the housing crisis

hey everyone meet kevin here i'm

standing outside of the beverly hilton

because i'm about to go on an interview

with martha mccullum from fox news in

person here in beverly hills california

which is absolutely crazy uh but i

wanted to give you an update because i

probably won't be able to do the market

closing live stream today i wanted to

give you an update about what the heck

is going on in the real estate market

and something crazy happening about

housing that is super important if

you're ever considering getting into

housing so here's the scoop this video

first is sponsored by deal machine go to

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more about deal machine but okay let's

get into the topic so here's what's

going on we've got a massive shortfall

of homes right now we are 5.24 million

homes short in the united states right

now and the way they calculate that is

between 2012 and 2021 we formed 12.3

million new households and a new formed

household is anytime somebody gets out

of a shared living arrangement so if

somebody's at home living with parents

and they're 21 and they move out and

they rent their own apartment that's a

new household formation just an example

and during this time frame we formed a

12.3 million new households but we only

built seven million new housing units

this has been an issue that has happened

over the past nine years it's not just

because of the pandemic but the pandemic

is actually making it worse because

we've got a big shortage right now but

consider this during the pandemic a lot

of households actually got sort of

unformed because younger folks went to

move back in with their parents so

you've actually limited the rate of

growth of new household formation and

when we fully open up again and these

households go back out into the market

we expect there to be even more of a

supply crunch for real estate now i

don't always want to be crazy bullish on

real estate because you know personally

i think a nice discount in real estate

would be nice like the housing market

would settle down and slow down a little

bit which it is right now there's a

little bit of a slowdown a little bit of

a sort of a buyer freeze we're feeling

right now because buyers are finally

resistant to how high prices have gone

so right now we're seeing prices level

we're seeing inventory level but sales

are still up we're still seeing those

pending sales push through but here's

the thing

the reason we're seeing this big

shortage is likely to continue for the

next couple of years and probably going

to keep pressure on real estate prices

to either stay stable or potentially

even keep moving up unless of course the

fed comes in and lowers interest raises

interest rates then we'll see a big

shift pretty fast if interest rates move

but i think the fed's going to be pretty

slow to move we'll see i don't expect

rates to change until at least the end

of 2022 if not early 23. but anyway why

are we seeing the shortage and building

why aren't we just building more

one of the reasons the labor shortage

not enough people qualify to be able to

build homes it's expensive to hire

people who are qualified and so builders

just aren't building as much in fact

new home builders are almost all of them

are lowering their guidance they're just

not building enough homes and they can't

get through the process fast enough

because building material prices have

gone up lumber prices have surged we've

seen again not just the cost of workers

go up but even the cost of sheet metal

for ducting going up appliances are

super delayed everything's delayed in

housing right now you've got waiting

lists like crazy for new construction

homes but on top of that you've got land

prices that are also going up and

existing home sales have been obviously

very very difficult

pushing up prices leading to less folks

uh getting into homes big problems and

so here's the reality when you look at

our country we're a country that overall

is becoming more and more resistant to

building new communities and that's

because in my opinion climate change and

politics look at california for example

we've got a lot of land in our inland

areas we've got plenty of places to

build why don't we build we don't build

in many cases because of politics

politics get in the way get this

california just to break even needs to

build 300 000 homes per year right now

we build just 80 000 homes per year in

order to get ahead of the curve we would

have to quadruple how many homes we

build in california and in the united

states we'd have to double the pace at

which we're building homes so california

is twice as bad as the united states the

united states itself is having big

problems so you've got a lot of issues

across the board and in my opinion this

is going to lead home prices to stay

stable and potentially continue to move

up unless of course interest rates come

tank the market now what do i think

about this well in my opinion it's

making me excited to look for potential

deals now some people look at this and

go kavanaugh taking away supply from

other people but housing formations

include rentals so you're not really

removing a household's opportunity to

live somewhere this change doesn't

matter if you're renting or if you're

owning the issue is we just have to

build more homes but in the meantime as

an investor it's very tempting to look

for deals in the market i'm in escrow

i'm closing next week on a deal

buy a fixer-upper renovate it rent it

out build your net worth if you have not

started with real estate yet because

i've got to go here gabe let me give you

this maybe you text them that i'll be up

in a minute if you don't mind um

what you've got to do is you got to get

started so one of the first things that

that we talk about when folks join my

programs link down below 40 of coupon

code one of the first things we talk

about is you got to get into owning real

estate if you have

thirty thousand dollars fifty thousand

dollars in the stock market twenty

thousand dollars in stock market what

can you do to get into real estate now

and the reason for that is even if

you're buying or you're paying mortgage

insurance even if your rate's a little

higher because your credit's not perfect

yet but your credit's good enough to

qualify and you can qualify most

important you can qualify for the

payment not assuming you're going to

rent out rooms you got to qualify for

the payment okay it's a 30-year mortgage

you're going to get qualify for that

payment get into real estate once you

get in property 345 so much easier but

you've got to start people like kevin i

want to yolo options though with my 20

grand no no no your first 20 grand get

into real estate then you can play

options then you can do the other things

but build a base where you're finally

controlling hundreds of thousands of

dollars of net worth that's what you

want to do highly recommend you get

started with that i got to go into a fox

interview now really appreciate you um

cheers go buy real estate we'll see you

next time bye