Welcome to the ALX show your premier source for DFW real estate data and insights. Let's get to it.
Hello and welcome back to another episode of the A LX Show today. Josh, you and I were just talking before we started recording that there is so much fear it seems with so many people on LinkedIn, on armchair economists that are posting about what you know will or won't happen with the economy or in real estate, and a lot of it is fear-based. And obviously fear is very powerful when you're trying to do marketing or you're trying to get more viewers or subscribers or whatever. Fear works.
The problem with that is fear is not the only emotion to have, and it's also not the only thing that is powerful, because hope and joy and optimism are also very powerful, especially when you are a business owner or you're flipping homes or you're investing in a deal. You've got to have a, a realistic optimism in order to keep going and, and do well.
And so I'd love to talk more about that and how you guys are, are thinking through, you know, what you're reading and, and seeing on the internet and how you're feeling about today's market. But also like, where can we hope, you know, where, where are you guys, what are you seeing in the data? What are you seeing in the news that is, is really hopeful. So I'll start with, um, just kind of a, a personal anecdote.
Josh, you were saying, you're like, I almost don't wanna be on LinkedIn anymore because. Of just the, kind of the things that you're reading and seeing, and it's just a bunch of stuff that A, nobody knows, but b, it's just a bunch of fear and like that may not be the case. We, we don't have to jump to fear. So tell me a little bit about that. Like how have you been feeling about things that you're, you've been reading and, and seeing online or in the news lately?
Yeah, on the, the LinkedIn stuff, kind of what, what we were talking about just before, you know, I get it there. There's, there's a lot of data out there, not all of it Great. Um, that can lead, uh, you know, to certain projections and, and oftentimes the ones that are kind of scary, uh, get the most attention because it, I mean, it has the most dramatic effect.
Mm-hmm.
Um, and it's entertainment for a lot of people and a lot of people, you know, that are, that will post about it. Um, you know, it's some may have, you know, may have skin in the game, may, uh, you know, own assets that are coming up for, uh, a refi or, you know, you need to get out of you're trying to sell. Um, others, I think a lot of times are. Kind of watching from the sidelines. And I, I don't know that they've got a lot of skin in the game.
Um, it's hard to tell, you know, based on who's posting what. But I guess my thought, my thought on it is, is anybody can post what whatever they want, you know, that that's, that, that's, uh, one of the great freedoms that we have, right? So, so feel free. And, and a lot of times they've got good reason, um, you know, to post potentially like. Negative outcomes and, and what could go wrong or what, what could happen. But there's another side to that. One is no one knows.
No one knows what tomorrow holds much less. You know, have we met, like you'll, you'll see like on, on asset classes and in commercial and multifamily. Are we at the bottom? Um, no. We've got room to go. Look at the, look at the, uh, debt maturity wall. Um, you know, expenses are, are going through the roof. There's no rent. Growth like supply is. Uh, you know, the supply surge all of a sudden has, has, has, uh, driven rents real, uh, real far down, and it's gonna take forever to recover.
And, you know, based on, based on previous recoveries, it's gonna take six years to get, you know, asset values back to where, you know, where they were at their peak before they started to drop. And I mean, and you know, you can go back to historical data and you can find evidence. Um. You know, to support all that, you really can.
I mean, so I'm not, I'm not, I'm not saying that, you know, anybody shouldn't post what, what, you know, if they, they think they've got a revelation or they think they've got a good idea, that's fine. Um, but I think there's also a lot of optimism and there's also a lot of hope and reason to be encouraged, uh, about what's going on and, and where we're going. Um, and I'd like to see, see more of that. Now, let me say, I also like to see more of that because, uh, we own a lot of assets.
So, you know, we're always, and we're, we're entrepreneurs, so we've got to be optimistic. We've gotta be positive because one of the keys to being successful as an entrepreneur, it's just, don't give up. You've gotta, you, you need to continually push forward and get up and go. And so if you're always focused on the, well, the negatives. Then, and that's always gonna be part of it. You're always gonna have to deal with that. There's gonna be a balance.
You're gonna have to control your thoughts and, and push some of the negative away. But in order to get up and go and be successful, you've got to focus on, but how good could it be? You know what, what, what are the positives here? Where's the light? And is that light getting bigger? And, and look for things in the data. Look for, for reasons to be hopeful and optimistic for, for us too, I mean we, we, we serve a God that controls all things.
So it, it, you know, it's easy to say that, but then you know, one way that you, you can actually, uh, like prove to yourself that you believe it is to control those negative thoughts and not focus there and realize, hey, there's, uh, you know, God's for me, he loves me. That doesn't mean we're gonna, life's gonna be easy. Doesn't mean that things aren't gonna be tough and we're not gonna go through challenging times. But ultimately, at the end, um, we're gonna get through this.
There's always a way. Uh, and it's gonna be good. It's gonna be okay. We just gotta keep working. We gotta keep having faith, keep trusting and look for reasons to be, to be optimistic and positive, because we believe that's the character of the God that we serve. That, that that's, that's part of walking in our faith. That's living in our faith is, is even when it's hard, keep your head up, keep moving forward.
Um, know that there's a bigger and better hope than, you know, just circumstantial difficulties. Um, and then also projecting it, you know, letting the, hey. Encourage other people, right? Like keep your head up to everybody that's around you and, and, and to, to, to be a message of hope to them too.
That's right. That's right. Uh, Paul says in different places, but you know. Think about whatever is pure, whatever is holy, you know, whatever is worthy. Think about such things and take every thought captive. You know, it's so important to keep your mind right when there's so much fear everywhere. I mean, you open up news, you open up Reddit, you open up LinkedIn. Total fear, just fear mongering.
I have on my, uh, I was gonna show you on the back of my phone, I have a, this is a background from Bluey. It's a great show. I have a 2-year-old, so I love Bluey
I know Bluey.
practicing, you'll get better. Just don't ever give up. And it's, it's so encouraging to
We, we talk about it all the time here. We, we talk now there's, there's, there's more to that. Like, like, and, and I know that you're practicing this. Um, you've gotta continue to do the right things, right? You've gotta grow and develop, um, be disciplined, um, take appropriate risks. You know, there's things to it.
But if you just, if you're already doing those things or you're committed to, to doing those things, then a lot of it is, I think Patrick and I had this conversation last week, I think believe one day we're gonna look back and say. All we really had to do was just keep showing up because we believe we're walking in a plan that's already been set out for us. So if, if, if we live the way that we know we should, um, and we're consistent in that, then just keep showing up. Just don't give up.
And I think we'll be amazed at, at where we land.
That's right. That's right. It's not, it's not the smartest or the best ideas that make people successful. It's that they're consistent determination over a long period of time. Uh, Patrick, while he was talking earlier, you were smiling about the things that you're reading in different asset classes and
Don't get him started.
yeah. What are you seeing? Like, what are people saying on your end that you're like, I don't know that that may be true, but there's no way to know, you know?
God, I have a lot of thoughts. I don't really know where to start. I, um, so, uh, I'll. Want to always put some data to the stuff that I talk about. So, uh, you know, a common thing right now, this is not just like LinkedIn posters, but the whole stock market is like on fear's edge because of tariffs, right? Mm-hmm. And, um, it's, it's funny to me so far because the, you hear the same thing over and over is like, this is gonna cause materials to increase.
I'm thinking more specifically like our world, like housing, commercial development, all that, all that kind of stuff. But you'll hear like that's just going to increase input costs, you know, uh, your raw materials are gonna increase. And like developers are of course gonna say that 'cause they don't want their prices to go up any further, whatever. But you're, it's happening at the same time that interest rates.
Uh, floating interest rates are coming down, come down a hundred basis points, which gives you a lot of room to make up what you had in that area of your budget with rising costs. But then I just curious, like, and I know it's not April 2nd yet, but how much have material prices actually increased? So I was just looking this morning, like lumber has like definitely increased, uh, over the last few months, but is still like. Yeah, infinitely below.
I, I mean, so we were building apartments at our peak in 2022 was when all that development started. Lumber was 15, at 1500, uh, a board it. Today it's at $684 So, uh, I mean, we were able to successfully develop properties at double the price of lumber. So lumber's gone up a hundred bucks over the last. Uh, month, which no one loves, but like, this is not ma a material thing. And steel. That's another one that you hear in the news all the time.
Like, um, it's a, it's still at the lowest that it's been in five years. I mean, the, and granted this is like all just forward looking and those prices could cha change real quickly when tariffs go into effect and all that. But, um, it just, the, the fear based Stuff that we see often doesn't align with what's really happening when you dig in on the ground. Those are just two examples that kind of came to mind as y'all were talking.
Yeah. I love that. I, I think the biggest thing, if I could summarize it is, is a lot of these posts, these pundits, whatever, whether it's on, you know, traditional, you know, very serious quote unquote news channels and news outlets and things like that, or it's just independent people on LinkedIn is a lack of context. I don't think you see a lot of that in people when they're summarizing or posting things or show a chart. You know, yes.
It, it went up, you know, a hundred percent, you know, whatever over the last month. But it's like, but it's still tiny relative to the last six years or 10 years or whatever. So, um, the context is really helpful.
So, with that in mind, in the last few minutes that we have here, what is, what is, uh, a piece of data or some kind of context or a larger story that you are really hopeful about, let's say over the next couple of weeks or couple of months, like heading into the, the, the next chapter of 2025?
Uh, you know, I think there's a, there's a lot of good things. You know, we, we focus primarily on DFW and that's another, another thing that we should, you know, make sure and mention is it, you know, it's, it's very localized. So the, the different markets are going to have, you know, are, are certainly gonna feel different ways about, you know, the outlook. Uh, we feel really great here in DFW. We've had a, a tough, like in multifamily especially. Commercial's been hit everywhere.
So, uh, DFW included, I think DFW probably is fared better than most, but, um, in multifamily we are starting, um, I think to see some of the historic supply surge, um, impact start to become, uh, less and less. Uh, you know, we definitely felt it though. You had all these Class A apartments that hit the market, and what that did is all these open class A units need to get, needed to be filled. So. What was typically a Class B renter.
Now with concessions on Class A could move up to a class a apartment, the same for, uh, in the Class B. All of a sudden now you, you Class B's losing their typical renter up to the Class A temporarily. So now they offer concessions and class C renters can move up into Class B and that trickles all the way down into the different, uh, property classes. And, and we've, we've felt that, I mean, our stuff is, is c and b primarily. And, um, and, and we, we certainly, uh. You know, felt that shift.
But, but if you look at the numbers now and the specific numbers, uh, the permitting, you know, it comes out every month. But, uh, the new permits for multifamily are, are way down. I think they're, they're as low as they've been since I know the early 2010, somewhere around that, that time. Um, but the population, uh, in DFW continues to grow home. Affordability is still a major issue. Um, so, and, and jobs. The unemployment in DFW is still way down.
I mean, I think it's, it's up four maybe, uh, 4%. It's right. Uh, right around there. Um, so there's ample opportunity. Businesses are still, are still moving in less and less. Uh, new units are, are being, are being brought to market. And we don't see, like, because the permitting has has been down, we don't see there being another big surge of inventory for several years. It's gonna happen, right? But it, but it, I mean, it's expensive to develop right now.
Land you, you're not getting a great deal on land anywhere. Um, even though transactions are down, values are still up. Um, that's one of the reasons why transactions are down, is because you have, um, asset owners and potential buyers at a disconnect. Uh, we we're asset owners. We don't want to, if we don't have to, then we don't wanna sell what we own at, at any kind of discount. And, and one big reason for that is people are optimistic about the future. Like, we'll just hang on, hold on.
Especially here in DFW, because fundamentally it's still very strong. So if we can, if you can just weather the storm for a little bit longer, then we're gonna start to see recovery. And depending on what the overall economy does, that recovery could be pretty rapid because the population growth is here and the job growth is here. So, so we are very optimistic about, you know, maybe not the next two or three months.
I, we think that it is, it is gonna take time to work out, but over the next six months, year, two or three years. We think, you know, owning uh, real estate in DFW is gonna be a really good thing.
Especially if you're investing in RV parks. Am I right? Am I right? Last episode, right.
All cla, all asset classes, but yes, uh, I mean, RV parks. Yeah, absolutely. And you know, as long as you've got, now we always say this too, you've gotta be surrounded by the right people and you gotta have the right systems and processes, but you've got those things and then you've got the assets and you buy correctly. Um, upfront, even if you don't buy correctly, the beauty of DFW in some places, um, that are growing and have a lot of development is you just gotta wait long enough.
But you still have to have the right people and systems in place, uh, so that you can sustain and get to the point where the value's appreciated enough to have a nice exit.
That's right. That's right. Well, as always, I love the optimism that you guys have, you know, realistic optimism. We call it risk adjusted optimism. But I, I love that they, the way that you guys think through these things because it is so realistic. It is so hopeful, and it's a, such a strong, encouraging message, but it's also really rooted in data. And you guys were saying this before we, we started recording, but like, you can, you can make data say anything you want.
And so I love that you guys are looking at data that's realistic, that you can back up that's foundational and still tells a really encouraging story, um, given all the context and all the kind of, you know, timeframes and things like that. So, always encouraged by you guys. So thanks for your insight as always, and, uh, we'll catch up next time. Hopefully, uh, next episode we'll be talking about some economic indicators that are coming up in April.
And, uh, so we'll be talking through those and what those might look like and what, speaking of data and context and all of that, what that looks for like, uh, for the future of DFW real estate. So thank you guys. As always, please check us out@alxrealestate.com and sign up for our newsletter 'cause we have insights like these every single week. And, uh, we'll see you guys next time.