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

hey everyone meet kevin here in this video we're going to talk about real estate we're going to talk not only about expectations on how many people we think are actually going to get evicted how many households we're going to talk about inflation and we're going to talk about the new people competing for homes right now some updated statistics here also going to talk about what i am doing in this market and when i expect things to get potentially juicy in this market we shall see but let's get right into it of course right after i mention that the amazing programs on building your wealth have a coupon code expiring today today is jack's birthday did just celebrate jack's birthday with pizza topo chico cake it's really cool we also had a pinata jack destroyed the minecraft pinata in he too hit it anyway let's get into it so first goldman sachs expects 750 000 households will be evicted during this eviction crisis that is because presently there are about two and a half to three and a half million households who are significantly behind on their hands on the rents and we're still waiting for that darn rental relief to come in we've only had about 10 percent of rental relief actually come in and i just had a commenter on my last video on real estate complain that their father was one of the lucky ten percent of people who got rent relief but only because they actually called the governor's office in texas to try to get rent relief california is no better california is one of the worst off so people should be calling governor newsome's office but i'll tell you this has been a disaster getting rent relief money out and therefore goldman sachs believes that 750 000 households are going to get evicted because landlords are just going to say we've had enough now this is somewhat of an issue because it obviously displaces a lot of folks but goldman sachs actually believes that these evictions going macro here because it's definitely not something you want to think about if you're a tenant but going macro here goldman sachs actually thinks this might help us ease inflation and remember the type of environment we're in right now in the summer we had really really high inflation because of those airline tickets and used car prices and wedding dresses and women's dresses things going up in price right well those have started to inflect down but now we think well inflation could stay high if shelter costs go up so that way while car prices and dresses and these other things that were going up seven eight percent month over month while those go down if rent prices now go up on the cpi readings then you could end up having hotter than expected inflation for longer but if we have an eviction crisis and that ends up driving down rents well now all of a sudden you push inflation potentially down because you have more housing stock available you have uh lower rent expectations and potentially a softening in the appreciation of real estate prices so this rental relief or rather i should say this eviction crisis isn't really being pegged as something that might crash the market but rather something that could in a horrible way actually be good for less inflation that's very weird and it's very like just saying those words sounds bad that anything related to evictions could be good because obviously every time we look at an individual eviction there's a story there there's a family there there are reasons there there are landlords suffering there are tenants suffering there's suffering happening right but zooming out on the macro goldman sachs is taking the business approach and going well that could actually reduce inflation crazy especially since last week the dallas fed published a report expecting rents to skyrocket suggesting that home prices are just a leading indicator of rent increases to come they showed all their fancy charts in terms of why this correlation exists but i think it's intuitive enough to where i don't have to explain all those charts they're essentially forecasting a big inflation coming in rents but maybe not as quickly as expected they believe that rent inflation will be at least three percent by the end of 2022 and then in a weird way between the end of 2022 and the end of 2023 end up hitting inflation for rents as high as 6.9 now that ignores the rent inflation we're seeing now but they actually think we're going to see sort of this high rent inflation now because we're already seeing rents go up then maybe lower and then a spike again in 2023 which might be around the same time we see a catalyst for interest rates in 2023 so this rent inflation is going to be something to pay attention to and at least in the short to medium term it sounds like at least if you listen to goldman sachs's analysis it sounds like the eviction crisis could actually help soften inflation now in the meantime we have some other statistics which are just mind-blowing and it's worth mentioning here that if you're trying to find real estate you can always check out deal machine go to medken.com deals and try to send letters with deal machine to sellers before their properties hit the market i'd say if there is any time to try it'd be right before the eviction crisis gets your name out there if you're looking to buy medkevin.com deals to use deal machine to send those anyway let's get into this home prices and quarter two according to the wall street journal shot up at an annualized rate of 23 the wall street journal also just reported that asking prices on homes for rent rose 13 year year-over-year the highest increase in the last five years so this is what i'm saying it's weird that we have this high rent appreciation now or asking price appreciation the fed thinks we're going to see three percent at the end of the year and then somehow 6.9 percent by or by the end of 2020 and then 6.9 by the end of 2023 maybe the fed is just broken with their estimates because the numbers are way higher right now we'll see what the eviction crisis ends up doing to these things now it's also worth mentioning that single-family family homes are seeing more rent appreciation than apartments right now apartments are seeing about an 8.3 percent bump in rents and we're also seeing that the best case scenario for tenants is actually renewing your lease rather than getting back out into the market because landlords are seeing an opportunity where when tenants leave they bump rent values to current market value whereas if a tenant's still there you might get a smaller bump we're seeing this at reits we're seeing this at syndicates we're seeing this across the board now it's also worth mentioning that there's been yet another shift usually nine out of ten home buyers are well home buyers that is they plan to live there home owner occupants well this has shifted so whereas usually we're at 90 percent our home buyers and 10 are investors we've now had an inflection point and we are at 84 of homes and nationally going to home buyers and 16 percent going to investors and if you go to certain markets like atlanta phoenix and miami 25 of single-family homes are now going to investors so no wonder a lot of buyers have been getting discouraged in fact redfin is now reporting that the share of homes with price drops is over five percent as we're starting to see a little bit of a cooling a little bit of a chill in the market and we'll see how this chill plays in with a potential new flood of eviction style properties 750 000 households if all of those ended up having evictions and let's say half of them ended up coming on the market for sale because just because a place has an eviction doesn't mean it's going to come up for sale but let's just be generous here let's say half of them come up for sale which i think it might be closer to a third or maybe even like 25 to 30 percent somewhere on there that would actually consider selling say half of them came up for sale that'd be about 275 000 homes 275 000 homes would add about 10 of our general national annual sales volume so it's not like we're really expecting 10 more supply to all of a sudden crash the market but that supply comes hard and fast all at the same time we could see some real volatility in real estate pricing because all we've seen so far has been the exponential up now we've seen a little bit of a flattening and i wouldn't be surprised if this sort of eviction crisis this extra 10 of inventory gives us a little bit of uh of a divot in the market or maybe even multiple divots in the market we'll see what happens we also know that builders are taking longer to complete houses thanks to the supply chain shortages especially expensive raw materials and the lack of available workers so it's taking longer to alleviate our housing shortage essentially it's also worth noting that in july bidding war rates were at their lowest rate since january right now about 60.1 homes have a bidding war and in june we actually had 66 66.5 percent of homes going into bidding wars and in april we were at 74.1 percent so you could kind of see this sort of slide down in the bidding war rate all right now let's try to consolidate all of this here so we've got this potential softening of inflation due to the eviction crisis we think the market might feel some divots because of this potential up to ten percent more supply might be as little as five percent more supply in the housing market so you'll see those little sort of divots i think those will create buying opportunities for folks and of course my heart goes out to those being evicted i highly encourage landlords and tenants get involved with the available rent relief options please get rent relief so that way we can avoid evictions but in the event that evictions do happen and properties come up for sale obviously i will be looking to buy and i encourage you to be looking to buy as well and i would expect to find these between october and january i think that's really going to be real estate buy time i i did just open up escrow on a property that i think has a nice 80 to 120 000 wedge it's kind of in that range there which is where i like to be where i buy something 715 000 house and i think i can sell it or or just own it and rent it out for somewhere between at the bare minimum 850 if not close to 900 000 so i think i did good there especially since i think the property only needs about 45 to 50 000 worth of work we shall see but anyway uh i'm in escrow that means uh i am uh not phased so terribly by the eviction crisis and i'm interested in potentially buying a few more properties during the eviction crisis we'll see what happens if something ends up coming through hopefully though for just the sake of individuals and people we end up getting that rent relief through as soon as possible now in the meantime if you want to learn more about do-it-yourself property management rental renovations real estate investing stock investing youtube making youtube videos being a real estate agent make sure to go to link down below check out the programs on building your wealth and if you want to be a real estate agent you want to hang your license with exp to start earning referrals when you refer people to exp as well check out my new referral link by going to metcalf.com exp thanks so much for watching folks and we'll see you in the next one good luck out there [Music] you

Channel: Meet Kevin

Views: 220,242

Keywords: real estate, eviction crisis, housing market

Id: yBGsl2TvNso

Length: 11min 21sec (681 seconds)

Published: Wed Sep 01 2021