The Real Estate Wealth Podcast with Edward Aloe

Housing Market Demographics and Demand

July 05, 2023 Ed Aloe Season 2 Episode 3
The Real Estate Wealth Podcast with Edward Aloe
Housing Market Demographics and Demand
Show Notes Transcript

Host, Ed Aloe, interviews Chris Porter, SVP and Chief Demographer at John Burns Research and Consulting Group, to talk about the different trends today shaping the current housing market.

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Ed Aloe (00:03):

Welcome to the Real Estate Wealth Podcast, the show about how you can build wealth by investing in real estate. I'm your host, Ed Aloe, founder and CEO of CALCAP Advisors. I'll dive deep into multifamily investing and today's current market. I'll also help you acquire the knowledge and tools necessary to generate passive income for life through discussions with friends and experts in the industry,


I'm excited to welcome Chris Porter to the show today. Chris is an SVP and chief demographer at John Burns Research and Consulting Group, which is an industry leading company focusing on providing expert analysis in the housing market. Chris has been with John Burns for over 18 years now, I believe, and he helps real estate executives understand how demographics shape the economy. Chris is a graduate of Princeton University with a master's degree from Northwestern and the author along with John Burns of Big Shifts Ahead: Demographic Clarity for Businesses. And Chris, we are delighted to have you on the show today.

Chris Porter (01:11):

Thanks, Adam. It's a pleasure to be here.

Ed Aloe (01:12):

Before we get started, why don't you tell our listeners a little bit about yourself, how you ended up in this industry?

Chris Porter (01:18):

Yeah, so actually I hit my 18-year anniversary yesterday, so it's a pretty exciting milestone to reach. I'm an adult now. I have a master's degree actually in journalism. I had gone back to school after working in finance for a couple of years and always had a real strong passion for writing and for journalism. And so pursued that degree. Coming out of that program, I wanted to stay in Chicago and the group that I went to work for was a magazine publishing firm that did business to Business magazine. The group that I got assigned to was the home building and remodeling group, which I knew nothing about that part of that industry at all, but I knew something about journalism and they said, "We can teach you the industry."


And that's how I got to meet John Burns. He was just starting up this firm at that time and as part of his outreach, wrote a column for our magazine. I used to edit his pieces and we got to know each other. At some point he was looking to grow the company. I was looking to do something else and it just made sense for me to come over and join the firm. And so it's been 18 years. It's been a great run.

Ed Aloe (02:15):

Yeah, that's terrific. Let's kind of jump in and talk a little bit about what you do in demography. I think I first heard that term demography many years ago when I picked up Harry Dent's book called The Roaring 2000s that you're probably familiar with. I was fascinated and interested with the study of demographics and demography ever since as it relates to just kind of broad based general macroeconomic thinking about the economy in general and housing specifically, which is our business. So can you kind of explain to our listeners who don't really understand demography kind of what you do, how you study it, how it affects the real estate market and general economy?

Chris Porter (03:02):

For sure. Yeah, I was trying to explain this to my eight-year-old daughter the other day. I always tell her that I count people for a living, but it really is much more than that. I mean, it is certainly a math equation. We're trying to figure out how and where the population is growing. But it's also really a study of consumer behavior as well, understanding why these shifts are occurring. And I think most people think of demographic trends as being very slow moving. And as a result, there there's somewhat of a degree of predictability to that, but there's only a certain degree of predictability. And so I really try to think about how do we form conclusions about those pieces that are less predictable. So yes, I'm looking at what's going on with the population in our country, how fast is it growing and where is it growing.


That's really important for real estate because everybody has to live somewhere. And while there's a general pattern to the rate at which people form households and require housing, that can really vary over time depending on what's going on in the world and in the country. So really try to understand what's happened historically. How have different groups of people behaved over time and what are the dynamics at play today so I can make more and informed decisions about how much housing are we going to need in the future and where is that house housing going to be needed.


When you think about what's happened with this massive wave of young adults aging into their young adult years this last year, you're going to need more rental housing because young people when they form households, at first they tend to rent first. And eventually, that demand's going to turn into for sale housing demand. And so really I'm trying to look at how do you forecast those patterns and what's different this time around than it maybe what's occurred in the past. Really what we've realized is this extends so much more beyond housing, really any business that relies on household growth, which is most businesses, really needs to understand these trends. And so when we started writing this book, I think we were originally writing it for housing executives and realizing this has much broader appeal. Every business in the country needs to understand these underpinnings from demographics. And it can explain the industry, but I also think it can help to explain some of the broader economy as well.


One of the things I look at is the labor force, for example. We've got a pool of workers or a pool of people aged 20 to 64 years old. That's the working age population in the US. That's a population that's growing at a much slower rate than it has historically. And as the boomers are aging out of that group into their mid 60s and in their retirement years and they're replaced at the other end of the age spectrum by a nearly equal number of people who are entering their 20s, we're just growing that pool of potentially available workers at a much slower rate, which is going to contribute to slower employment growth. How can you grow jobs at 2% a year if the pool of people your workers from is only growing at less than half a percent? And part of that you can predict by demographic.

Ed Aloe (05:56):

I think it's important for our listeners to know, okay, by an age cohort, you guys are really analyzing years of birth, where that person is now in terms of their age, are they school age, are they now starting to work, are they forming young families, are they retiring age. So kind of walk through maybe the basic cohorts of demographics and how that affects how people live and work.

Chris Porter (06:25):

Sure. The conventional generations are based on births in the US. And so you look at that period of time from 1946 to 1964, we call it the baby boom because there were just a lot of babies being born in the US and elsewhere in the world as well I should say. But that population was such a much bigger population than what we'd been seeing in the US prior to that. And as they kind of moved through their working years and end in retirement, it certainly has changed the landscape of American demographics.


But what we found was there's a lot of confusion around the way that the generations are defined. I mean, I could ask five people in a room, "How would you define a millennial?" And I'd get five different answers because it's just a little bit unclear as to what actually defines a millennial and what's the difference between Gen Y and a millennial. And so we came up with some definitions based on the year people were born and actually focused on the decade in which people were born.


So we've got nice 10 year increments to look at and compare and contrast over time. And really what this allows us to do is identify those shifts as we were talking about young people, the graduating high school. Some will go on to college, some will choose to go right into the workforce. More and more, we're seeing more young people go to college and it's not just their bachelor's degree anymore. You see more and more people getting their master's degree as well. That's great because that's an investment that they're making in their future. But over the long run, they're also delaying certain adulting milestones if you will. And they're also accumulating some student debt as well. And so all these things contribute to what we've seen occurring for decades. Some of these delays in in forming a household, in forming a family, in buying a home, in many cases getting a job because they're spending that much more time in school.


And so it's really important to understand what's happening with each one of these different generations and how are their decisions and their choices impacting the rate at which they form households and buy homes and rent. So there really is a pattern that you can follow and we do our best to try to forecast what does that look like going forward given some of the shifts we've seen in society.

Ed Aloe (08:33):

Right. Because we really have seen the delay that you mentioned that's been going on for what? 10, 20 years probably where people today are delaying... Well, they're going to school longer, like you mentioned. They're delaying marriage until later in life, delaying having kids until later in life. So everything has been extended out, if you will, compared to say where people were getting married, younger and probably buying their first home maybe a decade earlier than people are today. Or conversely, with affordability constraints and/or lifestyle, people don't want to own a home. We've seen this renter nation concept. We're now seeing many tenants around the country that are tenants by choice. So do you want to talk a little bit about that, just flexibility that younger people are wanting today than compared to in the past?

Chris Porter (09:32):

Yeah, I'd love to answer that question. I do want to go back to one thing you said about some of these delays in these adulting milestones. These are actually trends that have been going on for decades. And so I think if we look back at the group born in the 1950s, that was a group that couldn't wait to get out of the house. For them to move back home with their parents after they graduated college, that was just a no-no. They didn't want to do that. And so we've seen these patterns evolve over time. I think a lot of focus got put on the last 10, 15 years as you mentioned, because the millennials were such a big group and they were the ones that were going to reverse some of these trends. And then we had the great financial crisis and that really posed a real challenge to them.


But I think it's important to remember that a lot of these trends that we really identify I think with the millennial generation have really been going on much longer than that. There's a great graph that we have in our presentations that shows what's happened with 30 year olds over time and the rate at which they've moved out of their parents' homes and gotten a job and gotten married, that has been going down for decades. And so I think it's important to keep that in mind. It just got so much more focus here in the last 15 years or so because of that massive wave of young adults.


Back to your question about the renting, you're exactly right. I think we have seen more of a shift toward renting by choice. Certainly again in the wake of the great recession, we saw more people turn to renting as an out of necessity. Maybe they'd gotten foreclosed on or maybe they just couldn't come up with a down payment, they'd lost their job. But I think people have really benefited from some of the flexibility that you get by renting, the ability to have somebody else worry about the maintenance. And if you have to move, it's a lot easier to break a lease than it is to sell a home, just less work involved. And so I think you're right. There is definitely a shift toward more renting by preference. That said, I think as we look at the younger generations today, they still aspire to homeownership over time. But as you mentioned, they're certainly saddled with some of that affordability challenges in the market today and the trade off that they're willing to make is renting in the short term.

Ed Aloe (11:49):

So let's talk a little bit about what happened during the pandemic. I mean that was a crazy time. And I'm sure as a demographer, things happened that probably surprised even you and where you think we are now that it's over, right? Quote, unquote, "over." Are things getting back to normal in that regard? Or what are you seeing in terms of those migration patterns that happened?

Chris Porter (12:13):

Yeah, exactly right. One of the frameworks we came up with in our book was what we call the four big influencers of demographic shifts. We have government policy, we have economic conditions, we have technology advances, and societal shifts. I think when we were writing the book, I was sort of thinking about those in silos. Government policy is totally separate from economic missions and separate from technology. And boy, those have all come to play in the last three years in major ways and all sort of at the same time. So there certainly has been a lot going on demographically in the country. And I think you're right, as I mentioned before, people tend to think of demographics as being very slow moving, but we've had certainly some acceleration here in the last couple years.


I think with what you're talking about, the fact that it looked like everything was going to crater and then all of a sudden the market just completely reversed and housing just boomed, that's spot on. When you think about it, so much more emphasis placed on the home for people when you had all those experiences taken away. You couldn't travel as much, you couldn't go out as much. So much more of our time was spent at home and I think so much more focus spent on the home. And so we think it actually led to some pretty solid household formation, which the laws of demand and supply, being what they are, we just couldn't keep up on the supply side with the demand that was being generated. And that's why you saw prices and rents go up here these last several years in such dramatic ways.


But I think you're right, that ability to have that freedom to work from anywhere... And again, that doesn't apply to every single job in the country for sure. There's a certain number of jobs that were given that freedom, but I think it allowed a lot of people, and I can certainly speak to some of my own peers here in Southern California where I'm based, they were never going to be owners in Southern California, but moving to Tennessee or moving to Texas they could certainly become owners there. And even some cases, people who were still living with parents or living with roommates here in southern California could now go and form their own households elsewhere simply because they weren't tied to an office in the same way that they were in the past. And so we called it the Great American move who's this sort of this reshuffling of people across the country.


You can clearly see in some of the census data as we've now got some more insight into actually what did happen, there's certainly states that benefited more than others and metro areas that benefited more than others during this period of time. Those are the markets where you've had some real challenges finding housing at a reasonable price and a lot of the locals have gotten priced out of some of those markets simply because you had such an influx of people.

Ed Aloe (14:50):

Yeah, I agree. But it does feel like some type of hybrid scenario going forward, especially with Zoom and technologies is probably here to stay. It was also interesting to me during the pandemic that the house became kind of the center of the universe for people because like you mentioned, people were working from home. All of a sudden you're working out from home because your gym was closed, your kids are doing school from home. That I think affected people saying, "Gosh, I need more space. I'm paying X amount for a smaller place. I can move to Phoenix and get a larger home. My kids have a place to study. I can work out in the extra room, et cetera" and kind of shifted I think people's mentality of what their home was, right?

Chris Porter (15:37):

Oh, I think you're exactly right. And when you think about it, I mean the conditions were so ripe for household formation during this period of time. We had this massive wave of young adults who were turning in their 30s during this period of time. They were ready to form households and own in bigger numbers. You had more money in people's pockets because of government stimulus. Maybe people were getting raises at work because the labor market was so tight. Another thing that I think is maybe underappreciated is the fact that we had a moratorium on evictions and foreclosures. And normally, those would be a drag on household formation, and they were less of a drag during that period of time. And again, record low mortgage rates. I mean just all of these factors coming into play at once, no big surprise that we've had some pretty solid household formation over these last couple years.

Ed Aloe (16:25):

We bring up household formation a lot. Maybe you can simplify and talk about what that means exactly and how you guys look at household formation. It was growing. Household formations were increasing, I guess, during the pandemic. Do you now see that going the other way?

Chris Porter (16:42):

Yeah, certainly slowing a little bit, and I'll talk about exactly what you mentioned. What is a household formation and what is happening now? Basically, a household formation is an occupied housing unit. So whether it's occupied by an owner or occupied by a renter, if it's occupied by a single individual or a family of 10, it's one housing unit that's occupied. And so a new household is formed when somebody moves out of their parents' home and lives on their own for the first time. Or maybe you had two roommates living together, they just both decided they wanted a little bit more space so they split and each rented their own unit.

Ed Aloe (17:15):

And so that created an new space. And the other thing I remember hearing the pandemic, I'm not sure if it was true, but now that husbands and wives were spending more time together, it was going to force more divorces, which would also then increase household formations.

Chris Porter (17:29):

Sadly, yes. Divorce [inaudible 00:17:32].

Ed Aloe (17:31):

Yeah, and I don't know if that panned out to be true or not, but I thought it was interesting when I first-

Chris Porter (17:37):

I've not tracked those numbers as closely as I should, but I did hear from, anecdotally, a friend who has a friend who's a divorce lawyer saying, "Yep, I get a little bit more business these last couple years than in the past."

Ed Aloe (17:48):

Okay, Chris, let's shift gears a little bit and talk about the current state of the housing market and maybe even talk a little bit about single family if you want and what you guys are seeing in the marketplace today.

Chris Porter (18:02):

Yeah, I'd be glad to. I think the biggest challenge in housing right now is affordability. If we look at what's happened over the last several years, I mean prices rose 40% nationally since the start of the pandemic and even more in parts of the country like Florida where we saw prices get 55, 60% higher than those pre-pandemic levels. Markets like the Midwest and the Northeast, they've had price appreciation that's been a bit lower but still 30% higher than it was pre-pandemic. When you couple that with mortgage rates that are rising from sub 3% to rates that are in that 6 to 7% range, housing is just that much less affordable today on the poor sale side and there's just not a lot of supply on the existing home side of the market right now. People aren't moving as much, especially those people who've locked in rates at a very low level.


I mean, the staggering number of people who either bought or refinanced during the pandemic at such low rates is I think having a lock-in effect for sure because who wants to trade up for a much higher rate when you can count on your monthly payment, sort of saying steady, based on when you locked in? So we're seeing certainly a slowing in home sales activity right now as a result of just I think some concerns about the economy, but also affordability being that big challenge. Really that mortgage rate issue is a big one. It does impact people's monthly payment. And that's what matters at the end of the day, right? With inflation as high as it's been, rates are higher though we are starting to see them come in a little bit, although I've seen in the last week or two they've gone back up a bit.

Ed Aloe (19:38):

Right. I think you make a good point though. Anyone who's bought or refinanced a home in the last few years and has that sub 3% rate, which fortunately I have on my house as well, there's going to be no pressure for them to want to sell that house anytime soon, which is going to further constrict supply and keep the market tamped down I believe. And let's be honest, I mean if you're locked at 3.5%, that is a tremendously low rate if you look historically. I remember looking up historically kind of where rates were on average over the last 30 years and I think it was seven and three quarters, I want to say.

Chris Porter (20:16):

Oh, you're exactly right, the early '80s when my parents got their first mortgage at 16, 17%. It's hard to imagine.

Ed Aloe (20:25):

That is hard to imagine. Let's talk about new home developments as an example. I mean, are we seeing a slowdown? Are builders starting to offer concessions on some of the new products? Where is sales looking in terms of new developments around the country? And is it sort of pocketed by region or by city?

Chris Porter (20:45):

We've seen some real pickup here in the new home side. I think one of the advantages that they have on the new home side that is not really on the resale side is that ability to buy down the rate. And so we've seen a lot of builders offering this as an incentive. I think we did a survey back late last year, I want to say October, November of 2022, whereas basically 75% of builders around the country saying they were using some form of interest rate buy down as a way to incentivize buyers. You saw some differentiation by region of the country, those markets or parts of the country where sales were a bit slower and more of them were using these rate buy downs and vice versa. It really does seem to be working. We've seen the new home market actually pick up a little bit of share here more recently simply because that's not something that's available in the resale market in the same way.

Ed Aloe (21:37):

Chris, let's shift gears here and talk a little bit about kind of long-term supply demand fundamentals. I always talk about at least owning multifamily. Over a long horizon, when I look at supply and demand, we're still very supplied in this country. I think 4 to 5 million units under supplied is what I've heard, a lot to do with demographics. We've talked about this increasing demand for rental housing versus owning. And especially when it comes to the affordability component, more people have to rent versus own. But when you look at everything that's going on today, we have record new construction on multifamily, we have a slowing economy, and we have inflation that the Fed's still trying to fight. So where do you see in a shorter term prospect of where we are with supply and demand do you think there's a risk that we're going to be oversupplied specifically on multifamily or rental housing? I just kind of want to get your take on where you think we are in the market today.

Chris Porter (22:51):

I'd be glad to chime in on this. I spent a lot of time thinking about this. And you're right, there's a lot of reports out there about the amount of undersupply we have in the country. There's actually a really good piece in the Wall Street Journal this last week that looked at different people's measures of undersupply. We were lucky enough to get quoted in that. There seemed like there was a period of time where you had a couple different numbers coming out all at once. And within a two to three month period there was a 4 million undersupply estimate, then a 5 million and then a 6 million undersupply estimate.


Those numbers seemed really big to us, and so we sort of broke it down into two different pieces. One is looking at how much are we undersupplied for the households that have formed to date? So for every household out there that exists today, you need to have some additional housing so people have choices to move. So these are houses that are for sale or houses available for rent. They're basically vacant homes. And we think that our estimate is we're about 1.7 million undersupplied in the US today just based on the households that have formed to date.


That said, if you go back and look at historical trends and how many households maybe should we have formed by this point, that's a bigger number. We think maybe there are all these delays in household formation, a big part of that due to affordability. And so we haven't formed as many households as maybe we potentially could based on these long-term trends. And so that's where I think you get to that bigger number that's in the multi-millions, maybe it's 4 or 5 million under undersupplied, but I do think we're in a position right now where yes, housing is undersupplied. That's a bit of a reversal from what we saw during the 2000s where we think we actually built more than we needed and we were oversupplied for a while and you just had so much construction going on and because we had overbuilt during that period of time, there actually was less of a need for construction during the next decade. We were able to meet some of that demand with the housing that was already built.


And so our best estimate, we probably came out of that oversupply situation around 2019 as the economy was picking up and we were seeing more household formation, but the construction levels were still pretty low in comparison to history. We went through this really strong period of household formation during 2020, 2021. And for a variety of reasons, construction was still trying to catch up and so we do think we entered that undersupply situation. The national number though only tells you so much. It's one thing to say we've got 1.7 million units more needed in the country. And I should say that the answer is not just to drop 1.7 million units on the market all at once, that would create some pretty disastrous issues.

Ed Aloe (25:28):

Right. Right. Although Chris, having said that, I just read that there's almost a million units under construction or coming online this year, 2023, so we are going to have potentially a million new units coming online in one year.

Chris Porter (25:45):

Right. And so there's a lot of construction that is still in the pipeline, and you're exactly right. But what we've looked at is what really matters is what's where this undersupply is occurring. And so a national number tells you one thing, but what really matters is the local level. We did some research on this. We put together a white paper that we put out earlier this year. We still think we're undersupplied nationally. In the near term though, and I think we are going through this weird period right now where it feels like we could be oversupplying the market maybe in real time, household formation we think probably has slowed from where it had been in 2020, 2021. We had a real surge during those years. And so if you're borrowing a little bit from the future during that time, it only seems natural that you'd see a bit of a slowing in household formation. We're estimating about 12.7 million households formed over the 10 years between 2020 and 2030. That's a pretty solid number. It's bigger than the prior decade.


And then you've got to have some additional construction above and beyond that for second homes and for replacement housing and also to make up for this what we think is that structural undersupply right now. So I'm optimistic in the long term on the need for construction and the need to add more housing units, but as with every industry that has a cyclical nature to it, we're going to go through some periods of time where it feels like you're undersupplying by a bit and then it feels like you're oversupplying by a bit.

Ed Aloe (27:06):

Right. Just based on what you're saying, I think it was what you said, 12.7 million new households in the next decade?

Chris Porter (27:13):


Ed Aloe (27:14):

I mean to me, it's going to be pretty hard, right? Developers are going to be playing catch up for the next decade to sort of meet that demand. And especially if the affordability patterns continue to where they are and the fact that the younger generation wants freedom and flexibility and doesn't really want to be tied down with homeownership as much, yeah, I think the prospects of owning rental housing look very, very good in that regard.

Chris Porter (27:44):

I think a lot of people talk about just how big the millennial generation was. Well, this next generation that's behind them, we had more births in the US amongst that generation. And so the adult population or the young adult population is going to get bigger here at least for the next 10, maybe 15 years. Part of that is going to be dependent on what happens with immigration because I think it's one of the things that often is neglected in those conventional generation definitions. I would say based on what I'm seeing in terms of population growth, these next 10 to 15 years, we're going to see some solid growth in that young adult population. It's once you get past that period of time, the group that was born in 2007 I think was the peak birth year and there are 15 today. Beyond that, that's when births start to trend down in the US and it becomes a little bit more concerning about the adult population growth longer term.

Ed Aloe (28:36):

Yeah, I want to get into that in a minute too, but yeah, speaking of immigrants, so owning workforce housing, I agree with you. The immigration trend, and I think I read where people coming into the US, are renters. 95% of them I think are renters for at least five years when they get here, which is a whole nother sort of almost shadow demand, if you will, right? That's not always factored incorrectly I think, but is critical when you look at demand going forward.

Chris Porter (29:06):

You're right. We had looked at some of the historical trends from immigration. And back around 2015, 2016, we had about a million net immigrants coming to the US. And then that number started to slow in the subsequent years and then when the pandemic hit, it just fell off a cliff because we effectively had shut off our borders. The 2021 numbers came in pretty low, but the new data that just came out for 2022 shows we were back up to a million net immigrants between mid 2021 and mid 2022.


I think the demand to come to the US is strong, and you can see that in the visa application numbers. It's a very desirable place for people to be. And so I think that that's going to help add to our population growth and help add to our employment base as well here over the next.... While it's obviously dependent on government policy, but something we're certainly keeping an eye on. If you look back at the early 1900s, you saw a lot of immigration from Europe. And then as we looked later in the 20th century, you had more coming from Latin American countries and then more recently more immigration coming from Asian countries.


And so I had mentioned that in the book that we'd seen this evolving or changing of the immigrants in the US and quoted exactly some of those stats you're talking about. When people first move to the US, they are more likely to rent first. In fact, they're actually more likely to live with family and friends first. They don't even format their own household in the same way that a young adult born in the US would. They tend to live more multi-generationally, partially because in many countries that's more common just in general. And then as you pointed out, there are going to be renters first more than homeowners.

Ed Aloe (30:52):

Yeah, absolutely. And as a real estate investor, when we look at the demand side, obviously like we discussed, shrinking household formations is a threat, but it sounds like it's not going to be a threat for at least a decade or 15 years maybe. But the real sort of unknown, I guess, is a declining population, which we really haven't had to deal with. Where do you guys see that inflection point where there might begin the population decline?

Chris Porter (31:21):

Yeah, it's something that's pretty fascinating. I tend to focus more on just kind of next 10 years out, next 20 years out. But you're exactly right, birth rates have been declining. Death rates are increasing. I mean, even let's take the pandemic out of it. The number of deaths in the US is rising simply because we had this big wave of older adults who are now entering those years where they're going to start passing away in bigger numbers. And so those lines of births and deaths start to get a little bit closer. I think that's going to be very tight over the next several decades.


As we're seeing people having kids later in life, we're also seeing they're having fewer kids. And so we're not adding the same number of babies every year relative to the size of the population. And we also, as we talked about, are increasing the number of deaths. So from a natural population increase, I think that's going to be a very tight band over the next several decades. And so it really does depend a lot on what happens with immigration, how many people come into the country on a net basis.

Ed Aloe (32:24):

But in your mind, you think immigration would sort of balance out the number of kids being born or lack of number of kids being born in terms of US continuing to net grow?

Chris Porter (32:36):


Ed Aloe (32:37):

Yeah, that's very interesting. So Chris, we're kind of wrapping up here. I usually ask my guests kind of what you're thinking or seeing in terms of the markets over the next five years if you had a crystal ball. How do you think the real estate market plays out over this next five years?

Chris Porter (32:55):

Well, I think as I mentioned, we're calling for a mild recession. We are calling for some price declines. The biggest challenge right now out there is affordability. And yes, rates will come down. We think we'll get down to 5% mortgage rates here in the next couple of years, but prices are still a big challenge, and affordability is out of control for many potential buyers. So we're calling for some price declines. We're not calling for anything as dramatic as what we saw in the great recession. But to get affordability back into check, I think that's what's going to be required. So I think this next year and a half is going to be a little bit more challenging from the real estate side, but as I talked about before, I think we're really optimistic on the long-term fundamentals for housing. Simply from a demographics perspective, it seems like we've got a need for more housing to accommodate this growing rate of over the long-term household formation.

Ed Aloe (33:48):

Yep, absolutely. Well, Chris, I appreciate you joining me today on the Real Estate Wealth Podcast. And yeah, I think for real estate investors listening, it's important not only to pay attention to the property you own or properties you own, but really don't forget to look at the macro environment of what's really trending in the short and long term. I think you did a great job kind of explaining what you guys are seeing, so I appreciate you coming on the show today.

Chris Porter (34:17):

Oh, my pleasure.

Ed Aloe (34:28):

I hope today's show inspired you just a little bit. I would like to thank my guests again. I'm excited to bring you more episodes with interesting and informative experts to help you navigate your way to wealth and real estate investing.

Credits (34:49):

Thanks for listening to the Real Estate Wealth Podcast. The Real Estate Wealth Podcast is produced by Gusto, a Matter company. Our producer and audio engineer is Jeanette Harris-Courts, with support from Gabe Gerzon and Susan Rangel. Maia Laperle is our writer. For show notes and more information about this podcast, visit And for more information about CALCAP Advisors, visit us at or follow us on Twitter, @CALCAPAdvisors.

Ed Aloe (35:25):

I'm your host, Ed Aloe, and thank you for listening.