Timing for the Next Housing Market Crash (-20% FAST).

hey everyone week kevin here is

hyperinflation going to crash the real

estate market

let's get right into that right after of

course i mentioned this video is

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but folks we know the real estate market

is crazy right now real estate prices

are up 20

you've got stocks mostly up with the

exception of like certain tax and

consumer discretionary

you've got commodity prices up we're

seeing prices of everything going up and

it's because of the fed's money printer

this is obviously

leading people with assets and wealth to

have more of it which allows them to

shop

for more real estate and we are seeing

more than ever

more institutional buyers get into the

rental real estate market game more

people buying houses directly from

open door or zillow instant offers

buying them

from these companies as large entities

large landlord entities taking those

properties away from other home buyers

and this all creates more demand

for real estate and drives up prices

even more so we

know the market is maddening right now

we know that if you have a pre-approval

letter and you're like let's go shop for

a home

darn it there are enough available you

got to be ready to strike and go on

properties when they come up

but they feel a little euphoric right

now and this is where things get a

little bit dangerous

and where we have to get into a little

bit of our warning so here's the scoop

right now the market is on pins and

needles waiting to see what actually

happens with longer term inflation we

have most investors right now knowing

that we have massive inflation happening

right

now and we expect this inflation to

continue due to supply shortages

over the near term the federal reserve

takes the stance that don't worry

this is transitory these issues are

going to go

away we're not going to see these issues

for the long term

inflation will come down we'll balance

out around two percent we'll slowly

raise rates 23 24

and everything will be fine most folks

however in the investing markets

don't believe this they're concerned

that the federal reserve is going to

lose control

that we're going to have hyper inflation

and then you know what

mortgage rates are going to go through

the roof and real estate prices are

going to tank why

because we already know that there is a

clear link between mortgage rates

and uh home prices or rental property

prices or cap rates on commercial real

estate

quick easy rule it's the rule of 10x for

every

one percent that mortgage interest rates

increase

home prices rental property prices go

down 10

so if you get a half percent increase in

rates prices tend to go down five

percent

if you need a quick example of this

actually happening in history

go to about may of 2018.

what you're going to find is the federal

reserve started raising

interest rates to taper and

put less quantitative easing into the

markets reduce

market freaked out real estate prices

fell instantaneously

within a matter of a few weeks we saw

real estate prices tank 10 to 12

they recovered by the end of the year

but only because the feds started

reversing course

and so what's the trajectory going

forward well first things first

here's what's on the fed's mind you're

going to start talking

about talking about tapering now i know

that sounds convoluted but this is the

fed basically saying

we're considering maybe injecting less

cash into the markets

the first target they'll likely look at

is reducing their purchases

of mortgage-backed securities so here's

what's happening right now the federal

reserve is buying

40 billion a month of mortgage-backed

securities when they stop

buying these bonds mortgage rates are

going to go

up so a belief right now is if you want

to get into real estate you

probably want to get into real estate

before the taper

you can then lock in a 30-year fixed

rate mortgage

but be prepared for some potential

volatility because

here's what's going to happen we're

going to go into a fork and we have two

ways that we can go

path number one is the inflationary

direction

by september or october the taper may

have already started getting priced in

mortgage rates might be higher

but the market's going to anxiously be

looking for

are rates going to continue going up

because inflation is staying

or is inflation trending down this is

going to determine whether or not we

will actually have a real estate

crash so in the short term i think if

you're trying to buy now you probably

want to get in before the fed actually

starts talking about tapering

mortgage-backed securities

so once that happens i think mortgage

rates are going to jump up a good chunk

half percent would not be unreasonable

very very quickly within a day

you just want to lock in then if you're

thinking about buying after september

october

wait for september october watch what

happens in september october because

that's what we're going to know

is inflation temporary we're going to

get through this nasty period of

february to september and october

where we're uncertain we have high

inflation year-over-year inflationary

numbers look really really bad really

nasty the market freaks out over it

if by september and october we get uh q3

coming to a close in october we start

getting q3 earnings reports that mean we

have

q2 numbers we have q3 numbers and we

start getting a grasp on

how are companies seeing inflation what

are company margins looking like

is inflation here to stay is inflation

starting to inflict downwards

if we start seeing an inflection to the

downside we might

be at a place where we actually say

the fed was right we didn't get big

long-term inflation

if that fork happens real estate prices

could actually

stay stable and potentially continue to

trend

in the direction they are i don't think

they'll trend at this 20 percent

parabolic growth it's not healthy it's

not sustainable but we can

level out and go back to that four or

five percent natural growth of real

estate prices

as supply starts coming on the market

again yeah potentially evictions go

through foreclosures

that supply is needed right now it's not

saying i want anybody to get kicked out

of their house or lose their house we

don't want that

but that could be something that helps

soften this real estate madness to where

we get back to sustainable price

increases

now the dangerous fork is september

october we start seeing

inflation ramp up and not down

the short-term transitory nature of

inflation we're expecting

doesn't happen to be short-term it

happens to be long-term

it happens to be systemic it lasts for

three four five years

the fed has to then raise rates much

sooner than expected

that will force mortgage rates up even

faster so the taper's going to push

rates up

the fed freaking out pushes rates up

real estate prices could literally

collapse

if the fed had to raise rates say 2 20

in the matter of a month so if i was an

owner of real estate now

or i was thinking about buying now i

would want to be prepared

for that potential change in market

value the best way to be prepared for

that

is well not only by checking out my

amazing programs link down below and

using that coupon code

to get into the zero to millionaire real

estate investing course or the

do-it-yourself property management and

rental renovations programs

but also by just mentally being prepared

for

volatility in the markets going forward

if rates go up and you're locked in on a

30-year fixed rate mortgage

doesn't matter your payment doesn't

change nobody can margin call you you're

not gonna lose your house nothing's

gonna happen

in that angle if you have short-term

variable rate financing

rates might change and you should be

prepared to have to start paying

more on your mortgages this is a risk

factor

if you have a 30-year fixed-rate

mortgage you don't have that issue you

can

ride this out if you're looking to buy

after september october

keep in mind that inflection point is

inflation here to stay or not

is going to affect real estate prices

because i think there are going to be a

lot of folks that wait for that moment

and if all of a sudden inflation starts

trending down you can see a lot of

people who were waiting to get into real

estate

get into real estate we start seeing

inflation prices are going to come down

substantially that doesn't necessarily

mean it's going to be more affordable

for you

it just means prices are going to be

lower but you're going to be paying a

similar payment because those interest

rates are coming

up so you've got kind of this really

weird market where here's what i'm doing

right now sort of a bottom line

i'm only buying properties if i can get

them a hundred thousand dollars under

market value

i just last week closed on a property in

california

that is a hundred thousand dollars under

market value i bought it for

thousand dollars actually 570 thousand

dollars with closing costs like 574 or

whatever

uh it's going to be worth at least a 710

000

when i'm done doing about a 30 to 40 000

renovation on it

so we're set there's my dollars in

market value that's what i teach in my

real estate investing courses finding

those deals

but do i really want to buy an at market

value deal right now

um probably not the only way i would do

that is probably if i were buying new

construction

and i got a 30 year fixed rate mortgage

it's probably the only kind of property

i would get right now

because then i wouldn't have to worry

about renovating it i could just rent it

out right away

house hack it with room rentals or just

live in it and

live out whatever fluctuations we get

here in the short term

but otherwise cap rates on multi-family

you're gonna be really sensitive to

these changes

because you usually get shorter term

debt and you've got some big changes

potentially coming from the biden

administration with 1031 exchanges

that are going to disproportionately

affect properties above a million

dollars

so keep that in mind especially rental

properties so lots of digest here

hopefully that made sense to you let me

know what you think

big thing is big bottom line folks

september october is going to be an

inflection point

so let's pay attention to that we'll see

what happens and go to mackevin.com

deals to get with deal machine thanks so

much for watching we'll see you next one