Goldman Sachs NOW Reporting MASSIVE Housing Correction [THESE Markets]

hey everyone me Kevin here a lot is

being made about the housing crash

that's coming and will it potentially

evolve into a foreclosure crash that's

potentially worse than

2008. in this video we're going to break

this down the entire housing market into

16 very important pieces of data and by

the end of this video as we go through

these 16 pieces you should really have a

strong takeaway in terms of what's

actually affecting the real estate

market and how bad does Goldman Sachs

believe the real estate market actually

has to fall how bad are interest rates

going to get and how long are they going

to stay there we'll learn about which

markets might suffer the most we'll also

learn about credit scores in different

markets which is quite remarkable that

we can now break down credit scores in

different markets and we'll learn a

whole lot more about the housing market

so we're super excited to bring you this

Goldman Sachs research let's go ahead

and jump uh right into it now keep in

mind that we are looking for accredited

investors for house act to take

advantage of whatever dip we get in the

housing market now my goal is not to try

to tell you this idea that we're

definitely going to have a massive

housing crash here it's to be realistic

with whatever the data is because we

have to make sure that when we allocate

capital from accredited investors who

are investing in house hack that we do

so in such a way that we're able to

build an amazing company and build the

most value possible for shareholders so

check out house hack via the link down

below if you're an accredited investor

and if you're not yet wait until January

we should have some neat updates for you

so first thing that we really want to

keep an eye on is we want to look at

sort of the chart of a bankruptcies and

what we've seen with personal bankruptcy

history over the last uh you know really

30 years here well what you can see is I

mean even relative to the recession era

or slightly before the recession era

over here you can see we're

substantially lower in terms of the

levels of personal bankruptcies we saw

this massive decline over here and

that's really because of the everything

bailout of the Federal Reserve and

personal bankruptcies are really

important when it comes to the housing

market because if individuals feel like

they're so saturated in debt they have

to file for bankruptcy and essentially

completely reset their debts then we're

obviously in in the kind of Market where

it's more likely that we're going to see

foreclosures right let's get a little

bit more inside here so when we look at

Financial Obligations of individuals of

of all of their financial obligations

together debt payments lease payments

property taxes rents relative to their

income individuals in America actually

have still a pretty dang low debt to

income ratio which is very very good so

again their financial obligations

relative to their income in terms of a

ratio here some of the lowest levels

that we've really seen and we really

haven't gone to pre-pandemic levels

where we were at a ratio of just over

about 15 or certainly pre- 2008 levels

where we were sitting around 17 to 18 in

terms of a level regarding uh you know

this chart that Goldman Sachse was using

so we're climbing again so we're

starting to see some of that personal

debt increase but we're nowhere near the

level levels that we had previously seen

we look over here at households so not

now talking about homeowners not just

potentially everyone who's also a renter

we're also at these levels here we're on

a household that debt to income ratio

where uh or Debt Service ratio we're

substantially lower than what we have

seen historically right so if we put

sort of a yellow highlighter over here

on the historic region and we put a

little circle around where we sit now

just relative to the recession you know

where where people had potentially 110

120 percent debt to income uh now all of

a sudden we're we're actually

substantially lower than that we're in

that 70 percent range right this is a

huge difference I mean that's a 50 basis

point difference and so so what you're

really doing is you're establishing a

substantially stronger household today

than what you had before the Great

Recession the Great Recession was really

one marked by a massive debt and

speculation people without jobs getting

loans dead people getting loans uh

terrible credit scores getting loans

right the average credit score back

before the recession or the Great

Recession was somewhere in the

neighborhood of 660 to 680 for home

ownership which is just terrible and now

you've actually seen the average FICO

score come down a lot in in the last few

you know couple years here but still way

higher than the averages that we've seen

of between 660 to 680. we're actually

here now between somewhere between 720

and 760. the lowest levels of average

FICO scores actually right here Miami

and Detroit highlighted in green here

with an average of 725 for Miami and 721

for Detroit but otherwise if you look

over here most of these credit scores

are around 740 which is really where you

want to be when you're buying a home to

get the best interest rate in most of

the large cities that we have uh you

know throughout the United States that

are charted here are actually showing

relatively strong uh FICO scores so kind

of a neat element here that we can pay

attention to for research of okay okay

you know what are potentially weaker

areas or where could we potentially see

more stress generally individuals with

lower credit scores not always but

oftentimes individuals with lower credit

scores are more likely to default on

their obligations that's why credit

scores are created to sort of be a

measure of Financial Risk like How

likely is somebody to foreclose How

likely is somebody to default on their

debts right so over here we have an

all-priced a tier of Housing and we

actually do start seeing this decline in

all levels of housing prices and this is

something that we've already known right

we look at the Redfin data center we

already see that housing prices seem to

have peaked between February and June

depending on which area you are in in

the United States and they've come down

somewhere around six to seven percent so

far that's not by any means a massive

crash and we're still substantially

higher than where we have been

pre-pandemic there's no doubt about that

but we're starting to see that that

quarter over quarter growth or even that

month over month growth in and housing

really start to try Trend towards the

downside and we wouldn't be surprised if

that growth in housing prices actually

starts turning more negative beyond what

it already has on sort of a national

average so then the next thing that we

want to look at is over here we're going

to look at the share of young adults

living with parents this is interesting

because usually this cohort is going to

help us young adults are going to create

households and form households right and

we're actually at a little bit of an

above trend for household formation if

we take a peek right here at this chart

we can see we're a little bit above

trend for household formation if we're

sitting around that uh three year moving

average or we're kind of maybe slightly

below it right now here but if we look

at this sort of on a zoomed out basis

we've seen this household formation

Trend clearly move up here but we're

actually stunting some household

formation a little bit in that we're

seeing a lot of 18 to 34 year olds still

live with their parents relative to the

recessionary era take a look at the

Great Recession over here we were

somewhere between 27 to 29 living with

parents whereas now we're sitting around

32 to 33 really delaying some of that

household formation that could actually

create in sort of this next bottoming

process for Real Estate could create a

lot of demand and housing could

potentially rebound faster than we would

otherwise expect as maybe more people

actually engage and get into the market

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with real estate uh okay so then we've

got a banker lending standards we're

starting to see those tighten a little

bit which the last time we really

started seeing Bank lending standards

tighten was over here in the Great

Recession not uncommon to see lending

standards kind of compress and Titan as

Banks start getting a little bit nervous

about oh oh we got to be careful here

things are starting to fall but

foreclosure activity right now at least

still extremely low levels relative to

where we ever have been at before and

we're really only now seeing a slight

inflection up because the forbearance

programs are running out but otherwise

we're not really in a situation where

we're really expecting a massive

foreclosure crisis instead we are seeing

a sentiment decline in real estate and

so so that's probably the biggest thing

we have now is some of the lowest levels

of real estate sentiment that we've seen

since about March of 2020 which was when

there was some real Panic uh in

homebuyer's sentiment but that was very

very brief we saw that sort of Larry

Kudlow style v-shaped recovery here and

also almost back to the levels of 2011

in homebuyer's sentiment which is really

remarkable that could be something that

really ways on the housing market over

the next few years but I think A lot's

going to come down to interest rates not

so much inventory because inventory is

still historically very very low so

you're going to really need a

combination here of inventory maybe

staying stable but High interest rates

and lower buyer sentiment leading to

less demand for Real Estate right so

over here you could see new

single-family homes under construction

and single and family homes for sale if

we combined both of those so we take all

of the homes under construction and

assume that they're for sale right now

combine those with the existing housing

inventory we're still way lower than

where we were over here in 2019 or

really any time before that so very very

low levels of inventory even if we built

everything if everything tomorrow was

done being built we'd still have

depressed inventory right now what's

interesting is Goldman Sachs is actually

expecting mortgage rates to come down a

little bit towards the end of the year

because right now they're about 6.6

percent they think they'll go to about

6.4 percent by the end of the year but

no no big drop by the end of 2023 now

this is a big red flag in my opinion

because if we sit over six percent on

mortgage rates for a whole another year

and and a third basically you know

another 15 months I think we'll actually

continue to see year-over-year declines

in real estate starting in about March

where we look back to Peak and we'll go

oh no real estate's down 8 to 12 in

certain markets that could lead combined

with bad housing or home buyers

sentiment and low purchasing power

because rates are so high then we could

actually see housing move from maybe

eight to twelve percent declines to by

the end of 2023 somewhere around 18 to

maybe 25 percent declines because of

fear not necessarily because we saw a

big surge in inventory or because we saw

a massive amount of foreclosures which

there's way too much Equity people have

just way too much equity for us to

really see that but just a combination

of affordability and rates really

pushing things and resetting things back

down 18 to 22 or so not going to give us

2011 prices but potentially give us

slightly before pre you know pandemic

pricing basically pandemic pricing so

something really to pay attention to

here in terms of a potential this is

Goldman's forecast again that they're

expecting those mortgage rates to stay

above six percent and uh really what I

thought was quite remarkable here uh was

was this argument here that you're

starting to see this projection my

projections obviously slightly different

here but you're seeing this projection

here from Goldman that they actually

believe uh we are going to see a 4.1

percent decline in real estate in 2023

and still a 7.5 percent bump in real

estate prices for 2022. now I think

they're going to be wrong on these

measures here I think we've already seen

a six and a half percent decline so

we're going to see somewhere between an

8 to 12 percent year over year decline

but what's remarkable is uh and that's

by by March of 2023 but what's

remarkable is they're changing their

estimates to the dark side right so

their estimates are worsening and I've

often seen in real estate these Wall

Street estimates really start or really

lag actually happens in the market but

we've already seen a six and a half

percent off peak declined so I wouldn't

be surprised to see that escalate to

eight to twelve percent for a minus year

over year and then we get that fear

combined with affordability and high

mortgage rates which they expect to last

all the way through the end of 2023 I

kind of agree with we don't expect to

see a Fed U-turn or pivot anytime soon

and so they believe that's going to lead

to an overall decline in real estate

prices uh certainly uh next year but

also potentially some markets what they

say here certain overpriced markets like

Boise and San Diego potentially seeing

over 20 percent price reductions now

that's really interesting because what

this is telling you is that finding real

estate and and the Real Pain deals is

going to take effort it's going to take

studying it's going to take becoming

experts an expert in many different

local markets it's going to take a lot

of work again the buildup of home equity

here should be an insulation to

foreclosures as we see Goldman saying

here I completely agree with this

segment over here but again there will

be opportunities in real estate and I

think it's in everybody's best interest

to prepare for those opportunities lower

your outstanding debt get ready but

don't expect a 2008 style or recession

and so anybody really perpetuating that

and with with fearful music or clickbait

or whatever in my opinion is is really

creating too much fear where we should

actually just be excited about the

opportunity to maybe be getting real

estate at like a 10 to 20 discount and

be happy with that do we really expect

we're going to see a 40 to 55 decline in

real estate I certainly don't but I'm

interested in hearing what you think let

me know in the comments down below again

if you're an accredited investor go to

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all right folks thanks so much for

watching and we'll see in the next one

bye