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Nick(Reventure Consulting)의 주택시장 폭락 주장을 Kevin이 검토. 투자자 매수 46% 감소, 2006년보다 빠른 조정 전제. 임대료 하락이 집값 하락을 이끌 것이라 보며 전국 기준 15~25% 조정 예상, 10년물 금리 3%대 하회 시 바닥 형성 가능성. Kevin은 Nick보다 낙관적이나 당장은 매수 보류 권고. 5~6월 공포 정점을 매수 적기로 제시하며 본인 부동산 스타트업 투자 유치를 홍보.
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now we've got to react to a video on the housing crash coming is it possible the housing market is going to crash another 50 percent from where we are now what's happening in the housing market well in this video we're going to react to a Nick from reventure Consulting who's got a video and I'd like to add commentary and insight on specifically uh some of the arguments that he makes because I've got some personal insight into exactly these markets and we'll see do I reiterate what Nick has to say or do I have a different opinion let's find out as I hit the play button here we go Redfin is reporting a massive collapse in investor home buying in America specifically they're reporting that investors are buying roughly half as many homes as they were a year ago a 46 decline in investor home purchases in the fourth quarter of 2020.
all right I'm gonna pause here quickly so Redfin reporting 46 decline investor homea purchases uh and uh Nick goes as far as saying hey look that's actually worse than what we had in 2006 which was a period of having substantially longer periods of fewer investor buys now that's important because if we go back to 2006 it's important to remember how long it actually took for the housing market slow down to really begin the housing market really began slowing down in late 2005.
that means you really had your real estate pricing Peak potentially as early as late 2005 in some markets now what's crazy about that is we didn't actually think we were in a housing crisis until 2000 probably late 2007 and of course 2008 and then the housing market didn't actually bottom out until about November of 2011.
that's about a six year period of sliding down in home values it's pretty remarkable able now there are some arguments that because interest rates have skyrocketed from about 2.75 percent on a 30-year fixed rate mortgage all the way to where we sit now at about six point seven five percent that is a four percentage Point increase in interest rates on the 30-year fix for someone with a 740 credit score which actually aligns with a 40 decline in purchasing power it's kind of remarkable to think that that kind of purchasing power to climb has happened over the span of just one year when that same kind of decline likely happened over the course of three years between 2005 and 2008 and it wasn't until that three-year decline happen that we actually spawned the foreclosure and short sale crisis which really started taking hold in 2008 9 10 11 and 12 of 12 we were kind of already coming out really bottom aligning with about November of 2011.
so that's to say that this sort of housing crunch that we're seeing right now yes it's more dramatic but it's also been substantially sped up in my opinion now there's no guarantee of this but I believe that because we've sped up the crash so much and it's led to this decline of not just investor purchasing so much but also decline in real estate sales volumes so quickly e real estate market recover much faster than recovered in the 2005 to 2008 era so what we're comparing to the last recession I think it's very important to remember how quickly this housing crash is coming up and then consider what that could mean going forward now also keep in mind that in this housing crash we are not facing the type of low quality loan portfolio building that we saw in 2008 where you had dead people get loans people getting negative 2 percent interest rate loans only to see them at just six months later to seven percent interest rate loans and all of a sudden people couldn't afford their homes anymore and since home values were declining they couldn't refinance you're not seeing as much of that right now people in fact you might be seeing a very limited amount of that right now the average credit score of somebody then was around 670 today it's around to 770 100 points higher you're also required to show you have the ability to repay and rather than being able to qualify on a negative two percent interest rate you have to qualify on your highest interest rate that you'll have in the life of your loan we also have substantially stronger standards for appraisals now than we did in the past where in the past you could just call up your buddy to get a property appraised now you have a randomly assigned appraiser and while there is still obviously inefficiencies in any Market things have gotten a lot more difficult and I would say they're on much stronger foundations today than they were in during the last recession now with that said what's interesting that I'm noticing is I'm starting to notice around eyes and what are called these three two one loans where basically sellers are buying down the home buyers interest rates for the first one two and then three years so in other words it's kind of I'm just going to oversimplify this imagine you go in with a today interest rates there's let's say seven percent and a home by a home seller's like all right well I'll buy you down to five percent for the first year six percent for the second year at seven percent for the third year and then it makes it feel like the home buyer is actually getting a five percent interest rate and what's interesting about that is if they are getting a five percent interest rate right now they might have the expectation that they could just refinance in a year maybe back to a normal five percent thirty year fixed rate mortgage that kind of stuff makes me nervous when people start going into deals suggesting that they're going to be able to refinance in the future I get very nervous because now you're speculating that you're going to be able to have a payment that you're comfortable with in the future now the good news and that's something that's different today than into 2008 is that today you actually have to qualify for that seven percent rate in three years whereas back then you'd only have to qualify for that lower rate that teaser rate so to speak but it's an eerie similarity to 2008 that I don't like seeing or hearing about mostly because I also feel it's sort of supporting home buyers to say okay well if the seller's gonna give me a five percent rate for a year great then I'll buy right it's supporting this sort of misaligned pricing that we have in real estate because we still deserve a little bit more of a punch in the stomach for home prices to come down and that process has begun now let's go ahead and continue to see what Nick here says because so far we're only 15 seconds into his video and I've already had a lot to say 22.
even bigger than the drops that occurred in 06 before the last housing crash and these investors particularly the Big Wall Street investors are Running Scared from the U.S housing market right now which is of course going to cause home prices to drop by more because these investors were what was supporting a lot of local housing markets in a Metro like Las Vegas but okay let's just pause there in most areas throughout the United States before the pandemic investors for residential home purchases represented 15 to 20 percent of home buyers now in the pandemic because home prices really started skyrocketing in the second uh probably the first half of 2021 is really when we saw the run I remember doing weekly Market updates on the housing market in April of 2020 and saying I don't think the Market's going to go down I think it's going to go up and I put my money where my mouth was I ended up buying eight properties in Southern California each worth over six hundred thousand dollars six hundred to about a mill uh I bought eight properties in just 2020 because I saw the numbers were bottoming out I'm like I Gotta Buy which was great because in 2021 everything exploded I mean home values went up somewhere around 20 30 percent in just a year it was insane and unsustainable part of that reason was you had investors making up instead of 15 to 20 percent of home buyers you actually had investors ending up making up as much as 25 of the market so yeah on one hand it is true investors absolutely helped prop up the market now are they the sole reason the market has propped up of course not most properties still sell to home buyers in a single family and that ratio is now actually turning back to home buyers where now you're getting back to only maybe about 15 to 20 percent home buyers as uh or or being investors and that's pretty typical and sort of this sort of uh in state of the economic cycle all right let's keep us according to Redfin there was a 67 decline in investor purchases in Vegas a 67 decline in Phoenix 63 in Atlanta 62 percent in Charlotte and an interest what's really incredible is Vegas and Phoenix were also the bubbly markets the most bubbly markets of 2008 they got hit the hardest Florida also was considered one of the bubbly 2008 markets but interestingly Florida today actually seems to be much more resilient than the Phoenix or Vegas if you look at home prices in Florida you're actually starting to see some areas like West Palm Beach in Tampa start trying to rival prices where they were last year and potentially they might be able to avoid declines that's not what you're seeing in Phoenix or Nevada I'll talk more about them shortly interesting question is why are these investors bailing on the housing market and it's simple folks they're running out of money data from finsite shows that from the third quarter of 2020 to the second quarter of 2022 these Wall Street investors raised over 32 billion dollars in mortgage-backed Securities to go buy homes in the U.S housing market but here's the problem now folks over the last three quarters you can see they haven't really been able to raise any money in the mortgage-backed security market and that and this makes sense there's a massive liquidity crunch happening in markets we do not have as much money on one hand because the stock market has fallen the bond market has fallen people who are Diversified whether they are institutions or retail individuals have lost money in markets last year unless you were essentially wholly positioned in a position short or cash your equity in bonds or real estate has gone down which gives you less money to take and diversify into real estate this is pretty typical that lack of funding is one of the big reasons why these Wall Street investors can't buy as many homes right now is because the capital is not available to do it make no mistake this is great news for you as a regular home buyer out there The Leverage is now swinging back into your favor in the U.S housing market and in many city and this is also true look the more prices go down the more of an opportunity you have to buy lower now I think there's still a lot of patience to be required here especially because I'm of the belief that the rental market needs to fall first before housing to really hit its Bottom now think about that for a moment I just visited uh if this was actually my second time visiting the Phoenix Market uh Gilbert East Mesa Market kit and I'll be exploring the rest of the market as well here in the near future but this was my second time visiting the market in just the last about six weeks and what I noticed between my first time visiting Phoenix and my second time visiting the Phoenix area that East Mesa and Gilbert area is I noticed a substantial increase in the number of four rent properties and the number of single-family homes with for rent concessions concessions like hey first month free which is basically the same thing as reducing your annual rent for a property to get somebody in to get a property rented and that is the starting indicator that rents are rolling over we're not certainly not getting the rent growth anymore that we used to get especially as much more new construction is being built but on top of that you also have the expectation that so much additional Rental Supply is likely to lead to rental price declines the more you end up having rent price declines the more uncertain to you create for investors the more uncertainty you create for investors the less investors want to buy and as we saw earlier in the video when you have fewer investors buying you have less demand and competition for homes which could drive home prices down so it's not just interest rates going up that can actually drive home prices down it's actually rents declining thanks to an explosion in new construction and the availability of rentals whether that's short-term investors like Airbnb investors realizing they can't make their airbnbs work so they're renting out properties it's flippers who realize they can't sell their properties anymore to profit so they're resorting to renting them out it's long-term homeowners who do not want to lose their baked in low interest rates so they're renting out their properties or its institutions panicking to get properties rented I actually think the real pain in real estate doesn't actually come until you see rents full now I think that actually creates a phenomenal opportunity for those who are preparing for that obviously I have a real estate startup called House hack and that's exactly what we're doing now I have I have more of a bullish mindset on real estate than Nick does but I think we're still in the early phases of that downtrend especially since we haven't really seen rents roll over yet and that is going to change the investing game we want to see where those rents settle that way then we can compare those rents to prices and markets and see what kind of caps and cash on cash returns are we actually looking at when we're investing in real estate so in other words more to go let's keep listening a little bit these home buyers are gaining a much higher share of the home purchases however everyone there's still a big problem in the U.S housing market that's going to cause price is to go down by more in 2023 and that's the fact that the regular home buyer you guys out there you're not really buying many homes either right now there is a mortgage collapse occurring right now now I thought this was a great chart that he ends up putting up it's a basically the mortgage application chart and it there's been this this fervor or this idea that hey you know people are coming back to renting homes or or rather applying for home mortgages in January and you could see that sort of Pop uh in the data here on the right but it's still a relatively terrible level that's compared to 2010 and 11 which is really your bottom of the market over here and even though you had a pop of applications in 2012 and 13 you still had low applications now low applications does not necessarily mean low prices because keep in mind that you had over here in 2013 and 14 you actually had very very large real estate price gains so this is where I'm going to moderate this and say Hey you know just because we have fewer the housing market is going to fall but it is interesting to see that inflection point from Insanity of everybody wanting to get into uh real estate after the covet era uh when when rates were really cut to zero but then also you you see this this January sort of spike in data which we've seen in so many different data sets suggesting that oh well maybe maybe home buyers are returning right so it's quite interesting someone here asks uh or says uh rents didn't fall yet exactly that's my point that's like literally the point is is that you're seeing new rents start turning over potentially lower but broadly in many markets you're actually not seeing high or or lower rental comp like sold properties yet I'm saying sold in quotes here because really the rental property I consider rented properties rented right uh but closed rental comps so in many markets you're not really seeing the declines yet but you're seeing the backup of inventory and you're starting to see rental concessions and Rental concessions are always very difficult to use when you're trying to evaluate the real estate market because think about it this way if you have properties that are renting for 2400 a month but then in the memo it said by the way we gave them their first month free well that's really like renting the property out for twenty two hundred dollars a month but that rent price decline doesn't actually show up in the data yet which is kind of incredible now I personally think a lot of the data we're looking at is setting up for basically what I thought when I started my housing startup which was buy time would probably be Q3 to Q4 of 2023.
so far I'm still targeting Q3 Q4 2024. I haven't delayed that but I'm very cognizant of what's happening I'm not going to get into Q3 and if there are still red flags that things are still rotating down I'm obviously not going to pull the trigger and purchase in Q3 if there's still red flags but so far I'm still of the belief that by Q3 Q4 we could potentially as long as inflation indicates that yeah we're finally starting to see Eternal inflation we might then more convincingly see a turn in the housing market where maybe this could be a shorter housing market downturn but right now the trends are much worse than they are positive so in other words the market that we've been warning about for the last year and a half in the housing market is playing out we're playing out the pain that you would expect to see in the housing market now we've already seen in many markets home prices down 15 20 this is when you look at for example Austin Boise you're down 20 in some of these markets uh if Florida is really one of the few markets that's holding up uh really where you're still you're only looking at maybe five to seven percent declines but you're starting to see somewhat of an inflection point up so you got to pay attention to Florida some markets in Florida down nine percent nowhere near the twenty percent you've seen in other areas whether that's Phoenix Arizona or Boise or otherwise let's take a listen into this portion of Nick's video here where he essentially charts previous peaks of the housing markets years these peaks in home prices represent the housing cycle and we're coming out of a 16-year cycle from 06 to 2022 where we can now see prices have started to go down and what this graph says is that prices will continue to go down for a long time typically it's actually not what the graph says now look at a full respect for for Nick uh it's clearly an indication of inflection point and while I agree that the housing market is likely to still go down more before it recovers it doesn't necessarily tell us how long that housing market has to go down and as painful as the 2006 Peak to crash seams which implies that we might see a substantial decline I don't believe that we're in that same environment unless and this is the one thing that I think could really push us down longer is if we get institutional liquidations I think that's really what we're going to have to see because I think we're much more likely to see a rental collapse than a continuation of a very large housing value collapse however that rental collapse could pull down the housing market a little bit more as people demand a higher return on their invested Capital so let me explain that for a moment as I said earlier in the video if you have Airbnb landlords who aren't making it anymore on Airbnb turning around and resorting to long-term rentals you have homeowners with locked in interest rates resorting to long-term rentals you have maybe eye buyers like the open doors or whatever who realize they're the flippers who realize they're they were idiots for buying at the values they did and now they have to rent out their properties in my opinion you're much more likely to see a substantial real estate rental collapse as the next phase of this housing market turn now again don't get me wrong housing values have already in some markets Fallen 20 percent now I think to get to that next leg lower we need to go through that rental collapse everything however is going to be really dependent on the Federal Reserve the Federal Reserve is able to convincingly say that they have conquered inflation by let's say May June July August and bond yields start falling on the 10-year treasure yield from about where we sit now 3.8 to 3.9 percent down to under 2.75 what you're going to do is very quickly put a floor under the housing market and that chart does not actually necessarily have to go down for very long because you could end up seeing home buyers back to interest rates in that four to five percent rate and now you have home buyers who have substantially more cash than they've previously had remember someone who previously had two and a half to five thousand dollars in their bank account out now sits with somewhere around 12.8 000 on their bank account people have substantially more excess savings than they previously did and even though the savings rate is lower today people the savings rate is lower because people have more and because people have more once we get that strong inflection point to the downside in rates I wouldn't be surprised to see a floor set under the housing market that's very very uh different from 2006.
now remember the most dangerous words in investing ar maybe you have sort of this shorter double cycle right where the housing market moves down uh that inflation comes down then the FED Cuts rates or stabilizes rates and and bond market yields full to where all of a sudden mortgage rates fall and people come back into the housing market but then all of a sudden inflation comes back and you sort of get a double dip that's entirely possible as well certainly not my base case but I do believe that we're not looking at the kind of correction that we saw in 2006 which is really where you saw home values fall anywhere between 40 to 50 percent some condo markets were down as much as 55 percent in housing and so consistent with what I've been saying for about the last year I think most markets are going to experience a 15 to 25 decline in pricing some markets might end up having another squeeze in there where you go up to about 30 and of course some markets will end up being lower maybe closer to 12 but on average probably between 15 to 25 is consistent with what we're seeing uh in the data but again that rental crush is something we really want to pay attention to and we're not quite sure yet how those new home starts are really going to affect the housing market going forward that's probably as well is the fact that you have many more year-over-year multi-family housing starts right now as you do single-family housing starts single-family housing starts year over year down 20 percent whereas multi-family housing starts are actually up nine percent and that is another factor that could really weigh on the rental collapse for home values now Nick goes on and shows the affordability of various different areas within markets and He suggests that the first to crash markets are those with lower affordability and so far this is correct with really the exception of Florida take a look at Florida on the right Florida also showing a very high level of home unaffordability the more red areas here however Florida is really a market that so far is still seeing substantial substantially less building and substantially more buying than the other areas on the West Coast West Coast without a doubt is getting hit harder now Nick ends his video by talking about rental vacancy rates and the two areas that he's seeing rental vacancy rates Skyrocket are Las Vegas Nevada followed by Phoenix and I have to say both of those are markets that I've actually visited in person within the last week to look at real estate in as we're educating ourselves for a real estate housing startup and that's redundant real estate housing startup we're housing startup housestack.com anyway uh what we're seeing is exactly that build up of rental inventory and so my biggest concern for the housing market going forward isn't rates going up more it's actually really rate stabilizing which is all the pain you really need and then we're going to get year-over-year comparisons that start showing in the next few months uh oh home prices are falling or have fallen 20 and what kind of fear that potentially creates in the housing market right when all of a sudden people realize that year over year housing prices aren't actually Rising anymore that could create fear here's your year-over-year Redfin housing data and look if we just stabilize at 347 for the National Housing data we stabilize at 347 when we get out here to March and April what will we get out to this area over here being what is this this is April right here here's March you get into April well April you're going to be comparing to 383 comps from a year ago with 347 divided by 383 is a decline of nine and a half percent what's that going to do to people's psychology and buying and at the peak we'll be comparing 347 assuming no further declines to 389 which would represent about an 11 Decline and that's on a national basis right now if this rotates up and we actually catch up yeah maybe you have a flat housing market but it would really require home prices to start Rising again and I don't believe that is likely if rates stay stable where they are so rate staying stable where they are home prices are potentially likely to stay stable where they are once we get year over year fear that sets in along with the rental value Crush ee real estate values leg lower another five to ten percent for a total of potentially a nationwide 15 to 25 percent correction that in my opinion then gets a floor set under it once 10-year treasury yields fall under three percent now we're not sure when that's going to happen so that is going to be predicated on the market but with one of the large signals that I'm looking for so this summer I think will be demarcated by potentially the largest amount of fear for home buyers but also the least amount of competition from investors as rental values fall now the risky part about that as an investor is you don't want to get into buying properties if you're not confident where those rental values are going to go so that's something that I'm definitely paying attention to as a real estate investor myself and I'm very anxious to see what happens although I am patient and I think this Market is really demarcated by a need for patients if I was a home buyer right now or an investor as sort of just broad advice as a real estate broker I'm also a financial advisor but this isn't personalized Financial advice for you because I don't know who you are but it's sort of broad advice I would be pausing right now I wouldn't necessarily be super anxious about buying right now even if I saw something that I thought was a good deal based on recent comps or based on oh I could rent it out for X I would be pausing because I still think some of that pain and Rental comps coming down is ahead of us and then that fear for home valuations is ahead of us so so yeah in some markets was there a January boost in enthusiasm of course but that's also very typical because there's usually the lowest supply of homes available in January and that supply of homes really starts Rising throughout the year and the same is true for buyers most buyers aren't actively looking during the holiday season so I wouldn't be surprised to see an increase over time over the next few months in active listings usually you get your your Peak somewhere between March and may now combine those three factors number one Peak availability in May Peak fear from year over year comps in May and potentially still high rates combined with rental comps falling May is the end of Q2 right there with June May June is going to be an interesting time for the real estate market so I'd be marking my calendar for May June and it's not clear if May June is going to be the perfect time to buy or December will be the perfect time to buy but I think May June is going to be when you hit Peak fear and what that does to prices and your ability to negotiate could be juicy enough to actually start diving in and that's what we're looking at with my startup you can learn more about the startup at househack.com we're raising from accredited investors now we've got a non-accredited round that probably is going to launch in April which happens to be perfectly right before May will probably close our funding round before we buy uh probably by May the end of May we'll close out and then we'll be in buying mode so we're really really excited we've got some phenomenal plans for the housing startup anyway again go to housewife.com to learn more this video isn't a solicitation but uh yeah wow there's a lot going on in housing and I think it creates fun opportunities for everyone and ultimately everybody should be exploring getting into real estate investing there's a reason I have a course linked down below called at's because I think the easiest way for people to become a millionaire is through real estate and the opportunities now are starting to look pretty juicy
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