With over 10,000 tenants, real estate investor Ken McElroy has a unique insight into the economy.
In a video recently posted on YouTube, McElroy dives into the data collected by his team to shine a light on several emerging trends across the American real estate sector and broader economy.
Here’s what the mega landlord had to say.
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2024 is not like 2008
Having observed the 2008 housing and financial crisis, McElroy draws clear comparisons to explain why what’s happening in 2024 is different.
“In 2008, we did not have a rent inflation problem because demand did not exceed supply,” he says.
Back then, predatory private mortgage lending and unregulated markets created a housing bubble. When it burst, many homeowners were forced to sell and enter the rental market, McElroy explains. There was enough to go around.
This was followed by a period of little construction of new homes, which contributed to the “severe” undersupply of housing we see today. Household formations outpaced housing starts in 2022, according to Realtor.com. The gap between single-family home constructions and household formations grew to 6.5 million homes between 2012 and 2022. People who cannot afford to buy homes are pouring into the rental market.
He also pointed out other key differences in the economy during the two different periods.
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