The Coming Housing Market Crash.

hey everyone me kevin here let's talk

about what a lot of folks online are

talking about and that is the coming

real estate crisis in this video we're

going to talk about the truth about the

coming real estate crisis by looking at

data we're going to look at catalyst to

see what the heck is actually

potentially going to happen to the real

estate market after we go through data

of what's actually happening

and then we'll analyze is it going to be

better to wait to buy real estate or is

it going to be better to

wait

after you buy that is buy and then wait

well folks let's determine that in this

video of course this video is sponsored

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expiring on the 29th of october which

means the price is going up thanks to

all that inflation all right let's get

into this so first

foreclosures jumped 32

from the second quarter that means q2 to

q3 of 2021 we saw foreclosures go up a

third that's a lot and that's leaving a

lot of folks scratching their heads

going okay are we about to have a

foreclosure and eviction crisis because

after all foreclosures are up 67 percent

higher we're right now the level of

foreclosures we have is 67 or two thirds

higher than where we were in the third

quarter of 2020. now a lot of this has

to do with of course the end of

foreclosure prevention programs or just

straight out bans on certain types of

foreclosures specifically those related

to covet other foreclosures were able to

still process but when we look at the

statistics the statistics are a little

bit less alarming than these headline

percentages

we in september began the process on 25

209 foreclosures

usually at least before the pandemic so

on a typical month before the pandemic

we would have had somewhere around 40

000 evictions or sorry foreclosures get

started on a monthly basis this means

right now our foreclosure level is still

about 15 000 per month below average so

these percentages and growths of

foreclosure are really a sign that we're

coming out of a hole i mean the fact is

for the first few months of the pandemic

we went down to about three to four

thousand foreclosures per month we went

to virtually nothing this persisted

substantially throughout the first year

of the pandemic not particularly this

low but low levels substantially lower

and so the fact that we're up at 25 000

still represents a reduction of almost a

40

from where we previously were which is

kind of incredible i think that a story

headline should really be hey

foreclosures are 40 lower than where we

were pre the pandemic but the headlines

obviously sell the news story a lot more

because people enjoy fear and i think

it's really not that people want to be

in a fearful environment it's that

and i'm on the same boat i agree with we

want cheaper housing we want to be able

to afford housing again so we're looking

everywhere for signs that maybe this

market's finally going to give us some

discounts so that we can buy it's

totally logical that we would feel that

way because prices have gone ridiculous

by some measures and in many cities up

over 20 you've got institutional buyers

buying between 25 to 20 of properties

because they realize the real estate

market is where it's at with how low

interest rates that we have right now i

mean it's insane people are qualifying

for 30-year fixed-rate loans for 2.8 2.9

3 some are even getting better deals

it's nuts

now then we look at forbearances and

evictions and when we look at the active

forbearance number the amount of

properties that are actually in

forbearance we're down to about 1.4

million household units throughout the

country or about 2.6 percent that are

active

this is actually nicely declining

without us actually seeing a substantial

boost in properties hitting the market

in fact the amount of properties which

we'll see in a moment hitting the market

is declining we'll look at actual

statistics in a moment

and uh you would think that if

forbearances is expiring and people are

being stressed out of their homes that

maybe they would come up for sale but

we're not seeing that because remember

forbearance was actually one of the most

beautiful blessings for homeowners it

was the best stimulus check in my

opinion that you could get i mean you

were essentially able to not make your

principal an interest payment in some

cases even taxes and insurance for up to

a year and sometimes even longer and

then you were able to take that money

that you owed add it in most cases to

the back of your loan or as a second

loan to the back of the property and now

the sudden unless you were refinancing

your home or you were selling you're not

having to make that payment so if let's

say your housing payments two thousand

dollars

and you can kick that down the road 27

years that's 24 000 that you're not

spending

for the period of a year or potentially

even longer taking that down the road

for 27 years it's basically free money

as long as you're investing in the

meantime because thanks to compound

interest you'll make way more money

investing that 24 000

than paying it in 27 years is actually a

really wonderful thing so forbearance

i've been a big bull on seeing declining

numbers and seeing uh declining numbers

of forbearance and at the same time

seeing declining number of homes

available for sale not a surprise to me

the forbearances ending really

especially since you could just raise

your hand and go i want four bearings

you didn't actually have to prove that

you had a hardship in many cases certain

like va was a little more tougher but in

many cases you didn't have to prove

anything

kind of uh kind of not a surprise so

we're not really seeing negative news

out of foreclosures we're seeing

positive news out of foreclosures seeing

expected and positive news out of

uh the forbearance programs and then

when we look at evictions this is also

where we get some scary headlines

evictions are technically we've got

court filings that for evictions that

are up 8.7 last month you would expect

actually potentially even a bigger

number here because a lot of the

eviction protections have expired in

september especially in certain states

like california where there were the

eviction protections lasted longer and

so we expect filings to continue to ramp

up across the nation but here's the

thing

we are still sitting at half the rate of

evictions that we had

previously

now

this is worth noting that cities like

houston milwaukee and phoenix that have

not seen eviction protections

are seeing evictions at either at

historic average levels or higher than

historic average levels but ironically

evictions aren't necessarily leading to

sales we would think that if there's an

eviction crisis maybe we'll see more

homes come on the market and there'll be

more liquidity and buy and prices will

come down as buyers go shopping but

something totally different is happening

instead of people evicting someone and

then selling the property people are

raising rents substantially so somebody

that you evicted for two thousand

dollars a month maybe now you're able to

put the property on the market for

sometimes in many cases actually 20 more

or 2 400 per month your cash flow

roughly and essentially just went up 20

so when goldman sachs sees a danger of

about 750 000 evictions coming

and

quite frankly just a little sidebar here

uh if all 750 000 of those came on the

market that would be a 10 increase in

the amount of annual inventory and if

they all came on at the same time that

would be a sign of a potential crash

right

but when goldman sachs sees 750 000

families at risk of eviction

a lot of landlords are just preferring

to raise rents rather than sell the

properties so really if if we're looking

at maybe 750 000 evictions maybe we'd

actually only see about a third of those

or less like 20 of those even hit the

market instead the other landlords are

just raising rents with new tenants so

you kind of have this double bad like

the eviction crisis isn't really driving

home prices down the eviction crisis if

anything

is driving rents up which gets more

institutional buyers and more investors

interested in buying real estate and

actually potentially boost property

values maybe in the short term you'd

have a small headwind let's say even a

third of the evictions occurred that

goldman sachs sees

well a third would bring us to about a

boost of maybe uh another 200 000

properties on the market somewhere

around there if they all came at the

same time well that'd be an annual boost

of about 3.3 if they all came at the

same time maybe we'd see a small

headwind to prices assuming all the

evictions just got processed at the same

time and appetite wasn't available in

the market for people to buy these

properties maybe pricing could come down

what fractionally a few percent maybe

but it seems like bigger rents might be

more of a driver to actually push prices

up and this is why we really haven't

seen a big fat catalyst driving housing

prices down because the things that we

thought would be bad

like foreclosure aren't happening

because of the forbearance mitigation

programs as forbearance mitigation

expires people aren't selling their

homes because if they sold their homes

they'd have to pay off what they

basically just hung on to the end of a

30-year loan

so why sell why refinance if anything

it's just like ah just stay in the

position you are and not make that

payment so again less liquidity so we

thought foreclosures would be bad

they're not that we're 40 lower than

where we were we thought forbearance

would be bad but it's actually a good

thing and uh folks in in the community

when i say we folks in the community

thought that evictions would be bad but

they're actually helping drive rents up

which is just feeding the frenzy of this

real estate

like it's all willy wonka backwards it's

very very bizarre

now at the same time

congress was expecting to inject 322

billion dollars into a program to

bolster low-income housing as part of

joe biden's build back better plan the

three and a half trillion dollar

infrastructure plan

uh well uh 200 billion dollars of that

322 would have gone to the poorest

attendance and poorest neighborhoods to

help more individuals participate in

voucher programs well right now that

entire program is expected to

potentially be cut

so in other words housing prices are

going up rents are going up the poor

getting screwed more the people who

don't own real estate are getting

screwed more and so far we're not seeing

the catalyst yet for a coming real

estate housing crash which is kind of

mind-blowing

because again it's totally the opposite

of what was expected in fact there there

were and there still are dozens upon

dozens upon dozens of real estate

or youtube channels that comment on real

estate i don't want to call them real

estate youtube channels uh individuals

who comment on the housing market that

there's going to be a coming housing

crash because look at the statistics of

this there and the other when we

actually look at the numbers it's like

bro what are you looking at

there's no problem now that's not to say

we want to stick our head in the sand

because there will be issues

let's go into some of the issues first

inflation

folks

people like investing in real estate to

protect against inflation but it's not

good for rents for tenants rents are

going up and the cpi the consumer price

index is understating the shelter

component

why because we don't actually measure

the actual increase of all rents most of

the time we're looking at rent increases

in a lagging manner and then we're

looking at owner's equivalent rents for

people who are

or who own their homes but the problem

is people's belief as to what their rent

would be for their home in this survey

tends to lag what's actually happening

in the markets substantially more than

than actual rents like people actually

renewing their lease contracts and a lot

of people are in contract so it takes

time for rents to go up so really you

could have this this wind this uh you

know tailwind of inflation getting uh

that or rather rents that are pushing

inflation higher and higher and higher

longer and longer and longer

because rents are such a lagging

indicator and this is why the more we're

seeing these eviction moratoria expire

the more we potentially think rents will

actually just go

up higher leading to more inflation

longer and then again it takes time for

the owner's equivalent rents to go up so

cpi could really get propped up by

rental inflation substantially over the

next year and that's going to be

something that keeps that measure higher

now

let's look at some actual housing price

data let's go to my favorite here the

real estate stock market data section on

the redfin data center and then i'm

going to give you a prescription for

real estate okay so what do we got here

we've got a new listings are declining

right along the expected uh sort of path

usually around august september october

school season begins it's very very

common to see housing uh listings slow

down and for us to see a substantial

decline in these listings and a lot of

this is again school season then you get

into the winter and holiday season in my

opinion well i'll talk about my opinion

in a moment in terms of what i would

recommend but anyway let's look at

medium median sales prices you generally

want to look at this instead of average

we did see oops let's go to median here

we go median sale price there we go we

did see a small decline in median sales

prices which is good

at the end of 2020 we did see a

substantial increase in prices at the

end of 2020. we're not seeing that push

again we're actually going much more

towards a very 2019 2018 style of

softening and reduction in this time of

year and this is because usually the

people who have to sell homes right now

are selling more distressed properties

like somebody wants top dollar

usually and you can't say this about

everyone but i would say more times than

not are going to wait to sell the

property until let's say the springtime

you know like a march and april kind of

time frame so worth noting and then when

we look at pending sales

this is obviously declining here still

above and this is very interesting still

higher still more pending sales than

where we were in 2018 19 and 20. which

if you look at homes sold because people

like oh there's no housing available

there's no housing available it's not

actually true because if you look at

2019 and 2018

we are selling more homes now than we

did in 2019 and 18. they're just selling

faster so it gives the it gives the

appearance of shelves being bare of

housing stocks so to speak but the

reality is we're selling more than we

did in 19 and 18 and we're on par with

what we're selling in the second half of

2020.

all right now let's get to uh let's get

to the prescription so uh

my my opinion and i i get nothing out of

this okay it doesn't matter to me uh

well i mean the one thing that i do get

something out of is you checking out

those programs linked down below in full

transparency that money goes to me

but it can also help you analyze your

deals if you get into escrow and you're

going to learn a whole lot about getting

into the real estate sector uh if you

check out those programs linked down

below especially if you're a stocky or

somebody who's not super well-versed in

real estate but quite frankly even

especially if you're a real estate

investor never hurts to challenge your

uh your perspectives uh and uh if i can

help save you thousands of dollars by

doing one thing a little differently

you can pay for itself many times over

but anyway so uh what would i prescribe

for for the housing market right now oh

right i would do what i did i would look

for a good deal and buy

now i'm not saying go all in because i

do think that

uh in november and december

you usually have your best opportunity

to get fixer uppers because again the

people who are trying to list homes to

sell them around thanksgiving and new

year's or christmas or hanukkah or

whatever you celebrate those are folks

who have to sell and they're more

inclined to take a potential quicker

offer lower offer they're selling

fixer-uppers whatever look for

properties that you can fix up ideally

ones that still have a bunch of junk

around those are the best uh and and try

to find something a little below market

value i did just buy two properties for

in the 700s and i expect them to be

worth around the mid 900s to almost a

million no they're not going to break a

million but somewhere in that range i

bought two of those properties they

don't need a lot of work they need about

30 40 000 worth of work so i'm super

excited about these properties and uh

yeah i'm putting my money where my mouth

is i i look at this data and i'm like i

don't see a coming crash now is there a

catalyst for something that could be a

big headwind to

the real estate market yeah absolutely

and that's the federal reserve raising

rates which we do expect that rates will

start going up in the second half of

2020 by about a quarter of a percent

that would generally affect real estate

the real estate market by about two and

a half percent should be a headwind but

as

or i should say as rents continue to go

up we might still see some propping of

real estate prices i don't expect to

have this crazy run that we've had in

the last year but i would expect real

estate to still be propped up relative

to those rate increases and probably be

healthy for rates to go up a little bit

but i'm going to try to refinance as

much as possible to get my rates as low

as possible right now

so uh anyway thank you so much for

watching this video if you found it

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we'll see in the next one thanks again

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