The Real Estate Espresso Podcast – Details, episodes & analysis

For the past several decades, the dominant playbook was globalization and specialization. Companies outsourced components to the lowest-cost producer, often halfway around the world. Supply chains became long, complex, and highly optimized for cost.

On paper, it made perfect sense. If a supplier could produce a component cheaper and sell it to multiple competitors in the same industry, everyone benefited from economies of scale.

But there was a hidden assumption baked into that model. The assumption was that supply chains would always function smoothly.

And we now know that assumption was flawed.

Over the past several years, we’ve seen disruptions from pandemics, geopolitical tensions, trade disputes, and transportation bottlenecks. What used to be considered low-probability events are now happening with uncomfortable frequency.

Supply chains are no longer just an efficiency mechanism. They’ve become a source of risk.

And when risk enters the equation, the optimal strategy changes.

We’re now seeing companies rethink their dependence on third-party suppliers for critical components. In many cases, they’re bringing production back in-house. That’s vertical integration.

Not across the board. Not for every component. But selectively, for the parts of the value chain that are mission-critical.

That's changing demand for industrial real estate.

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**Real Estate Espresso Podcast:**
 Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)  
 iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)  
 Website: [www.victorjm.com](http://www.victorjm.com)  
 LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)  
 YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)  
 Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)  
 Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  
**Y Street Capital:**
 Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)  
 Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)  
 Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today’s show is sponsored by The Cost Segregation Guys. If you own investment real estate and haven’t looked seriously at cost segregation, you could be leaving significant tax savings on the table. The Cost Segregation Guys help investors accelerate depreciation, improve near-term cash flow, and make more efficient use of capital, all without changing the underlying asset. In a business where preserving cash matters, that’s worth paying attention to. If you’re interested in learning more, click on the link in the show notes and you’ll be able to connect with them directly, and qualify for a discount because you came from the show. 

 https://costsegregationguys.com/estateespressopodcast/

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On December 10 of last year I published an episode of the podcast that summarized the rules for how the Federal Open Market committee elects their chair. The Federal Reserve Act requires the Fed Chair to be elected in the January meeting for the balance of the year. It has been customary for a Fed chair to resign their position as Fed chair and to relinquish their seat on the FOMC in order to create space for the incoming chair to take their seat on the committee. 

On December 10, I made it clear that the committee has followed the custom of electing a new chair in January, and then after the resignation of the chair, making way for the new Fed chair to take their seat. While unprecedented, the current Fed chair, Jerome Powell would not be required to resign and it would in fact require a change to the Federal Reserve act in the Congress and the Senate in order to force the Fed chair to resign. 

I put this forward as a distinct possibility. 

Well, as fate would have it, today Fed Chair Jerome Powell announced that he would not be stepping down, and that he would only do so when he felt that conditions were right to protect the integrity of board as a whole. 

Powell is clearly signaling to the President the terms under which he gets to appoint his new Chair. This is a high stakes game of chess. It will continue to make headlines probably for days and weeks to come. 

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**Real Estate Espresso Podcast:**
 Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)  
 iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)  
 Website: [www.victorjm.com](http://www.victorjm.com)  
 LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)  
 YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)  
 Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)  
 Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  
**Y Street Capital:**
 Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)  
 Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)  
 Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Today’s show is sponsored by The Cost Segregation Guys. If you own investment real estate and haven’t looked seriously at cost segregation, you could be leaving significant tax savings on the table. The Cost Segregation Guys help investors accelerate depreciation, improve near-term cash flow, and make more efficient use of capital, all without changing the underlying asset. In a business where preserving cash matters, that’s worth paying attention to. If you’re interested in learning more, click on the link in the show notes and you’ll be able to connect with them directly, and qualify for a discount because you came from the show. 

 https://costsegregationguys.com/estateespressopodcast/

Today we’re talking about the shortage of workforce housing at resorts and near manufacturing plants. 

Our case study today is the Campus Ryan project at Mont-Tremblant in Quebec—a blueprint for how we can apply similar models in places like Vail, Breckenridge, Aspen, Banff, Whistler and countless others.

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**Real Estate Espresso Podcast:**
 Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)  
 iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)  
 Website: [www.victorjm.com](http://www.victorjm.com)  
 LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)  
 YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)  
 Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)  
 Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  
**Y Street Capital:**
 Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)  
 Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)  
 Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

Every year at the World Economic Forum held in Davos, a panel of economists gives their economic forecast for the upcoming year. This was no exception. On today's show we're summarizing the results of those panel discussions.

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**Real Estate Espresso Podcast:**
 Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)  
 iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613)  
 Website: [www.victorjm.com](http://www.victorjm.com)  
 LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)  
 YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)  
 Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)  
 Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)  
**Y Street Capital:**
 Website: [www.ystreetcapital.com](http://www.ystreetcapital.com)  
 Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital)  
 Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)  

On today’s show we are taking a snapshot look at how one state is trying to address housing affordability. 

Home pricing follows the laws of supply and demand. Sellers put their home on the market and buyers place an offer. That price might be low than asking price, higher than asking price, or at the asking price. It’s a full contact negotiation. There is nothing compelling a buyer to pay a particular price. If the buyer and seller can’t come to terms, then no deal gets done. This is the classic process of price discovery. 

Some jurisdictions have been addressing affordability by applying downward pressure on landlords and developers. Those greedy landlords are to blame for the lack of affordability. I’m thinking of places like California that have imposed state level and even municipal level price controls on rental housing. 

The effect of these measures is to discourage landlords from entering the market. The net result is fewer landlords, fewer rental properties and therefore higher rental rates. 

The state of Utah on the other hand has been growing rapidly and has experienced net migration growth for 31 out of the last 32 years. Utah also has the highest birth rate in the nation and is one of a very states that is growing organically. 

The state has also taken a very enlightened approach to encouraging new product to enter the market. The first step to encouraging growth is to remove the bureaucratic obstacles to growth. 

The legislature has implemented 10 initiatives aimed at reducing bureaucracy and encouraging development.

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Host: Victor Menasce

email: podcast@victorjm.com

On today’s show we are taking a look at interest rates. Yesterday the Federal Reserve increased the Federal Funds rate to a range between 5.25%-5.5%. 

This clearly sets the stage for short term interest rates to increase. The yield on the 10 year treasury decreased from 3.91% to 3.86% following the Fed announcement. 

The yield on the 30 day Tbill is currently 5.46%. This is matching the Fed funds rate. 

Back in October of 2022 the 30 day T-Bill yield was ranging between 2.85% and 3.75% as the Fed was aggressively increasing rates during that period. The yield on the 10 year Treasury at that time was 4.25%. The interest rate that most investor care about is linked to the yield on the 10 year Treasury. 

Today we have an interest rate inversion where the market is clearly signalling to the Fed that they don’t believe them. 

The real question is what’s next? 

We are seeing deflationary prices. We have a globally synchronized  economic cycle. 

The Fed says it is raising rates, and the European Central Bank says it is raising rates. But as we have discussed on this show before, we have not seen a dramatic rise in bond rates over the past 8-9 months. Since most long term lending is indexed to the yield on the 10-year or the 30 year bond, these numbers have hardly moved since October. 

If you listen to the rhetoric from the Fed Chairman, you would think they have tremendous influence over the market. 

The market sets the rates, not the Fed Open Market Committee. 

In Europe, we are seeing demand for credit falling. This is not being driven by rate increases. The reason we know that is that rates have hardly increased. So that cannot be the reason. Businesses are not going to stop borrowing money for a couple of percentage points if they have things to do that will drive business growth. We went from 0% to 2% in Europe. That’s not enough to choke off business activity. There must be another explanation. 

These are deflation and recessionary markers that are consistent with an economic cycle. 

Rates rise when there is a competition for money. Rates fall when there is a lack of demand for money. When we talk about money markets, this is an accurate term in the true sense of the word “market”. Just like the price of tomatoes or gold or oil, if demand goes up and exceeds supply, the price goes up. If demand falls, then prices fall. It’s the same thing with money. If demand for money goes up, then interest rates rise. Regardless what the Fed says about rates, we see supply and demand forces are dominating the cost of money over the longer term. 

On today’s show we are not talking about real estate, but instead about a major shift that is taking place in society. 

We have an unstated assumption in our world that more is better. We want more money, a bigger house, a faster car, a bigger boat. 

As investors we want more units, more mobile home parks, a higher rate of return, a longer vacation. 

Marketers want more content, more more more. We are literally carpet bombing people with advertising. 

To what end? 

That is the same impetus that drove fossil fuel extraction. It is the same impetus that drove the building of entire cities in China that remain empty with no inhabitants. It is the same impetus that created the Netflix library with more streaming content than you could ever watch in your lifetime.

We are mechanizing art. We won’t have the time to absorb it all. 

We are going to need AI to summarize the crap created by AI for us.

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Host: Victor Menasce

email: podcast@victorjm.com

Tenants can hardly be blamed for being confused. Many have never owned a home and they have no idea what it costs to own and maintain a property. 

With the rise in interest rates, home affordability has become even more expensive. Inflation has affected many of the maintenance and repair costs. Air conditioners have gone up between 15%-25% in the past year. If your air conditioner fails, you will feel the pinch. That means your replacement budget just took a substantial hit as well. 

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Host: Victor Menasce

email: podcast@victorjm.com

On today’s show we are looking at a fundamental economic concept, called the law of supply and demand. I have been a huge believer in the law of supply and demand as one of those fundamentals that must be respected. I treat it like a law of physics similar to gravity.You can try to bend the laws of physics, but gravity will usually win that battle.

Suppliers, often struggle with assessing demand, simply based on customer orders.

One of the largest contributors to that confusion is the buffering of demand and supply chain inventories. The larger the buffer, the larger, the potential for confusion. Over the past several decades, businesses all over the world, have aimed to reduce inventories, in order to reduce the cost of carrying that inventory. it takes a lot of working capital to carry inventory on a large scale.

The law of supply and demand is fundamentally rooted in the distinction between demand and utilization. I am making the distinction between demand and utilization. They are different. 

Shawn Moore is based in Park City Utah where he specializes in short term rentals. On today's show we are talking about the state of the short term rental market and how it is changing and "growing up". To learn more or to connect with Shawn, visit https://vodyssey.com

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Host: Victor Menasce

email: podcast@victorjm.com