The Real Estate Market Is In The Freezer, But Billionaire Grant Cardone Says Investors Will 'Save The Day'

Economists have been calling for a housing crash for several months. Some even predicted that home prices would fall by as much as 30% in 2023. While these claims are understandable considering that rising mortgage rates have priced many would-be buyers out of the market, it appears that a different scenario is beginning to play out.

Best-selling author and real estate fund manager Grant Cardone agrees that the housing market is in trouble, but points out that investors will create enough demand to keep the market from crashing.

“Banks don’t trust borrowers, and those they do trust will have to pay. This will move homeowners to the sidelines and slowly reduce home prices,” Cardone said. “Investors will step in to pick up single-family homes at lower prices with less competition. That being said, there will be no housing crash! Investors, like myself, will save the day and step in to buy the homes, put renters in place and enjoy them for the cash flow, not the kitchens and cabinets.”

Cardone’s real estate investment firm Cardone Capital has raised over $1 billion from accredited and nonaccredited investors across 22 funds since its inception in 2016. The company’s real estate portfolio is valued at roughly $4 billion and consists of nearly 12,000 apartment units across 36 properties and over 500,000 square feet of commercial office space.

Cardone isn’t the only major investor who sees an opportunity in the current housing market. J.P. Morgan announced in November that it plans to acquire $1 billion worth of single-family rentals. Other institutional investors like BlackRock Inc. and Norges Bank increased their positions in single-family housing real estate investment trusts (REITs) Invitation Homes and American Homes 4 Rent during the last quarter. 

Amazon Founder Jeff Bezos even staked a claim in the single-family rental market by investing in the seed and series A rounds of the investment platform Arrived Homes, which allows retail investors to buy shares of individual rental properties with as little as $100. The platform has already funded over 200 properties worth more than $75 million.

There is also a growing demand from foreign investors for U.S. real estate. Chad Gallagher, co-founder of the property management company Home 365, told Benzinga last month that his company has seen a significant uptick in foreign investors from economically volatile countries looking for property management services for their purchases of multifamily properties.

“U.S. real estate actually has a better cap rate than most countries. For instance, the average single-family home in Israel costs five times what a similar home here would cost,” he said. “So investing in a rental property in countries like that and making them cash-flow positive doesn’t work for them.”

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