The Impact of the Outbreak on Real Estate

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코로나 확산 속 부동산 시장을 분석. 12월~1월 매물(재고)이 7년래 최저 수준이고, 공포로 매도자·매수자 모두 줄어 당장은 가격 상승이 아닐 수 있으나 저금리(30년 고정 3%대)와 수요 억눌림이 겹쳐 3~6개월 뒤 가격이 5~15% 오를 수 있다고 주장. 할인 매수(wedge deal) 기회를 강조하며 자사 프로그램 홍보가 섞여 있음.

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01. today started like any other typical day I woke up at 5:00 a.m. to go to Lowe's to see if they had any n95 respirators in stock because of the corona virus and they did not so instead I came back and decided to make some coffee with my two-year-old Max and while he was sitting up on the counter watching the coffee drip I got to thinkin and dozing off Italy is closing at schools and daycares Spain has had the corona virus spreading for three weeks and LA County just declared a state of emergency and all the while Here I am making coffee worried about the impact the corona virus is going to have on real estate and I finally figured it out but first I just want to be clear I don't want to sound insensitive the corona virus is bad I have a wife with a severe asthma and the last thing I want is corona virus coming over here but the odds are corona virus is going to continue spreading like crazy because for some reason we're really bad at washing your hands and not touching our face with that said though real estate might be the best place to make money during the corona virus outbreak for the following reasons number one competitive removal number two the numbers and three of the volatility of real estate so let's explain all of these in detail on today's meet captain rapport where I report news that makes the corona virus is a business of fear and we don't have to go far to evidence of that just take a look at the stock market and what has been going on last week we had an entire red week on that Friday I suggested you get out there and go buy some stocks we had a green day Monday followed by a red day Tuesday and now we've got a mixed day Wednesday it's a mess there is no shortage of fear but let's look at how fear affects real estate and how we're gonna be able to make money from knowing the right information about real estate now the first thing we want to pay attention to is something known as housing inventory this just basically means how many houses are on the market this could apply to multifamily real estate just as well a single-family real estate and the easiest way to look at this is by pulling up something like the redfin data center and use that to see what housing inventory was in December and January across the country and compare it to prior years and if we do that we'll see that housing inventory in December and January of 2019 to 2020 was lower than any point in the last seven years which that's not even considering the coronavirus yet because the Corrado virus has only started having its impact presumably here and made too late February and that data isn't even showing yet on the red fin data center but let's start with the conclusion right here what happened in the spring of 2013 when inventory was at its lowest level that it had ever been in since before the Great Recession well prices jumped over 20 percent in April and May in two months prices went up 20 percent because inventory was at the lowest level that had been in in 10 years now inventories at the lowest level it's been in in seven years and the coronavirus is about to remove even more inventory from the marketplace now the redfin data center has not yet updated inventory figures for February and it's quite possible that they haven't because the coronavirus is having an outbreak in Seattle and Redfin is based in Seattle okay that might okay I hope that wasn't insensitive but I'm serious things are going nuts in Seattle even firefighters are now being quarantined with flu-like symptoms because they service people in the eldercare homes who are dying of the corona virus this is serious and now let's look at the practical impact that this is having to real estate in addition to some already scary inventory numbers let's just think about something totally practical something I think we can both relate to if I was gonna sell a house that I mean right now do I want people walking through my door with masks on probably not in fact I think I would be very likely to say you know what let's just wait for this whole coronavirus thing to blow over ASAP please because I don't want it then I'll sell my house which guess what that practically means well practically that means they're going to be even less people selling real estate so inventory for sellers is going to go down and the sellers also usually go out and buy because usually when they sell their home they need another place to go to and a lot of them go buy of their homes so they represent a lot of the buying pool and see that's where things get interesting if now all of a sudden fear strikes real estate less people are going to put real estate up for sale less multifamily will come up for sale less single-family real estate will come up for sale just because people don't want to be around other people after all real estate is a people business I know that because I've been a broker for ten years and it's all about shaking people's hands shake shake shake yeah a good idea shake shake shake getting tired here yep shake shake shake oh my eyes are itchy now initially you might be thinking to yourself wait a minute if inventory is low and now less sellers are going to be selling real estate isn't that gonna drive up prices no here's why the coronavirus is gonna screw up the typical supply and demand sellers usually become buyers because when they sell a place they generally need another place to go to and guess what we're also seeing dramatically less of right now buyers because how many buyers do you think little walk through multifamily apartment buildings looking for something the house hack or how many buyers want to go to open houses and go meet the rest of the purpled right now less obviously open houses are still happening obviously there's no buyers in the marketplace obviously there's still sellers in the marketplace but you're going to see less sellers and less buyers so I actually don't expect this lack of inventory to change pricing just yet follow this with me and you're gonna see exactly how you're gonna be able to make money because this could be a really big opportunity to make some money quick money too so for in a situation where there's low inventory and there are less sellers and less buyers maybe we won't yet see price fluctuation just yet we won't see those prices going up yet we gotta ask ourselves what kind of properties are going to sell coronavirus or not generally the kinds of properties that are going to come up for sale are going to be distressed properties foreclosures trust sales probate sales distressed multi-family deals all of these types of properties will continue to hit the market because they have to people oftentimes don't have a choice people can't afford to have vacant real estate sitting around or distressed real estate sitting around they will sell it no matter what is going on and it's gonna be up to people like you and me to put on a mask and go buy those things and no I'm not talking about a blue velvet mask either which on a practical level this now means less sellers of move-in-ready properties the same amount of fixer-uppers less buyers looking for move-in-ready properties and probably less investors willing to go hunt for multifamily or distressed single-family real estate because no people are trying to stay away from the coronavirus so all of a sudden when you remove all this what are you left with you're really left with distressed properties that are probably going to hit the market during the time of the coronavirus and less competition to buy those deals which means right now could be an incredible opportunity to take advantage of what I always talk about on this channel and in my real estate programs linked below and in my live streams five times per week where I answer all of your questions links down below to join those wedge deals or buying below market value real estate during this outbreak might be a really profitable move but housing inventory and a lack of competition isn't the only thing that is making wedge deals look really attractive right now which in case you don't remember a wedge deal is any kind of deal that you could buy below market value in real estate there are four types of those but the basic premise is if a neighborhood has houses or multifamily deals selling for four hundred grand a unit if you could go in and buy them for 300 grand a unit for whatever reason grow - it's a fixer whatever you're buying in the wedge you're creating profit and insulation and safety that's what you want it reduces the odds of problems behind below market value real estate is the only way we should be buying real estate but what else is happening what is another thing that is changing the real estate landscape right now the second crazy thing happening in real estate right now has to do with mortgage interest rates you've probably already heard that the Federal Reserve reduced the discount rate but you might not know yet what's happening to real estate and mortgage rates they plummeting okay like real bad let me tell you how badly mortgage rates are plummeting right now and when I say bad I guess I should say good how goodly mortgage rates are plummeting right now a 30-year fixed-rate mortgage right now is available for you right now at just 3% which is absolutely insane which here's what's really crazy about 3% interest rates if you pay 3% in interest and let's say you already itemize your taxes and you're gonna take the tax write-offs I come with owning real estate and tax benefits and all that 30% - your tax benefits of let's say 40% means you're probably only paying about 1.8 percent in interest to own real estate 1.8 percent Robinhood isn't even paying you that on your savings and you could pay less than that to have a bank finance your real estate purchase which you y'all know you could get into real estate with like 3% down 5% down and make it as if you're putting 20% down not have mortgage insurance because you're buying right you're getting good deals you're following the principles we talked about on this channel it's it's like folks it's like free money it's insane right now so what do 8 year lows and mortgage rates mean for us well it means that as long as we're willing to put on that mask and go shop for some coronavirus real estate we could take advantage of those distressed properties now at even cheaper prices thanks to the discounts we're getting from epic Leeloo mortgages now initially you might again be thinking well wait a minute kevin isn't that just going to make prices go up well that's where we get to part three even though refinances have surged a twenty five percent in the last week alone because of these epically low mortgage rates real estate volatility is so slow that it's going to take a while for price increases to take effect sure some people might be able to pay a little bit more money because their rates are lower but it generally takes a little bit of time for real estate prices to actually adjust upwards and for appraisals to allow people to pay more and for people to feel comfortable paying more basically it's probably going to take three to six months after the coronavirus blows over for us to see a substantial boost in real estate prices and when I say a substantial boost if mortgage rates stay this low and demand stays pent up because people aren't buying and selling now and they're delaying when they're buying and selling there's a good chance that real estate prices could go up substantially three to six months after the coronavirus blows over the first way to measure this is by the rule of 10x the rule of 10x says if interest rates go down half a percent real estate prices will go up 10x or 5% so just because of interest rate declines alone we might see real estate prices go up 5% but because of pent up demand that the coronavirus in my opinion will be causing and in addition to that already very low inventory I think this 5% could easily turn into 10 to 15% increases in prices thanks to the coronavirus very low inventory and ultra low rates now I'm not here to prophesize over the sustainability of this all I'm trying to say is if you want to get in you want to get in before that bump just to make that abundantly clear let's say this was 2019 real estate pricing here well we might be 2000 20 right here and we might be somewhat flat because of the coronavirus that is we're having this sort of downward pressure put on us not only because of inventory which usually pushes prices up but because of the coronavirus we see prices held down and dampened down and we're delaying this up actually until later and then what's going to happen is because of a combination effect of oh my gosh look how low rates are oh my gosh look how low inventory is which is this arrow right here how low rates are which is this arrow right here and hey honey we kind of delayed all of our actions by six months because of the coronavirus let's now sell and buy we're gonna see another push upwards this is exactly what we might see the three to six months after the coronavirus takes effect and so the natural conclusion here is if you want to buy real estate and you want to buy real estate below market value imagine if you can now buy that real estate at mark RS coronavirus prices below these prices extrapolate what that looks like over here all of a sudden you're buying real estate for a substantial wedge below market value folks this is why if you have not yet you need to join me in the program's link below like I've done with a little soft pitch you gotta join me in the live streams because you got a go get out there and get some of this money because this is ridiculous and look even if you don't want to join me in the programs down below do what you can to make sure you're pre-approved you've got your credit in at least a decent position so that you can replace your landlord you can buy a place with like a 600 credit score not saying you should but you could instead hit those links long as you deposit just a hundred dollars to free stocks gotta take advantage of that look for down payment assistance opportunities look for fixer uppers and folks get yourself a mask and go shopping for some real estate because this could be an opportunity of a lifetime thanks so much for watching stay safe and until next time you