THIS Damage to the Housing Market is like 2008 AGAIN.

hey everyone kevin here so what's going

on is the housing market actually

falling what are the latest indicators

we have and are we going to have an

opportunity to go shopping for real

estate because as many of you know i am

launching a series a investment round uh

this is not a solicitation for that it's

just a heads up that i'm launching this

in august we're hoping to launch it the

first week of august for course members

it might end up being the second week of

august we just have to make sure

everything is perfect and ready to go

for it but it's going to be all about

investing in real estate and so there's

going to be this beautiful mix of

assassin tech and real estate it's a

really really exciting project that i

can't wait to share all the details with

you on and uh course members will have

the first dibs at investing in this but

but what's what's crazy is we're really

monitoring the real estate market on a

regular basis and one of the most

fascinating charts that have sort of

recently come my way is this one right

here this particular chart shows a buyer

pipelines or it's sort of an estimation

of the buyer pipeline and it's put

together by the national association of

home builders it kind of gives an idea

of the traffic of how many home buyers

are actually out there looking to buy

homes and this figure rarely falls under

a special number which is known as 40

right here it rarely falls under 40. in

fact if we look at this dotted red line

we can see times that has fallen under

40. one time was over here in the about

94.95 period

then we have another time over here very

briefly in the early 2000s and usually

when we fall under 40 we don't stay

under 40 for very long with the

exception of the great recession the

great recession was really the first

warning sign that when in 2005 we

plummeted

on this sort of home buyer traffic

we really saw this six year hole of

homebuyer traffic and that was really

rare because again usually when we fall

under 40 it's a very short term drop in

fact we can look at covet over here and

we can see how short term that drop is

with the exception of the great

recession it's very rare for this

measure to be under 40 for very long now

this doesn't mean that we're going to go

straight up

we in fact you know we could basically

see something like this where it takes a

year or so to get that home buyer

traffic back up it's probably going to

be dependent on mortgage rates and

getting mortgage rates uh instead of

moving up to actually move down which

we'll briefly talk about in just a

moment

but it's very fascinating that now we're

here and that we've actually seen this

chart fall under 40 again and it does

send us some signals that okay either

home buying is going to be in in this

sort of prolonged period of a lack of

competition like what we saw for six

years starting in 2005 or it means we're

going to have a very short term

opportunity maybe the duration of about

a year or to two years which is actually

more closely resembling what i expect

our internal plans are that we're gonna

have about a year or two to really go

shopping for real estate we're not going

to have this five to six year pain that

we had in 2008 even if prices actually

begin to show some year-over-year

declines i'm not expecting something

like a 2005 2006. so i wouldn't be

expecting uh homes to come down 40 to 50

percent in price i'm just not seeing

that you know at most uh

i would expect at most maybe a 20 22

correction uh but probably more of a

base case scenario is going to be

anywhere between negative five to

negative 15 percent uh we won't get into

all the details and numbers behind that

right now you can watch some of my other

videos on real estate here to understand

why

but but this here

in all of these videos by the way they

go into a real estate playlist so you

can watch the real estate playlist

anyway this is really interesting

because it does really pique my interest

in that a

we saw this coming right we saw this

drop coming which is great which is why

we started positioning the way that

we're positioned now and we're ready to

go shopping i don't think it's quite yet

by time i think we're probably still

waiting for some of these comps to roll

off and we're probably still on schedule

for something like a q3 to i'd say a q1

by time uh that would be q3 of 2024 q4

uh 2022 that is this here q3 q4 and then

q1

uh so that's sort of a target now what

are some of the other things that are

going on well we just had some leading

indicators come out

leading indicators are so so important

in real estate because real estate moves

so slowly usually when you get these

national like year-over-year home prices

or home price appreciation measures like

oh home prices went up 12 year over year

you know march to march it's like okay

like nobody cares i want to know what

happened from

june to july like how are those home

prices moving are they stable what's

going on right and these are things that

we could survey on a local level which

we do but but every every region has to

kind of do this independently and so it

takes a little bit of effort but those

are ways that we can get quicker data

but home builders don't give us quicker

lagging indicators what they actually

give us

are leading indicators so new u.s home

building activity fell to a nine-month

low in june

multi-family construction actually

gained ground which is interesting

because that means potentially more

supply for multi-family and that's

because rents are still going up which i

expect as well i expect rents to go up

and prices to kind of converge down

slightly i do not see rents going down

so this makes sense to me however we're

seeing single-family activity dropping

to a two-year low and in my opinion that

actually creates some opportunities in

the single-family space

because you're starting to see

more homebuilder concerns about the

single-family market now it could be

argued that hey if you have more supply

of multi-family buildings wouldn't that

drive the price down more here or if you

have more supply of single families

which it looks like you're not going to

have wouldn't that drive the price down

so you're not getting as much of an

opportunity here

that is is a very wise

question to ask

but the answer to that is no because

these numbers here these starts are

going to take about three years before

we see this kind of supply hey i know

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seeking alpha so i don't like to look at

this homebuilder statistic as saying

like oh yeah we're going to get this big

dump of construction inventory it's

going to take at least in my opinion

three years for us to actually see these

buildings i i like the opportunity in my

opinion to buy is gonna be over by them

uh

i mean we'll just be back to sort of a

normal market the depressed market uh

opportunity to buy i think will be over

by then uh and so what this is more of

is a tell of what are home builders

feeling in the market and when we get a

miss

which wasn't much of a miss it was a

seasonal adjustment of two percent we

got a

1.559 million units we were expecting

1.58

uh you know permits for these future

housing constructions fell 0.6

not that big of a deal uh you know 2 0.6

they're relatively small numbers but

what they tell is sentiment is softening

and usually what happens is you see

sentiments start softening buyer demand

start softening price drops to increase

then it takes about three months where

sellers are like i just need to sell it

and they're selling for lower prices for

you to actually see price reduction show

up in closing so it does take some time

but we are starting to see the

indicators that say yeah the problems

are on their way how bad they're going

to be we don't quite know yet

but we see the percentage of active

listings across the nation

much higher than where we were in 2019

and in uh 2021. so the black line is

2022 and we see substantially more

active listings with price drops this by

the way is the july let's use a darker

color there this by the way is the july

10th data poll from

the redfin data center so you can

explore this as well so we're seeing the

sentiment declines we're seeing mortgage

rates up we're seeing

pending sales start to fall though

pending sales are kind of starting to

fall in a little bit of a seasonal

pattern here

you could just see that we've kind of

decoupled over here a little bit faster

than ordinarily we would but you've got

a little bit of a seasonal fall here

you've got price drops again active

listings with price drops we saw this

chart already this just shows you areas

like austin where you're knocking on the

door of twelve percent active listings

of price drops tampa florida

twelve percent san diego somewhere

around over nine percent over here

boise city idaho somewhere around uh

over

15 percent and a lot of this really

being driven by those higher mortgage

rates that we're seeing this was the

beginning of the year for the 10-year

treasury yield right over here which

tends to relate to mortgage rates and so

we could see this really strong uptrend

here in mortgage rates though a lot of

folks are expecting now that this right

here this 3.5 percent was probably the

peak for 10-year treasury yields as we

do expect inflation to finally end up

coming down

and that's why we're seeing treasury

yields right now sitting right around

three percent giving you a mortgage of

somewhere around five and a half to six

percent still about three percent more

expensive than what it was in december

which is substantial so

what are we seeing in the market well

we're definitely seeing a sentiment

shift

less buyers as substantially less buyers

especially with the new home builders we

saw that in the chart we saw we're

starting to see home builders rein in a

little bit more price drops more

competition for new construction we saw

the lennar earnings report where they're

saying there are three categories of

sort of catastrophe that they're seeing

with how much how competitive they have

to be and one of the unique things

that's happening now is a lot of sellers

are actually doing something known as

buy downs and this is kind of really

annoying because it's very difficult to

see in the data a buy down is basically

when the seller says hey buy my house

for six thousand dollars and the buyers

no i don't want to pay that i want to

pay three percent less and i'm not

paying a penny more i'm only going to

pay 582 thousand dollars for the home

which would actually represent maybe a

three percent decline in home values but

the seller's like

well rather than lower my price how

about i just give you 18 000 to buy down

your interest rate

and then it's kind of as if you bought

the home for 582 but it actually shows

up on redfin and zillow as me having

gotten 600. so there's there's a really

big sort of gamesmanship

element that happens in real estate

especially new construction this is

really prominent in new construction

that can really delay our ability to see

price drops so it's still going to take

time i think we'll get more clarity over

the next two to three months and we're

already starting to see more of that

clarity with with some of the shifts

though interest rates coming off their

insane rise where at one point a 10-year

treasury was at three and a half and and

mortgage rates were like six and a half

coming off of that insane rise is

actually really bullish for real estate

and does limit the overall potential

downside we could be seeing for real

estate so no huge armageddon a big shift

absolutely how much of a decline in

prices is shift going to lead to again

my guess if i had to pick a base case

range 5 to 15 percent declines

much more than that maybe maybe 20 maybe

25 more than that very unlikely in my

opinion uh and especially if we see

yields continue to go down then that

just that pushes us down the range

obviously nobody has a crystal ball but

these are my expectations if you want to

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