1 00:00:00,320 --> 00:00:04,280 Speaker 1: Why everyone is wrong about the twenty twenty three housing 2 00:00:04,400 --> 00:00:07,320 Speaker 1: market crash. I know everybody wants it to crash, but 3 00:00:07,440 --> 00:00:11,000 Speaker 1: what is going on? Is it really going to crash 4 00:00:11,440 --> 00:00:14,160 Speaker 1: or nah? So I want to break this down for you. 5 00:00:14,160 --> 00:00:16,320 Speaker 1: We're going to talk about what is going on in 6 00:00:16,360 --> 00:00:19,520 Speaker 1: the real estate market. It has to crash, right because 7 00:00:19,640 --> 00:00:21,800 Speaker 1: rates are so high. We're going to talk about why 8 00:00:21,840 --> 00:00:24,440 Speaker 1: it hasn't crashed. We're going to talk about what potentially 9 00:00:24,520 --> 00:00:27,159 Speaker 1: could constant crash, if it will crash, the changes that 10 00:00:27,160 --> 00:00:29,760 Speaker 1: you can expect, and if you're sitting on real estate, 11 00:00:29,960 --> 00:00:32,960 Speaker 1: holding real estate, want to buy real estate, what you 12 00:00:33,040 --> 00:00:35,279 Speaker 1: need to know, what you need to think about, and 13 00:00:35,320 --> 00:00:36,839 Speaker 1: what you need to do. All right, So we're going 14 00:00:36,880 --> 00:00:38,520 Speaker 1: to break all that down. It's going to be very 15 00:00:38,800 --> 00:00:42,199 Speaker 1: entertaining and educational. Now, just to give you a background, 16 00:00:42,240 --> 00:00:43,880 Speaker 1: if you're just tuning in you're listening to the Mark 17 00:00:43,960 --> 00:00:47,760 Speaker 1: Mass Show. We talk about money and freedom. 18 00:00:48,120 --> 00:00:48,760 Speaker 2: They go together. 19 00:00:48,920 --> 00:00:50,559 Speaker 1: You can't really have a lot of freedom if you. 20 00:00:50,520 --> 00:00:51,320 Speaker 2: Don't have the money. 21 00:00:51,440 --> 00:00:52,839 Speaker 1: As a matter of fact, this is a case that 22 00:00:52,920 --> 00:00:55,680 Speaker 1: a lot of socialists and communists make, is that without 23 00:00:55,680 --> 00:00:59,040 Speaker 1: money you don't have freedom, which is somewhat true. If 24 00:00:59,080 --> 00:01:02,080 Speaker 1: you don't have money, how can you enjoy the freedom 25 00:01:02,160 --> 00:01:08,440 Speaker 1: to travel, to move around, to change your health, things 26 00:01:08,520 --> 00:01:11,959 Speaker 1: like that. So without money, your freedom certainly is limited. 27 00:01:11,959 --> 00:01:15,800 Speaker 1: But the thing they have wrong is that, really what 28 00:01:15,840 --> 00:01:19,000 Speaker 1: freedom does. It gives us the opportunity to go get 29 00:01:19,040 --> 00:01:21,440 Speaker 1: the wealth. It gives us the freedom to have the 30 00:01:21,480 --> 00:01:25,200 Speaker 1: opportunity to go make those changes. I have the freedom 31 00:01:25,560 --> 00:01:28,600 Speaker 1: to have the opportunity to go travel. Whether I have 32 00:01:28,640 --> 00:01:31,600 Speaker 1: the money or not, that's on me. But we talk 33 00:01:31,640 --> 00:01:34,759 Speaker 1: about increasing your money. We talk about increasing your money 34 00:01:34,760 --> 00:01:36,880 Speaker 1: so you can protect your freedom. And today we're going 35 00:01:36,920 --> 00:01:39,240 Speaker 1: to talk about it in terms of real estate because 36 00:01:39,240 --> 00:01:42,400 Speaker 1: it's one of the biggest wealth generators in the United 37 00:01:42,400 --> 00:01:44,880 Speaker 1: States and really the world for that matter. And there's 38 00:01:44,959 --> 00:01:46,959 Speaker 1: a lot to dig in that a lot of people 39 00:01:47,040 --> 00:01:51,160 Speaker 1: have wrong. So again, first of all, the real estate 40 00:01:51,200 --> 00:01:52,800 Speaker 1: market has to crash, doesn't it. 41 00:01:53,040 --> 00:01:53,240 Speaker 2: Now. 42 00:01:53,280 --> 00:01:55,120 Speaker 1: I want to break this down for a second, because 43 00:01:55,120 --> 00:01:57,400 Speaker 1: this is a massive misconception. 44 00:01:57,520 --> 00:01:59,520 Speaker 2: It's actually what we would call a bias. 45 00:02:00,000 --> 00:02:01,440 Speaker 1: If you listen to me, you know that I talk 46 00:02:01,480 --> 00:02:04,680 Speaker 1: a lot about mental models. So we all have mental models, 47 00:02:04,680 --> 00:02:06,600 Speaker 1: whether we know this or not. And it's ways that 48 00:02:06,640 --> 00:02:11,000 Speaker 1: we can sort of shortcut our thinking process. To see 49 00:02:11,000 --> 00:02:13,040 Speaker 1: the world, to learn the world. So we have a 50 00:02:13,080 --> 00:02:15,600 Speaker 1: mental model or maybe like a lens that we view 51 00:02:15,639 --> 00:02:17,880 Speaker 1: the world through. And so each one of us have 52 00:02:18,080 --> 00:02:22,000 Speaker 1: a different lens which has been built and developed through 53 00:02:22,040 --> 00:02:27,160 Speaker 1: our experiences, through our past, through our learned experiences, and 54 00:02:27,200 --> 00:02:30,840 Speaker 1: so forth. But we also suffer from biases that we 55 00:02:31,200 --> 00:02:34,240 Speaker 1: a lot of times aren't aware of. Tony Robbins might 56 00:02:34,240 --> 00:02:37,400 Speaker 1: call these chains of false belief, which is one thing. 57 00:02:37,400 --> 00:02:40,760 Speaker 1: But there's certain core biases that we have, and this 58 00:02:40,800 --> 00:02:43,840 Speaker 1: one in particular is really hurting people. So we have 59 00:02:43,919 --> 00:02:47,280 Speaker 1: biases that I think about which would be like recency bias, 60 00:02:47,320 --> 00:02:51,160 Speaker 1: which is whatever's been happening recently will just continue on. 61 00:02:51,720 --> 00:02:54,080 Speaker 1: Or that's sort of like the Lendy effect, which is 62 00:02:54,720 --> 00:02:57,960 Speaker 1: whatever's been going on, whatever's been around the longest, will 63 00:02:58,000 --> 00:03:01,160 Speaker 1: continue to be there. We certainly have, but this is 64 00:03:01,240 --> 00:03:03,760 Speaker 1: one of the biases that we have. And I think 65 00:03:03,760 --> 00:03:06,840 Speaker 1: about well Mark Twain's quote that he said, it's not 66 00:03:07,000 --> 00:03:10,560 Speaker 1: the things that you don't know that get you or 67 00:03:10,560 --> 00:03:13,320 Speaker 1: cause you problems, it's the things that you absolutely know 68 00:03:13,480 --> 00:03:18,360 Speaker 1: for certain. So since the FED started raising rates two 69 00:03:18,440 --> 00:03:22,799 Speaker 1: years ago now, everybody said, as soon as the rates 70 00:03:22,880 --> 00:03:25,840 Speaker 1: go up, when the risk free rate, which is the 71 00:03:25,919 --> 00:03:28,200 Speaker 1: rate that the Treasury or the Fed pays on the 72 00:03:28,280 --> 00:03:31,480 Speaker 1: on the bonds. As soon as the risk free rate 73 00:03:31,560 --> 00:03:35,360 Speaker 1: goes up, stocks will have to adjust down. They have 74 00:03:35,400 --> 00:03:38,960 Speaker 1: to the pe ratios or whatever, twenty one twenty two 75 00:03:38,960 --> 00:03:41,360 Speaker 1: percent at the time, they're gonna have to come down 76 00:03:41,400 --> 00:03:44,960 Speaker 1: to seventeen eight percent. Stocks have to come down, But 77 00:03:45,000 --> 00:03:48,960 Speaker 1: they haven't. They said, when interest rates go up on mortgages, 78 00:03:49,360 --> 00:03:50,960 Speaker 1: homes will become unaffordable. 79 00:03:51,160 --> 00:03:54,560 Speaker 2: So home prices will have to come down. They have to. 80 00:03:55,360 --> 00:03:58,400 Speaker 2: Here we are two years later and haven't. So what 81 00:03:58,640 --> 00:03:59,200 Speaker 2: is going on? 82 00:03:59,400 --> 00:04:02,400 Speaker 1: They have two stocks to home price tat to Like 83 00:04:02,440 --> 00:04:04,680 Speaker 1: Mark Twain said, is the things that you know have 84 00:04:04,760 --> 00:04:08,160 Speaker 1: to absolutely for certain. But there's a lot more going 85 00:04:08,200 --> 00:04:11,920 Speaker 1: on with this. They obviously haven't. So why is that? 86 00:04:12,400 --> 00:04:16,839 Speaker 1: Why haven't we had a reset? Why haven't home prices 87 00:04:16,880 --> 00:04:21,080 Speaker 1: come down? When we are at you know, near decades 88 00:04:21,160 --> 00:04:26,239 Speaker 1: high interest rates on affordability as all time highs now. 89 00:04:26,520 --> 00:04:28,280 Speaker 1: I've said from the beginning again, if you tune in 90 00:04:28,279 --> 00:04:31,160 Speaker 1: and listen to me quite often, you would hear me 91 00:04:31,200 --> 00:04:35,080 Speaker 1: say this that home prices don't have to come down. 92 00:04:35,200 --> 00:04:39,839 Speaker 2: They don't have to. People will just buy smaller houses. 93 00:04:40,360 --> 00:04:42,000 Speaker 2: You could have afforded a four. 94 00:04:41,800 --> 00:04:44,360 Speaker 1: Bedroom home in this nice neighborhood. Now you get a 95 00:04:44,400 --> 00:04:47,800 Speaker 1: three bedroom home in this mediocre neighborhood. You used to 96 00:04:47,839 --> 00:04:50,359 Speaker 1: be able to buy a single family home, today you 97 00:04:50,400 --> 00:04:54,279 Speaker 1: can only afford a condo. Right, So home prices don't 98 00:04:54,440 --> 00:04:57,320 Speaker 1: have to nothing has to happen. You just buy a 99 00:04:57,360 --> 00:04:59,599 Speaker 1: smaller house. But I want to look at some of 100 00:04:59,640 --> 00:05:02,200 Speaker 1: this data. We're going to dig through data so you 101 00:05:02,200 --> 00:05:06,080 Speaker 1: can understand this from a like I said in mathematical, 102 00:05:06,160 --> 00:05:10,080 Speaker 1: a data driven framework, as opposed to this gut check 103 00:05:10,160 --> 00:05:12,159 Speaker 1: that you just think the world has to work a 104 00:05:12,200 --> 00:05:16,839 Speaker 1: certain way. So we'll start off with this survey from 105 00:05:16,880 --> 00:05:19,919 Speaker 1: Fannie May. Eighty five percent of fanny Ma survey participants 106 00:05:19,960 --> 00:05:22,359 Speaker 1: believe it's a bad time to buy a home, with 107 00:05:22,440 --> 00:05:25,479 Speaker 1: housing affordability at its lowest level in thirty nine years 108 00:05:25,680 --> 00:05:29,080 Speaker 1: and rents at record levels in many places. So let's 109 00:05:29,080 --> 00:05:31,680 Speaker 1: break that down. First of all, housing affordability. So what's 110 00:05:31,680 --> 00:05:35,680 Speaker 1: happened is because home prices haven't really collapsed, they've stayed 111 00:05:35,680 --> 00:05:39,159 Speaker 1: about the same, but interest rates went up. The house 112 00:05:39,200 --> 00:05:41,640 Speaker 1: is unaffordable. You have to understand first off, that people 113 00:05:41,720 --> 00:05:45,200 Speaker 1: don't buy the house they really buy a payment. So 114 00:05:45,240 --> 00:05:46,760 Speaker 1: what that means is you want to buy a three 115 00:05:46,839 --> 00:05:49,000 Speaker 1: hundred thousand dollars house or a million dollar house, whatever 116 00:05:49,040 --> 00:05:51,200 Speaker 1: that is for you. 117 00:05:50,400 --> 00:05:51,359 Speaker 2: You're not buying. 118 00:05:51,440 --> 00:05:53,200 Speaker 1: You're not coming up with three hundred grand by the 119 00:05:53,200 --> 00:05:55,120 Speaker 1: three hundred thousand dollar house. What you're doing is you're 120 00:05:55,120 --> 00:05:58,679 Speaker 1: buying a monthly payment. And so that's why the interest 121 00:05:58,800 --> 00:06:01,320 Speaker 1: rate is the most important thing, which of course is 122 00:06:01,320 --> 00:06:04,640 Speaker 1: why they say when interest rates went up, prices have 123 00:06:04,720 --> 00:06:08,080 Speaker 1: to come down. So, for example, the median income in 124 00:06:08,120 --> 00:06:10,480 Speaker 1: the United States is about sixty five thousand dollars. 125 00:06:10,520 --> 00:06:12,040 Speaker 2: That's like the average the median. 126 00:06:13,080 --> 00:06:15,920 Speaker 1: So at that median, if they say that you can 127 00:06:15,920 --> 00:06:19,320 Speaker 1: put forty percent of your income into the monthly payment, 128 00:06:19,720 --> 00:06:22,280 Speaker 1: then you can only afford a certain payment of I 129 00:06:22,279 --> 00:06:24,359 Speaker 1: don't know whatever it is. I'm another math two thousand dollars. 130 00:06:24,760 --> 00:06:27,640 Speaker 1: So at two thousand dollars, if the interest that's at 131 00:06:27,680 --> 00:06:30,200 Speaker 1: three percent, you can afford a much more expensive home. 132 00:06:30,240 --> 00:06:31,960 Speaker 1: But if the indust rate goes to eight percent, you 133 00:06:31,960 --> 00:06:34,520 Speaker 1: can only afford a lower price home. That's why they 134 00:06:34,520 --> 00:06:38,640 Speaker 1: say they have to come down. But again, if you 135 00:06:38,640 --> 00:06:41,320 Speaker 1: can only afford a two thousand dollars payment, maybe you 136 00:06:41,480 --> 00:06:44,000 Speaker 1: just buy a smaller house that that fits with. Now, 137 00:06:44,040 --> 00:06:47,000 Speaker 1: what we have seen is that the unaffordability has gone 138 00:06:47,080 --> 00:06:50,400 Speaker 1: up to record levels. And so just in the last 139 00:06:50,440 --> 00:06:55,880 Speaker 1: three years, the monthly payment, the monthly payment on the 140 00:06:55,960 --> 00:06:59,680 Speaker 1: median home price is up over fifty percent, but you're 141 00:06:59,760 --> 00:07:02,960 Speaker 1: in hasn't gone up by fifty percent, So that makes 142 00:07:02,960 --> 00:07:07,080 Speaker 1: it more unaffordable. How's pricing has not. The median home 143 00:07:07,120 --> 00:07:10,480 Speaker 1: price has gone up faster than the median income levels. 144 00:07:10,840 --> 00:07:13,160 Speaker 1: That's why it has to Now. Another thing that we 145 00:07:13,240 --> 00:07:15,480 Speaker 1: are looking at is we do look at the rent 146 00:07:15,600 --> 00:07:18,200 Speaker 1: to own ratio, and this has gotten out of whack 147 00:07:18,280 --> 00:07:20,200 Speaker 1: for a lot of areas. And so what we see 148 00:07:20,240 --> 00:07:22,000 Speaker 1: is that in a lot of areas it's actually much 149 00:07:22,120 --> 00:07:24,600 Speaker 1: cheaper to rent now than it is to buy. So 150 00:07:24,680 --> 00:07:27,240 Speaker 1: typically when it's cheaper to rent, people rent. When it's 151 00:07:27,280 --> 00:07:29,440 Speaker 1: cheaper to buy, people buy. This is sort of the 152 00:07:29,480 --> 00:07:31,400 Speaker 1: surface level stuff that you already know about, But I 153 00:07:31,400 --> 00:07:33,520 Speaker 1: want to dig deeper into this so that you can 154 00:07:33,640 --> 00:07:36,720 Speaker 1: understand exactly where we're at now. I want to preface this, 155 00:07:36,800 --> 00:07:39,520 Speaker 1: and we'll get into this. I want to preface that 156 00:07:39,640 --> 00:07:41,960 Speaker 1: I say it all the time, there is no such 157 00:07:42,000 --> 00:07:45,840 Speaker 1: thing as quote unquote the real estate market. Instead, the 158 00:07:45,880 --> 00:07:49,440 Speaker 1: real estate market is broken down into thousands of real 159 00:07:49,520 --> 00:07:55,480 Speaker 1: estate markets, broken down into location, size, type, all types 160 00:07:55,520 --> 00:07:58,000 Speaker 1: of factors, and we see this all over the place. 161 00:07:58,000 --> 00:07:59,880 Speaker 1: As a matter of fact, on my Twitter, I'm sorry 162 00:08:00,200 --> 00:08:02,080 Speaker 1: my Twitter. I'm locked out of my Twitter still. It's 163 00:08:02,080 --> 00:08:04,680 Speaker 1: been three months. I'm dying over here. Elon Musk if 164 00:08:04,680 --> 00:08:08,640 Speaker 1: you're listening, I need my Twitter back. On my Instagram 165 00:08:08,680 --> 00:08:10,160 Speaker 1: if you're not following me, you should check it out, 166 00:08:10,200 --> 00:08:12,640 Speaker 1: just at Mark Moss on Instagram. But I put out 167 00:08:12,680 --> 00:08:16,440 Speaker 1: this chart yesterday and it showed the top forty indexes 168 00:08:16,520 --> 00:08:19,760 Speaker 1: home priced indexes in the United States, and it showed 169 00:08:19,760 --> 00:08:22,480 Speaker 1: their month over month increased, their year to date increase, 170 00:08:22,560 --> 00:08:25,800 Speaker 1: the year over year increase, how much they're down from 171 00:08:25,840 --> 00:08:29,720 Speaker 1: its peak, and where they are since March of twenty twenty. 172 00:08:30,480 --> 00:08:32,800 Speaker 1: So if you watch this, if you're watching this on YouTube, 173 00:08:32,800 --> 00:08:35,240 Speaker 1: I'll put it up on the video so you can 174 00:08:35,280 --> 00:08:37,520 Speaker 1: see this, or go to my Instagram and check it out. 175 00:08:37,840 --> 00:08:40,840 Speaker 1: But what we see is if we look month over month, 176 00:08:42,040 --> 00:08:44,800 Speaker 1: or actually if we look year to date. So this 177 00:08:44,880 --> 00:08:48,360 Speaker 1: is twenty twenty three since January until now. If we 178 00:08:48,360 --> 00:08:51,160 Speaker 1: look at year to date, every single one of the 179 00:08:51,240 --> 00:08:54,800 Speaker 1: forty top forty markets in the United States is up 180 00:08:54,880 --> 00:09:00,520 Speaker 1: except for one, and that is Austin, Round Rock, Georgetown, Texas. 181 00:09:00,679 --> 00:09:03,000 Speaker 1: It's down two point three percent. If you're just tune in, 182 00:09:03,080 --> 00:09:05,560 Speaker 1: you're listening to the Mark mas Show running through some 183 00:09:05,600 --> 00:09:09,160 Speaker 1: of the latest information on money and freedom. I'll be 184 00:09:09,200 --> 00:09:10,959 Speaker 1: back with more in a minute. Don't go away, We're back, 185 00:09:11,200 --> 00:09:12,640 Speaker 1: all right, Welcome back. If you just tune in, you're 186 00:09:12,640 --> 00:09:15,839 Speaker 1: listening to the Mark maw Show, and we're talking about why. 187 00:09:15,679 --> 00:09:17,680 Speaker 2: The real estate market has to crash. 188 00:09:18,120 --> 00:09:20,480 Speaker 1: Actually, we're talking about why people think it has to crash, 189 00:09:20,559 --> 00:09:23,320 Speaker 1: and it certainly hasn't. And we're letting you know what 190 00:09:23,440 --> 00:09:26,199 Speaker 1: you should think about if you own real estate, want 191 00:09:26,200 --> 00:09:28,480 Speaker 1: to own real estate, or are thinking about owning real estate. 192 00:09:28,520 --> 00:09:31,760 Speaker 1: So we're talking about how it really comes down to 193 00:09:31,880 --> 00:09:35,600 Speaker 1: the power of the interest rates. Now, obviously you probably 194 00:09:35,679 --> 00:09:37,720 Speaker 1: already know this, and we've already kind of broken down why. 195 00:09:37,760 --> 00:09:40,960 Speaker 1: But it's because you don't actually buy the house. You 196 00:09:40,960 --> 00:09:42,520 Speaker 1: don't come up with the whole price of the house 197 00:09:42,520 --> 00:09:46,120 Speaker 1: of three hundred thousand dollars. You actually just buy the 198 00:09:46,160 --> 00:09:49,040 Speaker 1: monthly payment, and you have to think about it like this. 199 00:09:49,280 --> 00:09:53,120 Speaker 1: Most people don't really understand this, but we use money 200 00:09:53,440 --> 00:09:57,480 Speaker 1: dollars to buy things, but we also buy dollars. So 201 00:09:57,520 --> 00:09:59,080 Speaker 1: if you want to buy a three hundred thous dollar house, 202 00:09:59,080 --> 00:10:00,720 Speaker 1: you need the three hundred grand to go buy the 203 00:10:00,720 --> 00:10:02,800 Speaker 1: three hundred grand. Well, how much does it cost to 204 00:10:02,840 --> 00:10:06,520 Speaker 1: buy three hundred grand? Well about eight percent, seven and 205 00:10:06,520 --> 00:10:08,520 Speaker 1: a half percent. And so what we can see is 206 00:10:08,559 --> 00:10:11,840 Speaker 1: that as that price of money changes, it changes the 207 00:10:11,840 --> 00:10:14,040 Speaker 1: payment should be pretty easy understand, but it's a different 208 00:10:14,080 --> 00:10:16,439 Speaker 1: mental model to think about it. And what we see 209 00:10:16,520 --> 00:10:21,400 Speaker 1: is that since just since twenty twelve, we can see 210 00:10:21,400 --> 00:10:25,680 Speaker 1: that the annual income needed to a ford the median 211 00:10:25,760 --> 00:10:28,200 Speaker 1: priced home in the United States went from forty four 212 00:10:28,360 --> 00:10:32,400 Speaker 1: thousand and it's now at one hundred and fourteen thousand 213 00:10:32,800 --> 00:10:36,440 Speaker 1: as of August one hundred and fourteen thousand. Again, the 214 00:10:36,480 --> 00:10:38,920 Speaker 1: problem is that the median income is only about sixty 215 00:10:39,040 --> 00:10:42,320 Speaker 1: five thousand, So that's a really big problem. Now, the 216 00:10:42,400 --> 00:10:45,400 Speaker 1: reason why that unaffordability has changed so much is that 217 00:10:45,440 --> 00:10:47,839 Speaker 1: if we look at the thirty year fixed rate mortgage, 218 00:10:49,040 --> 00:10:53,200 Speaker 1: we can see that in January of twenty one, it 219 00:10:53,320 --> 00:10:56,800 Speaker 1: was about two and a half percent and today here 220 00:10:56,840 --> 00:10:58,840 Speaker 1: we are at seven and a half percent. 221 00:11:00,280 --> 00:11:01,959 Speaker 2: Now we have to go back to. 222 00:11:03,520 --> 00:11:08,640 Speaker 1: About two thousand, about the year two thousand and so 223 00:11:08,840 --> 00:11:12,040 Speaker 1: it's been you know, twenty three years since we've seen 224 00:11:12,120 --> 00:11:15,240 Speaker 1: interest rates that high. So this is what's causing this 225 00:11:15,280 --> 00:11:19,240 Speaker 1: whole thing to happen. Now, why has that happened, Well, 226 00:11:19,280 --> 00:11:22,360 Speaker 1: you probably already understand that it's because the Fed has 227 00:11:22,400 --> 00:11:24,679 Speaker 1: been raising rates at the fastest rate in history to 228 00:11:24,720 --> 00:11:28,640 Speaker 1: slow down inflation. But the Fed Funds rate is not 229 00:11:28,760 --> 00:11:31,960 Speaker 1: what you pay on your mortgage. So what happens is 230 00:11:32,000 --> 00:11:35,880 Speaker 1: the FED sets the Fed Funds rate, but the price 231 00:11:35,920 --> 00:11:38,520 Speaker 1: of the mortgage is different based off of what the 232 00:11:38,559 --> 00:11:40,960 Speaker 1: banks want to charge you. So we have like the 233 00:11:41,000 --> 00:11:43,600 Speaker 1: Fed Funds rate, and then we have the prime rate. 234 00:11:44,240 --> 00:11:45,800 Speaker 1: And so what we can see is that we can 235 00:11:45,960 --> 00:11:50,680 Speaker 1: we can track those differently, and somewhere in the range 236 00:11:50,760 --> 00:11:55,480 Speaker 1: of typically one to three percent is the difference that 237 00:11:55,520 --> 00:11:59,400 Speaker 1: the banks want to charge you on that. Now, right 238 00:11:59,440 --> 00:12:02,400 Speaker 1: now we are at an extreme where the banks want 239 00:12:02,440 --> 00:12:05,079 Speaker 1: to charge you a premium over what the Fed Funds rate. 240 00:12:05,240 --> 00:12:07,920 Speaker 1: Sometimes it comes down lower, So we definitely want to 241 00:12:07,960 --> 00:12:11,160 Speaker 1: be looking at the Fed Funds rate, but that's not 242 00:12:11,400 --> 00:12:13,440 Speaker 1: the only thing that we have to pay an attention to. 243 00:12:13,960 --> 00:12:18,680 Speaker 1: When things are when we're in like an easy monetary environment, 244 00:12:18,840 --> 00:12:21,240 Speaker 1: then banks are more willing to lend out money, and 245 00:12:21,320 --> 00:12:24,640 Speaker 1: so then that Fed funds rate, that spread, that premium 246 00:12:24,679 --> 00:12:27,480 Speaker 1: will come down. In times of higher risk, when the 247 00:12:27,480 --> 00:12:29,480 Speaker 1: banks are a little bit more concerned about it, that 248 00:12:29,559 --> 00:12:33,120 Speaker 1: premium will go up. And so what we really want 249 00:12:33,160 --> 00:12:35,160 Speaker 1: to do if we want to understand where home prices 250 00:12:35,200 --> 00:12:38,200 Speaker 1: are going, is we have to understand where the Fed 251 00:12:38,240 --> 00:12:41,960 Speaker 1: funds rate will go and what the premium will be 252 00:12:41,960 --> 00:12:45,840 Speaker 1: between the two. Now right now, like I said, we 253 00:12:45,880 --> 00:12:49,440 Speaker 1: are sort of at this really extreme end of that. 254 00:12:50,080 --> 00:12:53,080 Speaker 1: If we go back to say. 255 00:12:52,600 --> 00:12:54,240 Speaker 2: I'm looking at some of my charts here. 256 00:12:56,559 --> 00:12:59,600 Speaker 1: If we go back to say, you know, in two 257 00:12:59,640 --> 00:13:02,040 Speaker 1: thousand six, two thousand and seven, before the two thousand 258 00:13:02,040 --> 00:13:05,280 Speaker 1: and eight crash, we were at a very very low spread. 259 00:13:05,320 --> 00:13:07,520 Speaker 1: As a matter of fact, it was about one point. 260 00:13:07,800 --> 00:13:09,839 Speaker 1: So in February of two thousand and seven, Fed funds 261 00:13:09,880 --> 00:13:12,120 Speaker 1: rate was five point two, thirty year fix was six 262 00:13:12,160 --> 00:13:17,000 Speaker 1: point two. But then all throughout the twenty ten to 263 00:13:17,040 --> 00:13:19,800 Speaker 1: twenty sixteen range, when the Fed funds rate was basically 264 00:13:19,880 --> 00:13:23,680 Speaker 1: at zero, So like in twenty ten, for example, Fed 265 00:13:23,679 --> 00:13:25,920 Speaker 1: funds rate was at zero, but the thirty year fix 266 00:13:26,040 --> 00:13:31,760 Speaker 1: was at five percent. Here we have twenty twelve Fed 267 00:13:31,800 --> 00:13:34,320 Speaker 1: funds still at zero, but it dropped down to three 268 00:13:34,360 --> 00:13:38,920 Speaker 1: point three five percent. Then we have it right here 269 00:13:39,559 --> 00:13:43,080 Speaker 1: where it started really coming back together. Twenty nineteen fed 270 00:13:43,080 --> 00:13:46,679 Speaker 1: funds was two point one and thirty year was three 271 00:13:46,720 --> 00:13:49,680 Speaker 1: point six, so that really started to close up, and 272 00:13:49,720 --> 00:13:51,960 Speaker 1: then it sort of blew out again. Twenty twenty we 273 00:13:51,960 --> 00:13:55,079 Speaker 1: went back to zero percent rates and the Fed funds 274 00:13:55,160 --> 00:13:58,640 Speaker 1: were sort of at its lowest right around December of 275 00:13:58,720 --> 00:14:01,880 Speaker 1: twenty twenty. I'm sorry, a thirty year fixed at about 276 00:14:01,920 --> 00:14:05,400 Speaker 1: two point six. So we see this this change wildly. 277 00:14:05,480 --> 00:14:07,480 Speaker 1: So it's not just a Fed funds rate, but it's 278 00:14:07,280 --> 00:14:11,560 Speaker 1: the difference between that. Right now we're showing Fed Funds 279 00:14:11,600 --> 00:14:13,640 Speaker 1: rate five point three and thirty your fix is seven 280 00:14:13,679 --> 00:14:16,800 Speaker 1: point six. It's about a two point three spread. So 281 00:14:16,840 --> 00:14:18,480 Speaker 1: we have to be aware of what the Fed fund 282 00:14:18,559 --> 00:14:21,080 Speaker 1: rate is going, but also what that spread is doing. 283 00:14:21,120 --> 00:14:23,640 Speaker 1: Those are two numbers get to look at, and we're 284 00:14:23,640 --> 00:14:26,240 Speaker 1: going to talk about where those Fed funds rates are 285 00:14:26,280 --> 00:14:29,040 Speaker 1: going in a little bit, so I'll let you know 286 00:14:29,040 --> 00:14:31,520 Speaker 1: where there is. But there's other factors, all right, there's 287 00:14:31,560 --> 00:14:33,840 Speaker 1: other factors. Now when we look at I'm going to 288 00:14:33,920 --> 00:14:35,480 Speaker 1: the other factors are supplying demand. 289 00:14:35,560 --> 00:14:36,120 Speaker 2: That's what it is. 290 00:14:36,200 --> 00:14:37,920 Speaker 1: So we're going to break down supply demand. A lot 291 00:14:37,960 --> 00:14:40,440 Speaker 1: of people think the housing prices are going to crash 292 00:14:40,680 --> 00:14:42,920 Speaker 1: because a bunch of supply will flood the markets. 293 00:14:43,000 --> 00:14:44,040 Speaker 2: We're going to talk about that. 294 00:14:44,240 --> 00:14:46,760 Speaker 1: But before we do, I want to talk about the 295 00:14:46,800 --> 00:14:48,960 Speaker 1: case Shiller Home price Index. 296 00:14:49,000 --> 00:14:51,200 Speaker 2: So now we're getting into this bubble territory. 297 00:14:51,440 --> 00:14:55,040 Speaker 1: So people say that because home prices are in a bubble, they. 298 00:14:54,840 --> 00:14:55,880 Speaker 2: Have to crash. 299 00:14:56,200 --> 00:14:59,120 Speaker 1: So if we look in two thousand and eight or 300 00:14:59,120 --> 00:15:02,200 Speaker 1: two thousand and six, we were in a bubble on 301 00:15:02,240 --> 00:15:06,360 Speaker 1: the case Shiller home National Home Price Index. We see 302 00:15:06,360 --> 00:15:09,600 Speaker 1: that we hit about one hundred and eighty four thousand 303 00:15:09,720 --> 00:15:11,840 Speaker 1: was like this medium in two thousand and six, and 304 00:15:11,960 --> 00:15:13,840 Speaker 1: today we're at about three eleven. 305 00:15:13,960 --> 00:15:14,120 Speaker 2: Now. 306 00:15:15,160 --> 00:15:18,000 Speaker 1: It peeked out in June of twenty twenty two, a 307 00:15:18,080 --> 00:15:20,840 Speaker 1: few months after the FED started raising rates and home 308 00:15:20,880 --> 00:15:23,080 Speaker 1: prices started dipping the national average. 309 00:15:23,240 --> 00:15:25,800 Speaker 2: So again there's no such thing as the market. 310 00:15:25,840 --> 00:15:27,800 Speaker 1: But if we do average out the market, we can 311 00:15:27,840 --> 00:15:30,920 Speaker 1: see that the medium price dropped from about three oh 312 00:15:31,040 --> 00:15:33,640 Speaker 1: eight down to two ninety three. 313 00:15:33,680 --> 00:15:35,720 Speaker 2: So we took a little dip, but then they took 314 00:15:35,840 --> 00:15:38,160 Speaker 2: back off and they went back higher again. 315 00:15:38,600 --> 00:15:41,720 Speaker 1: And now that's confusing for some people, but we have 316 00:15:41,760 --> 00:15:43,640 Speaker 1: to kind of dig into some of the data and 317 00:15:43,840 --> 00:15:47,200 Speaker 1: understand what's going on with that. But really it all 318 00:15:47,240 --> 00:15:50,600 Speaker 1: comes down to the supply and the demand. So we 319 00:15:50,680 --> 00:15:55,160 Speaker 1: have the price which is really determined by or actually 320 00:15:55,160 --> 00:15:56,720 Speaker 1: say the price of the monthly pay, which is determined 321 00:15:56,760 --> 00:15:58,240 Speaker 1: by the interest rate, and that's up to what the 322 00:15:58,280 --> 00:16:02,080 Speaker 1: FED is doing. Then we have the price of the home. 323 00:16:02,240 --> 00:16:04,680 Speaker 1: So the FED sets the price of the payment because 324 00:16:04,720 --> 00:16:06,920 Speaker 1: of the price of money, but the price of the 325 00:16:07,000 --> 00:16:09,360 Speaker 1: home is being driven by and supplying demand. 326 00:16:09,640 --> 00:16:10,720 Speaker 2: Let me just give you an example. 327 00:16:11,120 --> 00:16:14,480 Speaker 1: If there was one home for sell in this neighborhood 328 00:16:14,480 --> 00:16:16,560 Speaker 1: that everybody wanted, and there was ten people that wanted 329 00:16:16,600 --> 00:16:19,360 Speaker 1: to buy in that neighborhood, the price of the home 330 00:16:19,400 --> 00:16:22,480 Speaker 1: would go up. Those ten people would be fighting. They 331 00:16:22,520 --> 00:16:25,440 Speaker 1: would be like an auction. They'd be fighting over the 332 00:16:25,480 --> 00:16:28,360 Speaker 1: one single house of the price would drive up. However, 333 00:16:28,560 --> 00:16:32,520 Speaker 1: if there was ten houses for sale but only one buyer, 334 00:16:33,160 --> 00:16:34,840 Speaker 1: then the home sellers. 335 00:16:34,400 --> 00:16:35,920 Speaker 2: Would be competing. They would be dropping the. 336 00:16:35,840 --> 00:16:38,880 Speaker 1: Houses lower lower, lower, lower, lower until the one buyer 337 00:16:39,240 --> 00:16:41,200 Speaker 1: would take their house. That's supplying demand. It's pretty easy 338 00:16:41,200 --> 00:16:43,920 Speaker 1: to understand, but that's the mechanics of it. So right 339 00:16:44,000 --> 00:16:47,040 Speaker 1: now we have a problem where we don't have enough 340 00:16:47,080 --> 00:16:50,080 Speaker 1: houses for sale for the amount of demand that's there. 341 00:16:50,520 --> 00:16:52,240 Speaker 2: Now, you hear a lot of talk about. 342 00:16:52,160 --> 00:16:54,640 Speaker 1: A home recession, and what they're talking about is the 343 00:16:55,400 --> 00:16:58,080 Speaker 1: amount of homes that are actually for sale right now 344 00:16:58,560 --> 00:17:01,560 Speaker 1: and the amount of homes being sold are at all 345 00:17:01,600 --> 00:17:02,520 Speaker 1: time lows. 346 00:17:03,080 --> 00:17:04,080 Speaker 2: So why is that. 347 00:17:04,480 --> 00:17:06,119 Speaker 1: Well, there's a lot of reasons why, and I'm going 348 00:17:06,200 --> 00:17:07,600 Speaker 1: to break that down for you, and I want to 349 00:17:07,640 --> 00:17:10,359 Speaker 1: tell you why that number could change and what I 350 00:17:10,359 --> 00:17:11,840 Speaker 1: think is going to happen with that number. 351 00:17:12,040 --> 00:17:14,000 Speaker 2: But I do have to take a very short break. 352 00:17:14,119 --> 00:17:15,639 Speaker 1: If you're just tuning in and you're listening to the 353 00:17:15,680 --> 00:17:18,640 Speaker 1: Mark Maas Show and we're talking about our real estate 354 00:17:18,680 --> 00:17:21,800 Speaker 1: price is going to crash in twenty twenty three or nah, 355 00:17:21,840 --> 00:17:25,160 Speaker 1: And we're looking at this from a data driven approach 356 00:17:25,480 --> 00:17:27,960 Speaker 1: and trying to get rid of our mental. 357 00:17:27,640 --> 00:17:30,440 Speaker 2: Biases to look at the actual facts. 358 00:17:30,800 --> 00:17:33,440 Speaker 1: Right, we have to we have to make decisions based 359 00:17:33,480 --> 00:17:35,679 Speaker 1: off of not how we want things to be or 360 00:17:35,680 --> 00:17:38,400 Speaker 1: how we think should things should be, but actually as 361 00:17:38,480 --> 00:17:40,360 Speaker 1: they are. I'm going to break down this data, break 362 00:17:40,359 --> 00:17:41,919 Speaker 1: down the facts. I'm gonna explain it to you and 363 00:17:42,040 --> 00:17:44,639 Speaker 1: let you know what you should be thinking, watching and 364 00:17:44,640 --> 00:17:46,040 Speaker 1: doing in the near future when it comes. 365 00:17:45,920 --> 00:17:46,440 Speaker 2: To real estate. 366 00:17:46,600 --> 00:17:48,240 Speaker 1: So whold lot to cover when I come back. Don't 367 00:17:48,240 --> 00:17:49,960 Speaker 1: go away, you don't want to miss it. I'll be 368 00:17:50,080 --> 00:17:51,840 Speaker 1: right back, all right, welcome back. If you just tune in, 369 00:17:51,920 --> 00:17:53,800 Speaker 1: you're listening to the Mark Maas Show, and we're talking 370 00:17:53,800 --> 00:17:55,920 Speaker 1: about our real estate price is going to crash in 371 00:17:56,000 --> 00:17:59,560 Speaker 1: twenty twenty three or twenty twenty four or nah. And 372 00:17:59,600 --> 00:18:02,560 Speaker 1: we're talking about why everybody thinks they have to come 373 00:18:02,640 --> 00:18:06,200 Speaker 1: down but yet to haven't and if they will come down, 374 00:18:06,720 --> 00:18:08,159 Speaker 1: what's going to happen from that. So we're looking at 375 00:18:08,160 --> 00:18:11,080 Speaker 1: from a data driven approach. And right now we talked 376 00:18:11,080 --> 00:18:12,439 Speaker 1: about the interest rate. We're going to come back to 377 00:18:12,440 --> 00:18:14,520 Speaker 1: where I think the interest rate goes in the future. 378 00:18:15,240 --> 00:18:16,760 Speaker 1: But right now we're talking about the supply and demand. 379 00:18:17,640 --> 00:18:20,520 Speaker 1: So we know that the supply of homes for sale 380 00:18:21,320 --> 00:18:24,399 Speaker 1: and the amount of transactions happening in homes is at 381 00:18:24,440 --> 00:18:26,840 Speaker 1: all time lows. If there's not a lot of homes 382 00:18:26,840 --> 00:18:28,959 Speaker 1: for sale, then there's not a lot of transactions happening. 383 00:18:29,080 --> 00:18:32,840 Speaker 2: Right It's kind of easy to understand. So why would 384 00:18:32,920 --> 00:18:34,880 Speaker 2: we see a change in those numbers. 385 00:18:34,920 --> 00:18:38,600 Speaker 1: If, for example, the transactions stayed low but the supply 386 00:18:38,960 --> 00:18:42,560 Speaker 1: increases really fast, then yes, that would drive home prices down. 387 00:18:42,640 --> 00:18:45,800 Speaker 1: It certainly would, But we'd have to understand what would 388 00:18:45,840 --> 00:18:48,439 Speaker 1: be the mechanism for that to happen, and would that 389 00:18:48,520 --> 00:18:50,800 Speaker 1: happen nationally or would that happen in certain areas. So 390 00:18:50,840 --> 00:18:55,040 Speaker 1: let's say, for example, in a certain city, maybe a 391 00:18:55,040 --> 00:18:56,919 Speaker 1: certain blue state that you live in, they decided to 392 00:18:56,960 --> 00:18:58,480 Speaker 1: lock you in your homes again, sort of like we 393 00:18:58,520 --> 00:19:01,320 Speaker 1: saw in twenty twenty, a lot of people might leave, 394 00:19:01,840 --> 00:19:04,719 Speaker 1: and if a mass exodus happens and there's not enough 395 00:19:04,800 --> 00:19:07,160 Speaker 1: people to buy those homes from the people exiting in 396 00:19:07,240 --> 00:19:10,960 Speaker 1: that area, then those home prices could fall. But where 397 00:19:10,960 --> 00:19:12,760 Speaker 1: do all those people go? What we saw in twenty 398 00:19:12,760 --> 00:19:14,840 Speaker 1: twenty is they all went to Florida and Texas. So 399 00:19:14,880 --> 00:19:17,719 Speaker 1: then it pushed the prices of those homes up in 400 00:19:17,720 --> 00:19:19,840 Speaker 1: Florida and Texas because there was now more demands. You 401 00:19:19,840 --> 00:19:22,120 Speaker 1: have to understand these mechanisms, and you have to understand, again, 402 00:19:22,160 --> 00:19:25,359 Speaker 1: there's no such thing as the real estate market. But 403 00:19:25,440 --> 00:19:27,600 Speaker 1: let's look at what happens a lot of people think 404 00:19:27,640 --> 00:19:30,600 Speaker 1: that we are going to go into a recession, and 405 00:19:30,640 --> 00:19:34,000 Speaker 1: the recession is going to force homeowners to sell. That's 406 00:19:34,000 --> 00:19:36,600 Speaker 1: what they think. So there's going to be this nationwide 407 00:19:36,760 --> 00:19:41,520 Speaker 1: mass exited homes because homeowners can no longer afford these payments. Now, 408 00:19:41,720 --> 00:19:43,400 Speaker 1: let's break this down for a couple of things. First 409 00:19:43,400 --> 00:19:46,320 Speaker 1: of all, are we going to have a recession? There's 410 00:19:46,359 --> 00:19:48,399 Speaker 1: a whole nother topic that we can talk about. I 411 00:19:48,440 --> 00:19:52,520 Speaker 1: talk about it quite often. One hundred percent guaranteed, Yes, 412 00:19:52,880 --> 00:19:55,440 Speaker 1: I guarantee you one hundred percent, we will have a recession. 413 00:19:56,359 --> 00:19:59,400 Speaker 1: When is the question when will we have a recession? 414 00:19:59,480 --> 00:20:02,120 Speaker 1: More important? If we have, or I should say, when 415 00:20:02,160 --> 00:20:03,560 Speaker 1: we have the recession. 416 00:20:03,560 --> 00:20:06,080 Speaker 2: How will it work? Who will be affected? 417 00:20:06,119 --> 00:20:08,160 Speaker 1: So, for example, even in two thousand and eight during 418 00:20:08,160 --> 00:20:11,640 Speaker 1: the Great Financial crash, maybe it'll be that big, Maybe 419 00:20:11,680 --> 00:20:13,040 Speaker 1: it'll be bigger, maybe it'd be less. 420 00:20:12,840 --> 00:20:15,480 Speaker 2: We don't know. But even in that one, not everybody 421 00:20:15,520 --> 00:20:16,840 Speaker 2: was affected. Right. 422 00:20:16,960 --> 00:20:19,840 Speaker 1: A lot of industries actually did even better during that time. 423 00:20:20,080 --> 00:20:22,080 Speaker 1: As a matter of fact, if you were renting homes, 424 00:20:22,240 --> 00:20:24,600 Speaker 1: you did really really well renting your home. There was 425 00:20:24,800 --> 00:20:27,160 Speaker 1: lots of business sectors that did really really well. Now 426 00:20:27,200 --> 00:20:30,600 Speaker 1: if you were in home building and construction and mortgage loans. 427 00:20:30,640 --> 00:20:34,080 Speaker 1: For example, in some banking it was a bad time, right, 428 00:20:34,200 --> 00:20:34,960 Speaker 1: you were affected? 429 00:20:35,000 --> 00:20:37,480 Speaker 2: For sure? I was affected. I got crushed. I was 430 00:20:37,480 --> 00:20:38,160 Speaker 2: in real estate. 431 00:20:38,920 --> 00:20:41,919 Speaker 1: I was living in Orange County, California, the epicenter of 432 00:20:42,040 --> 00:20:45,159 Speaker 1: the mortgage industry. So yes, we got adversely affected here, 433 00:20:45,160 --> 00:20:47,640 Speaker 1: but lots of people didn't. So even if or when 434 00:20:47,680 --> 00:20:49,720 Speaker 1: we have the recession, will you be affected? 435 00:20:50,080 --> 00:20:51,879 Speaker 2: Now? What happens is we make this mistake. 436 00:20:52,359 --> 00:20:54,800 Speaker 1: There's a saying that generals always fight the last war, 437 00:20:54,840 --> 00:20:57,679 Speaker 1: and because the last war was a housing crisis, we 438 00:20:57,720 --> 00:21:00,000 Speaker 1: think this next one is going to be a housing crisis. 439 00:21:00,640 --> 00:21:02,959 Speaker 1: I don't necessarily agree, but let's just say that we 440 00:21:03,000 --> 00:21:06,320 Speaker 1: do have this great financial crisis two point zero happens again, 441 00:21:06,960 --> 00:21:10,640 Speaker 1: we have this nationwide recession. Will there be a massive 442 00:21:10,640 --> 00:21:13,600 Speaker 1: amount of homeowners forced to sell? Let's look at some data, 443 00:21:13,760 --> 00:21:15,520 Speaker 1: so some things we may not be aware of. So, 444 00:21:15,600 --> 00:21:21,320 Speaker 1: for example, forty two percent of US homeowners, almost half 445 00:21:21,600 --> 00:21:25,760 Speaker 1: of the homes in the United States have no mortgage. 446 00:21:26,359 --> 00:21:28,760 Speaker 1: So if they have no mortgage payment, how are they 447 00:21:28,760 --> 00:21:30,800 Speaker 1: going to be forced to sell? Are they going to 448 00:21:30,840 --> 00:21:32,959 Speaker 1: be forced to sell and go rent? So they're going 449 00:21:33,000 --> 00:21:35,359 Speaker 1: to have a payment when they don't have a payment 450 00:21:35,480 --> 00:21:38,479 Speaker 1: right now, that doesn't make any sense. So right off 451 00:21:38,520 --> 00:21:41,760 Speaker 1: the bat, about half of the homeowners aren't going to sell. 452 00:21:41,760 --> 00:21:43,400 Speaker 1: They're not going to be forced to anyway. They might 453 00:21:43,440 --> 00:21:46,080 Speaker 1: want to sell again back if you know, they're in 454 00:21:46,080 --> 00:21:47,199 Speaker 1: a blue state and they get locked in the home, 455 00:21:47,240 --> 00:21:48,879 Speaker 1: maybe they want to sell, but they're not going to 456 00:21:48,880 --> 00:21:50,840 Speaker 1: be forced to sell based off a recession. 457 00:21:51,680 --> 00:21:52,040 Speaker 2: All right. 458 00:21:52,080 --> 00:21:55,320 Speaker 1: What else we talk about, and this is what's caught 459 00:21:55,359 --> 00:21:57,800 Speaker 1: most people off guard, is when interest rates go this high, 460 00:21:58,240 --> 00:22:00,240 Speaker 1: homeowners are going to be in a world of hurt. 461 00:22:00,240 --> 00:22:02,320 Speaker 1: They're going to have to force to be sell their home. Well, 462 00:22:02,880 --> 00:22:06,320 Speaker 1: ninety one percent, so almost all of them. Ninety one 463 00:22:06,359 --> 00:22:08,919 Speaker 1: percent of mortgage holders have an interest rate on their 464 00:22:08,960 --> 00:22:11,800 Speaker 1: mortgage of less than five percent. So even though interest 465 00:22:11,840 --> 00:22:13,879 Speaker 1: rates went to eight percent now they're seven in the 466 00:22:13,920 --> 00:22:17,679 Speaker 1: high sevens, they're not affected. Ninety one percent of people 467 00:22:17,920 --> 00:22:22,840 Speaker 1: are less than five percent, sixty six percent are under 468 00:22:23,080 --> 00:22:29,720 Speaker 1: four percent, and twenty six percent are under three. Now 469 00:22:30,040 --> 00:22:31,760 Speaker 1: we'll talk about where interstrates are going here in a 470 00:22:31,760 --> 00:22:35,040 Speaker 1: little bit. I think they're going to go back to 471 00:22:35,119 --> 00:22:36,760 Speaker 1: zero at some point, probably this decade. 472 00:22:37,960 --> 00:22:39,720 Speaker 2: The spoiler alert. We'll talk about why. 473 00:22:40,040 --> 00:22:43,720 Speaker 1: But if you have a four percent mortgage, you are 474 00:22:43,800 --> 00:22:47,360 Speaker 1: going to fight like crazy to not lose that mortgage 475 00:22:47,400 --> 00:22:49,439 Speaker 1: because if you do, you're going to have to go 476 00:22:49,440 --> 00:22:51,640 Speaker 1: buy a new home at the whatever seven point six 477 00:22:51,720 --> 00:22:54,840 Speaker 1: that is today, and again then you have to buy 478 00:22:54,840 --> 00:22:59,480 Speaker 1: a smaller house. And so even if we have this recession, 479 00:22:59,600 --> 00:23:01,880 Speaker 1: or I should say when we will have a recesion, 480 00:23:01,880 --> 00:23:04,560 Speaker 1: when we have this recession depends on how you're affected. 481 00:23:04,800 --> 00:23:06,800 Speaker 1: You're gonna fight like crazy to keep the house. Of course, 482 00:23:06,800 --> 00:23:08,639 Speaker 1: you're going to keep your house above everything else. You're 483 00:23:08,680 --> 00:23:11,040 Speaker 1: probably gonna let go of your vacations and going out 484 00:23:11,080 --> 00:23:12,360 Speaker 1: to eat, and you're not going to buy a new 485 00:23:12,359 --> 00:23:13,160 Speaker 1: clothes and. 486 00:23:13,160 --> 00:23:14,040 Speaker 2: All of those things. 487 00:23:14,280 --> 00:23:17,480 Speaker 1: But you're gonna want to keep your house. You have 488 00:23:17,520 --> 00:23:22,080 Speaker 1: a mortgage payment under four percent, you're locked in. I'll 489 00:23:22,119 --> 00:23:24,080 Speaker 1: take your house at four percent, So give it to me. 490 00:23:24,160 --> 00:23:26,720 Speaker 1: Like people want that four percent rate because it's going 491 00:23:26,760 --> 00:23:29,320 Speaker 1: to be lower than inflation. So now we have forty 492 00:23:29,359 --> 00:23:32,360 Speaker 1: two percent, almost half of homeowners have no mortgage at all. 493 00:23:33,280 --> 00:23:37,040 Speaker 1: Ninety one percent are under five, sixty six percent under 494 00:23:37,040 --> 00:23:41,359 Speaker 1: four So those people are probably not going to add 495 00:23:41,400 --> 00:23:45,840 Speaker 1: to a massive supply boom, so it's not gonna happen now. 496 00:23:45,880 --> 00:23:48,440 Speaker 1: We can also see that supply is very tight. As 497 00:23:48,440 --> 00:23:50,720 Speaker 1: a matter of fact, just last week, one of the 498 00:23:50,760 --> 00:23:53,959 Speaker 1: FED presidents, Kasharski, came out and said that we have 499 00:23:54,040 --> 00:23:59,240 Speaker 1: a structure that it's structural underbuilding that broke the market. 500 00:23:59,280 --> 00:24:02,320 Speaker 2: It's not the FED, it's what is he talking about. 501 00:24:02,880 --> 00:24:05,879 Speaker 1: He's coming out and saying that it's the underbuilt number 502 00:24:05,880 --> 00:24:09,480 Speaker 1: of units that we need to meet our growing population. 503 00:24:09,960 --> 00:24:13,040 Speaker 1: That's the biggest factor in why home prices are up 504 00:24:13,359 --> 00:24:17,320 Speaker 1: and not going down. Again, what he's saying is supply 505 00:24:17,359 --> 00:24:21,080 Speaker 1: and demand. He's saying that we did not produce The 506 00:24:21,119 --> 00:24:24,160 Speaker 1: country as a whole, did not produce enough homes. There's 507 00:24:24,200 --> 00:24:26,720 Speaker 1: not enough supply to meet the demand that we have, 508 00:24:27,600 --> 00:24:30,480 Speaker 1: So that's why he's saying that home prices are not 509 00:24:30,520 --> 00:24:31,000 Speaker 1: going down. 510 00:24:31,400 --> 00:24:32,800 Speaker 2: And that's exactly what we're seeing. 511 00:24:32,960 --> 00:24:36,480 Speaker 1: As a matter of fact, we've only been building, what 512 00:24:36,560 --> 00:24:40,880 Speaker 1: we've been underbuilding single family residences now since twenty ten, 513 00:24:41,000 --> 00:24:44,879 Speaker 1: so about thirteen years now. And what we're witnessing at 514 00:24:44,920 --> 00:24:48,240 Speaker 1: the same time as we've been underbuilding the single family 515 00:24:48,320 --> 00:24:52,280 Speaker 1: homes for the last thirteen years, we have this massive 516 00:24:52,359 --> 00:24:55,679 Speaker 1: tidal wave of baby boomers coming on board. Now, the 517 00:24:55,720 --> 00:24:57,720 Speaker 1: baby boomers are sort of like this echo boom. So 518 00:24:57,760 --> 00:25:01,560 Speaker 1: the baby boomers are the largest of our population, but 519 00:25:02,000 --> 00:25:05,160 Speaker 1: they had kids, and so the baby boomers are now 520 00:25:05,200 --> 00:25:08,320 Speaker 1: the second largest segment of the population. And they're all 521 00:25:08,760 --> 00:25:12,680 Speaker 1: turning thirty five right now, so they're all going to 522 00:25:12,840 --> 00:25:16,000 Speaker 1: need to be buying homes. So how is that going 523 00:25:16,080 --> 00:25:19,360 Speaker 1: to work when we have this massive demand coming in 524 00:25:19,760 --> 00:25:23,080 Speaker 1: and we have an undersupply under we have a shortage 525 00:25:23,080 --> 00:25:26,560 Speaker 1: of supply. Now, I know the arguments, Mark, Mark, Come on, 526 00:25:26,640 --> 00:25:29,400 Speaker 1: you don't understand the baby boomers can't afford to buy homes. 527 00:25:30,520 --> 00:25:33,399 Speaker 1: You know, they're still living in their parents' basements. Minimum 528 00:25:33,440 --> 00:25:35,720 Speaker 1: wage isn't pain high enough. I get it, right, I 529 00:25:35,720 --> 00:25:38,399 Speaker 1: get it, I get it. But some of them can 530 00:25:38,440 --> 00:25:42,280 Speaker 1: buy homes. I know plenty of people that are under 531 00:25:42,359 --> 00:25:46,119 Speaker 1: thirty five that are making six and seven figures. So 532 00:25:46,920 --> 00:25:50,199 Speaker 1: there's certainly people that can buy that. And because the 533 00:25:50,320 --> 00:25:54,480 Speaker 1: supply is so low, we don't need a lot of demand. 534 00:25:55,280 --> 00:25:55,480 Speaker 2: Right. 535 00:25:55,880 --> 00:25:58,679 Speaker 1: We have almost half the people have no mortgage. They 536 00:25:58,680 --> 00:26:01,480 Speaker 1: don't want to sell. We have of a ninety one 537 00:26:01,520 --> 00:26:06,600 Speaker 1: percent that have amazing mortgages at historical lows they don't 538 00:26:06,640 --> 00:26:07,359 Speaker 1: want to sell. 539 00:26:07,920 --> 00:26:09,040 Speaker 2: And so even if. 540 00:26:08,880 --> 00:26:11,280 Speaker 1: There's not a massive man, even if all baby boomers 541 00:26:11,320 --> 00:26:14,680 Speaker 1: can't buy, the few that can could continue to gobble 542 00:26:14,760 --> 00:26:17,320 Speaker 1: up the limited supply that we have. Now on top 543 00:26:17,359 --> 00:26:19,480 Speaker 1: of that, on top of the millennials, we have the 544 00:26:19,520 --> 00:26:23,640 Speaker 1: institutional demand. Now, the institutional demand, these are the blackstones 545 00:26:23,680 --> 00:26:25,560 Speaker 1: and stuff like that have been buying up. And we 546 00:26:25,600 --> 00:26:29,000 Speaker 1: can see that these what we'd call smart money started 547 00:26:29,040 --> 00:26:33,040 Speaker 1: accumulating houses at massive scale in twenty twenty and twenty 548 00:26:33,080 --> 00:26:38,080 Speaker 1: twenty one, and they're projected to grow their market share 549 00:26:38,200 --> 00:26:42,320 Speaker 1: by eight times in just the next seven years. So 550 00:26:42,359 --> 00:26:46,000 Speaker 1: there's been massive demand from the institutional side because they 551 00:26:46,080 --> 00:26:49,400 Speaker 1: understand one that people need houses to live in surprise, surprise, 552 00:26:49,800 --> 00:26:51,760 Speaker 1: and they want to continue piling into that. If you're 553 00:26:51,760 --> 00:26:53,920 Speaker 1: just tune in, you're listening to the Marcomas Show, we're 554 00:26:53,920 --> 00:26:57,000 Speaker 1: talking about weill real estate prices crashed in twenty twenty 555 00:26:57,040 --> 00:26:59,480 Speaker 1: four or not, and we're breaking it down from a 556 00:26:59,600 --> 00:27:02,399 Speaker 1: data driven approach, so you can just get rid of 557 00:27:02,440 --> 00:27:06,160 Speaker 1: your mental biases and you can understand. Now if you're 558 00:27:06,160 --> 00:27:07,480 Speaker 1: just tuning in listening to the Mark Mars Show, I 559 00:27:07,520 --> 00:27:09,360 Speaker 1: got to take a quick break, but I'll be right 560 00:27:09,400 --> 00:27:11,199 Speaker 1: back with what is going to happen with the real 561 00:27:11,280 --> 00:27:11,920 Speaker 1: estate markets. 562 00:27:12,200 --> 00:27:14,040 Speaker 2: Don't go away. We're back, all right. 563 00:27:14,080 --> 00:27:16,000 Speaker 1: If you're just tuning in listening to the Mark Mas Show, 564 00:27:16,040 --> 00:27:18,439 Speaker 1: we're talking about our real estate price is going to. 565 00:27:18,440 --> 00:27:19,399 Speaker 2: Crash or nah. 566 00:27:19,880 --> 00:27:22,560 Speaker 1: Everyone thinks they have to come down because of mortgage 567 00:27:22,560 --> 00:27:24,399 Speaker 1: prices being so high, mortgage rates being so high, But. 568 00:27:24,440 --> 00:27:25,320 Speaker 2: Of course they haven't. 569 00:27:25,640 --> 00:27:28,520 Speaker 1: And we're breaking that down as to why. Now we're 570 00:27:28,520 --> 00:27:30,679 Speaker 1: talking about supply and demand. Of course, supply and demand 571 00:27:30,800 --> 00:27:34,840 Speaker 1: drives all prices. And we talked about how the Fed 572 00:27:34,880 --> 00:27:39,440 Speaker 1: President Kasharski was saying that it's a problem of structural underbuilding. 573 00:27:39,800 --> 00:27:42,720 Speaker 1: We haven't been building enough homes for the last thirteen years, 574 00:27:43,000 --> 00:27:47,119 Speaker 1: and so the demand has been outstripping the supply. We 575 00:27:47,160 --> 00:27:50,120 Speaker 1: can see this. I talked about the millennial boom. They're 576 00:27:50,119 --> 00:27:52,400 Speaker 1: all turning thirty five. They all want to start buying houses. 577 00:27:52,600 --> 00:27:55,800 Speaker 1: We have more demand. The demand is outstripping supply. On 578 00:27:55,840 --> 00:27:59,280 Speaker 1: top of that, we have institutional demand, Blackstones, et cetera. 579 00:27:59,400 --> 00:28:03,040 Speaker 1: The smart money. They've been buying houses at massive scale 580 00:28:03,200 --> 00:28:07,120 Speaker 1: since twenty twenty, twenty twenty one, and they're not slowing down. 581 00:28:07,119 --> 00:28:09,439 Speaker 1: As a matter of fact, they're projected to grow their 582 00:28:09,480 --> 00:28:13,200 Speaker 1: market share in rink in real estate by eight times 583 00:28:13,640 --> 00:28:14,680 Speaker 1: in the next seven years. 584 00:28:14,680 --> 00:28:15,080 Speaker 2: So we have. 585 00:28:15,359 --> 00:28:19,680 Speaker 1: Continued demand from the institutional side, continued demand from the 586 00:28:19,760 --> 00:28:23,919 Speaker 1: millennial boom, and we have a continually shrinking in supply. 587 00:28:24,720 --> 00:28:26,960 Speaker 1: We talked about the math as to why the people 588 00:28:27,000 --> 00:28:29,760 Speaker 1: that have homes do not want to sell them. Now, 589 00:28:29,840 --> 00:28:31,640 Speaker 1: I get it you're gonna say, but Mark, Mark, Mark, 590 00:28:31,640 --> 00:28:33,399 Speaker 1: you don't understand these people can't afford homes. They can 591 00:28:33,440 --> 00:28:36,119 Speaker 1: afford homes, Millennials can afford homes, well, some can, but 592 00:28:36,320 --> 00:28:38,680 Speaker 1: the government wants to continue to make it easier and 593 00:28:38,720 --> 00:28:40,680 Speaker 1: easier for you to do that. So when you think 594 00:28:40,680 --> 00:28:44,720 Speaker 1: about they have to come down, do they What if 595 00:28:44,720 --> 00:28:46,560 Speaker 1: the Fed just said, you know what, We're going to 596 00:28:46,640 --> 00:28:49,360 Speaker 1: give everyone a fifty percent down payment on any home 597 00:28:49,400 --> 00:28:51,360 Speaker 1: you want to buy. Just go buy any home you want. 598 00:28:51,400 --> 00:28:53,440 Speaker 1: We'll give you fifty percent down payment. Would that change things? 599 00:28:54,160 --> 00:28:54,320 Speaker 2: Now? 600 00:28:54,320 --> 00:28:56,560 Speaker 1: I know that sounds crazy, but you have to start 601 00:28:56,560 --> 00:28:59,280 Speaker 1: to think outside the box because the government is going 602 00:28:59,320 --> 00:29:01,560 Speaker 1: to do things to keep the markets going. Now. I 603 00:29:01,640 --> 00:29:04,720 Speaker 1: know that one sounds pretty crazy and maybe we won't 604 00:29:04,720 --> 00:29:06,560 Speaker 1: get there, but you have to stop and ask and 605 00:29:06,760 --> 00:29:09,840 Speaker 1: stop thinking it can't happen because we're seeing government program So, 606 00:29:09,880 --> 00:29:15,920 Speaker 1: for example, Fannie Main government just introduced a five percent 607 00:29:16,080 --> 00:29:20,600 Speaker 1: down payment for multifamily properties. Now, if you're young, if 608 00:29:20,600 --> 00:29:22,800 Speaker 1: you're just getting started, you're in your twenties, you're a millennial, 609 00:29:23,280 --> 00:29:25,920 Speaker 1: something that you should heavily consider. What I did when 610 00:29:25,960 --> 00:29:28,920 Speaker 1: I was in my twenties was buying a multi family property. 611 00:29:29,280 --> 00:29:31,880 Speaker 1: You can buy a two to three four unit property. 612 00:29:31,920 --> 00:29:35,440 Speaker 1: Anything under four units is still considered like a residential property. 613 00:29:35,520 --> 00:29:38,240 Speaker 1: Anything over four is now commercial. So you could buy 614 00:29:38,240 --> 00:29:41,480 Speaker 1: a four four plex or a three plex triplex. You 615 00:29:41,520 --> 00:29:43,480 Speaker 1: could live in one of the units and you could 616 00:29:43,480 --> 00:29:46,600 Speaker 1: rent the others out. By living in one and renting 617 00:29:46,600 --> 00:29:48,360 Speaker 1: out the other two or three, that could probably make 618 00:29:48,400 --> 00:29:49,720 Speaker 1: your mortgage payment for you. 619 00:29:50,000 --> 00:29:52,320 Speaker 2: So now not only do I. 620 00:29:52,080 --> 00:29:54,760 Speaker 1: Have a reduced mortgage payment or no mortgage payment, now 621 00:29:54,840 --> 00:29:58,000 Speaker 1: I have a building that I'm getting one appreciation on, 622 00:29:58,480 --> 00:30:02,840 Speaker 1: two tax deductions, and three my tenants are paying it 623 00:30:02,880 --> 00:30:06,240 Speaker 1: off for me. Now, typically, like I said, this is 624 00:30:06,280 --> 00:30:08,479 Speaker 1: a great plan. This is what I did when I 625 00:30:08,520 --> 00:30:10,960 Speaker 1: was younger, what I'd recommend most people to think about doing. 626 00:30:11,600 --> 00:30:13,400 Speaker 1: But typically you would have to come up with a 627 00:30:13,520 --> 00:30:17,040 Speaker 1: much bigger down payment on that. Typically you would need 628 00:30:17,080 --> 00:30:20,120 Speaker 1: at least fifteen to twenty five percent of the property's 629 00:30:20,240 --> 00:30:23,360 Speaker 1: price as a down payment, and that's been prohibitive for 630 00:30:23,400 --> 00:30:25,480 Speaker 1: a lot of people. You can buy a single family 631 00:30:25,520 --> 00:30:28,040 Speaker 1: home for you know, ten percent or maybe five percent, 632 00:30:28,320 --> 00:30:30,360 Speaker 1: but to do this multi family you need fifteen twenty 633 00:30:30,400 --> 00:30:33,760 Speaker 1: five percent. Well, fannie May just change the rules and 634 00:30:33,800 --> 00:30:38,120 Speaker 1: they have now introduced a five percent down payment opportunity 635 00:30:38,120 --> 00:30:41,640 Speaker 1: for multifamily homes. So now you can go get the 636 00:30:41,640 --> 00:30:44,880 Speaker 1: two to three four bedroom or unit property at five percent, 637 00:30:44,960 --> 00:30:47,400 Speaker 1: just like a regular single family Do you think that 638 00:30:47,640 --> 00:30:53,200 Speaker 1: increases the demand or reduces it? Obviously it increases the demand. 639 00:30:53,480 --> 00:30:55,800 Speaker 1: If more people can afford to buy these homes, more 640 00:30:55,840 --> 00:30:58,480 Speaker 1: people will buy them. And so whenever you think that, 641 00:30:58,760 --> 00:31:00,840 Speaker 1: oh but you don't understand people can afford the down payment, 642 00:31:01,000 --> 00:31:03,680 Speaker 1: well okay, they just change the rules and now people 643 00:31:03,680 --> 00:31:07,320 Speaker 1: can afford the payment. RFK Junior is running for president 644 00:31:07,440 --> 00:31:09,480 Speaker 1: right now. I don't think he's probably going to win, 645 00:31:09,560 --> 00:31:12,400 Speaker 1: but he's running on a campaign to win, and he's 646 00:31:12,480 --> 00:31:15,800 Speaker 1: running on a campaign to actually change this as well. 647 00:31:15,920 --> 00:31:17,560 Speaker 1: As a matter of fact, what he wants to do 648 00:31:18,360 --> 00:31:20,440 Speaker 1: if he's elected, is he wants to bring back a 649 00:31:20,640 --> 00:31:24,320 Speaker 1: three percent mortgage. So he wants to level the economic 650 00:31:24,360 --> 00:31:27,520 Speaker 1: playing field, if you will, and come out with a 651 00:31:27,560 --> 00:31:31,080 Speaker 1: plan to allow Americans to get working class Americans, as 652 00:31:31,080 --> 00:31:33,400 Speaker 1: he calls it, to allow them to buy a home. 653 00:31:34,360 --> 00:31:37,000 Speaker 1: He said that there's been a shift in wealth since 654 00:31:37,040 --> 00:31:39,720 Speaker 1: twenty twenty from the working class to the super wealthy. 655 00:31:40,960 --> 00:31:43,120 Speaker 1: The average annual wage is five thousand dollars, less than 656 00:31:43,120 --> 00:31:45,600 Speaker 1: the cost of basic human needs. And what he wants 657 00:31:45,640 --> 00:31:47,360 Speaker 1: to do is he wants the government to create a 658 00:31:47,360 --> 00:31:50,120 Speaker 1: new program if he's president, to allow people to buy 659 00:31:50,120 --> 00:31:54,360 Speaker 1: a home for three percent. Now, if he makes it 660 00:31:54,440 --> 00:31:56,880 Speaker 1: easier to buy homes, do you think more people buy homes? 661 00:31:57,840 --> 00:31:58,800 Speaker 2: Yes, of course. 662 00:31:59,040 --> 00:32:01,360 Speaker 1: And so every time you get in this thinking that, oh, no, 663 00:32:01,440 --> 00:32:03,720 Speaker 1: prices have to come down because no one can afford it, Well, 664 00:32:03,760 --> 00:32:06,040 Speaker 1: what if they just make it affordable? What if prices 665 00:32:06,040 --> 00:32:08,040 Speaker 1: just come down? What if the government is as issue 666 00:32:08,240 --> 00:32:11,480 Speaker 1: like they have Now, another thing that you get thinking 667 00:32:11,480 --> 00:32:14,720 Speaker 1: about is like, again, no one can afford these homes. 668 00:32:14,760 --> 00:32:17,640 Speaker 1: No one can afford to put all this money down, 669 00:32:17,960 --> 00:32:21,160 Speaker 1: No one can afford these new payments. Well, there's another 670 00:32:21,200 --> 00:32:24,960 Speaker 1: thing that you haven't thought about. Existing homeowners could still 671 00:32:24,960 --> 00:32:27,600 Speaker 1: buy them. So if you've been out of the real 672 00:32:27,680 --> 00:32:28,760 Speaker 1: estate game, it's hard. 673 00:32:28,560 --> 00:32:29,000 Speaker 2: To get in. 674 00:32:29,160 --> 00:32:32,160 Speaker 1: This is why you have to get in, because if 675 00:32:32,160 --> 00:32:34,800 Speaker 1: it's hard to get in now, imagine how much harder 676 00:32:34,800 --> 00:32:36,520 Speaker 1: it's going to be to get in in three years 677 00:32:36,920 --> 00:32:40,160 Speaker 1: and five years and eight years. You're only getting further 678 00:32:40,200 --> 00:32:42,680 Speaker 1: and further behind. It's not going to be easier in 679 00:32:42,720 --> 00:32:45,600 Speaker 1: the future. You're only falling further behind. So if you 680 00:32:45,640 --> 00:32:49,320 Speaker 1: have an if you're an existing homeowner, when you sell 681 00:32:49,400 --> 00:32:52,120 Speaker 1: your home, you can take the equity from that home 682 00:32:52,240 --> 00:32:55,120 Speaker 1: and put it down on the other home. So if 683 00:32:55,120 --> 00:32:58,800 Speaker 1: you're moving right home equity helps offset the increase in 684 00:32:58,840 --> 00:33:01,840 Speaker 1: the purchasing price. In the second quarter of twenty twenty three, 685 00:33:02,240 --> 00:33:05,680 Speaker 1: the total number of mortgage residential properties with negative equity 686 00:33:06,200 --> 00:33:11,120 Speaker 1: decreased by six percent. Right, so that's with negative equity. 687 00:33:11,240 --> 00:33:15,400 Speaker 1: What that means is almost all the homes today have equity. 688 00:33:16,880 --> 00:33:19,360 Speaker 1: If you bought a home from the second if you 689 00:33:19,360 --> 00:33:21,560 Speaker 1: bought a home from before like twenty. 690 00:33:21,360 --> 00:33:24,360 Speaker 2: Twenty two, you have equity in your home. 691 00:33:25,520 --> 00:33:29,280 Speaker 1: US homeowners with mortgages gained an average of thirteen nine 692 00:33:29,320 --> 00:33:32,560 Speaker 1: hundred dollars quarter over quarter, accounting to a collective increase 693 00:33:32,600 --> 00:33:36,080 Speaker 1: of eight hundred billion, or a five point two percent 694 00:33:36,200 --> 00:33:42,400 Speaker 1: gain in home equity. So homeowners are gaining equity. They're 695 00:33:42,440 --> 00:33:46,280 Speaker 1: gained five percent of their home equity, eight hundred billion 696 00:33:46,400 --> 00:33:50,120 Speaker 1: dollars of equity they've gained in this period of time. 697 00:33:50,360 --> 00:33:52,560 Speaker 1: Now this increases in some of these other areas that 698 00:33:52,600 --> 00:33:56,240 Speaker 1: have gone up by more, obviously, But so these people 699 00:33:56,520 --> 00:33:58,920 Speaker 1: have equity they can afford to buy down the price. 700 00:33:58,960 --> 00:34:01,520 Speaker 1: So for example, they go buy this five hundred thousand 701 00:34:01,520 --> 00:34:04,280 Speaker 1: dollars house, they don't have to pay the payment for 702 00:34:04,320 --> 00:34:06,520 Speaker 1: the five hundred thousand. They can afford to put I 703 00:34:06,560 --> 00:34:09,640 Speaker 1: don't know two hundred thousand down, So they're in a 704 00:34:09,719 --> 00:34:10,680 Speaker 1: much better position. 705 00:34:11,040 --> 00:34:11,840 Speaker 2: And again, like I. 706 00:34:11,840 --> 00:34:16,719 Speaker 1: Said, almost every house today has equity in it. So 707 00:34:16,920 --> 00:34:19,360 Speaker 1: you have to think through all these variables. Let's just 708 00:34:19,880 --> 00:34:24,759 Speaker 1: rack them off again. One, home prices have to come down, 709 00:34:25,320 --> 00:34:28,680 Speaker 1: do they because they haven't, So that's actually been wrong. Well, 710 00:34:28,719 --> 00:34:30,600 Speaker 1: they have to come down because people can't afford them. Well, 711 00:34:30,640 --> 00:34:35,800 Speaker 1: people can just buy smaller houses. The price is set 712 00:34:35,840 --> 00:34:39,320 Speaker 1: by supply and demand. Well, there's no supply coming ons 713 00:34:39,480 --> 00:34:42,520 Speaker 1: and there's more demand coming than there is supply. There's 714 00:34:42,560 --> 00:34:45,479 Speaker 1: more demand coming because we have the baby boomers. There's 715 00:34:45,520 --> 00:34:48,520 Speaker 1: more demand coming because we've structurally under built, according to 716 00:34:48,560 --> 00:34:52,640 Speaker 1: what the FED is saying, and so we're seeing those things. Now, 717 00:34:52,680 --> 00:34:55,719 Speaker 1: what about people affording these homes? People can't afford them. Well, 718 00:34:56,000 --> 00:34:58,719 Speaker 1: governments are putting new programs into place to make them 719 00:34:58,719 --> 00:35:03,480 Speaker 1: more affordable. In the new homes, for example, they're buying 720 00:35:03,520 --> 00:35:06,600 Speaker 1: the rate down for you. So for example, you're going 721 00:35:06,680 --> 00:35:08,319 Speaker 1: to go buy a brand new home, a track home, 722 00:35:08,560 --> 00:35:10,640 Speaker 1: and the payment's going to be seven point six percent, 723 00:35:10,640 --> 00:35:12,319 Speaker 1: They're like, we'll just buy it down. We'll get you 724 00:35:12,360 --> 00:35:14,640 Speaker 1: a four and a half percent rate. We'll buy it down. 725 00:35:15,120 --> 00:35:17,680 Speaker 1: So we're starting to see all these types of programs. 726 00:35:18,120 --> 00:35:21,439 Speaker 1: So I understand the people's thinking. What they should say 727 00:35:21,560 --> 00:35:25,279 Speaker 1: is if nothing changes, then maybe the. 728 00:35:25,239 --> 00:35:26,160 Speaker 2: Price would come down. 729 00:35:26,560 --> 00:35:28,640 Speaker 1: But to say they have to come down without saying 730 00:35:28,680 --> 00:35:31,759 Speaker 1: if nothing changes because things change, people just buy the 731 00:35:31,840 --> 00:35:34,279 Speaker 1: rate down. The government comes out these new programs or 732 00:35:34,320 --> 00:35:37,960 Speaker 1: whatever it may be. Now again, I just want to 733 00:35:38,040 --> 00:35:39,879 Speaker 1: hit on one more time that there is no such 734 00:35:39,920 --> 00:35:42,719 Speaker 1: thing as the real estate market. In my area that 735 00:35:42,760 --> 00:35:45,560 Speaker 1: I live in southern California, homes are up six point 736 00:35:45,640 --> 00:35:48,759 Speaker 1: three percent year over year, six point three percent, not 737 00:35:48,880 --> 00:35:55,240 Speaker 1: down they're up, but again, affordability is buy area. Overall, 738 00:35:55,320 --> 00:35:57,440 Speaker 1: we have not seen a market crash. I don't expect 739 00:35:57,480 --> 00:36:00,319 Speaker 1: to see a market crash. What I do expect, per 740 00:36:00,400 --> 00:36:02,640 Speaker 1: Janet yelling at the Treasury, is I expect rates to 741 00:36:02,800 --> 00:36:05,240 Speaker 1: come back down. I think the Fed has already signaled 742 00:36:05,280 --> 00:36:07,640 Speaker 1: there's no more rate hikes. I expect rates to come 743 00:36:07,640 --> 00:36:10,400 Speaker 1: back down. I expect rates to be much lower in 744 00:36:10,440 --> 00:36:13,640 Speaker 1: the next two years, and I expect home prices to 745 00:36:13,680 --> 00:36:16,160 Speaker 1: be up by fifty percent in the next three to 746 00:36:16,200 --> 00:36:18,200 Speaker 1: five years. The FED is going to print so much 747 00:36:18,200 --> 00:36:20,120 Speaker 1: money it's going to make our eyes bleed, and home 748 00:36:20,160 --> 00:36:22,799 Speaker 1: prices and asset prices will be going up with it. 749 00:36:22,920 --> 00:36:24,600 Speaker 1: So I don't know what's going to happen in the 750 00:36:24,600 --> 00:36:27,279 Speaker 1: next three six nine months. I'm pretty confident that home 751 00:36:27,320 --> 00:36:29,160 Speaker 1: prices are up fifty percent from now in the next 752 00:36:29,160 --> 00:36:31,600 Speaker 1: five years, and so if you're thinking long term, that's 753 00:36:31,640 --> 00:36:33,640 Speaker 1: the play. If you just tune in you're listening to 754 00:36:33,680 --> 00:36:36,080 Speaker 1: the Mark mass show, we're talking about as real estate 755 00:36:36,120 --> 00:36:38,200 Speaker 1: going to crash or not. We broke down the data. 756 00:36:38,239 --> 00:36:39,719 Speaker 1: Hopefully that made sense. If you missed any of it, 757 00:36:39,760 --> 00:36:41,640 Speaker 1: go check it out on the podcast. Just search Mark 758 00:36:41,680 --> 00:36:43,920 Speaker 1: ma show on any of your favorite podcast players, and 759 00:36:43,920 --> 00:36:44,560 Speaker 1: that's what I got. 760 00:36:44,640 --> 00:36:46,319 Speaker 2: Thanks so much for listening. Till next time.