The 2022 Housing Market Crash is Here | Do this NOW.

please collapse the housing prices are

stupid

this is a comment on my channel from

five months ago and folks some of you

might be getting your wish hey everyone

meet kevin here it's time to talk about

what's going on in the real estate

market and folks we've got a lot of

updates look back in 2012 and 11 when i

was actively selling real estate which

i'm not right now other than my own real

estate

as a real estate broker i always used to

tell folks look one of the best ways to

build your wealth and quite frankly

retire early is real estate it's almost

like get rich for sure but hashtag not

guaranteed uh and what i used to say is

if you just started at 25 years old and

bought a house for a hundred thousand

dollars and then every seven years

bought a house for a hundred thousand

dollars more

at the end of that 40 years when you're

around 65 retirement age you would have

almost at 10 million dollars of real

estate with a lot of that paid off how

many people do you know that have 10

million dollars of real estate let alone

a bunch of that paid off like you would

never even have to think about index

funds or stocks or roth or anything like

you could do it all solely with real

estate now that's not saying you should

okay i'm a big fan of stocks as well but

folks buying real estate is a good idea

so are we going to have an opportunity

to buy some real estate coming up what's

happening in the real estate market

right now what do i think is going to

happen and what can you do to prepare

yourself well that is the point of this

video this video is of course though

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okay folks so here's what's going on

after valentine's day of this year about

six months ago i made a video explaining

that there's a massive risk that

mortgage rates will go above five

percent by may and real estate prices

could start coming down people called me

nuts and you know what they were right

to call me nuts because i was wrong real

estate mortgage rates did not go

to five percent by may they actually

went to six percent by may which is even

worse now currently they're settled

right around a five percent but what

happens when mortgage rates go up is

buyer purchasing power goes down now we

have a really handy tool for this and

that's that for every one percent that

we see mortgage rates go up we tend to

see about 10 percent less buyer

purchasing power that doesn't mean

prices go down by that amount because

there are other things involved like

inventory right how many homes are

available for sale well this would then

relate to about a 2.3 percent increase

from where we were at the end of last

year or about a 23 reduction in buyer

purchasing power that's pretty

substantial and so we would expect that

this has all happened over the last six

months to start seeing some signs of

these higher mortgage rates actually

trickling through the market the problem

is back in february you still have real

estate agents on tick tock calling

everyone stupid for suggesting that

prices could soften because there's not

enough inventory and it wasn't really

until i decided you know i'm gonna sell

my real estate because i've got a big

series a that we're launching uh you

know hopefully within the next 30 to 60

days here and this big series a is going

to be like a real estate investing

company and a sas company so i thought

you know what let me sell my real estate

and i'm

not recommending that for people but i

sold my real estate and i'm doing that

because i'm taking that money and

preparing it for this new company we're

launching so i have a unique situation

in that case but i also thought you know

if i am selling i'm probably selling at

a potential peak but this is where i

really started scratching my head see at

the time i sold in january february

march april there were only like 60

homes on the market in my city

and i was adding about 22 to that and

i'm like oh my gosh how can just one

person single-handedly increase housing

inventory by 30 plus percent in one

market and that's when i realized wait a

minute it's not going to take a lot of

kevin's who start thinking yeah maybe

maybe we've had a good run in real

estate it's it's time to you know pair

back a little bit and maybe sell a

little bit and then you start seeing

inventory skyrocket

and unfortunately for the real estate

market and its trend of continuing to go

up that's exactly what happened

nationwide housing inventory exploded

in the first six months to now eight

months of this year in fact so did the

monthly supply of new homes see this is

existing homes this is new homes and

what's wild about new homes is new homes

right now are sitting at about 2007

levels and i'll tell you there's nothing

anybody wants to hear in the real who's

in real estate that relates to 2007 and

2008. it's kind of a really scary

comparison to make because what happened

next was a disaster that is in 2008 what

did you end up having well you had a

pretty much collapse of real estate

prices not only did some commercial real

estate drop 45 to 50 percent some condos

dropped 50

single-family homes dropped 35 to 45

percent depending on the area you were

these are huge massive plummets in real

estate prices right it was all

followed by increasing inventory which

unfortunately is literally what we have

now most available units in the pacific

northwest since 2019 housing inventory

up the most as a percentage basis in the

last 12 years

housing inventory nationwide rises for

the first time in years but in addition

you've also got that remember decline in

purchasing power from rates going up

yeah not only do you have that inventory

going up but folks home buyer

affordability at a near two

decade

low which again hate to say it not only

are we now below trend on housing

affordability but we're also starting to

look at the chart again like we did in

2007 and 2008. not only are we looking

at the chart like it's 2007 or 8 again

but that leads to a lot of nerves and

anxiety especially with home builders

starting to panic like lennar who's

quickly increasing incentives to home

buyers to try to still prop up home

prices but you know behind the scenes

pass them a little bit of cash to go buy

down their loan or to do some upgrades

that they really wanted to do you know

this is sort of a way of artificially

keeping prices up a little longer

and this is directly from their earnings

call okay they've got uh some markets

which are seeing significant market

softening and a correction leading to

more incentives but of course all of

this just in aligns really with what

we're hearing which is what wall street

is suggesting and that is that in short

we can expect valuations for home

building companies to even come under

pressure as the real estate market

begins to crack but i mean maybe things

are different this time around right

credit scores are higher people are more

qualified people have more equity in

their homes that means the extra value

of cash they have in their homes is

higher than it ever has been before

foreclosures are still lower than any

year prior to the pandemic and the job

market is holding up meaning we're not

really seeing that crazy joblessness

that would generally precede a real

estate crash and this is leading a lot

of folks to say well kevin this time is

different we don't have to see real

estate prices come down

and this might be true but what's also

true is that the most dangerous words in

investing are this time is different now

before i show you what's happening to

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meet kevin with that said let's get back

to the video and unfortunately the price

declines have already begun this is the

chart of average new home prices which

have come off substantially off of this

insane peak of about 400 i'm sorry 570

000 all the way now down to about 468

000 for new homes but it's not just new

homes that are starting to see a

compression of prices it's all homes in

fact this is the redfin data center and

you can see the median price of homes

actually closing is starting to trend

down which is not a seasonal experience

that we tend to have it is just

happening because mortgage rates have

skyrocketed inventory is skyrocketing

and we're seeing more price drops which

all corresponds to home prices starting

to fall and that's just what we're

seeing home prices are officially

starting to fall now real estate tends

to be pretty slow see even during the

2007 to 2009 real estate crash the

largest single month slowdown in real

estate prices was about

1.19 percentage points per month

so if we ended up dropping

40 in some markets it took somewhere

around 35 months to actually get to your

real estate low it's because i i see

real estate is like this giant snowball

and when you get it up a hill it like

slowly starts accelerating like it

really takes time to crest around that

and as you get to sort of a trough it

really takes time for it to actually

slow down even when it gets to the flat

part or even starts hitting some

resistance it's still got a lot of

momentum behind it so in other words it

takes an extra long time for the real

estate market to react to some of the

conditions that we're seeing right now

and this is leading to this really

interesting thesis and this is

speculative but i do want to get into

what i think is actually going to happen

and what you should do to prepare

yourself but this little speculative

argument is kind of neat some folks are

saying hey kevin and i believe this we

might see a stock market bottom this red

line

and then the stock market run again

towards the end of year end of the year

and beginning of next year while at the

same time real estate really only starts

its decline as the stock market bottoms

and real estate prices are at their

lowest potentially when stock prices are

at their highest sometime at the

beginning of 2023 maybe later in 2023

maybe even at the beginning or sort of

the the end i should say of 2022. so

some things to pay attention to so what

should we do to prepare because if the

real estate market is going to see a

compression or sort of at least a

reversal of coveted trends which that's

a lot of what we're hearing right now is

a reversal of the covet effect

especially in what are called zoom towns

in areas like arizona or boise where

we're really starting to see some

massive changes in the real estate

environment even austin texas right like

places people flock to because of uh

well the pandemic and low world taxes

and politics and everything but anyway

what should we do to prepare ourselves

well in my opinion i would make a list

of these things and i would write these

down because i would want you to

remember these first thing i would hope

that you can do is share the video

because i think the advice is invaluable

no matter what ends up happening in the

real estate market you know personally i

believe we're probably going to see real

estate prices go back to the trend that

we saw in 2018 and 19 which means prices

probably should come down somewhere

between 10 to 25 percent maybe somewhere

closer to 20 if i had to like pinpoint

it but anyway write these tips down so

the first thing that you should

absolutely do is get educated like start

getting yourself educated on real estate

whether that means watching youtube

videos uh getting courses that could be

mine it could be somebody else's just

stay away from flipping okay you don't

want to be flipping in a market where

prices are going down you want to get

educated on buy and hold real estate or

at least longer term real estate where

you're looking at longer term capital

gains and you're being smart with how

you're renting the tenants because you

don't want to get uh you know in a

situation where you're dealing with

evictions and you generally want to

start with your own home that eventually

you could turn into a rental it takes a

lot of the pain away and it's a much

better deal anyway number one get

educated number two do whatever you can

right now to see if you get that higher

paying job can you lateral into a higher

paying job can you ask for a raise can

you work a side hustle so you're

bringing in more taxable income you want

to be able to show lenders and banks my

income's going up not down baby we'll

make more money let's go that's what you

want to be able to show right now and

the next thing that you really want to

do is make sure that you're minimizing

your debts lower your expenses have less

debts pass on the new car pass on

financing that furniture right now it's

not worth it save the money instead pay

down debt save the money and get your

debt to income ratio low you want less

monthly payments because every single

dollar of monthly payments that you have

costs you 200 or 2.31 cents of less

purchasing power that means if you have

a hundred dollar credit card bill every

month that comes in pay that off and

you'll be able to afford or be able to

buy a home qualified to finance a home

for 231 dollars in monthly payments more

per month

that's a lot there's a huge multiplier

there in debt so you want to be out of

debt and you want to master your credit

here now you don't need a perfect credit

score you can buy a home with easily a

640 or above it's just gonna be a little

bit more expensive and if you could

change your behavior now in six months

when it's time for you to buy your

credit score could be higher make

multiple payments per month don't wait

until your statement is due lower the

amount that you're outstanding and

putting on these credit cards in the

first place and stop financing new

things and getting credit inquiries

next

talk to a lender now this might sound

ironic because i'm like stop getting

credit inquiries on a bunch of different

stuff i know this sounds ironic but when

you talk to a lender and you find a good

lender they're going to want to run your

credit let them otherwise they're going

to think you're not serious and they're

not going to be interested in helping

you so let them run your credit let them

then coach you through how we can

increase our credit and be most prepared

whether that means paying something off

or saving more money or which loan

program would qualify for let them guide

you so get educated save money build up

your credit

get rid of debt talk to a lender and

then number six start trolling open

houses like go to open houses and tell

them i'm gonna be looking to buy you

know maybe a fixer-upper in six months

or whatever i watch me kevin he talks

about buying wedge deals how can i buy a

wedge deal how can i get a deal below

market value and how do things change if

prices are trending down do i need more

of a wedge what can i do to protect

myself these are all the things that you

should be thinking of and folks i really

encourage you

check out the programs on building your

wealth link down below share the video

and get ready because so far everything

that we've been saying at the beginning

of the market is likely to happen in

real estate has been happening

so buckle up for the next phase