238. How does the Housing Crisis affect Self Storage?
Self Storage Income
AJ Osborne
4.9 • 591 Ratings
🗓️ 2 April 2024
⏱️ 14 minutes
🧾️ Download transcript
Summary
The supply of housing is directly tied to the demand for self storage. The more people are moving, the more people tend to need a storage unit. But what happens if the housing market is being crazy, like it is today?
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The housing crisis is not just a matter of super high prices. Since price is a function of supply and demand, and the demand of homes is higher than ever, the last piece is: supply! You solve the crisis by building more houses. There's not a low enough interest rate or tax benefit that can magically add houses onto the market.
How does this affect storage? Let's break it down!
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Transcript
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| 0:00.0 | Welcome everybody to self-storage income and we are talking housing. Now, I know, you're sitting here going |
| 0:11.6 | why are we talking housing? Because we're talking about storage, right? This is self-storage income. |
| 0:16.2 | And here's the thing. Self-storage is driven so much by the housing market it is driven by people moving it is |
| 0:23.7 | actually probably the largest indicator of whether or not that you will have demand roughly |
| 0:30.4 | 43% of our tenants come from moving so in order to understand our market you have to understand |
| 0:37.4 | the housing market and understand what's going on. |
| 0:39.8 | It was this that actually led a lot of our belief structures. |
| 0:43.3 | And when we started writing about the self-storage bubble and showing what was going on there and how we thought demand was going to fall. |
| 0:50.3 | It wasn't due to investor demand or anything else. |
| 0:53.8 | It was due to the end user having a high |
| 0:57.0 | interest rate environment, if inflation was coming, and that that would not make the housing |
| 1:01.8 | market go away or it wouldn't actually make the housing market like pop, but instead it would |
| 1:06.9 | do something much worse and that was stagnate. Because if people are moving, it's good for us. So even if the housing market is maybe down, but people are transacting moving, that's good for us. If the housing market's up and people are transacting, that's even better for us because people have more money and they're willing to pay for more. But if it's stagnant, that means people don't need us. And that's bad. So when looking at the housing market, |
| 1:29.3 | this is the main thing I want to touch on today in this episode. This will give us a good |
| 1:35.2 | idea of demand coming for this year as well as the next. So the first thing that we need to |
| 1:41.8 | understand when looking at housing and housing data is our views |
| 1:47.0 | and our opinions on the overall housing market and how the overall housing market is remaining |
| 1:55.2 | in such good shape given interest rates. The reason has to do with really housing starts. |
| 2:04.7 | Now, you have to realize that you can go back all the way to roughly the 80s prior to 83. |
| 2:15.2 | So we're talking 82, 81 during that recession all the way back to 79, that the |
| 2:20.4 | United States had under a million housing starts consistently. The only other time happened in 91 |
| 2:26.6 | during the recession, and that was only for one year, and then it popped right back up to over |
... |
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