Transcript:
I want to give you a real estate update
we’re covering the housing markets and
my
prediction everything is happening
exactly as I said it would I said that
month over month home prices will go
down because of seasonality and weaker
demand year over-year I said no housing
market crash and that is exactly what
happened so am I shocked about how
accurate and precise I was honestly I’m
not because this is very easy to predict
I am not a magician I was just analyzing
the data and honestly a lot of people in
the comments they were saying that they
were saying the same thing I gave my
assessment and they said that yeah I
agree with your
assessments so honestly for making these
predictions and getting it right you are
capable of doing this too if you just
put in the time and effort but people
are busy and people have better things
to do with their time people have more
enjoyable things to do with their time
so I’m just here to really just save you
the
time
now I want to share with you the data
and I’ll let you know where the housing
market goes from here this is a
three-year chart of home prices from
Redfin the median sale price of a home
in September was
$41,800
so I told you that this would happen and
bigname institutions got it wrong this
is a combin of seasonality higher
interest rates and the
economy now this is a 5year chart home
prices have not crashed compared to 12
months ago home prices are up 2% they’re
not even down when home prices increase
by 2% how do you classify that as a
housing market crash some YouTubers do
but not me and compared to pre pandemic
look at the data home prices are up 30
to
40% and I have to say this again well
honestly I have to say this I have to
say this so many times I have to say
this again and again every real estate
video and intentionally be
redundant because we’re always going to
get that guy in the comments somebody
saying that home prices are down 20% in
my area the housing market crash has
already started so these people who say
this they clearly do not understand the
definition of median home prices or
national
averages it means that if home prices
are down 20% in your area then home
prices are up
22% in a different area so I don’t want
to be I don’t want to be repetitive but
I have to otherwise these fools are
going to run a muck in the comments so
let’s move on to housing
inventory so there are currently 1.51
million homes listed for sale in the US
this is down slightly month over month
year over year the number of homes for
sale is down by
15.8% that is a lot there are less
sellers so I have to tell you this if
you’re rooting for a housing market
crash then this is not good for you
because remember if you want a housing
market crash then you need a flood of
sellers you need homeowners rushing to
sell their homes people saying that I
have to sell my home right now I will
accept whatever lowball offer that
you’re willing to give me sell sell sell
and you need millions of the these panic
sellers but the opposite is happening
there are less sellers compared to the
previous month and there are less
sellers compared to a year
ago and I’ll tell you this yes it is
true that you have more Americans that
are struggling mortgage interest rates
are rising and home affordability is at
record
lows this means that there is less
demand for homes if less people want to
buy homes then home prices should go
down
but you can’t neglect to look at the
supply side of the equation there are
less buyers yes but there are also less
sellers so less buyers means that prices
go down but then you have less Sellers
and that means that prices go up so you
have these two opposing forces that are
basically canceling each other out less
buyers and less Sellers and for that
reason home prices are not crashing and
they’re not shooting up
either now I want you to look at this
this is a 5-year chart of the percentage
of homes that are selling above list
price 33.3% of homes are selling above
list so that is one out of every three
homes this number is trending down but
it’s still higher compared to 12 months
ago by
1.2% but this needs to fall into the 20%
range to be comparable to prepandemic
levels so historically speaking this is
still elevated now let’s take a look at
mortgage interest rates so this is a
10-year chart of the average 30-year
fixed as you can see pre pandemic it was
in the 4% range during the pandemic it
dipped to 3% even a little bit lower and
right now it’s around
8% now I want you to know that this
whole situation is thanks to the Federal
Reserve a lot of people already know
that but I want to be clear about that
you know thanks for nothing right so
they’re they are trying to clean up the
mess that they created and it’s resulted
in much higher home prices and higher
mortgage interest rates consequently
home affordability is at record lows so
the central Bankers did this and if
you’re rooting for a housing market
crash I get it I don’t blame you people
want affordable housing there’s nothing
Sinister about that but prices are not
crashing because of simple economics
supply and demand okay so I want to tell
you this normally I would give you the
expert predictions what they’re saying
is going to happen to the housing market
but honestly
I don’t want to waste your time with
that nonsense
because I am so sick of them being wrong
and I think most of us here are as well
Goldman Sachs Morgan Stanley these big
institutions they’re saying that home
prices are going to go up from here on
out no they’re not I was debating on
whether these institutions are just
stupid just like genuinely stupid or if
they’re acting dumb I’ve concluded that
they’re most likely acting
dumb so I’ve already given you the
housing market forecast you can watch my
previous video I’ve been right for the
past two years and I was honestly I was
the extreme Underdog so thank you for
believing in me I know many of you did
and I’m saying that I will be right for
my prediction for the winter season as
well home prices will Trend down because
of seasonality the weakening consumer
and higher interest rates so let’s knock
out the easy one first seasonality and
I’ll make this quick
June is usually the seasonal price peak
of the Year give or take a month so this
is not rocket science nor is this a a
new discovery it’s not like we
discovered fire here all these big
institutions they choose to ignore
seasonality as if it’s an urban legend I
don’t know
why moving on we have the weakening us
consumer the government reported a
strong GDP figure of
4.9% If This Were true the Federal
Reserve should jack up interest rates
but the Federal Reserve clearly does not
believe the government report if they’re
going to ignore the strong economic
report then I guess we should too us
households are not thriving unemployment
is ticking up it is expected to go
higher millions of Americans are maxing
out credit this is this is statistical
information coming from the Federal
Reserve the savings rate fell off a
cliff so people are struggling it’s
going to get worse in a higher interest
rate
environments and then you have the big
elephant in the room mortgage interest
rates okay so here’s what you need to
know the 30-year fixed mortgage interest
rate is highly influenced by the 10-year
treasury yield the 30-year fixed is
usually about 2% higher than the 10-year
yield right now it’s about 3% higher
which is on the high end of the range
okay so right now you have the 10-year
yield at 5% and then you have the
30-year fixed mortgage interest rates 3%
higher right around
8% so 5% and
8% if the 10 years stays at 5% then you
can expect that the 30-year fixed will
be in the 7% to 8% range because
remember it’s usually floating 2 to 3%
higher okay so what’s going to happen to
the 10-year yield that’s a good question
right because that will determine the
30-year fixed mortgage interest rate in
the
future so here’s a 40 plus year chart of
the 10-year yield right now the 10year
yield is slightly under 5% historically
speaking 5% is not that high it’s not
that low but I want you to understand
that even if the 10-year yield drops to
3% which is right here that still means
that the 30-year fixed mortgage rates
would be 5 to 6% so listen a 5% mortgage
interest rate on the 30-year fixed is
the best rate that we’re going to see
for a while if we’re lucky for that to
happen the 10-year yield needs to drop
to about 3% which is a big ask so here’s
a one-year chart of the 10-year yield so
you see that red circle that was the
12mon low at
3.25% it’s not even at 3.0% so asking
for three flat is a big ask and it needs
to fall there for mortgage interest
rates to get down to 5 to 6% But
ultimately what I want to tell you is
that it’s going to be difficult to have
more mortgage interest rates fall
significantly unless there’s some major
policy changes by the Federal Reserve so
I want to explain to you how this works
the Federal Reserve is no longer buying
government bonds this means that there’s
less demand for government bonds that
means that the yields increase well they
have to increase to attract more buyers
so this drives up mortgage interest
rates higher mortgage interest rates
means less demand for homes and then
this puts downward pressure pressure on
home prices so as I told you I’m not a
magician you just have to understand
what is going on that’s what’s going
on but we don’t get a housing market
crash because of the supply side of the
equation we don’t have the quantity of
arms the adjustable rate mortgages like
we did in ‘ 08 we’re not going to see
foreclosures climb to 2010 levels home
prices go down but they do not crash
okay so let’s play it by ear and I’ve
already given you my prediction up until
winter now I have to warn you about this
because I said this about the broader
economy in my previous video but I want
of course I want to focus on the housing
market in this one so when the Federal
Reserve starts cutting the FED funds
interest rates and when they start
buying government bonds again this is
going to Skyrocket home prices mark my
words as soon as the 10-year yield gets
close to 3% or below then it’s going to
be like a Feeding Frenzy people are
going to be jumping all over this buyers
are going to rush in and it’s going to
loosen up the lack in effect for sellers
if you already own a home then it’s
going to be glorious for you you’re
going to get really rich on paper if you
don’t own a home is this is going to
make things exponentially worse so I’m
telling you the Federal Reserve screwed
up worse than most people
realize and listen I’m coming up with
the videos about the midterm and
long-term solutions to all this I’m
working on those videos right now of
course they take time to make but first
things first I need to alert people and
update people on the situation and what
is going on so please
subscribe I’m just going to be honest
with you I’m going to tell it to you
like it is I’m going to save you the
time thank you for the support and I
wish you a very nice day take care