A Special Preview, Growing Ranks Of Renters, And One Of The Most Unique Asset Classes…

Editor’s Note: I hope you had a fantastic Independence Day. (Hopefully, it didn’t end up like this.)

As you may know, we’ve been mixing things up a little bit here lately. And today is no exception. I’m going to give you a peek at a little project I’ve been working on, called Crypto Roundup.

Each week, this series will bring you bite-sized news and analysis of what investors need to know in the world of crypto (with a little humor and edge). Be sure to check it out.

Then for the remainder of this issue, I’m handing the reins over my colleague Nathan Slaughter to tell you about a hidden (but lucrative) real estate asset class that gets overlooked by income investors. But if institutional interest picks up (similar to what happened with single family homes and storage units), we could see a windfall for investors who get in now.


Brad Briggs
StreetAuthority Insider

Crypto Roundup: Your Weekly Dose of Cryptocurrency News & Tips

At the beginning of every baseball season, I like to go back and rewatch Major League II. It’s the rare sequel that’s better than the original (don’t email me about this).

To paraphrase the words of Lou Brown, manager of the Cleveland Indians:

OK, we won a game yesterday. If we win today, it’s called “two in a row.” And if we win again tomorrow, it’s called a “winning streak”… It has happened before!

Welcome to the third edition of Crypto Roundup.

Crypto investors can probably sympathize with that sentiment. In fact, despite the slings and arrows thrown their way by the SEC, hackers, and malicious fraudsters, things are looking pretty good lately.

We’ll get to all that and more in just a moment. But first, let’s recap how this works.

Crypto Roundup aims to bring you the latest happenings in the crypto world in bite-sized nuggets. Whether you’re new here or have dabbled in cryptocurrency since before it was cool (look at you, you hipster), we’re here to sift through the noise and hype to give you what you need to be informed and make an investment decision. And, as always, each edition will feature a fresh Crypto Tip of the Week.

In this edition, we’re covering a lot of ground, from Black Rock’s about-face on crypto to a new record for BTC Holders and more…

Go here to read more.

One Of The Most Unique Asset Classes You’ll Ever Find…

nathanLook closely at the chart below. At the far right edge, you’ll see a slight downward blip in median home prices over the past quarter.

But that’s all it is: a blip in the data.

Source: Federal Reserve Bank of St. Louis

Outside of six short-lived downturns (the areas shaded in gray), median home prices have steadily escalated since the groovy days of disco in the mid-1970s. They advance for a decade or so, undergo a brief correction, and then continue climbing.

That trend has kicked into overdrive since the pandemic, with home prices surging from $329,000 in early 2020 to $479,000 at the beginning of 2023. That’s an increase of $150,000 in just 36 months.

Great news for sellers. Prospective buyers, not so much.

Prices have skyrocketed due to a convergence of complex factors. Housing starts had already slackened long before supply chain delays, chronic labor shortages and inflated raw material costs dampened construction even further. The end result was inevitable: a worsening supply/demand imbalance.

Realtors will tell you that in a balanced market, there is roughly a six-month supply of listed homes for sale. In January 2022, available inventory plunged to just 1.6 months – a new record low. At that point, only about 900,000 listed homes were for sale nationwide.

And prices had already risen for 118 consecutive months.

Exacerbating the shortage, institutional investors seeking to build their portfolio of residential rental units gobbled up homes left and right, accounting for nearly 15% of all purchases last year. That left desperate buyers in a competitive bidding war for the shrinking pool of available homes. I was one of them, offering well above asking price on several occasions only to be outbid.

Those red-hot conditions have moderated a bit since then – froth coming off the market. Still, median home prices across the U.S. have settled north of $400,000. Needless to say, that amount will stretch much farther in Omaha or Indianapolis than in downtown San Francisco (where $1.9 million is the norm).

But here’s the big picture:

From town to town and state to state, families are finding that cute 3-bedroom, 2-bath starter home on a quiet cul-de-sac that was once affordable is now completely out of reach.

Add one more name to the renter column.

The Growing Ranks of Renters

This is nothing new, of course. Realtor.com just released some sobering statistics on the subject. Over the past decade, 15.6 million new households have formed. Over the same span, only 11.9 million new residences have been built (8.5 million single-family homes and 3.4 million multi-family apartment units).

That’s a cumulative shortage of 3.7 million homes. Twice as many if you don’t count apartments. Last year alone, 2.1 million new households formed, roughly double the number of housing starts. Closing this gap and narrowing the deficit would take years of over-building.

Source: Realtor.com

Some newlywed couples might be okay crashing in their parents’ basements for a while. But that’s a temporary solution at best. Fortunately, jobs have been plentiful lately. More families might still be able to fit a house note into their budget… if mortgage rates were still at 3%.

But after ten straight Fed rate hikes, those days are long gone.

Last September, the average rate for a 30-year loan crossed the 6% threshold for the first time since the 2008 financial crisis. And it has ticked even higher since then. According to Freddie Mac, the national average for a fixed 30-year mortgage is 6.8%.

Needless to say, that is a huge (in some cases unmovable) obstacle standing in the way of many would-be buyers.

The monthly principal and interest due at 4% on a $500,000 home with a standard 20% down payment (financing $400,000) would be $1,910. A one percentage point increase to 5% would raise the monthly note to $2,147. At 6%, you’ll be sending the mortgage lender a payment of $2,398 each month.

Either the uptick in borrowing costs or the uptick in home prices might be manageable. But with both together, the math has become nearly impossible for many. And that’s without property taxes, insurance, homeowners association (HOA) dues, and other miscellaneous expenses.

Sure, wages have risen as well. Unfortunately, they haven’t kept pace. Assuming a standard 20% down payment on a median home, the typical house note now eats up 35% of the median household income, up from a historical average of 25%. According to Yahoo Money, payment-to-income ratios haven’t been this skewed in 38 years.

No wonder U.S. homeownership rates have shrunk from 69% to 64% over the past two decades. After crunching the numbers, more and more families are finding rentals to be the best solution. Finances aside, a growing number of Millennials and Gen Z-ers actually prefer renting for a variety of reasons (freer mobility, no yardwork, etc.)

How We Can Invest…

You can probably guess what all this has done to national vacancy and leasing rates.

Hint: they have moved in opposite directions.

Leasing costs are localized and vary by location and quality. But over the past couple of years (with demand outpacing new supply), average national apartment rents have been climbing at an 18% annual pace – make that 40%+ in space-constrained metro markets like Orlando.

According to analytics company Costar, the average monthly apartment rent currently stands at $1,612 nationwide. Rent.com calculates a national average of $1,937 per month. Good news for apartment landlords.

Yet, there is a much smaller – I would say hidden – asset class benefitting from these same macro tailwinds. The average structure in this group offers approximately 1,250 square feet of living space and rents for $1.00 per square foot versus 1,000 square feet at close to $2.00 per square foot for a standard apartment, duplex or townhome.

That’s about $700 less per month ($1,245 versus $1,996) for 25% more space. No wonder so many families are choosing manufactured homes. A handful of publicly-traded specialists dominate this industry: Equity LifeStyle Properties (ELS), Sun Communities (SUI), and UMH Properties (UMH), to name a few. And permits for new construction are tough to come by (not in my backyard), which means high barriers to entry.

I’ll hold off on naming my favorite among this group for now. But feel free to research these names on your own. In the meantime, my High-Yield Investing subscribers and I are laser-focused on finding the absolute best dividend growth stocks out there.

And that’s why I released a critical report about 5 bulletproof income stocks you can buy today and own for the long haul. To learn more, simply follow this link.