What We’re Buying During This Housing Correction

**Dave Meyer** (0:00)
Hey, everyone, I hope you all had a great Thanksgiving and you found a new property off your Black Friday wishlist. Today, for the Bigger Pockets Podcast, we are bringing you an episode from our sister podcast On the Market. You've probably heard me saying for the last several months that we're in a housing market correction. It's not a crash, but it's a different market than we've experienced for the previous few years. And to share some insights about that on this On the Market episode, I talked to Henry Washington and Kathy Fettke about how they're still buying real estate and still making money right now, even if the investing formula is not as easy as it was back in 2021 I hope this episode helps you think of the current housing market as an opportunity instead of just some big risk. And my conversation with Kathy and Henry will provide you with some inspiration as you plan for 2026 We'll be back with a new episode on Monday. Here's me, Kathy and Henry on On the Market, originally published October 23rd. Last week, I spent an entire episode laying out that I think we are in a market correction. We're not in a crash, but we're in a period where home prices may go down. They may stay stagnant. And I hope that was a helpful conversation for everyone to just have realistic expectations for what to expect over the next couple of years. So today we're going to shift that conversation from just data and background towards what you can actually do about it. In today's episode, I'm joined by Kathy Fettke and Henry Washington to pressure test the frameworks and the data that I presented last week. I'd obviously love their opinion. Compare notes on what they're seeing in their own analysis of the market and turn the playbook into practical steps. During this episode, we're going to talk about trends that we're seeing in each of our own markets, how we're adjusting our own investing strategy, and frameworks that you can all apply to your portfolios to make profitable decisions during this market correction. You're listening to On the Market. Let's get into it.
All right, well, I am assuming you guys don't listen to the On the Market episodes when you're not on it. I won't take offense. Last week, I did a solo episode, just sort of laying out what I believe to be the reality of the situations that were in a market correction. Basically, the gist of it is that home prices are up 1% or 2% in real terms. But if you look at inflation adjusted terms, prices have been pretty flat or a little bit down for almost three years now. And I actually think that's going to get a little bit more pronounced in the next year or so. I think the market is really slowing down and we might see nominal non inflation adjusted home prices go down 1% or 2%. More in certain markets. We're seeing Florida, Texas. They're already down more than that, but on a national level, a couple percentage points. Do you agree? Do you think that's crazy? Do you think we're going to see something totally different? Kathy, let's start with you.

**Kathy Fettke** (3:00)
I'm so glad because I am the A student on today's episode because I did listen to that show.

**Dave Meyer** (3:05)
Look at you. Henry, did you?

**Henry Washington** (3:08)
I listened to half of the episode, yes, 100%.

**Kathy Fettke** (3:11)
Yeah, so as I was listening, my thoughts were, yes, it's a correction. And my first thought was, if you're in it for the long game, when I buy property, I'm thinking long, long, long, long, long term. So it's just part of it. It's a softening. But if you are in the rental business, you don't care because you're not selling. All you care about is are rents going down.
That's your income. So where are we there? It depends on your market. Some markets, rents have softened. But if you're still collecting rent, you're in good shape.

**Dave Meyer** (3:46)
Yep, absolutely. I totally agree. And we'll get into some of that about what you should be looking for. But Henry, you're seeing a correction as well?

**Henry Washington** (3:55)
Yeah, I think we're seeing a correction. Now, again, my market has some insulation, I think compared to a lot of other markets. But we are absolutely seeing a slowdown. We just hit four months of inventory on the market, and that is about what we need to be considered a balanced market. But because we're so used to listing something and it's selling fairly quickly, even though we're in a very balanced normal market, it feels like we're not. It feels like we're in a situation that's more dire than that because things are moving slower than we're accustomed to. But if you zoom out, I got in this business in 2017 It was pretty normal to list a property and it said for 30 to 60 days and you only get a couple of offers, and you have to do some concessions, and then maybe you sell that property for a profit. We were buying properties and getting a 6 percent, 6.5 percent interest rate as a rental property.