Why Smart Real Estate Investors Focus on Supply and Demand Over Market Predictions

I just returned from spending over a week at sea (and some nice Caribbean islands) with some of the smartest real estate minds I know. The 2025 edition of the Real Estate Guys’ Investor Summit didn’t disappoint, and my brain is still buzzing from all the conversations and presentations.

Hard to complain about the “view from the office” in     St. Maarten

                                                                                                     After dinner with Robert Kiyosaki - nothing like discussing
                                                                                                    cashflow while he shows off the watch he bought on the
                                                                                                    ship an hour earlier            

But there’s one thing that’s continually been on my mind since I got back. Two of the most successful investors there, Ken McElroy and Jason Hartman, delivered completely different presentations, but the underlying theme running through both was unmistakable:

Supply and demand.

Sounds almost too simple, right?

  Ken McElroy                                                                              Jason Hartman

These guys both have decades of experience, have collectively done billions in deals, and could talk for hours about complex market dynamics and sophisticated strategies. Yet when you strip away all the complexity, what they kept coming back to (maybe without even realizing it) was this fundamental concept.

And then, as if the universe wanted to make sure I really got the message, I had a conversation with another investor this week that drove the point home even harder.

Investing in Office Buildings?

I was chatting with an investor friend who’s doing something that sounds like a bad idea on the surface: he’s buying office buildings.

Since the pandemic, office has been the investment equivalent of radioactive waste. It’s consistently been one of the worst-performing real estate asset classes at a national level, and most passive investors I talk with wouldn’t even consider investing in an office deal.

But my friend? He’s crushing it.

His secret isn’t some complex algorithm or inside knowledge about remote work trends. He’s simply buying a particular type of office building in a market where that type of building is undersupplied relative to its demand.

While everyone else is focused on the macro narrative that “office is dead,” he’s quietly exploiting supply and demand imbalances in specific pockets of the market.

And it’s working beautifully.

This conversation was the perfect real-world example of what Ken and Jason were preaching from the stage.

Why We Overcomplicate Everything

Here’s the problem: we all know supply and demand matters, but we consistently get distracted by shinier, more complex theories that sound smarter.

We obsess over Fed policy. We debate whether the 10 Year is going to 3% or 5%. We read ZeroHedge articles about the “death of the dollar.”

Don’t get me wrong, an awareness of the broader environment is important. But here’s what I’ve learned from years of investing and watching what actually works:

If you nail supply and demand and ignore most of the macro stuff, you’ll probably be just fine. If you nail the macro predictions but miss the supply and demand dynamics, you’re probably screwed.

It really is that simple and profound.

The Universal Investment Truth

This applies to everything, by the way. Apartment buildings, self-storage, car washes, SaaS businesses…the whole lot.

You want to invest where:

• Supply is limited or constrained
• Demand is growing

That’s the whole game.

In real estate, sometimes supply is constrained because of zoning restrictions. Sometimes it's because land is expensive or scarce. Sometimes it's because regulations make it nearly impossible to get permits to build.

And on the demand side, you’re usually looking for population growth, job growth, or changing demographics that create more need for your asset type.

When you find these conditions (and when they’re likely to persist for years, not months), you’ll probably do well.

Cutting Through the Noise

Here’s my challenge for you as a passive investor: the next time you’re evaluating any investment opportunity, ignore everything else initially and ask yourself two questions:

1. Is supply limited or constrained in this market for this asset type?
2. Is demand growing (or at least stable) for this asset type?

If you can’t answer “yes” to both questions with confidence, be very skeptical of everything else about the deal.

If the supply and demand story isn’t compelling, almost nothing else matters.

The Bottom Line

So yes, pay attention to the big picture and understand the macro trends. Dive deep into the business plan of a potential deal.

But don’t let all that complexity distract you from what Ken, Jason, and my office-buying friend all proved in their own ways:

Find the imbalance. Invest in the imbalance. Repeat.

Everything else is just commentary.