JPMorgan's $750B Bet on the Housing Market

0:04Brandon Turner:What's going on, everybody? Henry Washington here, and happy Labor Day. I hope you're all doing something super fun. On the feed today, we're sharing an episode of our sister podcast on the market that was originally published on August 20th. James Daynard, Kathy Fetke, and I broke down a few big recent real estate news stories. We covered JP Morgan's announcement that they're investing$750 billion, that's billion with a B, into the housing market, and also talked about whether the market has already peaked for 2026 and whether the latest inflation report could stop the Fed from raising interest rates.

0:38Brandon Turner:We'll be back with a brand new episode of the Bigger Pockets podcast in just a couple of days. Here's that conversation with me, James, and Kathy. So let's just jump right in. Henry, what do you got today? Well, I picked a story that was very near and dear to my heart, top of mind, something I am always thinking about. The headline is, the market may have already peaked for 2026 and the summer isn't even over yet. This is an article I found on usnews.com, and it's talking about what's happening in the real estate market in terms of sales. So the article goes on to talk about that existing home sales fell 1.7 % in July to a seasonally adjusted annual rate of 4.06 million.

1:22Brandon Turner:Even as the median home prices have climbed to a record for the month, the national median existing home price rose 2 % year over year. That's up to$434 ,000 in July, making that the 37th consecutive month of annual price gains. So housing prices have gone up and the market seems to have already peaked in terms of sales price. And now that we haven't finished summer yet, but we're moving into what would normally be a winter slowdown anyway, could be just a not pretty time in terms of real estate sales in the country. And as I was researching this article, I came across another article that talked about how first home purchase sales are down, but luxury home sales are up.

2:15Brandon Turner:And I think all of this is tied to affordability. Interest rates peaked over the last month, and that's caused a slowdown in the market for people who are just barely priced into the market. But there's also a lot of people who have made a lot of money or are making a lot of money in stock market gains. And so the wealth gap is pretty substantial. And so the people who have more money are buying more luxury homes. And in my market, I'm seeing exactly that. And why do I know that? Because I'm trying to sell my house right now, my personal house. And every house in my neighborhood in the luxury market, when it goes up for sale, it is under contract in less than 30 days.

3:02Brandon Turner:But when I'm selling my flips, I am seeing longer times on market. It's a little harder to sell them. There's more competition. And so I think all of this just plays into affordability. But I was very curious, James, like, is that the same thing you're seeing in your market? Your market's substantially more expensive than mine, but you're doing deals consistently. Yeah, it's flat. Things are sitting on market. I mean, it depends on what it is. There's velocity in every city. So, you know, I think one of the most important things that we've been going over the last 90 days is where's the velocity at in every zip code?

3:39because it doesn't matter if it's luxurious or it's a first-time home buyer. There's a price point that's moving in that pocket. Everything is not selling, but there's a lot of things that aren't moving. And so we're really locking down by zip codes, price points, where's the velocity, and that's what we're really targeting. For example, in North Seattle, if you have a house that's$1.5 million and it's a good street, that is selling and it's going to sell on the first weekend. If you're 1.7 million, not selling, your market times are going to 100 days. And so you really got to look at every type of price point.

4:14Like, you know, kind of look in 10 % blocks and then focus on that because it tells you where to be aggressive and not to be aggressive. I mean, it's not enjoyable in the summer when you're sitting on, I think I got like 18 for sale. I would say I'm clicking off two to three a month. But one thing I do want to stress is this was no different last summer. Last summer was terrible. And so what I'm hoping is we actually did see a little bit of an uptick in momentum the last two weeks. I think we sold five new construction of ours, like a little bit more starter units. I sold a couple of different flips.

4:49And it's funny, the ones I thought wouldn't sell sold. And the ones I thought would sell, don't sell.

4:54Brandon Turner:Story of my life. Same thing here. Just when I think I'm a real estate expert and can predict what's going to sell and what's not, I am absolutely not that. Because I have houses that I'm like, this one's going to be a tough sale. under contract in 30 days. And I have houses that I'm like, oh, this one's going to fly off the shelves. Sits. So don't ask me. Maybe I'm just, I mean, I just don't know what buyers want anymore. It's crazy. I mean, we have a subdivision we're building in Oregon and we actually have the city come to us and say, we need more housing. We want to help you come up here. We've heard your reputation and we did.

5:30We got some land. We got a great deal on it. This is the one where we just options the lots. We didn't even have to buy them, built the homes and they're sitting. Same thing. And the offers we're getting are brutal. It's something you and I would offer. They are low ball offers. We had one regular sale recently, but same thing, like five brand new homes just sitting on the market and it hurts. It's painful. But then we have a big subdivision, the one I've probably talked about before. It's north of Tampa. And that's where we bought 4 ,200 lots back in 2012, I don't know, for 10 cents on the dollar, but it's a lot of lots.

6:08And that one has just been consistent. It's done great. Maybe because it's, I don't know, it's Florida, it's inland. Could be that people are moving from more expensive areas like Miami has gotten so expensive. They're moving inland where there's not as many. I don't know, but that one's doing great. So as we always say, every market is different, but I also have my finger on the pulse of buyers And we just saw massive buying at Real Wealth, one of the best months that we've had. So what's that? Just all over the place.

6:42Brandon Turner:Yeah. And it's so weird. James, you mentioned that we had a similar time last summer. And I agree with you from a velocity perspective. But this summer feels a little different. And here's what I'm seeing in my market. Because again, real estate is local. last year when I put a good product on the market it was done well and priced right it still sold this summer that's not always the case sometimes that's the case but sometimes it's not and I think affordability is really playing more of a factor this summer than it has last summer because the trend that I'm seeing in my market is when we start comping these houses before we put them on the market again.

7:30Brandon Turner:And actually when we're buying them, because I comp them twice. I comp them when I buy them and then I comp them right before we put them on the market so that I can make sure that we price it right because the market shifts pretty quickly sometimes. And what I'm seeing in comps is homes that are unrenovated, but livable and clean have far less days on market than homes that are flipped and look super pristine. And I think that's just the affordability. I think people are much more willing to buy a unflipped home where they can put their own touch on it and get in for a lower price point than houses that are looking awesome because they've been flipped.

8:14Brandon Turner:And so we've had to adjust our strategy where we do kind of a two-pronged approach when we're buying deals right now. I comp deals where I can just clean them out, turn around and sell them as they sit. And I comp deals as a flip. So I'm using the flip as my plan B now. Plan A is just to get it clean and livable and get it on the market and see if we can get that deal churned faster. And we've done it a few times now and it's worked out really well. But all of that to me is just a problem with people's affordability. We're seeing the same thing. You know, there's grandma's house, right? Which is like your clean dated house, well kept and well taken care of.

8:54But you know, these aren't like fixer properties. These are like, you know, the windows are okay. The roofs are okay. There's about a 20 % delta on that price. Like if that house is selling for a million dollars in our neighborhood, it's going to trade for$850 as is in that kind of dated condition. And it's pretty consistent across the board. Same thing for$500, they're selling for like$380. And so we have problems making that pencil because we have to buy them so cheap that we just can't get them for that pricing.

9:23Brandon Turner:Yeah. Well, again, I think because real estate is so regional, my market doesn't have those kinds of spreads. For me, it's the percentage wise, it's not that big of a deal. So as an example, we just bought one for$130. Now, original, like the flip plan is to spend$60 on the renovation, sell it for$275. But instead of doing that, we're going to spend$3 ,000 to$5 ,000 on the renovation, just cleaning it out, cutting back some of the shrubs and the bushes in the backyard, professional cleaners, sticking on the market for$200 ,000. so yeah i could sell it for 275 flipped or i can spend nothing sell it for 200 and i'll actually make pretty close to the same amount of profit yeah look for the velocity because people are rain clouds right now they're like oh market's it's great i got some messages from somebody like hey you want to come to this conference i was like no and like well it's just important to get everyone together to huddle and talk about what's going on with the market i'm like are we in the same market like the market's not like it's not like it's 2008 or 9 i mean this is This is flat.

10:31And I think the key today is you've got to reduce your holding costs on everything, whether it's new construction build, whether going to dispo, how can you get that monthly debt down? Right. Whether you're refinancing them into DSCR loans, can you refinance that product? You know, right now I'm about ready to refinance all my flips into more DSCR because then it just knocks two points off my interest carry. And you just got to look at how can I stop the bleed? And it's not just for flipping. any type of project right now, the bleed and the expense of the debt is what's really beaten up the deals because it's just taking a lot longer to sell.

11:08Yeah. I mean, that's kind of why I love and probably will continue to do buy and hold. So I don't have to worry about selling anything. Well, Kathy, like, cause you guys buy so much new construction for the buy and hold. Some price points are dead in the new construction. Like you're trying to say, I mean, And you guys have been able to start talking to these builders about dumping off in bulk too, right? Oh, we've been doing it. We've been doing it for years. I mean, builders are distressed. And when you're a buyer, you want to look for the distressed. I mean, you guys know that. So why not? I know this sounds terrible, but why not look for a distressed builder?

11:45Because now you don't have to buy an old property and fix it up. You've got a brand new property that you can get for a discount. So that is what we've been doing. I literally just was looking at some properties that are highly discounted from builders and they don't want to reduce their price because then they've ruined the comps for everything else they've got to sell. So if they can spend a bunch of money and buy down your rate, you can get a really low rate, in some cases 3%, that really makes it cashflow well in a brand new home. And a lot of people don't realize on the buy and hold side, if you have a new home, say in Florida where everybody's complaining about insurance, the insurance is not high on newer homes because they're built to hurricane standards.

12:28So it's just a lot lower insurance, a lot lower capex over time. And people love to rent new homes. So it's fairly easy to rent. So for me, it's kind of a set and forget type buy and hold. And I love it. So yeah, to me, it's a wonderful, one of the greatest opportunities out there. But this is only for people who don't like getting their hands dirty like me. No, but you know what though? It's the new construction. It's starting to become very attractive for value add investors because you're, you can now buy for less than the, you can build it for. Yeah. In a lot of cases. And, and listen, I'm on both sides of that.

13:03Like I I'm on the side of being a builder and trying to sell stuff and having a really difficult time, but that's kind of how it is for you guys, right? If you're in flipping, you got to be able to find the deal. So you love a buyer's market, but then you got to sell it. So you hate a buyer's market. That's the game. When are you going to time it perfectly where you're buying in a buyer's market that you're selling in a seller's market? You just have to figure it out, right? It's a balancing act, which is why if you are buy and hold, all you really have to focus on is the buy and then the hold being what are the rents, how are rents doing?

13:33Are they going up or down versus I got to think about what I'm selling? Because if you're buy and hold, if you want to sell, you just sell when the timing's right, right? Well, Kathy, I want to talk about some serious money getting put into the market. But before we do that, we're going to take a quick break. Are you looking for a simpler way to find your next investment property? Lenar Investor Marketplace is a free platform built for real estate investors. Create an account and get access to investor-ready new construction homes, plus real-time data on projected rents, returns, and neighborhood insights.

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16:36Brandon Turner:slash bp i just booked a trip to the coast the kind where the morning starts slow and the air smells like salt and citrus a few days to wander eat something new every night and remember why we love to travel in the first place but while i'm away an opportunity is available to me that may not immediately come to mind. My place doesn't have to sit empty while I'm gone. I can list it on Airbnb and bring in a little extra cash. And with the co-host network, I could even hire a local co-host to handle the details. It's a simple and practical way to make use of an asset I already own. Find a co-host on Airbnb.com slash host.

17:14Welcome back to the On The Market Podcast. Kathy, someone's about ready to drop some serious money into the housing market. I want to know where the money's getting spent because I can go follow it. Yeah, my article today really contradicts the sort of doom and gloom we just talked about. This is an optimistic article, I guess you could say. It's from JPMorgan Chase. And it's basically JPMorgan Chase is doubling down on housing. So they see something that maybe others don't see. Those who are sitting on the sidelines should probably sit up and pay attention. They are deploying$750 billion through 2035.

17:53That's up by more than$200 billion through their American Dream initiative. This is nearly 40 % more than the firm's housing capital deployment over the past decade. So again, we're seeing big companies like Berkshire Hathaway investing in builders. You've got JPMorgan Chase upping what they're going to be lending and also kind of coming in as debt and equity to build affordable housing. And you've got Japanese companies buying American builders. So these huge firms are a little more positive than we just were. They see this demand coming. They see this lack of housing and they are all in. I mean, this is huge.

18:36My guess is that a lot of times companies will follow legislation and clearly we just had this new legislation really pushing for new housing. And maybe they're getting incentives for doing it. Maybe they know something we don't know about the new housing bill, getting tax credits, but there's more momentum towards bringing on that affordable housing and the big players are jumping in and taking advantage. You always want to follow the money, right? Like, I mean, it's kind of like, I remember 2008, 9 and 10 when Blackstone started buying all the single or no, it was 2010 and 11. I can actually tell you the date.

19:10It was 2012. It's when Warren Buffett said on national TV, if I could buy a few hundred thousand houses, I would, if I knew how to manage them. That was the second part, if I knew how to manage them. Instead, he went into creating Berkshire Hathaway and be on the real estate sales side. But a bunch of institutional investors at that time said, well, golly, I'll learn how to manage them. And let's face it, they didn't know how in the beginning, but they figured it out and they brought in new systems. So I do feel like that's kind of happening right now. There's a lot of signals that we should be paying attention to because there's big money coming in and those people sitting on the sidelines waiting for prices to drop.

19:48Do you think Warren Buffett's company might know a thing or two? Do you think JP Morgan Chase might know a thing or two? Like listen to them. Sure, it's probably easier for them to make bets. But to me, it does feel like a similar signal that we got in 2012 that we're getting now. Part of this is for financing too. Yeah, they're going to be lending. Being a lender is one of the more safe positions. But trying to be able to help more people get into housing, be able to buy their own home, but also building, bringing on new affordable housing as debt and equity.

20:23Brandon Turner:I was looking at this article and it got me thinking like, So, you know, what does it really mean when, you know, JP Morgan says they're deploying more money into the single family real estate space? And when I was reading through it, it looks like it breaks it down in buckets. So it's saying one of the buckets is they're going to be lending more money to developers to build apartments. So that increases housing units, increases apartment units. There's another bucket where they're going to be writing more mortgages. So this is what I thought the article was mainly talking about. So in other words, they're saying we're going to be writing more mortgages.

20:58Brandon Turner:More people should be able to buy a home, get a loan from us. We want to put money out there for people to buy homes. And then the third bucket is investments in affordable housing funds, which is interesting. I hadn't thought this was something they do, but essentially putting their own money at risk as an investor and investing in affordable housing funds, which is pretty cool. But that's a lot of capital to be all thrown at one specific asset class. So that's, I mean, I like it. That's good for me. I'm a single family and small multifamily investor. So to me, that means that the asset that I own has some demand attached to it.

21:34Yeah. It's funny. There's so much weird, bad taste in people's mouths about these big companies buying in real estate. You know, they don't want hedge funds buying up on the housing, right? And when you really dig into this article, it's, they're providing a lot of money for first-time homebuyers, different types of financing options. and the good thing is i always look at this is the banks are very quick to change their mind the big banks right that's why like as an investor i only work with small banks because once the big bank gets sick of real estate they don't really want to give you too much money on it the good news is is when you are seeing bigger banks they have a lot of money they spend a lot of money on research deploying that much capital into the housing market they're not really predicting a massive crash because why are they going to provide so much financing for first-time home buyers that are putting down a low down payment if they think their assets can be worth 10 to 20 percent less in three years.

22:26They're predicting stability is how I look at that. So anytime they're providing this kind of financing, it makes me feel more confident, especially when you have a flatter market right now. And that's what you want is you want confidence in this market. Because when the market is flat, you start to double guess yourself on everything. You're like, is this a deal? Like, I know what a deal is. I've been buying deals a long time. But Like on paper, it's a deal, but is it really a deal, right? And so these are important things to look at because it shows stability coming forward. And so I like these things.

22:57It just gives me a little bit of that like spinach courage to where I'm like, all right, let's go buy some stuff. Well, we're going to dive into the CPI report and what's going on with inflation and what that could mean for rate cuts soon as we take this break. Do you ever notice how every passive investment somehow turns into a very active lifestyle? active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10 % below market value in the best markets across the country without making real estate your second job? That's exactly what Rent to Retirement does.

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23:53Brandon Turner:I just booked a trip to the coast and I cannot stop thinking about it. Waking up early, walking somewhere I've never been, finding a little cafe with no plan except to see what the day brings. A few days to explore, try new restaurants, smell the salt and citrus in the air, and remember why we left to travel in the first place. That feeling of being somewhere completely new, that's what keeps me chasing the next trip. But here's what makes it even better. While I'm away, my place doesn't have to just sit there. I can list my space on Airbnb and bring in a little extra cash while I'm off exploring.

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