The 2023 Real Estate CRASH.

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30년 고정금리 구조 때문에 2008년식 주택시장 붕괴 재현 가능성은 낮다고 주장. 2023년 3~6월경 바닥을 찍고 가격이 회복 중이며, 매물 부족으로 매수 경쟁이 나타난다고 진단. 금리가 정상화되면 월 주택구매비용이 임대료보다 낮아질 수 있다고 보고, 자산가 매수자들이 들어오는 중이라 설명. 다만 보이시·오스틴·피닉스 등 일부 시장과 에어비앤비·상업용 공간에서는 하락 압력이 있다고 언급.

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01. it's time to talk about the famed real estate crash when did real estate prices actually bottom what are real estate prices doing right now and could real estate be the cause of the current recession or not recession let's talk about that in this video first let's understand where we came from we came from interest rates below three percent on a 30-year fixed rate mortgage sitting around 2.75 percent with over 90 percent of individuals having an interest rate of under six percent over 70 percent having an interest rate of under four percent most Americans are doing pretty dang well with their home mortgages and what makes America different from other countries in America today different from the past was what I just described in most other countries you get what are known as five or ten year fixed rate terms which means you have to refinance every five or ten years and you don't get this 30-year fixed trade mortgage that increases the pressure to sell or to refinance and if you can't refinance than to sell or make the payment if you have to make the higher payment then you end up getting hit as a consumer in America with the 30-year mortgage we've actually been relatively resilient from this sort of pain if you look at the housing market in the United Kingdom it's in the doldrums down 20 plus percent the same thing in Canada and it's still down by those levels if anything in some cases it's actually worsening whereas in the United States even though interest rates are going higher home prices aren't actually worsening anymore and this feels very different from the last Cycles in the last cycles and it's always dangerous to say the proverbial this time is different but in the last cycle you know we we had a massive economic recession led by the housing market and that was because most individuals were actually on a variable loans in other words as interest rates went up they immediately were within six months I had to start paying higher interest rates were introduced to more expensive housing using teaser loans or the inability to actually qualify for loans using non-qualified mortgages which now most mortgages qualified Dodd-Frank ability to repay requirements exist today for both qualified mortgages and non-qualified mortgages whereas back in 2005 thanks and seven you did not as a borrower have to have the ability to repay you could be a teacher and get a loan for a 1.5 million dollar house because you said you could afford it you didn't have to prove your ability to repay massive difference and again most did not lock in the 30-year fixed rate mortgage whereas today we're locking the 30 year fixed rate mortgage which potentially establishes the idea that the housing market crash may actually be entirely avoided as long as rates do not continue to stay at this level which they may for too long and that is because we are preventing price Discovery by preventing people from selling we're preventing inventory by preventing inventory we keep pricing stable because people continue to buy properties based on comps and there's no forced selling of distressed properties because people's mortgages are going nutty instead people's mortgages are affordable not new mortgages new mortgage affordability is off the charts but the number of buyers actually financing homes at these new mortgage levels is extremely low you're down 30 from last year and even last year's levels were down from the year before that so what's actually happening to prices well there are two pieces we need to cover there's a Wall Street Journal piece and there's a Morgan Stanley piece and what I'd like to do is start with the Morgan Stanley base Morgan Stanley's prices reapproaching Peak well this is really interesting and we should analyze this the way I'd like to start analyzing it is that I actually like to look at the chart uh and so what you can see is you can see here pending home sales down 14 year over year uh some markets are down even more than that new home sales are up that's great this tells us about purchase applications these the number of people going for mortgages the number of people actually buying we know those numbers are down and that's fine but what we think is most interesting uh is actually the following listen to this I'm trying to find exactly where it is where is it here it is uh we expect to return to positive prints with next month's case Chiller real estate home price index actually showing a positive read for Real Estate home prices on a year-over-year level again with our forecasts now showing a base case of a zero percent gain in real estate prices in a bull case of a five percent elevation in real estate prices wide do they believe this well they believe that real estate prices basically bottomed in March I'm trying to find exactly where that chart is we're going to end up finding it but anyway they believe that real estate prices have ended up bottoming in March of 2023 we'll find in a moment uh and when real estate prices bottomed in March of 2023 they actually started recovering from March of 2023.

02. so you had this decline from about May of 2022 to about December to March so December 22 to March of 2023 and since then you've actually started having a recovery and that recovery is really weird because so many less homes are actually selling because there's so few so many fewer buyers and this is having a really weird dynamic on Supply you're actually in many markets seeing the months of supply of homes go up not down now that's crazy people say like Kevin that's crazy what do you mean the months of Supply is going up there are way fewer homes on the market that's true but they're also way fewer buyers and that does still create a risk for the real estate market remember quick math how this could work if there are 100 homes on the market and 20 homes sell every single month then when you divide the two you have five months of inventory on the market if now you have 70 or let's make the math easy let's go with 80 homes on the market so 20 less inventory but you have half as many buyers uh you actually now have eight months of housing inventory so housing inventory actually went up by over 50 percent as your buyers dropped by 50 because inventory is down 20 isn't that crazy it is and that is a risk factor for yes prices but only if price Discovery is forced forcing price Discovery is usually done by short sales foreclosures and distress sales we're getting very few of those right now in fact in a lot of markets specifically like in the San Diego Market you're actually seeing substantially more competition now than you saw at the beginning of the year implying actually a market where buyers are saying okay like the worst is behind us it's time to continue buying and in a weird way you're getting asset Rich home buyers coming out and buying more properties not less The Wall Street Journal just released a piece indicating that the fall and home prices may already be over home prices aren't falling anymore after declining on a year-over-year basis for five consecutive months the longest run in 11 years home prices Rose in July this aligns with the idea that the bottom was probably somewhere between March and June somewhere around there March and June of 2023 was probably the bottom bottom uh although December was potentially considered a bottom in some markets but it is somewhere in that six-month region seems to have been so far where that inflection point is which I've been waiting for that inflection point and that's one of the reasons we've started buying with house Hack That We're cautiously buying right we're not like oh my gosh we need to blow everything because we actually don't think that real estate prices are going to escape we think real estate prices will probably be somewhat volatile and relatively more neutral we don't see a big crash just like we don't see a big runaway that's just Based on data we're looking at right now what we're seeing in the markets I combine data with actually being in markets talking to Realtors and seeing what the competition is doing there's nothing like having a read on the housing market like actually writing offers and seeing what deals you're winning and what deals you're losing that gives you a great perspective for what is actually happening in the market not what the Twitter trolls want you to believe is happening in the market because I'll tell you the Twitter trolls are really good at taking things out of context and we could look at some of these things for taking things out of context and and potentially add some context to some of the things that are being said mostly because generally what you find is that the folks on Twitter are going to take charts that say that tell you about uh what housing affordability is doing for new home buyers who are financing all of their homes but those charts generally completely forget that there is a very high likelihood that you could end up with a greater wealth Gap than you've previously ever had before and that's scary and it should be scary for people it's sad we don't want the wealth Gap to widen but it actually can widen and this is why when you see charts like the buying versus renting charts like this here's a buying versus renting chart the only reason this chart exists the way it does is because interest rates are as high as they are right now but if interest rates normalize which we expect them to you might actually end up seeing the monthly cost to buy a house be lower than the accelerated price of what rents have done notice this if you drew a trend line on the increase of rent prices notice this inflection point in rents right here this inflection point in rents is driven by fundamental increases in rent and wages whereas this is driven by artificially High interest rates right now yes we've previously had artificially low interest rates but this is artificially high right now to deal with the money printing that occurred as interest rates come back down you probably will actually see the monthly cost to buy a house lower than the cost of rent which will be pretty remarkable and so that's why asset Rich buyers are actually buying now because they expect that will actually be a Tailwind to home prices in the future and it might take a couple years might take three years for rates to come back down that's okay but anyway the Wall Street Journal suggests here uh that a residential the residential real estate downturn is turning out to be shorter and shallower than many housing economists expected scarcity is a big reason High interest rates have promoted homeowners to stay put rather than buy new homes or take on expensive mortgages resulting in an unusually low inventory of homes for sale many potential home buyers have given up their search because mortgage rates are just simply too high at a two decade High sure mortgage rates are ridiculous right now seven eight percent is very very expensive right now in August prices in 30 of the 50 biggest markets actually hit a record high according to Black Knight now you also have to keep in mind you have to add inflation an inflation adjustment into some of these prices you know you look at oh here's the chart uh this this gives you sort of your your chart yeah look at that so it kind of shows you a bottom march to May that's what I've been looking for uh and here's your inflection point which you're finally reiterating right now that doesn't mean you can't be volatile that's why you want to be careful but you want to watch this but what's fascinating is if you look at an eight hundred thousand dollar house today and you take off you know uh well let's do it the other way take a 650 000 house and you add 20 inflation which we've had that's a 780 000 house nearly 800 000 house so it's kind of like 800 is the new 660 ish it's scary but it's just the way it is you kind of have to like reprogram our mindsets it's bizarre but anyway uh and it's probably I mean the inflation probably isn't going to go away you know it's the same thing for grocery prices and some of the other prices that we're just dealing with and uh but anyway other economists have been torn uh I have torn up bearish forecasts you know my belief was that prices would fall between 10 to 25 percent uh and they did in many markets you look at Boise you look at Austin you look at Phoenix these markets were down 20 they've just started recovery now some of these markets are only down five to ten percent uh it's pretty incredible but anyway uh new listings of homes for sale are so low that baiting Wars are still breaking out yes in move-in ready properties you're getting a lot of bidding wars for move-in ready homes and it's another thing that we're consistently seeing is that move-in ready homes are more desirable for most home buyers right now as opposed to like hoarding fix droppers or whatever specifically because people don't have a lot of money left to actually do the renovations and that's hurting people even more from being able to get good deals in real estate you know I teach in the zero to millionaire course how to actually do what I do to buy real estate uh you know I think it's I think it's so jaded but there are a lot of people that are like oh you know if somebody's not going to tell you their secrets I literally tell you all my secrets uh it's like because there's I have an abundance mindset there's there's so much opportunity out there all of them are on the zero to millionaire course which by the way we're bringing back our partnership with I'm not allowed to say in the name but let's just say a big box retailer where we can now get five to Seventeen percent off the products we buy there for home renovations should be coming back this week which uh will be a course member only benefit which we're really excited about uh and it's gonna be great for househack as well because you're doing a big fat discounts for house hacks as well house hacks as well but anyway another thing is interesting is that the pace of affordability for homes has actually deteriorated again see like this is a chart here and basically when the line goes up from the private previous line it means that things are getting worse instead of better and it means unaffordability is actually even getting worse now than it has been and it's already been bad uh and then that's because we've recently seen oil prices go up and rates go up higher uh it's unfortunate but it's it's exactly what's happening uh Builders building more but uh even starts not that great what you're actually fighting is more starts in 5u and it's under construction than single family I thought that was somewhat interesting oh there we go here's another chart year over year change in median prices this shows you that bottom right there in March to May all right march to May uh and and I waited to for that inflection to really confirm itself uh and then we started buying in August so uh you know maybe could have been a couple months earlier but honestly I think we're pretty pretty pretty close and there's still so many deals to get I mean each of the deals we bought so far has been you know a home that people can't live in hoarding homes uh water leaks whatever and they're each going to be probably 120 000 wedges each I mean you're just plucking them up it's kind of incredible you could do it too you know so anyway these are some of the things we wrote down but uh it's very interesting the the real estate crash uh that the Bears are really calling for isn't happening here I will tell you though where there is some pain organ and Boise there's pain and the Airbnb market and then obviously office space so you have more individualized pain like I'm seeing more institutions off offload airbnbs and short-term rentals and corporate rentals and I'm also seeing more pain uh in certain markets again like the Boise's uh and uh and those may turn around but some of the more coveted levels areas