The ALX Show

Welcome to the ALX show your
premier source for DFW real

estate data and insights.

Let's get to it.

Brandon Giella: Hello and welcome back to
another episode of the A LX Show today.

Josh, you and I were just talking before
we started recording that there is so

much fear it seems with so many people
on LinkedIn, on armchair economists that

are posting about what you know will or
won't happen with the economy or in real

estate, and a lot of it is fear-based.

And obviously fear is very powerful
when you're trying to do marketing

or you're trying to get more
viewers or subscribers or whatever.

Fear works.

The problem with that is fear is not
the only emotion to have, and it's also

not the only thing that is powerful,
because hope and joy and optimism are

also very powerful, especially when you
are a business owner or you're flipping

homes or you're investing in a deal.

You've got to have a, a realistic optimism
in order to keep going and, and do well.

And so I'd love to talk more about
that and how you guys are, are thinking

through, you know, what you're reading
and, and seeing on the internet and how

you're feeling about today's market.

But also like, where can we hope,
you know, where, where are you guys,

what are you seeing in the data?

What are you seeing in the news
that is, is really hopeful.

So I'll start with, um, just
kind of a, a personal anecdote.

Josh, you were saying, you're
like, I almost don't wanna be

on LinkedIn anymore because.

Of just the, kind of the things that
you're reading and seeing, and it's

just a bunch of stuff that A, nobody
knows, but b, it's just a bunch of

fear and like that may not be the case.

We, we don't have to jump to fear.

So tell me a little bit about that.

Like how have you been feeling
about things that you're, you've

been reading and, and seeing
online or in the news lately?

Josh and Patrick: Yeah, on the,
the LinkedIn stuff, kind of what,

what we were talking about just
before, you know, I get it there.

There's, there's a lot of data
out there, not all of it Great.

Um, that can lead, uh, you know, to
certain projections and, and oftentimes

the ones that are kind of scary, uh,
get the most attention because it, I

mean, it has the most dramatic effect.

Brandon Giella: Mm-hmm.

Josh and Patrick: Um, and it's
entertainment for a lot of people

and a lot of people, you know,
that are, that will post about it.

Um, you know, it's some may have, you
know, may have skin in the game, may, uh,

you know, own assets that are coming up
for, uh, a refi or, you know, you need

to get out of you're trying to sell.

Um, others, I think a lot of times are.

Kind of watching from the sidelines.

And I, I don't know that they've
got a lot of skin in the game.

Um, it's hard to tell, you know,
based on who's posting what.

But I guess my thought, my thought
on it is, is anybody can post what

whatever they want, you know, that
that's, that, that's, uh, one of the

great freedoms that we have, right?

So, so feel free.

And, and a lot of times they've
got good reason, um, you know,

to post potentially like.

Negative outcomes and, and what could
go wrong or what, what could happen.

But there's another side to that.

One is no one knows.

No one knows what
tomorrow holds much less.

You know, have we met, like you'll,
you'll see like on, on asset classes

and in commercial and multifamily.

Are we at the bottom?

Um, no.

We've got room to go.

Look at the, look at the,
uh, debt maturity wall.

Um, you know, expenses are,
are going through the roof.

There's no rent.

Growth like supply is.

Uh, you know, the supply surge all
of a sudden has, has, has, uh, driven

rents real, uh, real far down, and
it's gonna take forever to recover.

And, you know, based on, based on previous
recoveries, it's gonna take six years

to get, you know, asset values back
to where, you know, where they were at

their peak before they started to drop.

And I mean, and you know, you
can go back to historical data

and you can find evidence.

Um.

You know, to support all
that, you really can.

I mean, so I'm not, I'm not, I'm
not saying that, you know, anybody

shouldn't post what, what, you know,
if they, they think they've got a

revelation or they think they've
got a good idea, that's fine.

Um, but I think there's also a
lot of optimism and there's also

a lot of hope and reason to be
encouraged, uh, about what's going

on and, and where we're going.

Um, and I'd like to see, see more of that.

Now, let me say, I also like
to see more of that because,

uh, we own a lot of assets.

So, you know, we're always,
and we're, we're entrepreneurs,

so we've got to be optimistic.

We've gotta be positive because one
of the keys to being successful as an

entrepreneur, it's just, don't give up.

You've gotta, you, you need to continually
push forward and get up and go.

And so if you're always focused
on the, well, the negatives.

Then, and that's always
gonna be part of it.

You're always gonna
have to deal with that.

There's gonna be a balance.

You're gonna have to control your thoughts
and, and push some of the negative away.

But in order to get up and go and
be successful, you've got to focus

on, but how good could it be?

You know what, what, what
are the positives here?

Where's the light?

And is that light getting bigger?

And, and look for things in the data.

Look for, for reasons to be hopeful and
optimistic for, for us too, I mean we, we,

we serve a God that controls all things.

So it, it, you know, it's easy

to say that, but then you know, one way
that you, you can actually, uh, like prove

to yourself that you believe it is to
control those negative thoughts and not

focus there and realize, hey, there's,
uh, you know, God's for me, he loves me.

That doesn't mean we're
gonna, life's gonna be easy.

Doesn't mean that things aren't
gonna be tough and we're not gonna

go through challenging times.

But ultimately, at the end, um,
we're gonna get through this.

There's always a way.

Uh, and it's gonna be good.

It's gonna be okay.

We just gotta keep working.

We gotta keep having faith, keep
trusting and look for reasons to

be, to be optimistic and positive,
because we believe that's the

character of the God that we serve.

That, that that's, that's
part of walking in our faith.

That's living in our faith is,
is even when it's hard, keep your

head up, keep moving forward.

Um, know that there's a bigger
and better hope than, you know,

just circumstantial difficulties.

Um, and then also projecting
it, you know, letting the, hey.

Encourage other people, right?

Like keep your head up to everybody
that's around you and, and, and to, to,

to be a message of hope to them too.

Brandon Giella: That's right.

That's right.

Uh, Paul says in different
places, but you know.

Think about whatever is pure, whatever
is holy, you know, whatever is worthy.

Think about such things and
take every thought captive.

You know, it's so important
to keep your mind right when

there's so much fear everywhere.

I mean, you open up news, you open
up Reddit, you open up LinkedIn.

Total fear, just fear mongering.

I have on my, uh, I was gonna show
you on the back of my phone, I have

a, this is a background from Bluey.

It's a great show.

I have a 2-year-old, so I love Bluey

Josh and Patrick: I know Bluey.

Brandon Giella: practicing,
you'll get better.

Just don't ever give up.

And it's, it's so encouraging to

Josh and Patrick: We, we talk
about it all the time here.

We, we talk now there's,
there's, there's more to that.

Like, like, and, and I know
that you're practicing this.

Um, you've gotta continue to
do the right things, right?

You've gotta grow and develop, um, be
disciplined, um, take appropriate risks.

You know, there's things to it.

But if you just, if you're already doing
those things or you're committed to,

to doing those things, then a lot of
it is, I think Patrick and I had this

conversation last week, I think believe
one day we're gonna look back and say.

All we really had to do was just
keep showing up because we believe

we're walking in a plan that's
already been set out for us.

So if, if, if we live the way that we
know we should, um, and we're consistent

in that, then just keep showing up.

Just don't give up.

And I think we'll be amazed
at, at where we land.

Brandon Giella: That's right.

That's right.

It's not, it's not the smartest or the
best ideas that make people successful.

It's that they're consistent
determination over a long period of time.

Uh, Patrick, while he was talking
earlier, you were smiling about

the things that you're reading
in different asset classes and

Josh and Patrick: Don't get him started.

Brandon Giella: yeah.

What are you seeing?

Like, what are people saying on
your end that you're like, I don't

know that that may be true, but
there's no way to know, you know?

Josh and Patrick: God, I
have a lot of thoughts.

I don't really know where to start.

I, um, so, uh, I'll.

Want to always put some data
to the stuff that I talk about.

So, uh, you know, a common thing
right now, this is not just like

LinkedIn posters, but the whole
stock market is like on fear's

edge because of tariffs, right?

Mm-hmm.

And, um, it's, it's funny to me so
far because the, you hear the same

thing over and over is like, this is
gonna cause materials to increase.

I'm thinking more specifically
like our world, like housing,

commercial development, all
that, all that kind of stuff.

But you'll hear like that's just going
to increase input costs, you know, uh,

your raw materials are gonna increase.

And like developers are of course gonna
say that 'cause they don't want their

prices to go up any further, whatever.

But you're, it's happening at the
same time that interest rates.

Uh, floating interest rates are
coming down, come down a hundred basis

points, which gives you a lot of room
to make up what you had in that area

of your budget with rising costs.

But then I just curious, like, and I
know it's not April 2nd yet, but how much

have material prices actually increased?

So I was just looking this morning,
like lumber has like definitely

increased, uh, over the last
few months, but is still like.

Yeah, infinitely below.

I, I mean, so we were building
apartments at our peak in 2022 was

when all that development started.

Lumber was 15, at 1500, uh, a board it.

Today it's at $684 So,

uh, I mean, we were able to
successfully develop properties

at double the price of lumber.

So lumber's gone up a
hundred bucks over the last.

Uh, month, which no one loves, but
like, this is not ma a material thing.

And steel.

That's another one that you
hear in the news all the time.

Like, um, it's a, it's still at the
lowest that it's been in five years.

I mean, the, and granted this is like
all just forward looking and those

prices could cha change real quickly
when tariffs go into effect and all that.

But, um, it just, the, the fear
based Stuff that we see often doesn't

align with what's really happening
when you dig in on the ground.

Those are just two examples that kind
of came to mind as y'all were talking.

Brandon Giella: Yeah.

I love that.

I, I think the biggest thing, if I
could summarize it is, is a lot of these

posts, these pundits, whatever, whether
it's on, you know, traditional, you

know, very serious quote unquote news
channels and news outlets and things

like that, or it's just independent
people on LinkedIn is a lack of context.

I don't think you see a lot of that
in people when they're summarizing

or posting things or show a chart.

You know, yes.

It, it went up, you know, a
hundred percent, you know,

whatever over the last month.

But it's like, but it's still
tiny relative to the last six

years or 10 years or whatever.

So, um, the context is really helpful.

So, with that in mind, in the last few
minutes that we have here, what is,

what is, uh, a piece of data or some
kind of context or a larger story that

you are really hopeful about, let's
say over the next couple of weeks or

couple of months, like heading into
the, the, the next chapter of 2025?

Josh and Patrick: Uh, you know, I think
there's a, there's a lot of good things.

You know, we, we focus primarily on DFW
and that's another, another thing that we

should, you know, make sure and mention is
it, you know, it's, it's very localized.

So the, the different markets are going
to have, you know, are, are certainly

gonna feel different ways about,

you know, the outlook.

Uh, we feel really great here in DFW.

We've had a, a tough, like
in multifamily especially.

Commercial's been hit everywhere.

So, uh, DFW included, I think DFW
probably is fared better than most,

but, um, in multifamily we are
starting, um, I think to see some of

the historic supply surge, um, impact
start to become, uh, less and less.

Uh, you know, we
definitely felt it though.

You had all these Class A apartments
that hit the market, and what that

did is all these open class A units
need to get, needed to be filled.

So.

What was typically a Class B renter.

Now with concessions on Class A
could move up to a class a apartment,

the same for, uh, in the Class B.

All of a sudden now you, you Class
B's losing their typical renter

up to the Class A temporarily.

So now they offer concessions and class
C renters can move up into Class B and

that trickles all the way down into
the different, uh, property classes.

And, and we've, we've felt that, I mean,
our stuff is, is c and b primarily.

And, um, and, and we, we certainly, uh.

You know, felt that shift.

But, but if you look at the
numbers now and the specific

numbers, uh, the permitting, you
know, it comes out every month.

But, uh, the new permits for
multifamily are, are way down.

I think they're, they're as low as
they've been since I know the early

2010, somewhere around that, that time.

Um, but the population, uh,
in DFW continues to grow home.

Affordability is still a major issue.

Um, so, and, and jobs.

The unemployment in DFW is still way down.

I mean, I think it's, it's
up four maybe, uh, 4%.

It's right.

Uh, right around there.

Um, so there's ample opportunity.

Businesses are still, are
still moving in less and less.

Uh, new units are, are being,
are being brought to market.

And we don't see, like, because the
permitting has has been down, we

don't see there being another big
surge of inventory for several years.

It's gonna happen, right?

But it, but it, I mean, it's
expensive to develop right now.

Land you, you're not getting
a great deal on land anywhere.

Um, even though transactions
are down, values are still up.

Um, that's one of the reasons why
transactions are down, is because

you have, um, asset owners and
potential buyers at a disconnect.

Uh, we we're asset owners.

We don't want to, if we don't have
to, then we don't wanna sell what

we own at, at any kind of discount.

And, and one big reason for that is
people are optimistic about the future.

Like, we'll just hang on, hold on.

Especially here in DFW, because
fundamentally it's still very strong.

So if we can, if you can just weather
the storm for a little bit longer,

then we're gonna start to see recovery.

And depending on what the overall economy
does, that recovery could be pretty

rapid because the population growth
is here and the job growth is here.

So, so we are very optimistic
about, you know, maybe not

the next two or three months.

I, we think that it is, it is gonna
take time to work out, but over the next

six months, year, two or three years.

We think, you know, owning uh, real estate
in DFW is gonna be a really good thing.

Brandon Giella: Especially if
you're investing in RV parks.

Am I right?

Am I right?

Last episode, right.

Josh and Patrick: All

cla, all asset classes, but
yes, uh, I mean, RV parks.

Yeah, absolutely.

And you know, as long as you've got,
now we always say this too, you've

gotta be surrounded by the right
people and you gotta have the right

systems and processes, but you've
got those things and then you've got

the assets and you buy correctly.

Um, upfront, even if you don't buy
correctly, the beauty of DFW in

some places, um, that are growing
and have a lot of development is

you just gotta wait long enough.

But you still have to have the
right people and systems in place,

uh, so that you can sustain and
get to the point where the value's

appreciated enough to have a nice exit.

Brandon Giella: That's right.

That's right.

Well, as always, I love the
optimism that you guys have,

you know, realistic optimism.

We call it risk adjusted optimism.

But I, I love that they, the way
that you guys think through these

things because it is so realistic.

It is so hopeful, and it's a, such
a strong, encouraging message, but

it's also really rooted in data.

And you guys were saying this before we,
we started recording, but like, you can,

you can make data say anything you want.

And so I love that you guys are looking at
data that's realistic, that you can back

up that's foundational and still tells
a really encouraging story, um, given

all the context and all the kind of, you
know, timeframes and things like that.

So, always encouraged by you guys.

So thanks for your insight as always,
and, uh, we'll catch up next time.

Hopefully, uh, next episode we'll
be talking about some economic

indicators that are coming up in April.

And, uh, so we'll be talking through
those and what those might look like and

what, speaking of data and context and
all of that, what that looks for like,

uh, for the future of DFW real estate.

So thank you guys.

As always, please check
us out@alxrealestate.com

and sign up for our newsletter
'cause we have insights like

these every single week.

And, uh, we'll see you guys next time.