you guys need to be really good at finding capital, in order for me to feel good about everything moving along. So to me, that's just that number. Properties built, renovated 202. Yeah.
Gregg CohenWe've already built and renovated 202 properties, which is again, where those dollars go to. And then property sales, we've already sold 45 properties. That's a mixture of both selling investor properties to clients like yourselves. And if we have any Jacksonville residents and what we call retail homeowners, owner occupants. It's about a 50 50 split as far as what we sell to our retail occupants. And I will say the type of housing that we provide in Jacksonville is the, that is that affordable, Workforce housing, uh, which is what is in need. If we talked about the overall supply problem, workforce housing, affordable housing is the biggest segment of the population that is in need or biggest segment of the housing stack that we need. So last year we had 42 percent of all the homes sold in Jacksonville priced at 300, 000 or below. Those were JWB homes. 42 percent of those. So we're also serving a need, not just as our, for our investor base, but we're serving a need for affordable housing in Jacksonville as well.
Pablo GonzalezThat's awesome. Yeah. All right. And this is all through February. So this isn't even a full quarter. This is just two months of activity. Right. You guys got a lot of stuff going on. All right. Cool. Other KPIs, rent collection stands at 98. 4%. Average rent per property right now is 1, 450 and current properties under management, you're just a tick under 6, 000, 57, 10. To me, the thing that stands out as this average rent per property, that 1, 450, I feel like Just yesterday, it was like right around like 1100. So that kind of flies in the face of this idea of people thinking that rents have gone down. No.
Gregg CohenWell, I actually looked last year when we reported it was 14, 25, 14, 29. So when you started to invest three years ago, it was a lot lower, but again, that's why we talk about the five profit centers of investing in rental properties. And so as you know, costs go up around property ownership, rents also go up around property ownership. As well. And so, you know, we've been able to see rents rise there in a, in a reasonable fashion from 1425 to 1450 in a year.
Pablo GonzalezSo if 1425 Q1 last year, 1450 this year, that says rents have not gone down.
Gregg CohenCorrect. I keep trying to let other people know that that's not just. JWB stats. That is Jacksonville stats. Rents have gone up in Jacksonville year over year.
Pablo GonzalezThere you go. That settles that. Local stats. And then finally other KPIs here, total rented houses, 221 average duration of initial lease, 27. 1 months. So that is a little like a two and a quarter years. Number of leases re signed, right? Keeping the tenant inside the home without having vacancy 381 in this quarter and a 0. 3 percent eviction rate.
Gregg CohenComing along 381. Leases resigned and 221 homes rented on the initial lease through only two months of activity. So again, the strength of this investment comes down to your decision of the team that you work with. And this is the type of productivity that, that the JWD team is able to support you with.
Pablo GonzalezAnd as an investor myself, right? Like just this idea of residents staying there at least two years when they're, when they're signing a lease with me and 381 of them are re signing, right? Like just like, Occupancy is the name of the game here, right? Like keeping residents in the home to me is what really sets you guys apart. And the fact that you guys can really, really deliver on these numbers to me, that's that peace of mind of, I'm not going to have to be like worried about a turn every single year. I'm not going to have to be like constantly thinking about this stuff because you can demonstrate this. Yep. Got it. Cool. All right, GC. Got some questions, but final kind of like answer here on what the portfolio, what the opportunities look like right now, what does the market look like as far as getting in on an investment?
Gregg CohenYes, absolutely. So here's some, some stats and highlights for you all to keep in mind. Minimum investment somewhere around 75, 000 to a hundred thousand dollars, depending on The asset and depending on what percentage down is right for you. And for your plan you can expect returns on investment somewhere between nine and 10%. And your interest rates for JWB clients, your interest rates are going to be five and three quarters percent, which is fantastic. You're not going to find those types of rates out there, especially for turnkey investment properties, generally speaking. So low interest rates today. And again, as interest rates continue to come down over time, We hope that those will continue to come down as well. And then there's multiple JWB incentive packages that are available currently. Don't know how long they are going to last and especially the maintenance credit one. That is not likely to last. the bundles one we've had for a while. I think that one's probably pretty, pretty safe. But I would absolutely encourage you to reach out. If you're a new client you can go to chatwithjwb. com. You can send an email to info at JWB companies. And if you're a current client, just reach out to your portfolio manager and get the process started with you.
Pablo GonzalezWe'll be here in the chat. Just hit up Cody. She's, she's there to help you out. So all you gotta do is do that. Sounds like a good time to buy a man is, is everything I'm saying, whether it's, whether it's Interest rates about to go down, which means prices go up, whether it's months of inventory and all the all the local numbers and the supply demand economics here in Jacksonville looking like things are things are going to continue to progress. More people need homes in Jacksonville that are a that. then the amount of homes in the market, which as an economics major, that's pretty simple. It means it is favorable to the person that owns the home, right? So like whether you own rental properties right now, or you buy your rental property right now, you're looking at a bright future of Wealth creation through home price appreciation in the workforce, housing sector of a growing U S city that continues to get better. A hundred percent. Got it. But you see, so let's get into some of these questions real quick. Sylvia Berenger says, what new industries are coming to the Jack's area? To continue fueling the supply need.
Gregg CohenYeah. You know, the industries that we have in Jacksonville are the type of industries that have been here for a long time. The type of industries that you want to support the job base. So think FinTech. So we have four fortune 500 companies here in downtown, in Jacksonville. Overall, three of them are located in downtown and two of them are in the FinTech space. So FIS and Fidelity National. Our, our stalwarts are two of our four fortune 500 companies, and we have a new FinTech companies coming to Jacksonville, relocating headquarters here. Let me hit you with this stat, by the way. I haven't shared this stat normally nearly as much as I think we should talk about it, but did you know that Jacksonville had the most net growth of corporate relocations of any major us city in 2022 to 2023?
Pablo GonzalezThat's an insane statistic. Right? I know.
Gregg CohenI came across this a few months ago, and I haven't shared it nearly as much as I should have. But, yeah. What
Pablo Gonzalezare you doing out here, bro?
Gregg CohenI know, I know. I failed, I failed. We'll share it a lot. But I just kept that one in my back pocket until, you know, minute 59 of the, of the So the most, the most
Pablo Gonzalezcorporate relocations to Yeah. Of any U. S. city.
Gregg CohenThe most net corporate relocation. So that talks about the number of businesses coming into a city versus the ones that would leave the city. Yeah. Jacksonville is the most of any major U. S. city in 2022 to 2023. Yeah.
Pablo GonzalezI mean, I can't say I'm surprised, man. It is a supremely livable city with a very, very high quality of life. Still under the national average, the national medium in like, of, cost of living. You've got the beach. You've got. The best weather in Florida. You get the low tax state. I mean, it's, I'm, I'm, I'm not shocked at all, but to Sylvia's point, to Sylvia's question, FinTech finance. Healthcare and healthcare tech is a big sector here. Logistics is a big, is a big sector here. And governments are really, really big. Yeah, military. The military, right? So, like, they talk about, like, the big military cities. People think of, like, the Virginia area around D. C. They think of San Diego. Jacksonville is, like, the third big, like, military complex where people tend to, tend to come as well. So, Very, very balanced mix of of, of economic drivers here. And
Gregg CohenSylvia, I do want to say thank you for your questions. I hope you keep coming back to the show. I really appreciate your perspectives.
Pablo GonzalezGot it. So Anonymous Attendee says, I saw a drop in rents and an increase in rental availability in Jacksonville for the last two months. Is this an indication of market saturation?
Gregg CohenNo, as I keep saying over and over and over again, the Jacksonville rental market is strong. You know, what we have to do is stop comparing it to two years ago, because Two years ago, and I shared this two years ago with you guys. Like, it was, it was not normal for rents to be rising as fast as they were. And it was not normal for vacancies to be as small as they were. I was even scared about sharing some of the real stats with you all because I didn't want that to be the normal expectation. Because now when we're performing as normal for a market the narrative becomes that, that we're not. So home rent price appreciation in Jacksonville. Has gone up year over year. And, you know, we're renting more and more homes. I mean, you can see we've rented 221 homes through the month of February. That'll be on pace for the record for the number of homes that JWB has rented in any calendar year. So now we're, we're performing like normal, you know, we managed 6, 000 homes and that's not to say that an individual investor isn't going through a turn or a vacancy at this moment, I want to be sensitive to that. But overall, no, the macro of this it's very positive.
Pablo GonzalezMichael Santoro says a couple of takes here in the Q and a versus Greg. I agree with everything you're saying about home prices increasing. However, as the value of the home increases, so do taxes. Also, when interest rates come down, they drive inflation up, which drives up insurance costs. It's imperative to plan for higher taxes and maintenance as well.
Gregg CohenGreat points by the patron Santorini is there. So, you know, one by product of home prices going up as interest rates come down and home prices go up, expect that property taxes are going to go up because property taxes are a It's somewhat of a function of your home value increasing. So you can't have appreciation without more property taxes. So that is very, very true on the insurance side. You know, we have weathered the storm as far as a lot of insurance cost increases, especially over the last few years. Those haven't necessarily been tied to economic activity. Those have been tied a lot to legal activity. And we have a lot of. improvements to that situation both within our regulators and those that are in charge politically to make sure that that's happened. We feel like the worst is behind us as far as those insurance cost increases. We're starting to hear that the insurance companies are profitable again in the state of Florida, which is a good thing because if they're profitable, that means we'll have more insurance options. It'll just take a little bit of time for it to get back to. what was closer to normal in the past. So I, I guess on the insurance side, I think it's always a wonderful thing to prepare for additional reserves to be in place. So that's the message that Michael's sending. And I agree with that wholeheartedly. I think property taxes are likely to go up as home prices go up insurance costs. You know, we'll see. We'll see how it kind of lands over the coming years.
Pablo GonzalezWe have another question that has to do with insurance in the Q and A. H S T N. I'm not sure that's just like a pop. Anyways, I don't know how to pronounce that. Asking what is the property insurance outlook for Jacksonville compared to the rest of the state? Are rates going up tremendously in Florida? How's it going to affect the bottom line?
Gregg CohenGreat question. You know, Florida has been the poster child for insurance cost increases over the past couple of years. And again, it's tied to the number of lawsuits that were brought to the insurance companies. There were a lot of things that the, the number of lawsuits was. incredibly high compared to any other state in the country. And so because of this, those in charge politically and the regulators got together and they closed down a lot of that potential legal ramifications, which was the number one most important thing to do in order to get. insurance providers to remain in the state. And then of course, for insurance costs to come down over time. So, Florida has been the bearer of the brunt of it much more than any other state in the past. But again, largely we feel like the worst is behind us and we can start to get more towards normality when it comes to insurance costs. I don't have data specific to other parts of Florida. You know, Jacksonville is an insurance friendly part of the state compared to other parts of the state, notably Southern Florida, because, you know, the rate of hurricanes in Jacksonville is much smaller than in other parts of the state of Florida, like Tampa and like, you know, down South. And, you know, that of course leads into our insurance rates. In fact, we haven't had a a direct hit from a major hurricane ever in the state of Florida and the last Jacksonville. Sorry. Thank you very much. Appreciate that in Jacksonville. We haven't had a major hit direct major hit from a major hurricane. And the last. Hit that we had from a category one storm was in 1964, so that leads to lower insurance premiums than in other places in the state.
Pablo GonzalezGot it. All right. Another hot take from Michael Santos in the, in the q and a. Greg, that home. So he's talking about that home price chart that we showed earlier, and he says that home price chart shows $110,000 in 2001 as the medium price. If you adjust that 110, 000 for inflation, the buying power of 110, 000 in 2001 would require 193, 000 today. So the great news is Jacksonville home prices are outpacing inflation.
Gregg CohenThere you go. And that's what happens. That's why you buy into this asset class because over time it does. not just keep up with inflation. That's what we mean by a hedge against inflation, but it outpaces inflation as well, especially in a market where you have significant reasons for population growth. That's how you win here. You invest in the long haul in an asset that at least keeps up with inflation, but you choose one where people want to move to. And that's how you wind up five years, 10 years, 15 years down the road with a very successful portfolio. Just like Michael does with JWB.
Pablo GonzalezThere you go. Last two questions from Carlos Andres Lopez, AKA Cal at what level of months of inventory do prices go down GC
Gregg CohenCarlos? It's, it's not as simple as that. That's why you got to keep. tuning into the show, and that's why I need to make sure I take this information and have the perspective to look at all things that are going on in the economy. If anybody tells you they know exactly when home prices are going to go up or go down, there's no way to know that. There's a billion variables out there. So, this is one indicator that would lead, it's a leading indicator to either higher than normal home prices appreciation. Or lower than normal home price appreciation. And we use it in conjunction with a lot of, a lot of metrics. So
Pablo Gonzalezis it fair to say, right? If it's like normal home, normal months of inventory is between six and seven. Is it fair to say it's like north of 10 months of inventory when price, when we like even start to even think that it would go down?
Gregg CohenThat sounds about right to me. Okay. You know, I mean, based on the home prices don't go down a lot. So that's another reason why we don't have a lot of data. I mean, the last. It's only
Pablo Gonzalezhappened once
Gregg Cohenin
Pablo Gonzaleza generation, right? Yeah.
Gregg CohenIn multiple generations. Exactly. So, but yeah, I mean, that, that sounds about right to me, but I, as you're kind of hearing in my voice, this data is really important, but don't take this that it's cause and effect. There's way too much more than, it's not just a simple one one relationship to another.
Pablo GonzalezGot it. Last question from Carlos Andres. Thanks. Private lending return for investors? Collateral used?
Gregg CohenYes, absolutely. There's collateral for the investment. You get a mortgage on the property, which protects you as an investor. It's just like, you know, when you go and you buy a property, let's say your primary home, you probably went to the bank and, you know, the bank said, okay, I'll give you 80%. You bring 20 percent as your down payment. And you said, okay. And then the bank said, but I'm going to make you put a mortgage on the property. So if you don't pay me. You're gonna, you know, I'm gonna, I'm gonna get the house and you said, okay, well, it's the same thing for private lenders with JWB. JWB brings 20% of the equity. We ask, our lenders lend 80% of it, and then the lenders get a mortgage on the property to protects their interest, and JWB has delivered over $500 million in private lending funds and principle back to our owners. We have never had a default, but in the unlikely event that that would ever happen, you as a private lender. would be able to retain the asset. You would foreclose on the house which is nice to know, even though don't expect you to ever have to do that.
Pablo GonzalezGot it, buddy. Well, I want to wish our MVP, Lee Bishop, a happy birthday tomorrow.
Gregg CohenAll right, happy birthday. 62 never looks so good. 62
Pablo Gonzaleznever looks so good, Lee. Good job, Jusin. Order Q1 market update. Seems like the market isn't pretty healthy. Like it's, I feel like we've been doing so many of these market updates and for the last like two, three years, we've been showing up here kind of like justifying that the market's not going to hell.
Gregg CohenYeah,
Pablo GonzalezI know. Right. Right. Like this really feels the first one that there was no kind of like looming recession, looming housing crash. It's just kind of like this idea of our price is going to continue to go up. You know, it feels, it feels like a, like a big relief of, of this is what's happening. At no point have you panicked in the last like three years. You've just kind of kept steady with the data, continue to show that the market's going to continue to go up. You've continued to be right. So, if you stay on this track record, it feels like a good time to buy right now.
Gregg CohenYeah. And I, I just want to. To share with you all that I, I, I appreciate the trust that you put in me. And I understand that this show is about being a not your average investor. And what you may hear in these market updates has been not what you hear in other places. It's certainly not what you read. And we own that. And, you know, You know, that's the value that we can provide. We see angles. We see things that other people don't see because of our experience and because our own money is in the game too. We're right there investing alongside with you. And I think that's what can really set our investors apart. But I, you know, I know that sitting here telling you that this is a great time to buy is a different message than what you might be hearing and reading. And I just wanted to say, thank you for your trust because we said that. Four years ago, when we said home prices weren't going to go down, we said that two to three years ago in the pandemic, when everybody said home prices weren't going to go down, we did the same thing two to three years ago when eviction moratoriums were out there. And we said, you know, we don't see any challenges coming from there as far as home prices go or, or even rents. And we delivered 98 percent rents there. We came strong and said, we didn't see a foreclosure crisis when people said a year or two ago that there was going to be a foreclosure crisis. So this is a not your average take too. and I'm getting more comfortable knowing that other people say it differently than we do, just because. The data doesn't lie guys, the data with the experience. So, so hope, I hope you use this to your advantage and I hope you take us up on it because I do think it will set you and your family up for great success.
Pablo GonzalezOr hit her up here in the chats. Thursday, we've got a guest investor. We've got our friend Glenn Shanken that is asking himself whether or not it's worth it right now to invest with a non recourse loan. It's a question that we keep getting asked this idea of investing in retirement with a loan in retirement. Many people are asking that question and Glenn is in the middle of that buying process right now. So we're going to dive into that. Hope to see you on Thursday. From now till Thursday, do you see any piece of advice for everybody? Don't
Gregg Cohenbe average. See ya.