Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

The Future Of Real Estate: Is The Market Appreciating Or Depreciating?

Written by Than Merrill

There’s a lot of talk and uncertainty right now when it comes to the real estate market and its future. Is it going to continue to appreciate? Is it going to crash? When is the best time to buy real estate? These are some of the questions that your host, Jeff Rutkowski, will answer in today’s solo episode. Learn what quantitative easing is and why the government keeps printing money. Find out how to generate wealth and why your net worth is based on dollars. Learn all of this and more in today’s episode of Fortune Builders Live.

Listen to the podcast here:

The Future Of Real Estate: Is The Market Appreciating Or Depreciating?

I’m excited about this episode, and I’m going solo, folks. I’ve got some stuff on my mind that I’m excited to share with you. There is so much talk lately in the real estate market, “Is it going to keep going up? Is it going to continue appreciation? Is there going to be a bubble? What’s going to happen with the future of the market?” I have some specific thoughts that I’m excited to share, and then some suggested actions that you should take. Before we get into that, let’s get into the word of the week. The word of the week is quantitative easing.

If you watch any news channel out there, you have probably heard that word. I’m a simple guy and I like simple definitions. In my mind, quantitative easing is printing money. The Federal Reserve in our country is in charge of the money supply and injecting more money in setting the interest rates and the cost of money, which we are set at 0% now for the second time in our country’s history. The Federal Reserve also oversees the money supply. When they feel we need more of it, we don’t have it sitting in a savings account, so they have to print more of it. Quantitative easing is your word of the week. Let’s go ahead and get in the show.

Real Estate Ignite Event

There is so much going on in the world, many thoughts and interesting things are happening in the real estate market. Not so long ago, we finished up our big annual event. We do a lot of events if you follow us. The big one that we do at the end of every year is called Real Estate Ignite, where we bring in some of the top real estate minds in our country in the game now. One presentation that stood out to me was an economist. His name was Mr. Mark Dotzour. If you have never heard, read, and learned about him, follow him. He’s probably one of the top five economists in our country.

His job is to collect data, look at historical trends and use current data to project where this market is going and where we are going to be a couple of years from now. I was blown away by this. He confirmed what I had been feeling. I have been in real estate for twenty years. I have a sense of what’s happening. I studied my data myself but not on the level of an economist. This economist’s message to our community was to buy more real estate now. Buy as much and as fast as you can now.

It was funny because we had Mark speak at our event in 2020 well. He studied what we are doing here at Fortune Builders. He looked up the company and watched some things that we train our students. After presenting last 2020, he went out himself. He bought four single-family properties in Texas because he saw that we have the how to do it and knew from an economist standpoint that this market is going to continue trending up. That is what he believes. I can’t do the whole presentation justice but let me tell you what my takeaways were.

Number one, I believe that the market is going to continue to appreciate over the next 3 to 5 years. That’s my prediction. Nobody has a crystal ball. Nobody could see the future. Anything could happen at any given time. Looking at current trends and taking into consideration some of the things that Mark was talking about, I’m even more confident in that statement. Do I believe that we will continue to appreciate over the next 3 to 5 years at the current rates we have been depreciation? No, I don’t. We have been seeing 17% to 18% year-over-year for the past couple of years now, which is bonkers.

America doesn’t have money sitting in the bank account. They have much more in debt than they do assets.

It’s more of 2% to 4% is a normal year in the United States of America with natural appreciation because of a lot of different causes. What I believe are the factors that are going to contribute to the continuing appreciation and its deceleration? We are going to appreciate at a slower rate. I personally don’t see any deflation coming any time soon. I know there are a lot of people sitting on the sideline. Some real estate investors were like, “Should I get into business now?” Even the individuals are thinking, “Should I buy my own home now?”

I talked to a lot of people that feel like, “The market is going to crash or the market is going to slow down.” You hear that in some media headlines nowadays but when you look at the data, it says we are appreciating at 16% where it was 17% a quarter ago. Is it slowing down? It’s still at record numbers, in my opinion. That’s one of the things I love and attracted me to real estate in the beginning. It’s all about the math. Don’t make buying decisions based on what the media tells us about the estate market. Make buying or selling decisions based on the data that comes out quarterly about our real estate market.

As we talked about a few episodes ago, there’s so much data that any real estate investor can dive into their local markets to predict the future. If you have been reading for a while, in the past couple of months, I always reference Wayne Gretzky’s quote where he says, “You don’t skate to where the puck is. You skate to where the puck is going to be.” Through studying data, metrics, and all of these different things, we can have a good sense of what’s happening.

Top Three Reasons Why We Believe The Market Is Going To Continue To Appreciate

Let me give you my top three reasons that I believe the market is going to continue to appreciate. Number one is we still have record low-interest rates. The Federal interest rate is set at 0% for the second time in history. Mortgage interest rates are a little bit different and not necessarily tied directly to the Federal interest rate. They are more tied to the ten-year Treasury Bond. If you look up the ten-year Treasury Bond, you will see the rates of mortgages to buy and sell homes mirror that treasury. It is still incredibly low. Typically, the mortgage interest rates will be about 1.25% to 1.75% rates higher than what we see the ten-year Treasury Bond is set at. That reflects current rates.

Now, we are still in the low 3s and high 2s to buy a home with a conventional mortgage. The Fed has created an environment where we are dependent on those low rates to keep the economy going. The economy is white-hot now. There is a lot of money in a lot of people’s pockets through stimulus, appreciation of properties, and all of these different factors. There’s a big demand for real estate and a lot of goods and services.

Number one, we have record-low interest rates. Number two is we have record-low inventory. Here in San Diego, this is something we track on a weekly basis. We went into uncharted territory, the lowest amount of inventory ever in San Diego County. It was a record-low about a couple of weeks ago, and then in two weeks’ time broke that record row. That’s simple supply and demand. As long as inventory is low, demand is going to remain high.

FBL 21 | Real Estate Market Future

Real Estate Market Future: Quantitative easing is printing money. The Federal Reserve oversees the money supply and when they feel more money is needed, they have to print more of it.


That’s one of the things as a real estate investor. What you always want to keep an eye on is the housing supply in the markets that you are investing in. It’s also known as absorption rates. This one market that I have been targeting for a while now came up with a one-month housing supply. That means if no other homes came for sale in this ZIP code, then in one month, we would be out of properties to buy. In a healthy real estate market, you see about six and a half months supply. That would be considered a neutral market and not necessarily a buyer’s or a seller’s market.

Anything below six and a half is a seller’s market. Many markets across the country are anywhere between 0.5-month to 2.5-month inventory is the typical market across our country. That’s record-low interest rates and record-low inventory. We have the Federal government using the word of the week, quantitative easing. We have printed so much money in this country over the last handful of years. We have been printing money since the ‘70s but since 2008 is when we began to do it at an exponential rate.

It’s hard to even keep up anymore with all the different stimulus packages coming out. I know we had a $2 trillion package and a $3.5 trillion one is in the hopper now. It’s staggering and hard to keep up with. As I mentioned, we don’t have the money sitting in the bank account. If I were to draw out a financial statement of the United States of America, go to It gets real-time information populated by the Federal Reserve and the US Congressional committee showing you the real-time status of our finances as a country.

It’s not looking good. We spend more than we bring in as a country. We have much more in debt than we do assets. We are upside down. If it was any personal business or individual, we are maybe running to file bankruptcy but we are able as a country to print money and that’s what has been done. The equal and opposite reaction of that is the more money that’s printed, it devalues the dollar. The value of the dollar is decreasing as more dollars are being printed. The equal and opposite reaction to that is we have seen inflation continue to rise.

Quantitative easing is not the only reason. We have seen inflation. We have major supply chain issues now in our country. I’m out here in San Diego, and we have two major ports off of LA and Long Beach. I knew they were big ports but those two ports represent 40% of all the goods and services that come in via ships into our country. That’s a huge amount, and we have a total backlog in which these large ships are sitting off the harbor. They’ve got to get dockside to get unloaded onto a train or a truck.

They’ve got to be driven or shuttled over to wherever their market is, loaded into some warehouse, loaded back on trucks, and delivered to businesses or residences. We don’t have the workers. We have more jobs now open in our country than ever before. I believe it’s eleven million job openings or something like that. Companies cannot hire enough people.

Owning real estate is a hedge against inflation.

It’s an excellent time to be in the job market if you are looking for a job, although I wouldn’t recommend it. We have this cocktail of these different factors that continue to drive inflation up. Inflation is sitting in the high fives at around 5.64%, 5.84% or somewhere in that mark the last time I looked at it according to the CPI or the Consumer Pricing Index that the government uses to calculate inflation.

I don’t see it slowing down anytime soon. There are a lot of talks, whether this is transitory or permanent. I do believe there’s a transitory component to it until the supply chain does get fixed. Predictions and a lot of insight and data that Mark shared were suggesting that we are going to see the issues continue through the end of 2022 and start to lighten up in 2023.

Over the next year, you are going to see a lot of continued growth. Anytime I say things like this, I want to quantify this and say that I’m not a financial advisor or an economist. I’m telling you my personal opinion based on what’s happening, what I study and learning. I say all that to say it’s time to buy real estate. I started investing in real estate in 2004. I spent the first ten years fixing and flipping and wholesaling. That’s great, and I suggest that. I do that, and that’s active income.

If I could go back in time, the one thing I would have done differently is I would have started buying and holding properties a lot sooner like single-family homes, multifamily homes, small apartment buildings, retail, and even some office. I would go back and get that going sooner because all of these factors are going to continue to drive the market up.

The average appreciation in our country since 1975, not including 2020 because it has been bonkers, has been almost 4% year-over-year. We know there are times where the market is up higher, and then it dips and all of that but we have continued to trend. You always hear the old adage, “The best time to buy real estate would have been 20 or 30 years ago but the second-best time is you now.”

Creating Wealth

There are two ways of creating wealth. As a financially educated person, one thing that we should always be looking at monthly, at minimum, on a quarterly basis, is our own personal financial statements and personal net worth. Financial statement, income expenses, assets, and liabilities, you take all those numbers to say, “What is my current net worth, and is that trending upward or downward?” The two ways of increasing wealth and net worth is, number one is to buy assets that over time are going to go up in value. The second one is to add good debt and liabilities that over time are going to go down in value.

FBL 21 | Real Estate Market Future

Real Estate Market Future: Don’t make buying decisions based on what the media is telling you about the real estate market. Make your decisions based on the data that comes out quarterly about your real estate market.


One of the reasons why you see so many people rushing to buy real estate and pick up investment properties is they understand because of the inflation problem that is owning real estate is a hedge against inflation. Where companies like Zillow, although they are stepping out of the business because they didn’t know what they are doing but large institutional money coming in now and buying 1,000 homes here and there.

You could go buy a single-family home in Texas for $200,000, throw a 20% down on that, and lock in a mortgage, which is good debt for 3.5% to 4%. If inflation keeps rising, where it goes up to 8% or 9% or even if it stays in the high fives, you have locked in a fixed interest rate at 3.5% or 4%, essentially shorting the dollar and giving yourself a hedge against inflation. It’s one of the biggest reasons now where people are coming out of the woodwork to get their names on the title of real estate. I suggest that you do the same.

Good Debt Versus Bad Debt

Those two ways are we want to place assets in our asset column that are going to go up in value, and then we want to place good debt. If you have been reading this, you should know the difference between good and bad debt. There is bad debt but not all debt is bad. It’s like fire. It can save or take your life. Debt used in an undisciplined way to buy things that don’t put your money in your pocket can get you in trouble. Debt used to acquire more real estate that is going to pay you every month is a big difference. The bottom line is if inflation is 6%, that means our money or personal funds need to be growing monthly above 6% or we are losing money.

Think about $100,000 sitting in the Wells Fargo banking account at 0.5%. We are losing money at 5.5% points, which is insane. In real estate, by knowing what we’re doing by investing some time and money into our education, we can very quickly get up and running in this business and obtain the knowledge to understand, “How do I grow my money at 12%, 24% or even 30% interest rates?” A lot of people hear that and go, “That’s impossible to grow your money at 24%.”

If I had more time, I would show you exactly how to do that. If you want to get to one of our training, one of our trainers will show you exactly how to do that. We have one coming up. If you want to get in on that training, go to You click on that, and it’s a free ticket to a 4 or 5-hour virtual event. You get lots of great training. One of those training is exactly how to grow money passively at rates of return of 12%, 24%, and even greater by looking at what one piece of real estate and what that does for you. I suggest that you get in on that training.

Types Of Policies

We have a lot of different things that I talked about that are going to continue to drive up the value of the real estate. We have two types of policies in our country. We have a monetary policy, which we have talked about already. That’s set by the Federal Reserve, and they govern what interest rates are set at and inject money into the money supply through quantitative easing if they feel it’s necessary. We talked a lot about that.

Debt is like fire. It can save or take your life.

On the other side, we have a fiscal policy, which is set by the US Congress. Fiscal policy determines, “How much are we paying in taxes? How much are we spending as a country? What are we allocating to the military, education, and all the different buckets that the government allocates funds?” How is the US Congress determining our fiscal policy? As I mentioned, the country, from a financial statement standpoint, is not looking good. I have it in front of me here. We have $4.1 trillion coming in per year, with $6.8 trillion going out.

We have $22.9 trillion in assets with about $28 trillion in liabilities and $159 trillion in unfunded liabilities promises that we have made as a country to pay people Social Security, Medicare, prescription drugs, and all of these things. The good news is the government is keeping those promises. Those people are getting paid. Starting in 2020, you had over 70 million Baby Boomers knocking on the government’s door saying, “You promised. It’s time to pay up.”

The good news is the country is paying up but they are doing it by means of quantitative easing and printing more money, which is causing the residual effects of everything that I talked about. We are on pace now to have printed $20.3 trillion by 2024, which is incredibly staggering. If I could go back in time, I would have started buying and holding properties much sooner. In the weeks ahead, I’m going to be doing training for you that I’m excited about how to get out there and buy your first rental property.

I will probably get my computer open and go online through public sites that you can use as well. We will search properties together, walk you through the process and things like that. It’s going to be awesome because I want to see more people own real estate, retire on their terms, get financially free and not have to work your job that you don’t want to work. There’s nothing wrong with working a job if you feel called or wired for that and all of those things. I don’t want you to be financially dependent on a job.

My First Experience

In 2014, I bought my first investment property. This was a little home in Memphis, Tennessee. The purchase price at the time was $68,000. If I showed you a picture of the house, it’s nothing super sexy that you would probably get excited about but the math on that property is pretty exciting. The math is sexy for sure. That little property, I’ve got into it with a 4.62% interest rate on it. I was able to finance 80% of it. When you get started buying properties, you can get conventional financing for ten properties. Every individual in our country could have ten mortgages on your credit report.

After that, you are going to have to shift into commercial financing. That’s how you stock up to 10, 20, 100 or 200 properties and so on. You have ten available where you could buy properties with 20% or 25% down in some cases. When I had got started in 2004, I said, “I wish I could go back in time and start buying and holding.” I didn’t have the 20% or 25% to put down. Don’t let that be a deterrent. I’m not getting into that on this show but there are many ways to buy and hold properties without taking money out of your own pocket.

FBL 21 | Real Estate Market Future

Real Estate Market Future: The real estate business is so dependent on our education, what we know and don’t know.


I’m using this as an example because that was my first experience. By that time, I was flipping and wholesaling properties regularly. I was making excess cash than what I needed to live on at the time. I would take some of that excess and begin putting it down on rental properties. That little property there in Memphis, last time I did the calculations, was earning me about 13.8% cash-on-cash return. It’s a good rate of return but not super exciting. That equates to $400 a month or something like that.

This is not financial advice. It’s not a guarantee that you will go buy a property, and you are going to make $400 a month. This business is so dependent on our education, what we know and don’t know. That’s why you constantly hear us preach this on this show. You have heard my story. I have done real estate education and it didn’t turn out too well. I have done it with it and it has been much better. Don’t interpret this as any promises or anything like that. It’s something I always have to say.

That’s about a 13.8% return, and that’s just on cashflow. The rent comes in, I pay the mortgage, taxes, insurance, and the property manager because I’m sure as heck not going to be managing that property myself. I put aside 5% to 10%, depending on the property for vacancy and repairs. That’s what I like to do. It depends on the property and what you are comfortable with. Typically, 5% to 10% is probably the most common.

The Power Of Owning Real Estate

After all of that, the property cashflow is a few hundred bucks. “It’s one of those properties that’s going to set me up for life.” It’s not going to set up anybody for life but if you get 10, 20 or 30 of those things, or you get tired of buying them the little greenhouses, so you go for the 20-unit, 6-unit or 180-unit apartment building and all of that, it’s real-life Monopoly. On that one property that I mentioned, 13.8%, that’s on cashflow. The power of owning real estate is there are so many different profit centers than the actual cashflow. The cashflow is nice. Don’t ever buy a property unless there is positive cashflow.

There are some people out there that are trying to talk you into doing that. It’s your life. You make the decisions but I can’t imagine buying a property that is not making me money the first month I own it unless I have to renovate it before I rent it out. During the renovation period, you are not cashflowing but you are setting yourself up to cashflow. Always make sure cashflow is there. I like to see 12% or greater. Some of my buddies want to see 15% or greater, and some are comfortable with a little bit less. That’s a personal business decision you make for you and your family.

Outside of cashflow, we have debt reduction. When you lock in a fixed-rate debt, that debt is going to get paid off over time by your tenant, by the individual that is renting your property that is paying you every month, and in turn, you take that money, and you pay your taxes, insurance and mortgage. Remember, there are two ways of increasing your net worth. Buy assets that go up in value and take on debt that goes down in value that’s paid off by somebody else.

Don’t ever buy a property unless there is positive cashflow.

By adding one rental property, you are placing an asset in the column and debt over here. Over time, this is going to continue to rise. Can I guarantee the rise, though? No. You should never buy property banking on appreciation. I laid out a case in this episode that it’s highly likely, based on what’s happening in our country but you don’t buy a property that’s negative cashflow, hoping that it’s going to go up in value in the future. There’s a very strong chance they will but we don’t buy for that. That inevitably has happened year-over-year since 1975.

Now, we have this asset going up in value and this debt going down in value, creating a spread and ultimately increasing your net worth. When that spread becomes wide enough where the value of the property has separated from the debt owed on the property, then you could sell the property. You could cash out that equity but I don’t recommend that. You could refinance the property. There’s a book I read not too long ago called Refi ‘Till You Die. It’s about the power of cashing out properties.

Think about this. The second property I purchased was in Texas in 2014. This property was purchased for $126,000. Now, it’s worth $280,000 and the debt was on it was $81,000. Now, I have this spread. One of the best things to do when you have that spread or equity in your property is we want to tap into that equity at low fixed interest rates and deploy it on higher return rates. The way that I learned to look at equity in a property is no different than if you had $100,000 sitting in a Wells Fargo account doing nothing for you, you want to begin to think of equity in homes equivalent to that.

It’s good to have equity in homes. Maybe this property was almost $200,000 in equity. That’s great but that’s doing nothing for me if I leave it there. One day, I could cash out or sell it but why not tap into that now? You can go up to about 80% LTV in investment properties. If that property is worth $280,000, which I believe it is, 80% of that to $224,000 if my debt on it is $80,000, that is approximately about $144,000 in equity that could be removed from that property. That $144,000 is tax-free money.

If we sell the property, we are liable for capital gains and taxes on that property. We could 1031 exchange it into something bigger. If you are not refinancing or selling it, look to 1031 and exchange it for something bigger or greater, so we can defer those taxes and keep our wealth growing because taxes are the biggest expense you have in this life. That’s a silent partner there. After every deal, Uncle Sam with his hand out is saying, “Where’s my cut?” We are going to give him his cut but we are going to defer it down the road as much as possible.

In this example, I pull out that $144,000. It’s also an asset protection technique because if you pull a title on that property, you will see that it’s encumbered up to $80,000 plus $144,000, which is about $220,000. There’s less equity they are showing on paper. Let’s say I pulled that out, and the interest rates are around 3.5% up to 4.5%. I now know how to redeploy that money and grow it at 12% or 24%, then that is continuing to create wealth.

FBL 21 | Real Estate Market Future

Real Estate Market Future: Two ways to increase your net worth: buy assets that go up in value and take on debt that goes down in value that’s paid off by somebody else.


We talked a lot on this show about making money, creating wealth, retiring early, and all of that stuff. Your net worth is based on dollars, whereas being rich is based on dollars. “I’m rich because I have X number of dollars,” but being wealthy is more about time. Being rich is about dollars but being wealthy is if I have $1 million in money and my expenses are $100,000 a month, then my wealth is ten months. It’s in time.

I could go live ten months, not doing anything until I run out of money. You think of it as, “If I were to stop working now, how long could my wealth carry me?” That’s the way I look at it. We have the cashflow, debt reduction, property appreciation, which is not guaranteed, and then you have a myriad of tax deductions. The US Tax Code is so slanted in favor of real estate investors and business owners.

Mortgage interest is something that you can deduct every year. There are so many different expenses. We do strongly recommend that if you are going to own rental property, own it in an LLC. Don’t own it in your personal name. First of all, it’s not smart to do that for liability purposes. If you are owning it in your own name, you are throwing away money in taxes that isn’t necessary to do. By owning it in an entity, is something that gives you a lot of different benefits. You could write off the mortgage insurance, repairs on the property, insurance, local travel, you in front of the property, and all of these different things.

Also, depreciation. The IRS Tax Code allows us to take the value of the structure of the property, not the value of the land but the value of the structure divided by 27 and a half years, and that gives you tax savings and an additional write-off year-over-year. You could go a little deeper on that and do what is known as cost segregation studies, where there are certain elements of the property that depreciate at a faster rate like fencing, appliances, and things like that. You could even segregate out certain elements of the home that depreciate faster and even maximize a depreciation on the properties that way.

Maximizing Properties

There are a lot of different ways of maximizing properties. I did a little presentation at this church out in Salt Lake City. I showed them the math on this one property that I bought in 2014. The rate of return on the money, aggregate it to the total of those four profit centers to cashflow, all the different tax benefits, the appreciation, and all the things that I went through, where the down payment on that property was growing over 30% cash-on-cash return.

When you are investing in real estate, you want to look through the lens of a residential real estate cash-on-cash return. You want there to be positive cashflow every month but the amount of cashflow is not the priority to me. It’s, what is the cash-on-cash return? What percentage interest rate is my money growing at? Ultimately, we want to make investments where right out of the gate or shortly down the road, our cash-on-cash is infinite because any money that we put in the deal has been returned to us.

Being rich is about dollars, but being wealthy is more about time.

Now that there’s no personal money in the deal, that money is growing at infinite rates. This is exciting stuff. It’s an incredible skillset. Real estate is an incredible asset class that gives us the ability to take control of our financial future. The time is now. Some of you have been reading week after week and questioning, “When is the right time? Should I do this now? Should I wait?” There are always a million reasons why now is not the right time always. If you talk to other people, they will always give you a million reasons why you shouldn’t do it.

If you are going to talk to other people, talk to people who are where you want to be, not in similar situations. That’s something that I learned to do is surround myself with people in all areas of life and not just financial. My wife and I have a pretty good marriage but we are very intentional about surrounding ourselves with people that have great marriages and families. What can I learn? How do they think or talk?” It’s all of that. It’s the same principle.

Any area of life you want to grow and better in, get yourself educated in that area and surround yourself with people who are where you want to go. I’m going to leave it right here, folks. Hopefully, I made a strong case for you that you have been thinking about buying. Even if it’s your personal residence, maybe you don’t own a home. You have been renting a home and debating, “I missed it.” I hear so many people say that, “I should have bought in 2019. It’s 2020. I have missed it. It’s going up. I’m going to wait for it to come down.”

I’m not a financial advisor nor an economist but from what I have been studying from the people I surround myself with, now is still a good time to buy. I’m going to leave it right there. That’s my opinion. As always, if we can help you in any way in your educational journey, learning how to buy assets and take on good liabilities, the place to start is always with the We would be honored to have you in one of our free classes. These classes provide great value.

Is there stuff that we will offer at the end to continue learning that you could pay for? Yes, there is. I will tell you that upfront, whether you go that direction or not, you will get incredible value by attending that 4 to 5-hour class. You would be armed with some foundational principles that will serve you for the rest of your life. Hopefully, you do and enjoy that. Continue to follow us, like the show, share it with friends and family, and help us achieve our mission of helping people empower their purpose through financial education. Take care.

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