Real Estate Collapse Coming in 2020? Let's Talk
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Today we talk about real estate! We talk about if there will be a real estate collapse coming in 2020! Many folks are hoping for real estate prices to fall in a major way this year and next year so they can buy a home for cheap! Mortgage interest rates are super low.
Refinancing is at an all-time high. People who are interesting in getting into real estate investing want cheap prices on homes so bad people might be very let down when they observe the whole situation. There might be an even bigger risk.
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Well, I think we’ve all witnessed in the stock market had the fastest collapse in history during the month of March, right? 22 trading days is all it took for the stock market to go down 35% an absolutely unreal number, something you couldn’t even really fathom 35% down in 22 trading days, and just as unreal as the stock market has come back.
So incredibly strong look at how much the market has come up. I think we’ve all witnessed it. And we’re just looking at this and like, wow, we’re all just kind of in awe of what has transpired here.
And know a lot of folks are wondering, please, a real estate collapse coming in 2020 at some point, okay. As the economy opens back up, as things get rolling again, do we have a real estate collapse coming? Is this realistic?
A lot of people have seen the stock market, what happened with the stock market, like maybe something similar is going to happen with real estate, maybe this scenario is going to happen in real estate where real estate prices just dive in a massive way, whether it be for a month, or whether it be for several months, or if it be, you know, maybe for a year or two.
Okay, now, I know most you guys watching this video right now, most of you guys want real estate prices down, you’re like plews real estate prices go down. Because why do I know this? Well, most of the folks that watch my channel.
I think like 60 to 70% of people that watch my channel are under the age of 40. And the fact is, most people under the age of 40 don’t own real estate yet. They don’t own a house for themselves. And they don’t have any real estate investment properties.
And so a ton of people that are younger, in general, they want real estate prices to go down and down in a big way. And Heck, even if you own your own house, a lot of people still if you’re young, you still want real estate prices go down so you can maybe buy real estate investment property or something like that.
So almost everybody that’s watching this video is rooting for me to hopefully say that real estate is going to collapse in a huge way. Okay, it was like Jeremy, please tell us houses, condos, everything tell us it’s all going to get a lot cheaper.
Okay, I understand this. Okay. It’s something I just realized. We haven’t even talked real estate in over a year on a channel, which is absolutely crazy. And by the way, for you guys, I keep in track at home.
It looks like the underdogs gonna win the race, there was a race between financial education, the main channel here, and who was going to get to a half million subs first or 100k. And it looks like the underdogs gonna win in that game.
So let’s get into this guys hope you enjoyed as always smash the thumbs up button, and let’s start getting scammed. So right off the bat here, Us Weekly jobless claims hit 2.4 million, bringing the nine week total to 39 million.
Let’s just take a moment and just like, like, like, just take a deep breath here and just look at that number. I mean, we could have never predicted something like this. nine weeks 39 million jobless claims.
Absolutely unreal, like something we’ve never seen before. Right? And so after looking at that, we can just say video over Yep, real estate prices are gonna go down 30% to 60%. And in 2020, like literally like we just say that right?
If you’re if that’s all you’re looking at, and that’s the only information you have in your hands. And that’s all you see, you see 39 million jobless claims in an unemployment rate now that I think that’s way over 15%.
If that was all you had, all you had either, supposedly you’re saying get real estate is going to collapse in a massive way. 30% 40% 50% maybe even a 60% decline. It’s gonna get absolutely trashed. And I’m here to tell you guys, unfortunately, it’s not that simple. You can’t just look at that one number and say, yeah, real estate is gonna go and get absolutely hammered.
Okay, there’s so much at play here. It’s ridiculous. Let’s just talk getting into this. Okay. So first off, the economy is starting to reopen, we know this k the economy all over the United States. And to be quite frank all over the world is starting to reopen.
It’s not 100% yet, it’s not even close to 100%. But the fact is, state by state, the economy is starting to open back up, which means some jobs are gonna start coming back here in June. And some actually have started coming back a little bit in May.
But mostly we’ll start to see June and more over the course of summer, July, August, September, as we go into the fall time, October, November, December. We’ll see more and more jobs come back. Now should you expect 100% of these jobs to come back? I highly doubt it.
I mean, highly doubt it. I don’t see there being any way possible that anytime soon, the unemployment rate magically gets back down to the 3% range, like we were in literally just a few months ago. Okay. That’s pretty unrealistic.
But we do know a lot of jobs will come back, the unemployment rate will drop and unemployment claims will go down over time. But something to keep in mind here. Okay. This is where things start getting really, really strange and really, really weird.
And this is why you can’t just look at one thing say it’s gonna be bad or good or something like that. Okay. Employers struggle to compete with $600 unemployment. Pay That’s okay. What you have happening is some employees of companies and it’s actually a pretty large percentage now are purposely trying to get fired from their companies, basically.
So they can go on unemployment because they will make more money on unemployment, then they actually make from their job. And I know, that’s just like, what, okay, this happened to my own brother. Okay.
My brother, he has like a, like a pet food store or whatever, in California. Right? And no, he had at least one or two employees, you know, that’s usually a lower wage industry, right? Yeah, at least one or two employees that literally purposely went out of their way to get fired.
So they could make more money in California on unemployment, on unemployment than they were making before. That is nuts. Okay. You know, people literally, this is this is going on the United States of America right now.
Right? You have literally, you know, hundreds of 1000s if not millions of people in the United States of America, they’re making more money right now. Not working, then if they were working, like just think about that, guys, that is like, what, okay, you know, that you should have a confused like, face on like, You mean to tell me.
There’s people out there making more money not working, then if they had been working. That’s just crazy, but it’s literally going on right now. And so some people are actually benefiting by this whole Roni, Rona, they believe me, like, that’s just nuts.
The Rooney Rule has happened, and they’ve actually are doing better financially than they were previously. absolutely nuts. And I’ve heard things like in California, you can be on unemployment for like a year, a year. Like what? Okay, that is crazy.
Okay. On top of that, you have this stimulus checks, okay, stimulus checks, stimulus checks, they’re all going out there to everybody, those 12 $100 stimulus checks, okay, I can tell you almost every family member, I know, got a stimulus check.
Okay, they all got stimulus checks. And honestly, some needed the money. And some of those family members, they really didn’t need the money, they really didn’t need that 12 $100 stimulus check. And so it was just like extra money for them.
They just put it in their checking account or savings account, or they went out there and spent it but most of honestly didn’t need that money. Some did, but a lot didn’t. So you have a ton of Americans, we’re talking most individuals in the United States of America, Heck, even you know, if you have kids, that kids got a stimulus check, great.
Most people in United States of America have gotten the stimulus money 12 $100 checks each, okay. And basically, a lot of them haven’t really needed to pay bills. But if they need to pay bills, hey, that’s just that’s just helped them out, they didn’t have to go through a hardship or something like that.
And a lot are just waiting to spend that money, or they investing that money or something like that, or just keep it in an account for now. And that’s just off those first round of stimulus checks. There could be more stimulus checks coming, okay.
And I can tell you, if the economy starts to reopen, and things to learn looking that great income base icon business is kind of weakened, we’ll have to see what happens there. But if that is the case, there will likely be more stimulus checks coming.
Okay? Know, the White House is rumored to have been in favor of more stimulus checks. We know the dems want more stimulus checks out there. And so who knows what will happen if more stimulus check money, but the fact is, the majority of Americans now have stimulus checks, and has been credited in their account in this potentially more coming down the road.
Okay, if that wasn’t enough, you have the PPP plan, the paycheck Protection Program, there’s been hundreds of billions of dollars given out there to small businesses all over the United States of America. And just like the stimulus checks, some of those businesses needed the money.
But I can tell you, a lot of those businesses didn’t really need the money. They just applied because of many various reasons. Some said, Well, our competitors are doing it. And yet Do we really need the money now we don’t really need the money, but you know, our competitors doing it, and if they get free money that we want to get free money to.
And so you have tons of these businesses all over the United States that have gotten, you know, been part of the PPV plan hundreds of billions of dollars, and said, you know, let’s go ahead and take that money, and most of them aren’t paying the money back.
And it’s been on basically like an honor system. And so you know, at the end of the day, that’s just a ton more money out there. That makes those business owners more flush with cash. So they can either you know, continue to pay their employees or expand their business or just keep the money or spend the money, whatever they want to do.
But the fact is, it’s just a ton more money out there, and a bunch of money into a lot of people’s hands who needed it for businesses and a lot of people’s hands who really didn’t need it and now they just got a bunch of extra money.
Okay. So that you have going on and so you see where this starts to get really flippin confusing. Okay. Then you have big corporations getting bailed out in this whole situation, right? Look at the Boeing situation, right?
I mean, Boeing pretty much got a government bailout massive. We’re talking 10s of billions of dollars. Huge employer. You know, it’s one of those companies that you know, the US government’s just not going to let go under especially because They’re also a defense contractor.
Right? They make a lot of the military planes, right? So at the end of the day, Boeing got this massive corporate rescue, you have all the airlines have got the corporate rescues, and some people have been in favor of this, some people say.
No, we should just let them fail. You know, whatever your opinion is, it was whatever your opinion was just pretty much irrelevant to the subject we’re talking about, which is real estate prices. And the fact is, you know, mass amounts of jobs are saved because those corporations got bailed out.
And it also means a ton more money in the system. And so it means a lot of those debt payments that would have, you know, come due and wouldn’t have been paid would have caused a lot of financial hardship on investors, right? Or banks and things like that.
No, it’s just, it’s just all Okay, we got a bunch more money in the system. And so you’re looking at all this and I know we love to make the stock market means this is like, you know, super popular thing in the stock market community, you know, J power, you know, the the money printing.
It’s so funny, but it’s the truth, okay. J pal is up there with the money printer. And it’s just going to everybody, like who needs it, you have your big company, you need to bail out, we’ll bail you out, okay, you’re a small company, new bail out, we’ll bail you out, you’re an individual need to bail out, we’ll bail you out.
You don’t really need the money, we’ll still give your money. Okay. I mean, literally, like, unless you are a millionaire, or multi millionaire, you pretty much didn’t get a money. But even some of those individuals still got money. Keep in mind, because of the whole PPP thing. And some of them didn’t really need it. But they still went ahead and did it.
Okay. But the fact is the money printing just constantly over the last couple months. And you know, you could say, well, if that didn’t happen, who knows what type of situation we’d be in? We can definitely, you know, have that argument.
Okay, recent balance sheet trends. Look at this. This is how the Federal Reserve, the balance sheet for the Federal Reserve has gone. bonkers, okay, Holy smokes, this ain’t no joke. Look at that, it doubled up, but not just the fact that it doubled up, it doubled up in like a three to four month span, something we’ve never seen before.
That’s just absolutely incredible. I mean, think about that, guys, you know, three plus trillion dollars just added on the balance sheet, just in a snap of fingers like that absolutely incredible. And the numbers gonna go higher.
If you think it’s stopping there, you’re more than likely incorrect, the numbers gonna keep going higher, the Fed balance sheet will continue to keep expanding higher and higher. That’s just, it’s just crazy, okay.
And if all that wasn’t enough, if that wasn’t enough to convince you, maybe real estate might be okay, I have a lot more to share with you other than just bailing out individuals, corporations, businesses, everything across the board, we have more Okay.
Then on top of that, you have mortgage forbearance, which millions upon millions of Americans right now are using what’s called mortgage forbearance, which is essentially they don’t have to pay their mortgage right now.
Okay, even have some people doing this with with rent as well. But mortgage side is the side that you know, a lot of people are paying attention to millions of Americans out there literally aren’t paying their mortgage right now.
But they’re also not being kicked out. It’s basically just because of the whole running running situation and saying, Okay, well allow these individuals to just not pay their mortgage for an X amount of time.
And then they can pay it down the road. And here’s where things were going to get real interesting when it came to if you’re thinking about a real estate collapse, okay? So before, here’s what it was looking like, if you had missed payments, you were going to have to pay back all that money, when it came to three months from now, four months from now or something like that.
So let’s say your mortgage payment is $1,000 a month, you can’t make it for whatever reason, or let’s just say, you know, you don’t want to make it and so you still apply for the thing or whatever, right? Then all of a sudden, at the end of let’s say three or four months, also, now you got to come up with $4,000.
Right, you will come up with 4000. If you couldn’t realistically come up with $1,000, you’re not often magically gonna come up with $4,000 when it’s all said and done. And so before, people were saying, well, this is when real estate could get interesting.
This is when real estate could collapse. Once people have to make those mass payments, those lump sum payments, at the end of the three month span or four months span that they had their mortgage forbearance on they can’t do it.
That is when things are going to get ugly. But now they’ve just changed it Okay, they kind of you know, I’m surprised this hasn’t picked up more media attention. But basically now you’re just gonna have that tacked on to the end of the mortgage I had I had a very strong feeling they were going to end up doing that.
And so it looks like they’ve done that now where essentially instead of having to pay back a crazy lump sum which was so realistic on an FHA loan or something like that, now you can just go ahead and use just put it into the future and you’ll pay it someday down the road but it’s not like you have to come up with that lump sum payment right then and there.
Okay. And that is a huge thing. That is huge. Okay, that’s massive for the real estate market. Okay. Then you have things like this, right? You have different situations going on in different cities and states, new Your for instance, tenants cannot even legally be evicted until August one, yes.
So even if a tenant right now is not paying, you can’t evict them, you can’t evict them. You can’t say you know what you’re out of here or something like that. Okay, that’s another huge thing. And that’s not the only marketing.
I’ve seen some, you know, talking about you couldn’t evict somebody for a year. Like that’s, that’s absolutely incredible. Okay. And if that wasn’t enough, we have more. Okay. There is more mortgage rates, interest rates, plummeting to record lows refinances at all time highs.
So essentially, if you’re thinking about it, you know, the home buyer market, right? Two things are the most important when you’re thinking about somebody’s going to buy a home, what is their income?
And what are mortgage rates, those are kind of the two biggest things that can dictate the real estate market in general. And if you know mortgage rates are really low, generally, it’s a pretty good sign for real estate, you’re gonna see some nice praise praise appreciation over time.
However, if mortgage rates go up and up, that means real estate is less and less affordable in those monthly payments or more and more and more expensive switch prices, more and more people out of the market.
And usually that can you know, just it just hurts real estate prices in general. But right now mortgage rates are about the lowest they’ve ever been in the history United States refinance. People are refinancing left and right right now like refinancing is crazy right now, like numbers.
We’ve never seen what people refinancing because you can just get a much lower interest rate, which means they have to pay even less on their real estate. You look at the mortgage rates right now a 30 year fixed rate is trading about 3.54% a 30.
Year VA rate 3.72% a 30 year FHA 3.49% those numbers are incredibly low. They’re about the lowest you’ll ever see. Okay, I mean, who knows what unless interest rates go negative someday maybe they’ll pay you for buying a house like you never really know.
But the flat out honest truth is those interest rates your if you’re thinking about buying a house or incredibly attractive, and at the end of the day, it just makes housing more affordable. Even if prices go up, you know, if mortgage rates come down, that helped offset some at least Okay, and if there wasn’t enough, we have more Okay.
Here’s where things get so screwy Okay, you read this headline and you’re thinking Oh man, this is great real estate prices are going to fall big home sales dropped nearly 18% in April like yes. Okay.
Awesome. Sweet. That means real estate prices are coming down. They’re gonna they’re gonna collapse here we go baby. Some deals are coming while declining inventory pushed prices to a record high. Oh, okay.
Well just like everything real estate is supply and demand right? If you got a million houses in an area and you only have 500,000 people you need to buy a house in that area real estate prices are gonna go down and down and down because supply and demand right.
But if you have 1.5 million people live in an area and you only got you know, let’s say 100,000 houses real estate prices are going to be looking pretty dang attractive. So the fact is inventory is going down right now take the supply of homes for sale fell almost 20% annually to 1.4 7 million units for sale at the end of April that is the lowest.
April inventory figure ever ever not only did potential sellers decided not to list their homes as job losses mounted and the economy shut down but some sellers already on the market pulled their listings my parents did that they actually just had put their house in the market.
Roni Rona hits is super bad timing and they ended up just pulling it off the market because they didn’t want people going through the house and plus Who the heck was going out there really like buy houses at that particular time.
So they just they literally just pulled their house off the market. Okay, that drop in inventory pushed prices to a new high the median price of an existing home sold in April rose didn’t decline Rose 7.4% annually to $286,800.
That record does not account for inflation, but is nominal record high in credible okay. You can’t make this stuff up. Okay. Real estate prices rising in a once in 100 year Ronnie Rona event, okay, this you know, you just can’t make this stuff up. Okay.
So at the end of the day, people are asking, will real estate prices fall in any major way? Is this possible? Okay. And the answer unfortunately, I know a lot of you guys don’t want to hear probably not okay.
The truth is, when you go through all that and you talk about everything the government’s doing If you’re expecting a 30 4050 60% decline in real estate, probably not coming. Okay. And you know, I’m not gonna say it’s not possible real estate could decline at all, because it’s definitely a possibility that real estate could decline.
But honestly, it’s looking more and more unrealistic as time is going on. And I think honestly, the bigger risk now, and this is where things are really screwed up. I mean, this is this is just wrong even have to go here.
The bigger risk is the fact that real estate prices could actually end up going a lot higher over the next couple years. And that’s where it’s just like, what, what, but the fact is you look at this.
And if inventories are going to continue to be low in the mortgage forbearance doesn’t create some type of situation where, you know, everybody has to pay their mortgages at once with a 3x 4x payment or something like that, at the end of the day, we’re actually at a big risk of real estate continue to climb in terms of prices.
And that’s the last thing people want to hear. But the fact is when you have all this government intervention, trying to protect prices, and when you have super low interest rates, and you have money being pumped in the system like that, what ends up happening, honestly, at the end of the day, is assets end up increasing quite dramatically.
And the two main asset classes, the United States of America are what? Real Estate and stocks, okay, those are the two biggest real estate classes out there in generally speaking, when interest rates are really low.
And when they’re pumping money in the system, it’s usually a very good thing for real estate. So if if you’re hoping that the massive real estate collapse is coming in pricing, it’s probably a little bit unrealistic.
And like I said, I know it’s frustrating to hear, because I know everybody wants real estate prices to go lower, but it is what it is. So something that a lot of younger folks don’t even know Okay, is the fact is, in most recessions, real estate prices don’t go down much at all, if at all, okay, that is most recessions.
If you look historically, at real estate prices, literally most recessions, prices, if they fall, it’s very minuscule. And sometimes even during a recession, real estate prices will actually be stable, or rise during a recession.
And so I think 2008 because that’s the only recession a lot of younger folks have lived through, right? You know, when 2008 I was like, I don’t know, 1819 years old, that was the that’s the only major recession I’ve ever seen in my lifetime.
As far as my adult lifetime, we’re actually paid attention that stuff, right? That’s the only one I’ve ever seen. So we look with a lot of us younger folks, look at 2008 and we’re like, oh yeah, real estate prices, they’re gonna fall 4050 60%.
That’s gonna happen. We’re in a major recession. That was a major recession. That was a whole different recession. And what happened, there was a whole different situation, okay. And the fact is, right now, we have a massive, massive stimulus money coming into not just the financial markets in general, but coming into people’s pockets coming into mortgage forbearance.
So many different situations, that that just people in general are a lot more flushed with cash in this whole scenario than they were in the 2008 recession, which was a real estate led recession. Okay, let’s not forget the type of speculation that was happening in my city that I lived in, in that time, Phoenix, but also the city.
I currently live in Las Vegas. And this was happening around the United States, in general, the speculation had just gone crazy with real estate, like literally created a real estate bubble and finally popped 2007 2008.
And it took several years to work through that just like the stock market bubble that happened in the tech bubble, right, that, you know, that took several years for the NASDAQ just to get back to where it was before.
Okay. Very similar thing happen in real estate. So, at the end of the day, just understand if prices don’t fall in any meaningful way. Don’t think it’s it’s, it’s out of the ordinary something because most times, and recessions just look at the facts, not the opinion.
Most times, real estate doesn’t fall in any real way during a recession. 2008 was a big exception to the rule. But I will say the jobs market is going to be key in 2021. If you’re thinking about 2021, and could real estate prices fall in 2021, the jobs market is going to be so key in this whole story.
If jobs market is super weakened 2021. And we’re already moved past the stimulus and all the government bailouts and all those things, then we could be talking about something potentially coming in 2021.
But that remains to be seen and no one knows how the job market is going to be in 2021. So much depends on how the economy opens back up this year. If a Roni Rona Vax comes at some point in you know, 2021 so much depends on that.
And so if the jobs market is super weak unemployment rate still super high in 2021, then we could be looking at some type of major real estate price drop, but outside of that, the you know, it’s almost unrealistic to expect any major pain in the real estate market, but you know, the jobs market will be absolutely very important in 2021.
And that’s gonna be something we all have to keep an eye on. So hope you guys enjoyed today’s video, as always overthrew a lot of lives in a lot of research workflows videos. Hope you guys appreciate it.
You’re gonna show me some love by smash that thumbs up button and leave me a comment down there on your opinion and if you want any real estate I would love to hear from you guys. As always, thank you for watching. Have a great day.