Although COVID has been bad for many of us in so many ways, the pandemic did one good thing. The pandemic helped protect American homebuyers from a resurgence in foreign real estate investors. In a big way, the pandemic has throttled the demand from foreign real estate investors to buy American homes.

Before the pandemic hit, 2020 was shaping up to be another solid year. There were growing talks that capital restrictions out of China would ease. Foreigners wanted U.S. assets, and they wanted them bad, partially thanks to a tremendous current account surplus.

Currently, mainland Chinese residents can convert up to US$50,000 per year on foreign currencies for travel, overseas study or work, but not for buying overseas property, securities or life insurance policies.

But before 2018, Chinese foreign buyers were buying United States property in droves. It was easier for citizens to pull resources to buy U.S. property. Then, the Chinese government started cracking down.

Once lockdowns and travel restrictions were in place in the United States and many foreign countries, it became very difficult for foreigners to transact. As a result, COVID gave U.S. buyers the opportunity to buy up our own real estate with less competition. And as a result, Americans who bought homes are much richer today!

With the Ukrainian Russian war, the demand by foreigners to buy American real estate has now increased even further. International capital from Eastern Europe is now also looking for a safe haven.

One of my biggest fears for renters has come true. Rents are surging due to rising home prices, increasing household formation, and not enough inventory. The main question now is: How long will rent increases last?

We shouldn’t feel bad for those who’ve been against homeownership for years. You can find plenty of them commenting in my posts:

• Real Estate Vs Stocks: Which Is A Better Investment

• Why Real Estate Will Always Be More Desirable Than Stocks.

All those against real estate have rationally saved and invested the difference in the stock market and other classes. And given most asset classes have done phenomenally well over the years, renters who invested have also done very well.

However, for those of you who wanted to buy real estate but couldn’t or want to buy real estate but can’t, this post is written mostly for you. This post should help you better figure out your future living situation.

2023 housing price forecasts from various institutions range from -22% to + 5.4%. There is no consensus as to which way house prices will go. However, the bias is towards the downside.

There is also the issue of forecasting the national median home price and the price of your local housing market. While we care about the national median home price forecast, we care way more about our local housing market forecast.

For background, I expected the median sales price in the United States to rise by 8% to 10% in 2022. My estimate was less bullish than the majority of firms expecting 12% – 18% price increases.

The 4Q2021 median home price was $423,600. The latest pricing data available, 3Q 2022, shows the median home price of $454,900, or a 7.4% increase. 4Q 2022 housing price data will be released in 1Q 2023.

I have a love-hate relationship with owning rental property.

On the one hand, my rental properties are one of the main reason why I had the confidence to leave work behind. On the other hand, my rental properties are my main source of investment stress.

Whenever there is a tenant issue or a maintenance issue, my mood sours. Weird situations always arise that are hard to predict.

To counteract this change in mood, I’ve had to change the framing. Instead of seeing my rental properties as a source of passive income, I now view them as having a part-time job.

As a fake retiree, it took years for me to accept this mental shift because it felt like going in reverse. But the shift has made a positive mental health difference whenever I need to spend time dealing with rental property issues. Now when issues arise, I no longer feel as stressed because it’s just a part of the job.

Let me share an example of why I hate being a landlord and an example of why I love being a landlord. Then maybe you can better decide whether owning rental property is right for you.

During a bear market, one of the things I like to do is embrace losing. The more you can embrace reality, the more you can accept reality. And the more you can accept reality, the easier you can move on with your life.

Recently, I ended up losing ~$1 million in real estate. It was a significant hit to my net worth. Years of gains, savings, and hard work vanished into thin air! How sad.

Thankfully, as a fake retiree focused on cash flow, the $1 million real estate loss didn’t negatively affect my rental income. If I can just keep the cash flow coming for the next 18-24 months, fingers crossed everything will be OK.

Let me share a situation about how losing so much money in real estate might actually be a net positive.

As someone who has been consistently invested in private real estate deals since late 2016, I’m now firmly in the window for receiving distributions. My investment thesis to invest in heartland real estate has turned out well, partially thanks to the bad luck of the pandemic.

Although a couple of my investments in one fund turned sour due to a lack of equity cushion, poor execution, and the shutdown of commercial offices, the vast majority of investments have provided positive returns.

One such investment was a multifamily investment that paid out $122,423.04 in distributions on July 6, 2022. The invested capital should be about $60,000 for a ~15.3% compound annual return over five years. I say should be because it is part of a fund that invested in over 10 properties.

If you want to upgrade your home, get excited! The perfect time to upgrade to your move-up home is coming. Meanwhile, be patient and build your cash reserves.

I really can’t believe the good fortune for move-up homebuyers. The supply of homes has stayed relatively steady (and still well below pre-pandemic levels), but the demand for homes has been dropping since the end of 1Q 2022 given mortgage rates have increased by ~2%.

For those of you with strong cash flow and large cash balances, you should appreciate this economic environment. Not only is the Fed helping you make nicer homes more affordable, you’re also getting a higher return on your risk-free cash.