The Housing Liquidation Crash is Happening | Where it's WORST | Bottom Line Report [E.7]

what I'm about to show you is a big

problem for the real estate market but

it's not just for housing it's also for

the greater economy because in this

bottom line report we'll not only talk

about this statistic from Real Estate

that's a big deal and shows you where

some of the biggest pain is but we'll

also be looking at the odds of a soft

landing and how history has treated the

odds of a soft Landing in Prior

recessions or not we'll talk about all

of that in this bottom line report so

first you know in order to understand

this data that I'm going to present to

you you have to know that this data was

inspired by on the ground work I'm a big

fan of not just sitting in an office and

running numbers but actually traveling

I'm sitting in a hotel right now looking

at one of the markets that we're

considering investing in and what I do

is I visit open houses I talk to

Realtors I go to specific showings that

we set up with the hundreds of different

agents that work with us in my real

estate startup if you're not familiar

with that startup yet it's housak.com

it's now raising money so if you don't

want to invest in real estate you can

invest in house hack it's a company

that's leveraging the wedge deal model

learn more there anyway so what we're

finding is that some markets feel like

they're in much more pain than others

for example last week I reported that I

thought Boise and Austin were feeling a

little weird like they had hit a wall

things weren't selling and the reason I

identified that was because we're

looking at fixer-uppers we're like oh

that looks like it's decently priced

compared to the June July comps then we

look at active listings and everything's

like wait a minute no that doesn't look

decently priced anymore everything's

dropping on the active side which is a

sign that everything was okay in the

summer and then now we have more pain

and it's that change to more pain that

we call an inflection that you need to

pay attention to and markets are well

handling this very differently depending

on the type of market so I've made a

list we'll throw it up on screen but

I've made a list of the pain in

different markets by coming up with a

ratio and then we'll talk soft landing

and some of the recessionary issues so

first uh Max would you mind lowering

that sound just a wee bit he's fire what

are you shooting in Minecraft

thank you

anyway so inventory to population ratio

is what I've done so what I've taken is

I take I threw this together on the iPad

right here we'll go ahead and throw it

up on screen but basically we have an

inventory to population ratio and so

what I do is I write down in this case

somewhere around 20 different cities and

I write the population as of 2022 for

each of these cities then you go to

realtor.com and type in the city name or

the county depending on what you're

using city or county and write down the

level of housing inventory you could

also do this Statewide if you wanted to

take it a level further then divide

inventory by population multiply that

ratio by one thousand and then you get

how many houses are available on the

market per 1000 people and what we found

is that the bubbly markets uh or or are

usually the ones that seem to have the

highest ratio and the ones where markets

are still very very hot where people are

still like falling over each other to

try to get listings in bidding wars

because inventory is low are the ones

with the lowest ratio what you'll find

is that some of the areas with the

highest ratio are some of the areas that

really boomed during the pandemic look

at this Miami Palm Springs Palm Desert

you know like the Airbnb Mecca where

essentially people are facing this

Airbnb bubble now where they realize wow

I can't always rely on an Airbnb or

rental Arbitrage where I can make so

much more money just airbn being a

property out now I'm stuck between

either having a negative cash flow as an

Airbnb because I can't rent the place

out or I rent it for a negative cash

flow can't refinance hard to sell in a

market with this kind of inventory to

population level without taking a

haircut you kind of see a little bit of

a bubble reversal here in some of these

high levels Miami Palm Springs Palm

Desert Vegas Atlanta Tampa San Antonio

Spokane Washington Broward Boise Austin

what's surprising is Boise and Austin

which were the markets I identified last

week we're only in the middle of this

chart that's those are actually the same

two markets where you saw I saw Lennar

that one of the nation's largest home

builders complain that Boise and Austin

were the softness out of all of their

markets when you look at the lowest

levels of inventory to population you're

actually in California San Diego Los

Angeles Ventura San Francisco Oakley

Chula Vista now I thought even

Sacramento's up there now what I thought

is really interesting about this is is

it possible that as is usual in Market

crises you end up getting a reversion

that undoes the prior movement so if the

prior movement in 2020 and 2021 was

leave California go to Florida Miami

Texas Washington Vegas maybe even

Phoenix we should throw in here right

you go to these different markets

because you're leaving for pandemic

restriction actions or freedoms whatever

reason cost of living income taxes

whatever you leave to those areas so you

get a surge of people there then all of

a sudden you get a surge of building and

now all of a sudden people maybe aren't

coming to these areas anymore or they're

going back to the office and so you're

getting this reversion where maybe some

people are like you know what I'll pay

the extra 10 13 whatever it is to go

live in Liberal California which is fine

that's not an insult I live in Liberal

California okay the weather's beautiful

I love Southern California I will pay

the extra 13 I will work 13 harder to

pay that extra in tax because I love the

SoCal weather but what see what you're

seeing is this potential reversion as an

explanation of where you could expect

markets to be the softest now the other

problem that we face is data most of the

data we're actually seeing now

especially when it comes to housing

inventory is totally a misunderstanding

or a misrepresentation of what could

actually be happening in a market think

about this from a very basic point of

view if you have 10 home buyers

that buy homes every single month then

over the course of 10 months you need to

have 100 homes right so 10 people buy a

home every single month if you have 100

homes on the market that means you have

10 months of supply

well let's say that 100 homes is really

low usually you have 500 homes on the

market right and everybody's like oh my

gosh inventory is so low but what

happens when inventory stays really low

at 100 homes and then all of a sudden

what do you get you get the home buyers

going from 10 buys a month down to five

well now you double your month's Supply

it literally Supply stayed the same

but that will last you twice as long

it'll now last you 20 months instead of

10. so in other words low inventory when

somebody's like oh but inventory is so

low that does not matter what matters is

how many buyers are there relative to

that inventory this is why you want to

use months of Supply data but you can't

readily get that online without

calculating it yourself because you go

to let's say Redfin data center it's

sometimes six weeks delayed on the data

and it takes time for some of these

moving averages because Redfin usually

shows you a 4 or 12 week moving average

to actually show you changes so you have

to look at your individual Market but

it's also a little bit more challenging

for us as individuals to calculate okay

well how many people are buying we just

have to look at the absorption rate

or you're out there on the street and

this is the easiest way to do it in my

opinion this is the practical way this

is not the statistician's way and then I

want to talk about the soft Landing

recessions the practical way to

understand this is you talk to Realtors

you go see how many offers places are

getting if you go into a market and

you're like all right here's a

fixer-upper that's worth 450 and it

should be worth 620 and then all of a

sudden somebody puts on a house on the

market for 5.99 and it's not selling

then I guess that house isn't worth

fixing up 620 anymore you have to really

pay attention to this you have to be

fluid to this because if you're trying

to insulate Yourself by getting a wedge

deal like I teach in my real estate

courses I'm building your wealth so

you're in a millionaire real estate the

new verse Pro crash courses which are

really inexpensive you can get in for

under a hundred dollars while they're on

pre-sale these are this is literally my

brain dumped on you in a condensed easy

to understand way just go to meet

kevin.com to learn more

then you can actually understand how do

I position myself do I wait do I get

more aggressive in the spread in which

I'm writing offers you have to

understand your markets point is some

markets are softer than others and it

could potentially be because of this

reversion to mean that we might see this

in this next cycle now the problem with

this higher for longer is we're starting

to see buyers hit a wall it's entirely

possible that buyers had enough cash to

keep buying with high interest rates

throughout the early part of 2023 that's

why we saw prices rise between January

and August and I'm like I'm not buying

during that time because I want to watch

what happens and sure enough now what's

happening now the buyers are drying up

things are starting to sit longer this

is a good time to be patient don't blow

all the money you have be patient be

more aggressive on the deals that you're

getting now what else do we need to

consider well another thing that's very

important to consider is this soft

Landing call can frequently lead to a

recession consider this and I'll throw

this chart off on screen here soft

Landing calls have proceeded past

recessions since the early 1980s

consensus predictions that the economy

would achieve a soft Landing have

basically preceded each of the last four

recessions that we had so why is it

often wrong well because recessions can

come suddenly when something breaks or

snaps it's possible that the real estate

market could be what breaks and snaps

even though we think right now the

underlying borrowers are substantially

more well positioned to weather this

storm weaken at the fringes see

institutions offload real estate those

are going to be companies like uh like

American homes for rent or Invitation

Homes they are literally selling parts

of their portfolio especially in some of

the bubbly markets they are selling

right now and they're if they weren't

buying portfolios from other portfolio

sellers who are like need to get out of

real estate they dump their portfolio in

Invitation Homes and Americans American

homes for rent tries to pick them up for

pennies on the dollar even if it's 80

cents on the dollar whatever uh they're

picking these deals up if it weren't for

those portfolio buys they would be net

sellers of homes right now

so people really sharpening their

pencils for good deals right now as we

are as well at my real estate startup so

if you don't want to get into real

estate yourself or you can't you don't

have the time money credit whatever

we'll consider investing with househack

read the offering circular we're

offering it we're raising it essentially

a one to one uh dollar valuation which

the company's going to be worth the cash

level we raise obviously they're

offering fees and costs and stuff that

go into while having attorneys and

filing with the SEC and all that good

stuff but that that's not for you so

much to worry about now you can read the

offering circular and see all of those

details but what matters is soft Landing

calls throw this up on screen again here

what do we got look at this soft Landing

calls and uh leading to the.com era boom

recession leading to the 07 recession

boom recession leading to the uh you

know into where we are now potentially

the 2024 recession you could see this

sort of skyrocketing here now we did

have our a recession in the early early

90s coming out of 89 and this is where

there was talk about soft Landing but as

you can see here recession recession

recession recession we just regularly

seem to predict a recession

with oh it's going to be a soft Landing

now that's not to say this won't be a

soft Landing it's just to say as bottom

line practical advice for folks number

one

consider that I'm filming this in a

hotel room using this beautiful web

camera it's a 4K web camera it's really

really good if you want to check that

out I have a paid sponsorship with this

company it's amazing check out the link

down below metcaven.com webcam I'll also

put a link for the lights that I use and

the microphone that I use I think

together like all three of these things

together you can have a really sick

setup and it all fits in a tiny little

box if you want to travel light with a

little box so much easier than trying to

have a DSLR and it's so much better than

the basic built-in webcams of these

computers as much as I wish I could just

use those anyway check those out by the

link down below okay now practical

practical practical practical what do

you do you have to focus on as much as

possible keep your job now is not the

time to quit now is not the time to give

up on the job you're working because the

jobs Market is going to be even harder

out there it's going to be harder for

you to get a replacement job do what you

can to provide more of a value at your

current job and increase your income

number two try to increase your income

with a side hustle if you need to

yesterday I suggested you go buy a 3D

camera like the one at medkevin.com 3D

buy that camera also paid promotion buy

that camera and go do smatterport 3D

scans it's a great idea but not only do

that but recognize that I was getting a

ton of comments yesterday of people

going bro Kevin you know offering to do

one matterport scan for free and then 99

thereafter for 30 minutes worth of work

you're under pricing you could actually

make even more money and I'm like great

that's more opportunity for you to

provide value in the marketplace so

consider that as well next

more income is number one uh side hustle

if you need to number two next number

three make sure you're being patient

don't blow all in on this Market it is I

still expect the stock market to be a

volatile Nike Swoosh but the real estate

market you really want to be patient

here because you don't want to buy what

you think is a good deal like another

soft Market is Oregon because everything

looks like a good deal but that's

because the active listings are

plummeting so pay attention to these

sort of ratios that we talked about pay

attention to what's going on in the

broader market and recognize the odds of

us getting a rate cut this year or like

zero and people still think the fed's

going to go higher but this fear that

the fed's going to go higher could be a

great opportunity to buy when other

people are fearful you just have to be

patient and aggressive and make sure

you're good with your numbers that's why

I always say check out the courses on

building your wealth on zero to

millionaire real estate investing or the

new Bruce Pro real estate investing ones

those crash courses are in pre-sale

they'll be out within the next six or so

days but you can lock in the best price

now they'll probably be worth twice as

much when we actually launch them but

anyway point of all of this is to say be

patient look at the numbers realize that

people just talking about inventory or

dated numbers aren't going to guide you

through this crisis you have to be

vigilant thank you so much for watching

I'll keep traveling exploring and

Reporting what I'm finding out in the

streets as well as in the data thanks so

much consider subscribing and we'll see

in the next one goodbye