The Coming Housing Market Crash | How Bad It'll Be.

hey everyone meet kevin here in this

video we're going to talk about real

estate we're going to talk not only

about expectations on how many people we

think are actually going to get evicted

how many households we're going to talk

about inflation and we're going to talk

about the new people competing for homes

right now some updated statistics here

also going to talk about what i am doing

in this market and when i expect things

to get potentially juicy in this market

we shall see but let's get right into it

of course right after i mention that the

amazing programs on building your wealth

have a coupon code expiring today today

is jack's birthday did just celebrate

jack's birthday with pizza topo chico

cake it's really cool we also had a

pinata jack destroyed the minecraft

pinata in

he too hit it anyway let's get into it

so first goldman sachs expects

750 000

households will be evicted

during this eviction crisis

that is because presently there are

about two and a half to three and a half

million households who are significantly

behind on their hands on the rents and

we're still waiting for that darn rental

relief to come in we've only had about

10 percent of rental relief actually

come in and i just had a commenter on my

last video on real estate complain that

their father was one of the lucky ten

percent of people who got rent relief

but only because they actually called

the governor's office in texas to try to

get rent relief california is no better

california is one of the worst off so

people should be calling governor

newsome's office but i'll tell you this

has been a disaster getting rent relief

money out and therefore goldman sachs

believes that 750 000 households are

going to get evicted because landlords

are just going to say we've had enough

now this is somewhat of an issue because

it obviously displaces a lot of folks

but goldman sachs actually believes that

these evictions

going macro here because it's definitely

not something you want to think about if

you're a tenant but going macro here

goldman sachs actually thinks this might

help us ease inflation

and remember the type of environment

we're in right now in the summer we had

really really high inflation because of

those airline tickets and used car

prices and wedding dresses and women's

dresses things going up in price right

well those have started to inflect down

but now we think well inflation could

stay high if shelter costs go up so that

way while car prices and dresses and

these other things that were going up

seven eight percent month over month

while those go down if rent prices now

go up on the cpi readings then you could

end up having hotter than expected

inflation for

longer

but if we have an eviction crisis and

that ends up driving down rents well now

all of a sudden you push inflation

potentially

down because you have more housing stock

available you have uh lower rent

expectations and potentially a softening

in the appreciation of real estate

prices so this rental relief

or rather i should say this eviction

crisis isn't really being pegged as

something that might crash the market

but rather something that could

in a horrible way actually be good for

less inflation that's very weird and

it's very like just saying those words

sounds bad that anything related to

evictions could be good because

obviously every time we look at an

individual eviction there's a story

there there's a family there there are

reasons there there are landlords

suffering there are tenants suffering

there's suffering happening right but

zooming out on the macro goldman sachs

is taking the business approach and

going well that could actually reduce

inflation crazy especially since last

week the dallas fed published a report

expecting rents to skyrocket suggesting

that home prices are just a leading

indicator of rent increases to come they

showed all their fancy charts in terms

of why this correlation exists but i

think it's intuitive enough to where i

don't have to explain all those charts

they're essentially forecasting a big

inflation coming in rents but maybe not

as quickly as expected they believe that

rent inflation will be at least three

percent by the end of 2022

and then in a weird way

between the end of 2022 and the end of

2023

end up hitting inflation for rents as

high as 6.9

now that ignores the rent inflation

we're seeing now but they actually think

we're going to see sort of this high

rent inflation now because we're already

seeing rents go up then maybe lower and

then a spike again in 2023 which might

be around the same time we see a

catalyst for interest rates in 2023 so

this rent inflation is going to be

something to pay attention to and at

least in the short to medium term it

sounds like at least if you listen to

goldman sachs's analysis it sounds like

the eviction crisis could actually help

soften

inflation

now in the meantime we have some other

statistics which are just mind-blowing

and it's worth mentioning here that if

you're trying to find real estate you

can always check out deal machine go to

medken.com

deals and try to send letters with deal

machine to sellers before their

properties hit the market i'd say if

there is any time to try it'd be right

before the eviction crisis gets your

name out there if you're looking to buy

medkevin.com deals to use deal machine

to send those anyway let's get into this

home prices and quarter two according to

the wall street journal shot up at an

annualized rate of 23

the wall street journal also just

reported that asking prices on

homes for rent rose 13 year

year-over-year the highest increase in

the last five years so this is what i'm

saying it's weird that we have this high

rent appreciation now or asking price

appreciation the fed thinks we're going

to see three percent at the end of the

year and then somehow 6.9 percent by or

by the end of 2020 and then 6.9 by the

end of 2023

maybe the fed is just

broken with their estimates because the

numbers are way higher right now we'll

see what the eviction crisis ends up

doing to these things

now it's also worth mentioning that

single-family family homes are seeing

more rent appreciation than apartments

right now apartments are seeing about an

8.3 percent bump in rents and we're also

seeing that the best case scenario for

tenants is actually renewing your lease

rather than getting back out into the

market because landlords are seeing an

opportunity where when tenants leave

they bump rent values to current market

value whereas if a tenant's still there

you might get a smaller bump we're

seeing this at reits we're seeing this

at syndicates we're seeing this across

the board

now it's also worth mentioning that

there's been yet another shift

usually nine out of ten home buyers are

well home buyers that is they plan to

live there home owner occupants well

this has shifted so whereas usually

we're at 90 percent our home buyers and

10 are investors we've now had an

inflection point and we are at 84 of

homes and nationally going to home

buyers and 16 percent going to investors

and if you go to certain markets like

atlanta phoenix and miami

25 of single-family homes are now going

to investors

so no wonder a lot of buyers have been

getting discouraged in fact redfin is

now reporting that the share of homes

with price drops is over five percent as

we're starting to see a little bit of a

cooling a little bit of a chill in the

market and we'll see how this chill

plays in with a potential new flood of

eviction style properties 750 000

households if all of those ended up

having evictions

and let's say half of them ended up

coming on the market for sale because

just because a place has an eviction

doesn't mean it's going to come up for

sale but let's just be generous here

let's say half of them come up for sale

which i think it might be closer to a

third or maybe even like 25 to 30

percent somewhere on there that would

actually consider selling say half of

them came up for sale that'd be about

275 000 homes 275 000 homes would add

about 10

of our general

national annual sales volume so it's not

like we're really expecting 10 more

supply to all of a sudden crash the

market but that supply comes hard and

fast all at the same time we could see

some real volatility in real estate

pricing because all we've seen so far

has been the exponential up now we've

seen a little bit of a flattening and i

wouldn't be surprised if this sort of

eviction crisis this extra 10 of

inventory gives us a little bit of uh of

a divot in the market or maybe even

multiple divots in the market we'll see

what happens we also know that builders

are taking longer to complete houses

thanks to the supply chain shortages

especially expensive raw materials and

the lack of available workers so it's

taking longer to alleviate our housing

shortage essentially

it's also worth noting that in july

bidding war rates were at their lowest

rate since january right now about 60.1

homes have a bidding war

and in june we actually had 66 66.5

percent of homes going into bidding wars

and in april we were at

74.1 percent so

you could kind of see this sort of slide

down in the bidding war rate all right

now let's try to consolidate all of this

here

so we've got this potential softening of

inflation due to the eviction crisis we

think the market might feel some divots

because of this potential up to ten

percent more supply might be as little

as five percent more supply in the

housing market so you'll see those

little sort of divots i think those will

create buying opportunities for folks

and of course my heart goes out to those

being evicted i highly encourage

landlords and tenants get involved with

the available rent relief options please

get rent relief so that way we can avoid

evictions but in the event that

evictions do happen and properties come

up for sale obviously i will be looking

to buy and i encourage you to be looking

to buy as well and i would expect to

find these between october and january i

think that's really going to be real

estate buy time i i did just open up

escrow on a property that i think has a

nice 80 to 120 000 wedge it's kind of in

that range there which is where i like

to be where i buy something

715 000 house and i think i can sell it

or or just own it and rent it out for

somewhere between at the bare minimum

850 if not close to 900 000 so i think i

did good there especially since i think

the property only needs about 45 to 50

000 worth of work we shall see but

anyway uh i'm in escrow that means uh i

am uh not phased so terribly by the

eviction crisis and i'm interested in

potentially buying a few more properties

during the eviction crisis we'll see

what happens if something ends up coming

through hopefully though for just the

sake of individuals and people we end up

getting that rent relief through as soon

as possible now in the meantime if you

want to learn more about do-it-yourself

property management rental renovations

real estate investing stock investing

youtube making youtube videos being a

real estate agent make sure to

go to link down below check out the

programs on building your wealth and if

you want to be a real estate agent you

want to hang your license with exp to

start earning referrals when you refer

people to exp as well check out my new

referral link by going to metcalf.com

exp thanks so much for watching folks

and we'll see you in the next one good

luck out there

[Music]

you