Watch This Before Buying Real Estate Or A House In 2021
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Well guys do I have an interesting video for you. You guys know I rarely talk about the real estate market on my channels, and if I do I will talk about it briefly. Today I decided to make a whole video on my thoughts on the housing market and the real estate market and if I believe there will be a house market crash.
This is a sellers market and a lot of homes have been selling like hot cakes. Every time I play around on Zillow and look at houses I see most of them are contingent or are sold in a short amount of time. With rates being low and unemployment still being pretty high, is this a recipe for a housing market crash?
Hope you enjoy this video! Don’t forget to smash! And leave me your opinion in the real estate market in the comment section. Do you believe there will be a housing market crash? Also let me know if there is a stock to buy or a stock to watch now?
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Yo guys here today, let’s talk about a potential real estate and housing collapse. How realistic is it for the real estate market to crash the housing market to crash over the next six to 18 months, what I want to do is I want to kind of talk a little bit and kind of give you guys an intro on this subject and why we’re talking about this.
Okay, from there, we’ll take you into my perspective on the real estate market, in the housing market, and what it would take to actually get the real estate market to crash. Obviously, we know things are flying high right now.
And it’s beautiful. Okay, I’m going to talk from my perspective on what it would take for the housing mark to actually collapse. And then lastly, where to get into my prediction on where I think the housing market in the real estate market is going over the next six to 18 months, do I believe the real estate market is going to stay hot?
Or do I think there’s going to be some sort of like slowing down to the real estate market or just a you know, like, full on crash, let’s just put it that way. And this is a subject that, you know, if we go back five years ago, I didn’t even own any real estate, I never cared about real estate for the longest time, I just started getting in real estate in terms of actually putting my own money in real estate’s an industry of study for a long time.
But in terms of actually putting my money in real estate, I just started in the last two or three years, and when the new properties finished, all controlled, probably between 3 million and $4 million worth of real estate now.
And so all this stuff affects me whether I’m just like thinking about holding properties, potentially selling properties, how my mindsets going, like, What if there was a crash, would I be buying properties, things like that. I didn’t, I didn’t, you know, get into this market till you know, the last couple years.
And now I’m trying to share from my perspective on what I believe is going on out there and things like that. And keep in mind, you know, the stock market, the real estate market, all these different asset classes, when everything’s doing great, it helps all the others out when things go bad, they all usually start dropping in times when the when the stock market’s pretty rough, usually Real Estate’s pretty rough and vice versa.
Okay, so hope you guys enjoy this. As always, don’t forget to smash and leave me a comment on what your opinion is down there in that comment section. Okay, so what are we talking about this subject today? Well, housing has been red hot, okay. I mean, if you go back to 12 months ago, right, as everything was starting to break, and it was like, oh, man, we might have to start shutting down the economy and things like that.
There was a lot of belief out there that the housing market could collapse, okay, and just fall through the floor, obviously, you know, they sloshed ridiculous amounts of money out there, right? You put interest rates and nothing.
And needless to say, you have everybody spending so much time in their house, all of a sudden that the housing markets been red hot. Who would ever thunk it? We’re in a once in 100 year health event, almost crisis, right. And the housing markets literally as hot as it’s ever been, if not Hunter. I mean, in the market. I live in Las Vegas, right?
I’m watching properties move that I’m like, how is that house selling for that price? How’s that, like these properties would not have moved a year ago, year and a half ago, two years ago, and they’re just flying. Like if I go on Zillow, and I’m clicking around properties.
I’m seeing contingent, contingent contingent. I’m seeing more contingent now than house for sale. It’s absolutely insane. I’m seeing raw piece of land move. It’s hot. My dad, he obviously, you know, lives in Arizona, and I have a house in Arizona as well.
And he was sending me some articles last night and how the housing market in Arizona is the strongest pretty much since 2006. So the housing market in real estate specifically in the residential sector is hotter than it’s ever been.
Okay, malls and those sorts of things. Obviously, that’s a different real estate market there. Okay, that’s not the prettiest recently, right. But in terms of residential real estate, which is what pretty much everybody watching this video actually cares about. If you own a house, or you’re thinking about owning a house, right?
That market has been as hot as hot gets, okay. And then when you hear things like, oh, the housing markets as hot in this market in that market since 2006, that kind of wakes people up a little bit and they’re like, wait a minute, 2006 what happened after 2006? Okay, what happened?
The real estate market, you know, starting in 2007, things started to fall apart, and then it got really ugly. 2008 2009 Okay. So we get to talk about from that refi refinancing of mortgages is red hot. Okay. I mean, you look at the last year, the last nine months, we can just go back on reifies ridiculous, right.
Everybody out there. I mean, I don’t think I know anybody that owns a house and didn’t refinance their mortgage in the past nine months. It’s ridiculous right? Now we are seeing numbers. Okay. We are starting to see numbers that the amount of reef eyes in mortgage applications as well but reef eyes are starting to slow.
Okay, so something very important to keep in mind. Remember, mortgage rates have just started to climb very recently, and they could climb a lot faster. And so that’s just one part of kind of what’s going on in this whole mixture. All right. The stock market has been red hot.
The Nasdaq has almost doubled. I think it right around has doubled since the march bottom, literally 11 months ago. Think about that for a minute. index doubling, right? The Dow has hit record highs within the past week the s&p 500 has hit record highs within the past week.
Obviously, growth stocks, which growth stocks in a risk on environment where people want to take maximum amounts of risk, right? Those fly the highest rate and we’ve seen it with growth stocks, a lot of the valuations have gotten to ridiculous levels.
And it’s just about ultra optimism and a lot of different growth stocks out there. Right. So we’ve seen all that playing out, we’ve seen kryptos red hot, right? Bitcoin just hit 50,000 very recently, and pretty much all the kryptos have just been you know, it’s been the healthiest market for kryptos.
Literally since 2017. It’s just been extraordinary, right? household debt is at an all time high right now. It’s reached some pretty epic levels, right? And so when you see all this housing market red hot reef eyes, red hot stock market red hot it like it’s not like it’s just.
Oh, it’s going up a little bit like these have been dramatic, dramatic moves up, okay. cryptos, Red Hot household debt at all time high, you start to you start to wonder, this sounds a little bit too good to be true, especially if you’ve been in the you know, financial markets for a while, right?
You see all this? I think this might be a little too good to be true, right? There’s gotta be something going on here. And obviously, you know, if you own real estate, it sounds too good to be true. If you’re looking to buy real estate, a house, right? It’s not the ideal situation like no one wants to buy into a time period when you’re having a bit up on houses.
Some of these houses are having 510 1520 people then I mean, I haven’t heard about stuff like that, since maybe like la many years ago, when la was just like super, super hot is probably back in I don’t know 2014 it you know, it was just like ridiculous bitters mark.
And this is going around like different markets around the United States now, and all sudden you’re having to, you know, bid against other people for that house.
I mean, it’s getting, it’s getting, you know, pretty crazy, right? And so if you’re looking to buy, it hasn’t been the most ideal situation, it’s definitely a seller’s market. Right. Now, if you’re a seller of a property, you are in a, you’re in a an insane position of power in almost any market across the United States.
If you are a buyer, you are in a biggest position of weakness, you have been in a long time for buying that property, I can tell you that. And that’s across many markets across the United States, okay. And so when you’re seeing all this, this leads us to a place where we have to discuss if a slowing of the housing market or a straight up crash in the housing market is realistic in the next six to 18 months.
And that’s what we’re going to get into now. So hope you guys enjoy this. As always, let’s get into it already. Folks, I always love to break things down as simple as possible when you’re looking at any type of financial market out there.
And if we’re talking about real estate, what makes a real estate market go up? What makes housing prices go up? There are many various factors that actually control this and make this go up. Okay. And so we’re going to go through this and we’ll get into my prediction on what I think is going to happen here. Okay.
So if you’re going to get real estate prices to go up, especially in real, you know, residential real estate, right, you need household formation to go up, right. So you know, if I think about something like my own life, right after I moved out of my parents house, and I think it was 21, moved into a one bedroom apartment, right, and I got a girlfriend, then we ended up moving to a two bedroom apartment, right?
Then I ended up having a kid, we moved to a three bedroom apartment, then I had another kid. So we moved to rent an actual house right? then ended up buying a house. And nowadays, I just buy houses buy houses.
But needless to say, like, as like babies are born and things like that people need more space, right? And then you add on top of that kind of this little other factor, right, which is more and more people working from home.
And so the home has begun to get more important than it’s been maybe ever in history, or certainly within the last 50 to 100 years in the United States of America, people are viewing their home as like, extremely important, because they’re spending so much time there. A lot of them are working out of it.
They need an office now they need more space, right? Never mind if you have kids and things like that you need even more space. So that is definitely plays a part in the fact that real estate’s gone up recently, and if you’re just talking about real estate going up over time, like that’s usually a good thing.
Okay, more people moving to the United States, or moving to different states in general. Right. So obviously, you know, the United States population pretty much just increase increases, like if you look at the, you know, like, look at the last 100 years, the United States or last, you know, any any like decade, pretty much United States population gets bigger and bigger, not just in terms of like, there are more babies here, but people moving from literally other countries coming to the United States, right?
And so that always puts the housing market in a good position. And then if you add on top of that, like imagine if people are leaving a state and moving to another state that helps out that new states market for instance, I live in Vegas, remember I told you guys that right?
And in the new neighborhood, we’re going to be moving to my neighbor, Where are they from California, we met the neighbor across the street. Where are they from California, if I ever talked to any of the realtors out here and in terms of like the house At a price, over a million dollars, almost all not all those buyers, but the high majority of those buyers are not actually coming from Vegas itself.
A lot of those buyers are actually coming from California, right? Because there’s kind of like this like, I don’t know, I don’t really want to call them an exodus out of California. But there’s definitely a factor right ton of people moving from LA a ton of people moving from San Francisco coming to markets like Vegas, right?
Or Phoenix, or, you know, different markets in Texas, San Antonio, Texas, Austin, Texas, Dallas, Texas, markets like that as well, right. And so when you’re seeing some of these, these numbers, on some of these states, a lot of it’s because people are moving from some other big markets.
And when you have all that buying pressure coming, it helps inflate, obviously, real estate, right. And that’s just the way it is like you come from LA, you see what you can get in Vegas, you see what you can get Phoenix, some of these other markets, you’re like, Whoa, man, this is a little, it’s a little different.
What I can get out here, all right, low unemployment for the middle class is absolutely key. Okay. And what we’ve seen, as far as unemployment, in this whole messy situation we’ve had to deal with, we’ve seen most of the unemployment come from folks that were not making a lot of money to begin with, okay, a lot of folks that made 30 K or less, right.
And so a lot of those folks don’t own residential real estate in general, what’s really, really important if you’re going to have a super strong housing market is that people that are making 40,000 a year to 100,000 a year, those folks doing still really good.
And what we’ve seen is a lot of those folks have been able to keep their jobs throughout this whole situation. And some of them have obviously been able to get some stimulus money, so maybe PPP money or PPP money, whatever was called right, some of those loans that weren’t really loans that they just got to keep the money, right. And so the middle class is actually fairly strong right now and in fairly good position.
And then when you add on the fact that a lot of them could refi. And when you add on the fact that the stock market’s been flying up, it definitely leads you to a feeling of like, my wealth increasing, things are doing good, I can go out and buy another property or just a bigger house, things like that, right. So that’s obviously something that makes real estate go up, easy access to capital, very, very key in there’s definitely a very easy access to capital.
Right now. There’s no doubt about that, right? I mean, if all of a sudden, all the banks, right, and all the mortgage companies, if all of a sudden tomorrow, they said in order to get a loan, you have to have a credit score of over 800.
And you need to have at least half of that new home purchase in cash in a bank account. The housing market collapses immediately, okay? I mean, immediately, you just get ugly because all sudden, everyone’s like, I can’t buy a home because I might, because most people that buy a home don’t have a credit score over 800.
Most people don’t have, you know, if they’re going to buy a, you know, $600,000 house, most of them don’t have 300,000 just sitting in the bank. Never mind, let’s say they who made them, like come out of pocket for the the downpayment, or imagine if all homes being said, instead of like 10%, or 20% down payment, imagine if all sudden you had to do 50% overnight, like the housing market is just a disaster literally, immediately, right?
folks that have a lot of money, it’s not really an issue. But I can tell you, the folks, most folks just can’t afford that. Right? That’s just completely unrealistic. Right now, there’s definitely an easy access to capital, when you have easy access to capital, it sets you up in a market where prices can increase, right?
I mean, you get you and you can get into markets where the access to capital is too easy, right? We definitely saw that in 2005 2006 going into 2007 in the real estate market where people were getting mortgage and mortgage and mortgage. And that was too easy, right. But right now, it’s probably the easiest since that time.
All right. Now, interest rates very important. For a member we talked about, if you’re going to have a truly strong housing market, you really need the folks that are making 40,000 a year to $100,000 a year doing very well, right. And a lot of those folks, sometimes it can come down to interest rates on if they can afford a property that’s a little better than the one they were looking at, right.
And so if you can get an interest rate at like, let’s say 2.6%, like a lot of people have been getting the last several months, versus let’s say, a 4.6% rate, then it can mean the difference between you being able to afford that house and not afford that house, right? Never mind if you start climbing to like a 5% 6%.
Like you could run those numbers on a calculator and realize that’s actually, you know, sometimes hundreds of dollars a difference, if not much more than that. And that can be the difference between buying a house and not when interest rates are ridiculously low, and set yourself up as a homebuyer in a position of power, right?
And you can afford that much more easily and you lock in that very low rate versus something higher. And so that’s big. All right, confidence. Overall confidence is key for the housing market and for the real estate market. It’s it’s honestly true for all these right without confidence kryptos are all at zero without confidence in the stock market or the stock market not at zero but it’d be a lot lower than it is today.
I can tell you that and you know without confidence real estate would be a lot lower, everything would be a lot lower, and if it’s not for confidence, obviously the It’s being driven up a lot right now, by confidence, confidence that the economy is going to come back stronger confidence that, you know,
Hey, I got record highs and my stock market accounts or my crypto account, and the house I own is just like, worth more than it’s been worth in many, many years. And so you definitely have a lot of confidence.
Confidence is key when people are unconfident. It leads to a situation where there’s just the houses aren’t moving, right. I mean, it took in this market Vegas, right, and I wasn’t living out here back then. But I know a lot of people that were, you know, the housing market of Vegas didn’t come back till I think it was either 2011 2012.
And a big part of that other than ease of trying to get to capital was just confidence. Confidence was so shaken in the Las Vegas, you know, basically, you know, real estate market, that a lot of folks didn’t even feel like starting to pursue home buying in this market, despite prices being insanely low. Until like 2011 2012.
And that was when the recession started in 2007. Because confidence was that low right now, we’re definitely on that market, we are in a confidence market through the sky. When you’re talking about a market, you know, when you’re talking about asset classes, where people are bidding them up, left and right, that’s no lack of confidence out there, right now,
I can tell you that, okay, the confidence is through the roof, okay, through the roof. And also, you need more buyers than sellers in the market high buying pressure, like it does with stocks, right? With stocks it what makes a stock really go up, okay, it’s not just execution, the company is affected, a lot of people want to buy that stock, and you have a limited amount of sellers.
Okay. So if you’re in some stock, and you know, everybody wants to hold that stock for the long term, there’s very few people that actually want to sell out, then that stocks in a really, really strong position long term, because there’s likely always going to be more and more people wanting to buy, including some people that already own the stock, they just want to buy more of those shares, right.
Something to keep in mind, one of the reasons Tesla stocks been able to fly so high over the last few years, is people that own that stock aren’t selling, they’re like, I don’t care what price it goes to, I’m gonna hold that stock.
And meanwhile, you have countless people and funds that are always trying to buy more and more shares or shares for the first time in it, what goes up, what happens to stock price, it goes up. And that’s any growth stock, right?
Same exact thing is true in the real estate market. If you’re going to get housing prices to continue to climb higher and higher, you need a lot of buying pressure, and you need a lot more buyers and sellers.
And like I said right now, especially in this market where I live, man, like I said, a lot of times when you’re going in to try to buy a home right now, you’re going against 510 15, sometimes 20 other people that are bidding on that you want to talk about an insane amount of basically buyers versus sellers.
Okay, so now we’re getting into my prediction on what’s going to happen now that we understand all this and how I think things are going to play out already, folks. Now let’s get into my prediction on what I think is going to transpire in the short term. In real estate.
Obviously, if you’re looking at a 1020 3040 year perspective on real estate, I imagine homes will be worth a lot more in the future. Okay. But we’re talking about more of a short term, what’s going to happen, okay, so in my opinion, I truly believe that real estate prices will likely peak within the next six to 12 months, and then they will level out for the next one to three years after that.
Okay. Basically, what I think is going to happen is, obviously, a lot of people that have wanted to move have already moved in the last bit of laggers are going to probably transpire over the next, let’s say six months, okay, folks that have been thinking about moving, they’re trying to figure out if their their work situation, if they’re allowed to move if they can work remotely, things like that.
And so a lot of those folks are starting to get some clarity. And so I definitely think there’s going to be more folks that continue to move for the next six to maybe up to 12 months. Okay. But then I think the housing market is going to slow down big time, because a lot of people have already made their move by that particular time.
Also, if you have a situation where you’re locked in at a very low interest rate in your current property in real estate, and interest rates continue to go up, right, which is definitely a very realistic possibility, in my opinion over the next 612 months. Keep in mind, as far as mortgage rates go, they’ve already started to climb, they’ve already started to climb.
And I think they’re gonna climb a lot more over the next 612 months, but that way, and so then if you’re going up there buy house and you’re at 2.6%. Why would you sell that unless you really have to move or really want to move, if all sudden you have to get a mortgage rate that’s actually much more expensive than that, right?
So I think you’re gonna have definitely a lot of factors moving into 2022 and maybe even the back half of 2021 that are going to be kind of negative for the market in general, specifically around rates and specifically around the fact that a lot of people are moving, and they’re just not going to want to move for a while.
Now in that scenario. That does not mean real estate collapses, that does not mean real estate crashes. That means you level out, k Real Estate’s been going like this, especially in a lot of the hot markets. It’s like this housing prices are increasingly increasing, boom, boom, boom, boom, right? like crazy. And so you’ve had this kind of trajectory.
I think things are gonna go more or less For a while, and you’ll have kind of a leveling out of the system for maybe a, you know, up to a few years, I can see it up to be like three years of kind of leveling off. And real estate prices really not doing much. And keep in mind, that’s real estates like that sometimes. I mean, you know, if you look at it over time, real estate goes up over time.
But real estate sometimes just gets hot and has a few amazing years, an amazing year to write. And then it’ll level out for a while. And so that happens sometimes in the real estate market. I definitely see that play now. There is the wildcard. Okay. And if we’re gonna talk about those Q, the black and white screen press, okay. Q the scary drama, thunder, let’s put it all in.
Okay, if we’re going to talk about a real estate collapse, real estate crash, where real estate prices were to fall, 20% 30%, something like that. Okay, here’s how that plays out. All right, the wild card is if capital was to dry up, and what I mean is actually, I’m not talking about necessarily, like getting a mortgage and things like that.
I’m talking about capital markets to businesses, right? The obviously the economy has been flushed with a crazy amount of capital, it’s out there, right? All these companies have got it businesses, I’ve got it, everybody’s gotten it, okay?
If there’s a if there’s a substantial slowing of that, which pretty much no matter what, in the back half of this year, there will be a substantial slowing of that, if that plays out. And then you have kind of a, like a domino effect of capital drying up and a little more fear out there, and you get the stock market to shake around a little bit, right?
Especially if it gets to go down negatively, and you kind of have more capital dry up, right? Then it leads a lot of companies to potentially cut jobs. This is what is very key, okay. And so even though everybody has kind of priced in the fact that they think the jobs mark is going to get very much stronger over the next six or 12 months.
Remember, the key jobs are those folks making 40 K to 100. k, and a lot of those folks can work at companies sometimes that are taking losses, and how are those losses funded? Like, if you’re at a company that loses money, like how is it being funded is being funded by capital, it’s being funded by investor funds, right.
So if that Olson dries up, jobs have to be cut, companies have to go under right, or, you know, they have to get really strict and cut, cut the pay, things like that. And if you if you had that sort of situation is like I said, it’s a bad domino effect.
And it continues to have ripple effects. And if you had that play out, that’s when I could see an actual potential collapse or crash in real estate prices. Because remember, what dictates the entire real estate market, the fact that people are able to pay their mortgage, and what sent the real estate collapse in 2007 to 2009, which went all the way to 2011.
For some markets like this one, right? What happened, it was a fact that tons of people in the middle class that were making 40 K to 100 K a year, all of a sudden couldn’t pay their mortgage. And that led to more job losses, that led to a lot of folks in the middle class having to be put in situation, especially when you had variable rate interest rates that also had these balloon payments on them, right.
And you had those folks also not be able to pay that and they lost their job. It led to a very poor situation and where housing prices obviously went down a lot. Now, that was an extraordinary event. I mean, real estate prices in some markets like like this one Vegas, Phoenix, I mean, we’re talking about a lot of homes fell 30 to 50 plus percent.
That was extraordinary. That was beyond a crash. Okay. I don’t know if we’ve ever seen in any time in modern history, a collapse like that real estate prices. And I don’t know if we ever will in the future. But I can tell you, it is a possibility. If jobs are lost, jobs are the key. The moment people can’t pay that mortgage, especially the middle class, that’s the moment everything starts going bad.
And that’s also the moment where even on high end, real estate is affected by that. Because there’s some folks out there that buy, you know, properties they can’t afford, I like to always live way under my means. And I mean, massively under my means, like any real estate property I buy. It’s not even anything compared to what I could actually afford.
And I like to do that for safety. I can tell you not everybody’s like that. Even wealthy people or people that might be making really good money. A lot of them buy houses that are that are that are really pushing it. And then if all sudden their capital dries up for that business, things start trending the wrong way. Oh, my gosh, things get ugly really, really fast.
Okay, we’ve had a band aid put on the overall economy for now, that’s holding everything together. If it wasn’t for all that band aid money, we would already be like, let’s be very clear the stock market would be at the Dow would be at 15,000 right now or 12,000. The real estate market would be a complete disaster right now, let me be very clear about that.
The complete just flooding of money, lower interest rates, give everybody stimulus money and money, just flood money out there. Okay, that approach has worked. There’s no doubt but if that was to really dry up in a real way You know, that’s where things could get interesting there. But that’s how I personally see things playing out.
And this is kind of the wild card scenario. The other wildcard scenario would be everything just skyrockets for years and years go in the future. And that would mean the dollar is going to literally become more. So that’s something to keep in mind.
So anyways, hope you guys enjoyed this video. As always, it was a very in depth one on the real estate industry and from my perspective on what I see kind of happening there and things like that, if you don’t mind, smash that thumbs up button if you haven’t already. Thank you for watching. Have a great day. Bye.