The Real Estate Crisis is Worsening.

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coupon code expires August 26th hey

everyone me Kevin here the housing

market has started to feel like it's

been straight up since about 2011 and

the fact of the matter is it has been if

someone bought a fixer home in 2011 for

305 000 with a little under twenty

thousand dollars down they would have

seen that little under twenty thousand

dollars turn into over 250 000 in profit

after fix up repairs taxes expenses and

everything that's like a 12x more than

the 3x we've seen that the stock market

would have safely returned unless of

course you'll loaded into margin which

is a great way for people to absolutely

get destroyed this is why I don't

advocate for margin now I want to Circle

back to that scenario towards the end of

the video because we've got some really

interesting shifts happening and there

are some that you really want to pay

attention to that we haven't actually

seen a flip-flop this way uh very much

so take a look at this all right so

first after the 2008 great financial

crisis and housing market crash some of

the first buyers back in the market were

institutional home buyers in fact Warren

Buffett famously said in 2012 that if he

could buy as many single-family homes as

possible throughout America that is

exactly what he would do equities are

still cheap relative to any other asset

class but they're not going to say the

single-family homes are cheap now too

yeah single family homes but yeah

if I had a way of buying a couple

hundred thousand single-family homes and

I had a way of managing the management

is enormous it was really a problem

because they're one by one they're not

like apartment houses so but I would

load up on them and I would I would take

mortgages out at very very low rates but

but uh if if anybody is thinking about

buying home five years ago they couldn't

buy them fast enough because they

thought they're going to go up and now

they don't buy them because they think

they're going to go down and interest

rates are far lower uh it's a way in

effect to short the dollar because you

can you can take a 30-year mortgage and

if it turns out your interest rates too

high next week you refinance lower and

if it turns out it's it's too low the

other guy stuck with it for 30 years so

it it's a very attractive asset class

now of course Warren Buffett is a famous

value investor when he sees value he

goes and buys and today you have the

opposite of that you don't have a lot of

value in real estate in fact you have

the chairperson of the Federal Reserve

telling home buyers that they're better

off pausing and waiting for a reset

before buying you know I would say if

you're if you're a home homebuyer

somebody or a young person looking to

buy a home you need a bit of a reset we

need to get back to a place where where

supply and demand are back together and

where inflation is down low again and

mortgages are mortgage rates are low

again so this this will be a process

whereby we ideally we we do our work in

a way that where the housing market

settles in a new place and housing

availability and credit availability are

at appropriate levels these two things

together are really important because it

goes to tell us that when investors and

institutional investors start buying

there must usually be a sign of value

which implies that if they stop buying

then there's a sign of a lack of value

and there's probably also a sign of a

lack of value if the chairperson on the

Federal Reserve is like yeah you may as

well wait right now no these things are

awesome because hey they can tell you

that when investors are stepping back

into the market you could see a sort of

setting of the floor in real estate

valuations now some of this is kind of

what we're hoping is happening in the

stock market right now maybe this summer

ended up having its a stock market low

and a floor has been set because we've

now potentially hit Peak inflation and

maybe we were able to reiterate the

disasters that were going on with still

good earnings potentially actually

setting that floor in the stock market

now leading some to wonder is this bear

Market rally we're seeing in the stock

market or is the floor in now Wall

Street tries to do the same thing with

homes and watching what Wall Street is

doing when it comes to homes is really

important because when they set a floor

in real estate you want to be shopping

now of course Main Street tends to get

mad about Wall Street buying because

well after all it creates more

competition for home buyers but the fact

is it also does create more stock for

renters and of course prevents the Free

Fall of home values because you have

somebody coming in buying when prices

are low which is better than having

nobody buying because then the 2008

crisis could have been even worse so

tracking institutions is important but

it's not just institutions it's also

Small Time flippers and investors they

all help contribute to that floor in

2011 in fact the first home that I

bought went into Escrow in in

2011. now for four months in a row now

here in August of 2020. something

interesting has happened take a look at

this particular chart here this chart

shows that real estate professionals

have actually been pulling back from the

housing market and this has occurred now

for four months in a row that is

investor purchases of homes in the

United States has fallen for four months

in a row last time we've seen something

like that was actually during the

lockdowns of of the covet pandemic

usually though this number is rising and

if you take it all the way back to 2008

you can see that it consistently has

been rising but unfortunately now

something's changing the Market's not

seeing that anymore and this

just gets worse the more we dig see

we've actually now gotten to the point

where institutional investors have

decided wait a minute mortgage rates are

higher home buyer affordability is at

the lowest level that we have seen since

2008 what's actually starting to happen

we'll take a look at what Bloomberg's

telling us Bloomberg's telling us that

some companies like a D-Max investment

properties in Dallas said a

california-based investor canceled 20

contracts after mortgage rates jumped in

June and the company lost about three

thousand dollars in deposits per

property to express interest in these

properties that means investment

companies are now starting to lose money

canceling deals and walking away and

you're even seeing eye buyers which are

basically like flippers like open door

and Redfin saying that they're trying to

aggressively get rid of the housing

inventory that they've built up which

potentially leads to sort of a an

increase of inventory on the market of

homes for sale putting more pressure on

home prices going down and when you

start getting a willingness of these

companies to actually start taking lower

offers rather than keep carrying

properties it's a sign that CEOs and

Corporate America are like ah crap okay

if we'd rather lose money on deposits

and dump property sooner uh at a

potentially lower price deciding that

Corporate America is like yeah no this

is this is definitely not the time to be

buying real estate in fact here's

another one here is somebody the chief

economist for Moody analytics Moody's

Analytics and they say investors can't

make the economics of investing in real

estate work whether they're a flipper

small mom and pop or Institutional

Investor institutional buyers are

opportunistic I'm sure they're waiting

thinking they'll get a much better price

for these properties in the not so

distant future like this is the stuff

that's circulating right now and really

you can't blame this even American homes

for rent and Rhythm Capital are quote

taking a more cautious approach slowing

down their purchases now you look at

this and you're like wait a minute so

flippers are relaxing the institutional

investors are relaxing the total number

of purchases by small mom and pop

investors flippers and the big Corporate

America ones everyone's slowing down

what's going on here well again it's

fear that prices are going down

or could go down even more and it makes

sense because mortgage rates are up

three percent in eight months which

increases costs for homes in fact we're

at the lowest levels of home buyer

affordability that we've had since

2006 which is right before the Great

Recession you've also on top of that got

new construction home buyers

companies of new construction homes

complaining that buyers are canceling

deals or taking a larger credits to be

convinced to take a deal in other words

taking more builder upgrades or at a

higher expense to the home by building

companies or potentially buying home

buyers loans down which just means

paying more money to try to convince

buyers to still buy homes by lowering

their interest rates but you got to

start paying even more and more and more

or people just keep canceling more and

more deals in the event that price is

actually really start falling because

what happens is once you start creating

more expensive housing an inventory

builds up and price drops start ticking

up and people start getting more

desperate to offload homes more quickly

then you start seeing a little bit of a

fall in prices what happens that fall

turns into an oh crap more of a fall is

going to happen now

something here is one word and that may

have already alluded to it but there's

one thing here that makes all of this

even worse and it's a warning that I

gave six months ago

and the neat thing is it could be around

the corner now I want to talk about

what's around the corner but if you feel

like you need help getting knowledge in

order to avoid making Necessary mistakes

that could cost you hundreds of

thousands of dollars and instead learn

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price goes up so folks what's worse than

a price full what's worse than prices

actually falling it's literally

the following it's what Bloomberg has

thrown up on a chart well not in a chart

but they've been talking about it here

it is folks the first word right here

fear has crept into the housing market

replacing the can't lose optimism that

attracted mountains of capital in the

years after the most recent crash after

the nearly doubling of mortgage rates

since the end of 2011 investors are

having to navigate an increasingly

complex Dynamic where both borrowing

costs and home values are relatively

High there's one last potential Silver

Lining a pullback could help settle at

more affordable prices exactly and those

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in there so folks if fear is coming

and we actually have statistics already

turning dirty for real estate what could

happen next and what should we do to

prepare well we'll take a look at that

right after you see this this folks is

the Redfin data center the black line is

2022. those are price drops that is

active listings with price drops yeah

you've got a skyrocketing of price drops

and it keeps going higher nationally

everywhere we're seeing it and yeah all

real estate is local but boy macro

Trends are National or Global take a

look at this median sale prices already

three percent off the top and don't be

so excited that you've got a level there

for four weeks

once fear comes in which now Bloomberg

is saying fear is in it's just a matter

of time for that number to come nicely

down even more remember the largest drop

in real estate prices we saw was 1.9 on

a month over month basis and a 40

percent drop over three years so real

estate drops slowly but the reason it

drops slowly is because of fear and fear

takes longer to manifest and takes

longer for people to react to especially

when it comes to real estate this is why

I gave a warning earlier this year that

look if real estate starts to turn

slightly like tick tick tick and then

you get a Tucker Carlson saying uh oh

real estate prices are now down year

over year you get to like February or

April of next year and what's gonna

happen you're gonna get these news

anchors going real estate prices are now

officially down year over year oh no

once that news spreads then you could

really manifest the real fear and you

want to be ready to buy and so that's

why there are six critical things that

you should consider right now number one

we're in a technical recession more fear

will come next year when that fear comes

be ready to buy I'm giving you like an

over a year heads up do whatever you can

now to increase your income honestly

consider becoming a real estate agent I

know that sounds ironic because you know

it's like wait a minute we're gonna if

we're prices are going down why would

you become a real estate agent because

that's what people need an agent when

it's hard and if you could help people

and hard times understand the

macroeconomics they will be loyal to you

they will buy with you and you'll

massively profit off of it you'll get

rewarded in the good times and the bad

you don't want to be a new agent when

it's easy to sell a home I've got a

course on everything that I did when I

was a real estate agent everything that

I did when I was a broker because I

became a broker as well to get clients

and to educate clients and to make them

lifelong clients you could do it too so

consider becoming an agent and teaching

people about your local market helping

them navigate the buying and selling

process it's easy to do you probably get

your license three months after you

watch this video it's not that hard you

just use flash cards but whatever you do

get more money so that you're right

ready to invest then pay down debt for

every one dollar of monthly payments you

have you reduce your ability to qualify

for a home by two dollars and 34 cents

every dollar is a multiple of two

dollars and 34 cents that's a lot it's

gonna affect your purchase price a lot

number three get educated stay away from

flipping courses focus on long term

wealth building in real estate super

super important number four start

building your reputation and your

connections lenders escrow title agents

go to broker tours go to open houses

become an expert in your neighborhood

now and don't wait and seriously number

five I want you to ask yourself right

now how many people do you know that own

more than four homes and the people that

you know that own more than four homes

are they rich or are they poor yeah you

probably know very little people who own

a lot of real estate but the ones you do

are probably pretty damn wealthy

consider that write that down it's not

just buying index funds or buying M1

Finance pies okay then number six I want

you to right now write down write it

down on a little sticky note or

something write down hey I need to get

that prayer potion cup from RuneScape no

I'm just kidding what what you actually

need to do is write down

what do I need to do to buy my first

home you might be thinking yourself oh

I'm only 18 I'll buy a home in the

future no your age is not the limiting

factor you picking up the phone right

now and calling a loan officer off of

Yelp is the limiting factor hey my

name's Kevin I'm wondering what do I

need to get pre-approved for my first

home would you mind sending me your

needs list write that word down and

underline it needs list sure what's your

email I'd love to send you my needs list

because I actually as a lender have

fewer clients right now because the

Market's slowing down and I'd love to

walk you through and educate you through

the process of buying real estate as a

lender boom how easy you pick up the

phone you get a lender now if you really

want to understand how to Value real

estate and make sure you're getting

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the live streams and did you really

think I'd leave you with about circling

back to what we talked about which was

wait a minute how'd that 12x happen in

real estate yeah so I actually have a

full video on this and I'm going to link

it down below it's a totally free video

that you can watch but it shows you a

little bit more insight into real estate

and it walks you through how I was able

to buy a home for 305 000 uh That Home

by the way I have now sold for seven

hundred eighty thousand dollars so I

realized my long-term profits on it now

usually I don't like selling real estate

I don't Advocate anybody sell their real

estate because you give up the fact that

you could literally never pay capital

gains taxes in real estate 1031 forever

and then uh you know something happens

in the future and you uh basically get a

stepped up tax basis and you never have

to pay taxes in real estate it's really

really incredible so real estate is a

phenomenal way to build massive wealth

and never pay taxes you can't say that

in the stock market unless you take

advantage of uh having your own ETF and

avoid taxes while exchanging stocks but

you know who knows so uh those things

are pretty expensive but anyway watch

that video it's gonna be linked in the

description down below and you're gonna

see that property the only update from

that video is the fact that that

property is now sold and I realized the

profits and like I said if that money

placed in the stock market would have

done very well I would have three to

four x tip would have not held a candle

to what I was able to do with that first

property and what it led to with other

properties that experience and the money

whoo go watch that it's huge