The Real HOUSING MARKET CRASH is HERE
Transcript:
we need to talk about the housing market
crash because everything you read about
or hear about online is telling us about
how horrible home buyer affordability is
which is true it’s like the worst since
right before the Great Recession not
only that but mortgage rates have been
rising virtually all year now breaking
over
8.3% only just in the last two days
falling for the first time in months lot
of folks realizing on one hand even
though there’s very little inventory on
the other hand the people willing to pay
the high prices of real estate today are
starting to become further and fewer
between in other words while people
might have been willing to pay these
high prices for Homes at high interest
rates or have had cash saved up from the
pandemic Lucky them that or those sets
of fires might be dwindling and so we
could be be in this weird transitionary
state where as the FED says rates stay
higher for longer housing gets screwed
in fact that’s what Jerome Powell told
us right Jerome Powell just yesterday
said I’m talking to my industry contacts
and they are concerned to a significant
degree about what the impact of higher
for longer will have on the housing
market because that impact is starting
to be seen look it’s been volatile when
rates first went up from basically 2.7%
to like 5% we saw the real estate market
hit somewhat of a wall the coid markets
dropped about 20% the non-co that’s
going to be the the markets everybody
kind of fled to during coid right so
your Austin Texas your Boise idah right
we saw those surge we saw rents slowly
catch up afterwards and try to surge as
well then by the end of the year we saw
that pain had been hit and come January
23 we started seeing a recovery that’s
LED some markets to actually now be
positive year-over-year Florida positive
year year-over-year San Diego positive
year-over-year other parts of the
country still negative and potentially
trending right back towards where they
were at the end of last year like Austin
went- 20% Then positive 10% now it’s
trending back toga 20% so the question
is what happens going forward especially
when you have a jpow sending the warning
signal what is the most realistic answer
for what’s going to happen well first
there are considerations yes today
inventory is substantially low but even
though inventory is substantially low if
you have a lower amount of buyers you
could still see pain in the housing
market we in the specific housing
markets that we are looking at and we
are looking at many different housing
markets with my real estate startup
travel to over 200 different cities 200
different times this year years it’s
been nuts uh that’s just this year alone
it’s a lot of traveling but point is we
started seeing markets hit a wall right
around September which is when rates
started Rising even more that’s when we
went from like a 7 and 1/4% interest
rate to like an 8 and a/ qu% interest
rate that extra percent almost started
feeling like the straw that broke the
camel’s back properties that were
comping for 600,000 were all of a sudden
selling for 530,000 it was like a 12%
hit to the market in the spam of a month
the market hit a wall it’s probably
because of that straw that broke the
camels back really again in a low
inventory environment driving available
buyers even lower now you have a lot of
people suggesting well we’re going to
wait to the spring to sell and so a lot
of people are fearful that okay well if
everybody says they’re going to wait
until the spring to sell their homes and
yes that’s when there are more buyers on
the market what if inventory 10 x’s and
buyers 5x you’re going to have a surge
of inventory which could also depress
prices especially in a higher for longer
regime so the question is what the hell
do you do how do you put all of the damn
information together because it’s
exhausting everybody has a different
opinion nobody knows what the hell is
going to happen and it’s creating a lot
of fear uncertainty and doubt and
rightfully so because you don’t want to
buy a place and then get decimated
because it falls in value so the first
thing that absolutely everybody should
do and then I will give you my
prediction the very first thing that
everybody should do is they should
consider when are they getting into real
estate themselves because ultimately I
think every single person watching this
video should become a homeowner that is
number one when is it your time and if
it’s not your time right now are you at
least saving money and preparing for
that time okay number number two how are
you protecting yourself when you buy
real estate is not like the stock market
where you go in and you wow there two
Apache helicopters right above me
that that’s odd I’m on FSD by the way
that I have not seen before okay odd uh
anyway the second thing that you need to
do is ask yourself how are you
protecting yourself how many Apaches are
around you no when you buy something in
the stock market you’re just hoping the
stock market doesn’t tangle on you you
can have all the fundamental research in
the world which usually works in the
long term but in the short term you have
no protection unless you’re hedging
right that’s why the options Market
exists but that’s hard that’s trading
and it’s a job what privilege do you
have in the real estate market well the
real estate market is so imperfect it is
horribly inefficient terribly
inefficient inefficient uh agents uh and
I’m not I’m not saying that to bag of in
the industry I’m just saying humans by
Nature are inefficient computers are
much more efficient and real estate is a
human business it’s a people business
you have to be there on the ground
talking to the painters the vendors the
people the contractors the Realtors the
inspectors uh the city officials you
have to be involved with everybody and
if you’re not involved with everybody
you’re not getting a good deal so you
have to be in the markets that you’re
investing in the beauty is you can
insulate yourself and protect yourself
by getting a good deal in real estate
off Market is a fantastic way to do that
tell everybody you know that is an agent
in your community or a wholesaler or
whatever this is what we’re looking for
bring us a deal like this we’ll work
with you that is a fantastic way to try
to get less competition when you’re
buying but you can get great deals on
the market too you just have to make
sure you’re not foming that’s when you
get multiple offers and all of a sudden
everybody’s like oh I I got to pay more
cuz I got to win the deal you could
always win the deal you could win 100%
of the offers you’re writing but if
you’re winning 100% of the offers you’re
writing you are
overpaying simple it’s that simple like
people are like oh I lose out on so many
offers it’s like okay well you’re not
paying enough you don’t know your market
and if you’re winning all your offers
you’re paying too much there’s a right
balance
so what is the rule of thumb that you
should be focused on number two is
getting wedge deals I teach this in all
the courses that I have on real estate
and building your wealth go to
meetkevin.com to learn those they’re
phenomenal I’ve been doing this for what
coming up 14 years now I love this this
game is easy and there is so much
availability that I’m not afraid to
share this Intel with you because there
are no shortages of deals which I’m very
excited about so what do you want to do
you want to do what we just did on a
house we just bought a house in a
neighborhood where a model near model
match four-bedroom two bath was selling
for like
$817,000 next to a busy road we’re like
wow that’s like an $830,000 property you
know adjusting for the busy road it
might be like $8.40 that’s crazy though
why would you want to buy that next to a
busy road so we get one not on a busy
road in in a way better part of the
neighborhood for
605 and it probably needs like 60k worth
of work so that means if we’re looking
at being into it for say 6 65 call at
670 and the place is going to be worth
$840 okay we we are looking at a
delicious spread of like
$170,000 in equity that’s awesome
because that means the market would have
to fall
20% for us to go to zero on Equity but
we still wouldn’t be upside down how
crazy is that those are the kind of
deals you want to look for this
particular deal not everybody’s going to
be able to pull it off the way we did
because this was a seller that that came
to us and said look I’m willing to sell
this house for a discount
because I need the money in five
business days I’m like I can make it
happen but the numbers are going to have
to be right they’re like let us know
what you think go inspect the property I
give a number I go inspect the property
I’m like oh God it is even a little bit
more work than I expected you get a
better deal okay you make the numbers
work for you you have to be patient in
this market and have that desire
to miss a deal and then you get good
deals okay that’s how you insulate
yourself now the third thing is any kind
of talk about timing that this is going
to be 08 all over again it’s going to be
a horrible Market recession whatever
okay remember in ‘ 08 prices fell like
38% so that’s pretty extreme that was
based on people having uh Ninja loans no
income no job no assets liar loans uh
variable variable interest interest rate
loans not like the 30-year fix most
people are on right now who are locked
in you were getting paid to dump your
property back then okay remember that
you were given money to short sell your
home just to cooperate with the short
sell process and you were giving given
move out money just to get
out that’s what we had in ‘ 08 that
facilitated a 38% drop if you have
already a 10% drop in markets now and
you’re insulating Yourself by another
20% you’re basically insulated by 30%
and I don’t think there’s any way in
hell we see the same kind of explosion
of loans that we saw in 2008 because the
loan portfolio is so different today
people are being paid to stay today
30-year fixed rate mortgage at you know
most people 90% of people under 4% it
doesn’t make sense for people to sell so
it artificially keeps inventory low yes
it’s rigged yes the real estate market
should have fallen a lot more but guess
what it doesn’t doesn’t have to you’ve
got unique circumstances here that say
doesn’t have to not paying people to
sell now is it possible that rates stay
higher for longer and keep sort of a
boot on the neck of the economy because
after all Drome Powell says we’re
keeping rates higher for longer of
course it’s possible but here’s what you
have to pay attention to not just the
opinions of people quite frankly you
should have your own opinion but what
you really want to pay attention to is
I’ll tell you in a second house act
closed its fundraise yesterday it’s my
real estate startup however there were
some people who got caught yesterday in
the glitchiness of a lot of people
trying to use the software at the same
exact time so if you didn’t get into the
offering and uh you were having
technical issues yesterday email us at
ious hack.com
for people who were trying to get in
yesterday and were having problems we’re
making sure that they still have access
so you can still read the offering
circular at house hack.com but the
website it has been changed and you
can’t invest there you have to email us
email us at IR
house.com but otherwise the round is
closed which we’re grateful for because
it’s exhausting to fund raise uh did
very well though very very happy for all
of our investors we’re going to do great
so what do you really need to pay
attention to the 10-year treasury that’s
it pay attention to the 10-year treasury
because it doesn’t matter if jpow keeps
rates High the 30-year mortgage rate is
based on or trades roughly around what
the 10year mortgage does or the 10 year
treasury does and there’s a spread
between the two so it’s not always
perfect uh and I’m not saying the
30-year mortgage rate is what the 10e is
it’s not what I’m saying what I’m saying
is when the 10e goes down mortgage rates
go down okay and there’s a spread
between the two that’s all you got to
remember so what does that mean watch
the tenure because if the tenure starts
plummeting because jal’s like we’ve
reached cap and everybody starts buying
bonds because they’re like bonds are
about to Skyrocket in value yields
plummet the real estate market ain’t
going to crash and the best possible
time to buy real State might quite
potentially be what I’ve been saying for
a year to 2 years now Q3 Q4 2023 here we
are baby Q4 2023 let’s go