Massive Seller Liquidations! | The Worsening Housing Market Collapse.

new construction home builders are

getting reamed so badly that now they're

doing something completely unheard of

but boy oh boy is that going to be a

potential opportunity for yeah you

guessed it my real estate startup house

hack now look I hate to Revel in the

pain of others because I actually think

that falling real estate values is going

to be quite devastating to our economy

specifically because as the case Shiller

reports and Robert scheller from the

case Chiller reports tells us from Yale

PhD Economist hey housing is much more

impactful on someone's ability and

willingness to spend than stock

valuations are that means as home prices

come down we're probably going to see a

deepening of that earnings recession in

the stock market and boy that is not

looking great

so we've got to talk about some of the

crazy things happening now I think some

of the early things that we could just

get out of the way are the following in

July the National Association warned

that we're already in a housing

recession new construction home builder

prices that is prices for new

construction homes have risen to the

highest relative income level that we

have not seen since the 1980s when we

had substantially High inflation so

basically they adjust income for price

and what did we end up getting look at

this particular chart here it's a chart

that shows you we are at a ratio of 0.5

which we have not seen since

approximately 1988 and again in 1984. in

other words real estate for new

construction homes has been cheaper for

the last 40 years than at any point

compared to today and now it's no

surprise that homebuilder construction

activity and spending is starting to

inflect down now homebuilders did

something really funny as they waited

for Supply chains to catch up they

actually purposefully didn't put homes

on the market because they thought hey

well the Market's appreciating let's

just wait to put homes on the market and

you know because we'll just be able to

sell these properties for more like why

lock-in buyers at early prices when we

could just wait because prices only go

up yeah well now housing starts are

declining construction spending is

declining and it's all happening

naturally because it's becoming a lot

harder to actually sell new construction

homes we're seeing cancellations that we

haven't seen before according to Pulte

group Dr Horton and Lennar all of them

are seeing an increase in cancellations

in all of their markets but things get

even worse in specific markets

especially the zoom towns remember the

zoom towns are towns like Phoenix Boise

Idaho parts of Florida and these are are

areas that are not bad areas they're

just areas that are going to get hit by

this housing crisis even more than

others but cbh homes which is a big

builder in Boise Idaho and throughout

Idaho saw one third that is one in three

of all of their contracts cancel that's

twice the level they saw just in January

and a lot of people in January myself

included were already screaming uh-oh

might not want to buy real estate

because we might be at the peak and so

compared to January we're twice the

cancellations in Idaho and so really

what's happening is Builders are getting

stuck with too many homes as U.S home

buyers pull back especially since homes

are becoming as expensive as they were

in the 80s relative to income which is

bad it's a high level of expensiveness

right again reiterating they've been

cheaper for the last 40 years and now

they're expensive again like really

expensive again and so it makes sense

that mortgage applications are also now

at a 25-year year low because it's just

so freaking expensive to get a home loan

right now the average mortgage rate did

tick down slightly because we finally

moved off the 10-year treasury yield and

remember when we move off the 10-year

treasury yield and we see the 10-year

treasury yields come down it came down

from uh four percent where it was to I

believe right now it's sitting right

about 3.7 mortgage rates are going to

take down slightly which is actually a

good thing it's actually right now at

the time of this recording at exactly

3.828 so it's actually jumped back up

it's trending back to that that four

percent uh it went down as low as 3.6

the other day but anyway despite these

sort of daily fluctuations and treasure

yields treasure yields are higher than

they've been at any point in the year

when you just look at the last three

weeks the last three weeks treasure

yields have been the most expensive

they've been at any point since like

years ago and and the point of that is

to say that interest rates from

mortgages are going to be at the highest

point that we have seen in a very very

long time that's why the average 30-year

fixed rate a mortgage right now is

sitting at six point six six percent

yeah triple six if that's not an omen I

don't know what it is but anyway you

look at this chart and you look at

mortgage demand not only has it fallen

off a cliff but if we draw the bottom of

this Cliff all the way over to the left

side here we see we have not actually

seen this low level of mortgage demand

since

1995.

1996-ish right around that region that's

insane I mean that's a massive massive

plummet in mortgage demand so you're

seeing less people buy homes you're

seeing more cancellations but you're

also seeing a larger backlog of new

construction and this is actually what's

creating a crazy opportunity now uh you

know a Shameless plug I just want to ask

you to subscribe that's all really

appreciate you watching the video okay

in June and this is wild okay in June

there were 824

000 single-family homes under

construction that is more homes under

construction than any time since 2006

October to be precise we're currently at

9.3 months of supply for new homes this

is insane

that is a massive backlog of homes so it

makes sense that Builders are cutting

back on new home starts but it's also

insane because it's like holy crap we're

about to get flooded with even more in

2023 as Builders try to clear their

inventory and this is where a unique

opportunity is coming up which if you

want to take advantage of unique

opportunity learn everything I know

about real estate by joining the zero to

millionaire real estate investing course

there's a coupon code linked down below

we're having some issues getting our

Shopify store up uh for for this new

product that we're launching uh that's

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analysis stock analysis once we launch

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delay there in in launching this new

product Kevin come on man get it up but

anyway so if you want to learn

everything in my brain uh courses okay

people are like oh I could Google this I

don't know watch some of my videos and

then ask can you just Google clone Kevin

I don't think so uh and that's not to

Pat myself on the back because I think

I'm a little crazy okay but anyway

what are home builders doing now okay

well now listen to this this is where it

gets absolutely insane

there have now been multiple interviews

with uh Executives especially this one

rental home Investment Company kinlock

and apparently their co-founder has been

getting offers directly from new

construction home builders

to purchase thousands of completed homes

with discounts of up to 20 of what they

would charge retail buyers why would

they do that why would you take a 20

haircut from what you could charge

retail buyers why not just take a five

percent cut and sell it to more retail

buyers I'll tell you exactly why and

what's happening in my opinion so my

opinion is in order for you to be

willing to take such a massive cut that

is the real estate market has gone up

and then it's sort of peaked right and

now we're kind of expecting it to do

something like this right so we're

probably there okay so really with the

home construction Builders are saying is

hey look we'll sell you these homes

right now at a 20 discount for the

following reasons one we need

money

number two we uh because if if Builders

Builders don't want inventory okay they

want the money back so they can put the

money to work they can put the money to

work by buying back their stock if it's

cheap which right now build their stocks

some of them are selling below book

that's like getting a wedge deal on your

own freaking company it's amazing uh

they can redeploy that for for future

Investments or making sure that they

survive the recession in general so

there could be a lot of reasons why the

builders need the money now not later

because selling it to retail is going to

take a lot longer it'll take maybe a

year as opposed to selling it to an

investor now will take two months

now the other potential concern here is

that like is this an omen in terms of

how bad they think the real estate

market is going to get well if they even

remotely think that home prices over the

next year could fall another let's say

15 does it potentially make sense to

take a 20 haircut now because home

prices are going to fall on value 15

yeah maybe

maybe and this is why like for example

for my company my real estate startup

which if you're accredited you could get

founder shares in right now you just go

to househack.com and read the PPM that's

why for me I'm looking at this like hey

I'm not necessarily chomping at the bit

here to say you know what I need to get

in on those 20 discounts now to me this

is just the start of the panic really

when the Panic bottoms is when we

actually start seeing treasury yields

Peak and really consistently and

meaningfully come down which they

probably won't until the FED is even

remotely close to you turning and given

that Marie Daley and uh you know in

pretty much every board member at the

FED is coming out going don't expect a

quick U-turn we ain't you turning quick

so you know fed policy is is going to

linger pretty aggressively for uh longer

right higher rates for longer so why why

else would you potentially if you need

the money cut well because really you

think you're going to get less

in future right and then adjust it

obviously uh for your op cost your

opportunity cost so basically if they

think their opportunity cost is 10 and

they could sell the homes now for a 20

loss but then they can make 10 back with

their new opportunities because they

have access to the cash they've only

lost 10 percent if they hold the

properties and they fall in value 15 to

retail and it takes them that whole year

where they can't use that money they

lose that opportunity because now

they're down 15 so would you rather be

down 15 or down 10 either way the point

here like no matter what it is the point

here is obvious

Builders are bailing Wells Fargo

reported that September that just

happened okay was the worst month for

Builders on record

and that Wells Fargo is reporting

Builders are seriously now considering

unloading homes to investors it's not

just this one executive saying it's even

Wells Fargo saying it okay it's like

this is a serious problem the builders

are ringing the alarm Bells like crazy

uh and again I all I think when I hear

this I just look at this as an

opportunity if I'm an individual I'd be

like all right you know what like I had

somebody the other day they're like hey

you know what I'm gonna get another job

because Kevin you're right I'm gonna

increase my income so I can go buy a

deal when home prices come down we're

not expecting them to come down like

Great Recession levels but at least let

me have my income up and my debts low

let's stop financing cars and furniture

and refrigerators and stupid consumer

stuff let's save money let's build our

income let's pay more in taxes I know

that sounds painful but pay more in

taxes so you can qualify for more right

the danger of being self-employed as you

write everything off uh hint you could

depreciate your expenses so like if you

buy okay let's say okay

trick you buy a new iPad for fifteen

hundred dollars which is insane because

you had to get the stupid keyboard with

it or whatever okay

depreciate it over you know talk to your

CPA three to seven years don't take the

full write off this year because they

add depreciation back into your income

if you write it off in full you'll be

able to qualify for them for Less right

anyway that's more of an accounting

thing talk to your accountant about that

I'm not an accountant uh but I am

really excited again to invite you not

only the courses linked down below with

a brief exploration extension but also

we've raised almost 30 million dollars

in a month if we can get to a hundred

million dollars because we you know we

expect the first month to be the biggest

sort of burst but uh if we can get to

100 million dollars raised in uh the

next uh probably three months or so but

maybe by the end of the year beginning

of next year then we're gonna have over

300 million dollars of purchasing power

and if next year things are really in

pain and we're able to go up to builders

in great locations where we could do

long-term and short-term rentals and

really milk cash flow and we're able to

go hey we've got 300 million dollars to

spend we're gonna actually have

negotiating power negotiating clout and

so if you want to be part of this on the

ground level founder shares one-to-one

valuation no dilution day one

consider going to househack.com all

right folks we'll see you next one bye