The Housing Market has Flipped

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deals hey everyone meet kevin here let's

talk about five reasons why the housing

market is so broken

and unaffordable right now folks it

sucks right now if you want to get into

real estate and build wealth

it's not easy because things are flying

off the shelf and bidding wars

left and right you don't even need to

look far to know this

everybody knows this right now but there

is some nuance that we should really

talk about right now

now this is not just a problem that is

plaguing cities or larger communities

it's also plaguing

rural towns and cities throughout the

country in fact

of 6000 different rural towns surveyed

one fourth are seeing the most dramatic

increase

in people spending more than 50 percent

of their money on

housing of their income folks half of

their income on housing

how are you supposed to do anything else

how are you even supposed to operate

like you're literally just trying to get

by with a roof over your head

it is ridiculous how unaffordable

housing is throughout the country

we have a massive lack of housing in

this country especially

in california where i'm running to be

governor to try to fix the madness

because california is like the worst out

of the entire country

in terms of actually having affordable

options for people people are fleeing

california because they can't afford it

in california anymore

and i think even more people especially

higher income earners are going to be

fleeing after covet because

why not go to austin or miami the new

tech hubs

when you're paying all these crazy taxes

in california and things are still

unaffordable

but anyway this video is not about

california it's about the housing crisis

in the country so let's talk about it so

the first reason

that housing prices are obviously high

we like to think that there aren't

enough homes for sale but the truth is

there are just too many buyers

we are actually selling more homes in

2021

than we have at the start of 2020

2019 and 2018. the issue is we have a

lot

more buyers and there are reasons for

this

demand is up and supply

is up but demand is just up way more

than what supply is up and so this takes

a little nuance because a lot of folks

i hear them all the time they're like i

just can't find anything well

you realize just as many homes are

selling in fact more homes are selling

than they were last year

you're just not looking hard enough or

you're not fast enough or you're not

catching them when they're off market

deal machine or using agents or maybe

you're missing something in the way

you're presenting your offers maybe

you're not negotiating the way i teach

in my real estate investing course

to make sure you know like if you're

writing an offer and you're like

what what's gonna happen what's gonna

happen like if you're surprised that you

missed the deal

then you're not negotiating correctly

like you should know

okay we're getting the deal or not and

in most cases you could find that out

with proper negotiating techniques

but take a look at this just to evidence

what i'm saying here this is the redfin

data center

and if we jump over here we'll see

weekly housing data going back

to about the yeah this is the first week

of

this goes back to january 1st here so uh

this is an average a four week duration

chart right here

and what this shows us is the difference

in home sales in 2021 2020 2019 and

2018.

and you can see here 2020 and through

2018 those three years here pretty dang

similar

here's your cova dip but look at 2021

you're actually at

every point selling more homes so again

more homes are selling

the problem is demand is just so

freaking

high right now so why do we have more

buyers well it's simple number one

interest rates are super low so things

have been more affordable this is a

simple explanation to give

obviously people get incentivized to buy

but there's also part fomo buying

and fomo holding which is where if you

were moving

why would you sell your prior property

you may as well just keep it because the

market keeps going up and we all know

that things that go up can only go up

right

no but people do actually continue to

hold their real estate

when prices are going up and so they

either turn their real estate into

rental property or what's happening more

commonly now is

they keep their previous residents as a

second home covet has really allowed us

to live

in many new places that we never thought

were possible this really enables a lot

of folks to

move out of states high tax states like

new york or california

and just live six months in a day in a

place like

nevada or florida or texas and not pay

your state income taxes anymore because

you spent over 181 days in a different

state

some big opportunities here to save some

big dollars in taxes

and while at the same time have a second

home now that's not sustainable we know

real estate's not going to keep going up

forever

but maybe it's going to take us getting

to that inflection point in prices

for sellers to actually go all right you

know what it's time to offload a little

bit more than we're offloading right now

because again like in some cases you're

better off leaving a house vacant than

you are selling it if the price keeps

going up the second problem and this is

really just a national problem

home prices are rising faster than 80

percent

of wages in the united

states there was a recent atom data

solutions rental affordability report

and it points out that

home prices are climbing faster than

wages in 80 of us markets and they go on

to say that median home prices

increased at a faster pace than average

weekly wages

in 601 out of 755 counties

and that climbing home prices and

less than significant increases in wage

growth have contributed

to renting becoming a more affordable

option so in other words

we're somewhat becoming a renter nation

the more expensive it gets to get into

real estate because people who already

have wealth

are buying multiple homes less people

feel inclined to sell properties because

why not just total when prices keep

going up

basically more people are just inclined

to stay in their rentals

and this prevents them from building

wealth this is one of the problems with

for example affordable housing

restricted affordable housing

or rent control is you basically force

people into never becoming owners

well the same thing here that usually

happens artificially with rent control

and affordable housing restrictions by

governments

governments create massive

inefficiencies in this sense

locking people essentially into a lack

of wealth building opportunities big big

big mistake

but the market is essentially driving

that same wedge right now

in that because governments have

restrained how many houses were building

and commodity prices have shot through

the freaking roof

lumber copper sheet metal you name it

this has been

i mean you could have invested in

commodities like copper this year

and you would have had almost 10x the

return you would have had in

electric vehicle companies for example

or tech companies

the returns have been amazing

in commodities especially since a lot of

the techs and evs have

lost money so far to date this year but

we don't need to talk about that because

real estate has been doing very well

again people not wanting to sell but

folks it's not just low interest rates

it's not just people fomo holding

and renting properties and it's not just

second homes

that people want it's also wall street

coming in to shake things up

now wall street generally competes for

around

historically 10 to 10 of the

homes that are available for home buyers

to buy

so if 100 houses come on the market

maybe

10 of those homes go to investors lately

that number has started getting skewed

in areas like texas you're starting to

see out of 100 homes

maybe 15 to 20 homes go to

wall street style landlords now this

isn't necessarily

their fault they're operating a business

and providing rentals for the people who

need

rentals you can't just solve the problem

by saying well screw you

landlords get you out of the market and

just let people buy those extra 10 to 20

homes that just creates more

inefficiencies in the market what you

actually need

is more homes but what's happening in

the meantime

well again regular communities are

getting screwed because these homes

are getting sucked up by either people

who can qualify with higher wages

or financial institutions now most of

the time eighty percent of the time at

least 80 percent of the time

it's people who have higher wages so the

rich are getting richer right

the other 20 10 to 20 of the time yeah

wall street's coming in

there's no joke about that wall street

firms are buying up single-family homes

firms like blackrock and other

institutions

invitation homes you name it it's a

profitable business to be in

i get it i know it and it's something i

encourage

everybody get into landlording becoming

a landlord

bill buy your first property buy it with

three and a half percent five percent

down

own that property buy another property

move into that house with three and a

half

five percent ten percent down whatever

rent out the first place after you've

lived there for a year

you can do it it's called bank hacking

hop hop hop hop before you know it you

own four or five homes

totally legal nothing wrong with that

how does the market balance it out

you need to build more homes it's that

simple and that's exactly why in

california rather than

what our state currently does build 80

000 homes

i have initiatives that would make it

possible for us to build

500 000 units redeveloping commercial

spaces making sure that we fast-track

permits

building new communities but that's

beside the point that i'm mentioning

broadly for the united states is a

solution that would work if prices are

too high

give people more options that doesn't

mean go into like downtown l.a and start

building a bunch

more homes and skyscrapers or units to

make traffic even worse

traffic is a problem it's a different

whole different video right but it does

mean

you need to build more homes when you

have a lack of supply

build more government right now kind of

has sort of like a boot

on the back of real estate development

and it's a big problem the government's

exacerbating this issue and so it's easy

to sort of point the finger at wall

street

when really the finger points back at

the government

but folks it's not just wall street

coming in and buying 10 to 20 percent of

the homes that exist that's just part of

the problem

the other thing is wall street firms

have lots of money

to lobby the government to say hey we

got to lift these eviction bans

the eviction bans are another issue

because what happens when people get

kicked out of their homes

where are they supposed to go we've got

about 10 million

americans behind on their rent now

congress has passed rental assistance

bills

but folks most of these rental

assistance programs

aren't even up and running in california

you've got about

maybe 30 of the funds actually allocated

for rental assistance

you've got people clamoring to try to

get rental assistance while at the same

time wall street is trying to go

hey let's go let's beat up these

evictions let's get people out if they

can't catch up

while at the same time you got cities

and counties like oh well like 70

of them haven't even set up their rental

assistance portals yet or if they have

they have really weird restrictions on

them like oh well we'll only pay

50 of your back rent that's not what

congress said

congress said here's rental assistance

you can get up to

12 months of back rent and six months of

rent going forward

if you prove you're at risk of going

homeless well

all these cities and counties like la or

even broward county in florida

they're coming out going hey well you

know we only want to pay 80

of the landlord's rent you know if the

landlord wants uh you know 80

of the money well they're gonna have to

take a 20 haircut that's just the way it

is

a lot of landlords are going why would i

do that kick them out evict them

sue them have a judgment against them

and get 100

get it through small claims maybe not

small claims depending on the amount

would depend

but geez i mean the whole process is

screwed up

like if if we actually had a cohesive

government that came in and said no no

it's 100 rental forgiveness it's like a

ppp

loan give people money get rid of the

back rent

well then we would have less problems

but again wall street has a lot of

leverage here

and right now while the eviction bans

are still in place

we have held up inventory once people

actually get evicted which is horrible

but if people actually get evicted

sure homes might come up but it's the

wrong way to think about creating more

housing supply

we need to be building more homes not

kicking people out of their homes

because they got to live somewhere

and so generally what happens then is

you end up concentrating the poor

this is a phenomenon where basically if

you end up having mass evictions

people have to leave an existing area

where they're making money move to a

poor area

and what happens when they move to a

poorer area is that area becomes even

poorer because the schools get

overburdened the medical and police

services get overburdened

the city can't keep it doesn't have

enough tax revenue to keep up with

streets and graffiti and crime

and and dirt and debris or whatever and

the city

goes into an even worse state of despair

so you have a massive massive issue in

this country when it comes to housing

affordability

and so it's very simple to just blame oh

that's it wall street landlords are

coming in to buy everything up

not quite yes they're buying more but

10 to 20 percent isn't moving the needle

the bigger problems are the fact that

yeah on one hand you do have wall street

pushing people to get evicted

and that's going to lead people to

concentrate into poorer areas leading to

more housing unaffordability because now

we're concentrating here

prices have to go up a little bit over

here the places they left might become

available but there are plenty of people

to take those homes because there's so

much demand right now it's a big big big

issue

problem number four the average wait

time for permits and remodels in the u.s

is ridiculous right now it takes

on on average over 60 days

to pull a basic building permit that's

because most cities are just overwhelmed

want to pull a basic building permit to

do a remodel 60 days

basic then they come back and go you

have to go into plan check

you could be waiting for two to three

months

or more sometimes even four to 10 months

12 months

just to remodel a property this ends up

leaving properties

sitting vacant even longer to be

transparent

the last buildings that i bought that

i've put into larger renovations where

i'm working with architects and

engineers

well long story short it's been a

complete disaster

first architect got fired second

architect was non-functional got nothing

done for months

third architect can't use what the first

architect already did has to basically

start over from scratch

it's a complete nightmare and it all has

to do with the overbearing permit

process because just to hear back from

the city

took 10 weeks on projects to hear back

once you submit corrections you hear

back again take some other stomachs

it's a disaster stay away from projects

right now with architects and engineers

cities are just way too overwhelmed you

had massive crises here i mean think

about the things that we have so far

you've got in a lot of them it's the

government in the way people not selling

well this makes sense because people are

holding on they're buying second homes

that's just the market at work demanding

more homes demanding more luxuries for

the people who can afford it

so demand is way up supply is nowhere

near as up but it is up we're selling

more homes as we saw

homes home prices are rising faster than

wages well yeah

wages are stagnant in part because we

also have this massive transition in the

labor markets

where you have folks who especially

after covid

might not be employable anymore they

might have to get educated and the

government actually doesn't provide a

convenient way for you to go to a

trade or technical school get a

financial education you know get a

college style degree

with with little cost and little debt

those things are really hard to come by

hard to come by and so retooling america

to be able to qualify for homes

it's not easy it's not easy and that

means more and more again concentration

of poverty and then when people do want

to remodel homes

you've got average wait times for

permits in excess of 60 days

you'd be kidding me but then you've also

got problem

number five and this has to do with

some levels of systemic inequality

and this is very very true i mean we

know that housing helps

people build wealth and unfortunately

in areas where there has been even less

wealth building

you typically find that they are larger

minority communities

so blacks and hispanics are

disadvantaged

thanks to decades upon decades of

discrimination that's happened in our

country

now racial inequality and the k-shaped

recovery is also very real

consider this if you were born in the

1970s or 80s

where do you think you were able to

build more wealth through real estate

investing

as a white person in a white family or a

black person in a black family

well obviously here the answer is a

white person would have had an easier

time building wealth why

because even though we have the 1968

civil rights act guess what we still had

throughout the 70s 80s and even into the

90s

blockbusting where folks were panic

selling in certain areas because of

potentially other races coming in

leading prices to fall these were real

things that happened it's just history

redlining where lenders wouldn't do

loans in minority neighborhoods

these are massive issues and they

contribute in california

people of color make up nearly 92

percent of the

1.8 million people living and guess what

within

one mile of oil and gas development

which means now you've got families more

exposed to

lower quality neighborhoods where you've

got pollution from oil wells pumps and

facilities putting them at greater

risk of health problems with symptoms

ranging from nosebleeds to chronic

headaches higher rates of asthma

respiratory illness increased cancer

risk folks

it sucks it race is a very very real

issue in wealth building in this country

and really it's a lesson for everybody

it doesn't matter if you're a black

white hispanic or whatever

the lesson is really to build

generational wealth

you got to start the generational wealth

you know the best time to plant a tree

is not tomorrow it's yesterday right

or really the best time to plant a tree

what is it 20 was 20 years ago

the second best time is today and plant

it right now

you got to get on the ball with building

wealth but it's been

very difficult so in this fictitious

black family example

maybe you try to go buy your first home

and you're in your 40s

in in 2020 that's great

but what if your pay hasn't kept pace

were you able to get out of college with

about without a bunch of student debt to

where you can actually qualify so now

you're on the first

you're the first person on the right of

trying to build wealth through real

estate it's a lot harder than

whites who disproportionately own more

homes and have greater wealth there's a

reason the

average net worth of a homeowner is 173

000

and the average net worth of a renter is

somewhere around 5 600

real estate owners build wealth they

make

money and we have massive issues in this

country

massive massive issues so when folks say

oh they're just no homes for sale

no the issues of our real estate

affordability crisis are

way way deeper than that we are in a

housing

emergency a housing crisis in this

country we don't have enough homes

it's that simple sure we have way less

discrimination today which helps

but it certainly doesn't help all the

people who got screwed in the past

decades it's nice to know there's less

or hopefully there's less discrimination

today you know redlining blockbusting

these things have become illegal over

time

fair housing laws are much more

stringent today than they have been in

the past

there is hope but we got to get

government out of the way of building

that's the big problem sure people

aren't selling

well there are more people selling but

there are still way more people buying

thanks to second homes and

price increases we know that home prices

are rising faster than wages this means

it's tougher for people to buy because

well they need to be able to get a

better job but in this country to get a

better job you need to probably take on

more student debt which is also a

problem

wall street is encouraging evictions

while at the same time trying to buy up

more homes

that's a problem we're not building

enough homes because building permit

wait times have become a disaster thanks

to coven

and building permit processes in many

states specifically california

are a complete complete complete

disaster

but then you've also got systemic

inequality that has made it almost

impossible for certain groups to even

get on the ride

and this is something that the federal

reserve is paying attention to the

federal reserve

has recently been regularly talking

about race

in america and it's very very important

that in order for us to see a full

lasting recovery we need all

groups within our country to be able to

afford homes so

what's the solution well from a

government point of view the solution is

simple we need to build more homes it's

very very simple

loosen regulations have statewide

permitting so that folks

can get statewide permits with

development companies develop in new

areas

develop them where solar and wind farms

are so you don't have to

transmit that electricity a long

distance literally build communities

around solar and solar wind farms

now you're becoming green you're

providing more housing also you should

improve transportation

there are many solutions to the housing

problem in fact if you go to meet

kevin.com you'll see my full 20 part

plan on how i plan to fix california

and my housing project is is part of

that

but i acknowledge the very serious

issues that we have in this country

so how do you personally try to get out

of this crap

it's very hard but the very first thing

that you need to do if you want to get

into owning real estate

is in my opinion it's not necessarily

weight you know i don't want to tell you

how to time the market my belief is it's

better

to buy and then wait than to wait and

then buy so i'd rather see you in

sooner i think the first thing that you

really have to do is you have to

accept smaller except less except an

area that maybe previously you didn't

think was going to be perfect

get in you gotta get in three percent

down three and a half percent down

call up your local community development

corporations try to get down payment

assistance

just make sure you can always rent out

whatever property you buy

never ever buy a property that you

cannot rent out i teach this in the real

estate investing course

i want you to buy homes buy buy buy real

estate it's very important for your

building of wealth i want everyone in

the country to be able to build wealth

now even though i say that you know

sometimes i get these cynical comments

and go well kevin if everybody buys up

all the homes and nobody's going to be

renting

i don't get to reach everybody with my

message and even if i did

not everybody does what i say and i'm

not saying you should do what i say

but i think you get the messaging here

and that is if you want to be at build

wealth you got to get in

you get it smaller you want a three

bedroom two bath suck it up in a one

bedroom one bath as soon as possible to

get in

start building wealth try to get a two

bedroom one bath rent out a room try to

get a two bedroom two bath rent out a

room in a bathroom

get a three and two rent out a bathroom

and and two rooms

do whatever you got to do to build your

wealth ideally start with a property

that needs a little bit of fixing up

if you need to buy new construction

that's fine you're paying a little bit

over market value for it but at least it

gets you in and then you can house hack

right away

but you've got to get into the game and

remember more houses are selling right

now they're just selling

faster than they ever have before with

many offers there are

there's a lot of competition get

pre-approved do not get discouraged

use the negotiating tactics that you

learn in the real estate investing

course use the coupon code down below

and folks hopefully this helps you out i

really want to see you help yourself out

because the reality is somebody's not

just going to go like that

and build hundreds of thousands of new

homes i will try to do that if i become

governor in california

if i don't become governor in california

it's going to be even harder to do it in

california

and i probably gotta leave but anyway

folks

hopefully this helps you out let me know

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