Are We About To See Something We Haven't Seen In Two Decades?

can we talk real estate for a second yeah let's do so we were talking during the break about just even in nashville it's just it's crazy right now like our friends are trying to buy houses and they're asking like insane over asking price and they're still not getting it like it's just wild so kovit plays into this and i know real estate you know you look over decades and decades you see the influx of things going up and down i mean it's just like anything else but what do you i mean it just feels like it's insane right now and i don't know if that's just because we live in nashville and nationally it's so so what does covid cause people because i would think coming out of 2020 you almost are more conservative and you're holding tight and you're staying put because it still feels a little unstable right like we're not even i feel like out of all the stuff with covid so why why the like why the surge well several things but the baseline on it is there's a shortage on new housing because the lumber factory shut down and a lot of the other components of the house the factories shut down yeah new lumbers just say get lumber yeah and then when you can't get it it drove the prices way up on that yeah and uh then there starts to be a frenzy around it a feeding frenzy like piranhas you know it's like crazy and uh and and so the new housing slowed to nothing and there's this gap of six or eight months of production of the components therefore the new houses and when you take the new housing gap uh supply out the inventory supply out then it shortens up the well i can't get a new house so i gotta go buy a used house and so it doubles doubles down twice many people looking at half the numbers of houses and so you end up with a inventory shortage of new and used housing and a shortage always cause when you got you know half the number of houses for sale as there are buyers out there you know two to one three to one ratio whatever four to one whatever the ratio is then you know that just that alone did this but the coke what covete did was it shut down not the real estate market because people were still buying houses during quarantine they were buying them sight unseen on zoom and other stuff right right but but the uh uh the factory shutting down the supply chain getting screwed up has screwed up the economy so it's not that there's more buyers it's just that the well and then the buyers go crazy yeah and then the sellers go crazy yeah and then the buyers go crazier and so there's this this cycle of just this feeding frenzy and it's all in motion and and so you know you're seeing properties uh in lots of towns get multiple multiple offers uh you know fifty a hundred thousand dollars over asking for yes yeah and they line up through the whole weekend and there's 62 offers on our house over the weekend that's not unusual in a lot of cities right now but that'll subside it'll just eventually the feeding frenzy calms down and then they'll just be this like hangover uh you know like the housing hangover after that will just be like like the morning you've felt this ever i mean for four years i've never seen it like this exactly yeah but uh in 19 in the 19 uh what we are going to see out of this that you've never seen your generation has ever seen is inflation inflation the components that make up the inflation index housing is one of them it's the biggest part of inflation and when housing shoots up and oil shoots up and oil has shot up too yeah it has yeah and uh you know you look at the gas pump oh i know i filled up my minivan two days ago nobody's talking about it but the gas pump doubles and housing goes up a bunch then all of a sudden you're going to see stuff like i saw in the 70s and 80s which was double-digit inflation where stuff's going up 10 15 a year and inflation was out of control and the politicians it took it you know it took some real strong politicians to do away with it uh it was out of control how do they do away with it well i i credit ronald reagan i'm just putting the brakes on because it was out of control under carter and he comes in and shifted economic policy and uh just started opening up uh doing away with regulation opening up the markets because if you can flood the market with supply it slows down as flows down the feeding frenzy because if you can get it everywhere there's no scarcity sure then the prices start to settle you know if there's an oversupply prices go down if there's an under supply prices go up because there's people chasing it sure demand you know if you you know half the number of people chasing it as there are you know you got two houses for sale for every buyer well all of a sudden prices stabilize start to go down start to or at least quit shooting through the roof so the out of control upward inflation so we're probably going to see some actual inflation out of this which we've not seen in two decades but in 1982 or yeah in 1980s under carter the uh interest rates on housing was 18 17 percent i was in in college so on real estate so guess what happened nobody's buying houses because your interest rate on a house is like a credit card that's insane yeah and so nobody's buying houses they're all on the sideline going i can't buy a house with these interest rates yep and so everybody that would have bought a house that year starts stacking up and you get pent-up demand water behind the dam it's getting spilled over the dam and so when rates came down from 18 to 14 i was selling real estate at 22 years old and rates were 14 and there were cars lined up around the block in the new subdivision it was like just that four percent i mean like yeah but but it was three four years of nobody buying a house and the floodgates broke loose 14 was enough to get them out of their house yeah and it was like covey they lined up around the dadgum block buying these houses and guess what prices went up interest rates continued to go on down yeah of course over the years after that we saw 12 and then we saw 10 and i was on the radio by then and i'm like oh you'll never see single-digit interest rates again ever in mortgages well obviously i was an idiot and didn't know what i was talking about because we've had single-digit interest rates and now we've got what we've had for a decade we've had two or three percent i was going to say it's like went down last year yeah you watch these interests that's the other thing you watch these interest rates go up with inflation yeah it'll shut this housing market down i was going to say how yeah the correlation between inflation and the interest if you go from three to six this housing market will freeze like a deer in the headlights it'll just stop people just stop buying they'll just back up and wait and uh that's you're gonna see some of that back and forth now it's gonna be a little rocky a little volatile but it won't this feeding frenzy that you've got right this second is not going to continue yeah but you do not want to be buying a house or selling a house right now without a pro in your corner oh sure this is not this is not amateur hour yeah yeah yeah yeah yeah really not amateurish just a bizarre this is how you can overpay for something or or you know not get them you could you could be off a hundred grand on what you could have got with an agent that knew how to manipulate the whole process yeah because it's basically a freaking auction in some of these cities on some of these properties that was one of ours in our neighborhood the builder did an auction he was like highest price and people were like i mean it was like it was put them out in the front yard crazy i was like what is happening right now yeah yeah without that but that's that it's i don't know if it's just nap yeah but it's an emotional frenzy well that's it too buying a home if you just back up and go right now i'm just gonna chill and watch all these crazy people finish and when they finish then i'm gonna walk back in there because you can't get a deal in most markets and the uh let's have let's add one more variable to it all the people leaving california because they're sick of it they're done they're done with crazy land all the people leaving new york because they're done with crazy land and they're they're coming out they're like oh there you go you can't get chicago here's another short here's another shortage u-hauls u-haul's leaving california you can't find one you can't find them to rent one you mean you can't really you can't rent one in new york because they're leaving they're all leaving and they're not coming back

Channel: The Ramsey Show - Highlights

Views: 1,429,119

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, Are We About To See Something We Haven't Seen In Two Decades?, inflation, finances, housing market

Id: o0jGs59dxl0

Length: 8min 0sec (480 seconds)

Published: Tue Apr 27 2021