The TRUTH BEHIND WHO IS BUYING ALL THE HOUSES...

one thing I hear you guys talking about a lot in the comments and people are always asking me you know with this huge housing crisis that we're in why do they still let big corporations own and buy real estate and rent it out and you know contribute to this housing shortage and that's a good question guys some states are pushing forward initiatives to try and change that so in States like New York and California those are Democrat run States and uh they're pushing forward initiatives and then you have other states like Ohio and Nebraska and they have some Republican bills on the table to try to eliminate Wall Street buying up all the homes one interesting point that this story mentions in here is you know a lot of people are against HOAs right like people don't want to live in an HOA Community they say I'm never going to live by their rules and all this and that don't want to be told what to do but I hate that too but the one good thing I would say about HOAs that they do is some of them anyways they eliminate the possibility for investors to buy some of them are strict like you cannot rent your your property you have to be owner occupied so it prevents people from coming in there and buying up all the property and other ones that do allow investors to buy sometimes they have limits on how many properties can be rented out and the rests are all required to be owner occupied and it's like that comes on a first come first serve basis sort of thing literally investors over the past several years have scooped up hundreds of thousand thousands of houses to rent out to people and it's contributing to the shortage of homes for sale as we know and if we take a look at this chart here it reveals something interesting cuz I brought up this data point months ago in one of my videos and what this chart shows you is the share of single family homes purchased by investors by portfolio size and one thing I mentioned in previous videos is that the Wall Street investors get a bad rep for buying up all the H SP so to speak but if you look at this chart it's actually small mom and pop landlords that own most of the real estate and are buying most of these investment properties okay the gray line at the bottom are those mom and pop landlords that only own one to nine properties and they buy up more than 15% of all these investment properties that have been purchased at least single family anyhow and at its peak during 2021 and 2022 when 25% of single family home hes were being purchased by investors you know probably like 18% of that 25% was being purchased by small mom and pop landlords guys and this data here proves that this this research that was done by John Burns research and Consulting so really the thing you have to think about is it's not just Wall Street that's contributing to this and making it worse they get a bad rap they get all the headlines for this but really it's the small investors guys even if Wall Street completely went away then small investors would still be buying up 15 to 20% of the single family home stock year after year cuz this goes all the way back to 2017 and they're pretty consistent you can see on this chart the I buyers and the Big Wall Street landlords yeah they do purchase a small percentage of the single family homes but nowhere near what the small investors purchase so these states can pass laws all they want on making it illegal for big corporations to own homes but I don't think it's really going to make much of an impact like people think you know the data does not support that I'm not saying they should be allowed to do this I'm just saying that if it gets eliminated Nationwide which is not even a nationwide measure we're just talking in a few States right now then it's not really going to have as big of an impact as people think but of course these big corporations that buy homes they say well you know our companies buy homes and our business model provides renters the opportunity to live and Des desirable neighborhoods where they otherwise wouldn't be able to afford to buy while there might be some truth in that the reality is if an investor can buy a property and rent it to you for a profit that means it's most likely cheaper to buy than it is to rent okay so if you live in an area where it's cheaper to buy than it is to rent you can just buy yourself you don't need to rent from a big Wall Street landlord or any landlord for that matter now if you want to get used to the area check it out things like that see if you like it that's one thing or if you just want to rent as a lifestyle CU you don't want to deal with problems with the house that's another thing too but as far as giving people access to neighborhoods they otherwise wouldn't have access to be able to buy into that really only applies to people that just can't afford to buy because they don't have the down payment and they really can't qualify to buy because if the actual monthly payment is lower than the rent which is the only way these investors are turning a profit then it's still more beneficial for you to buy in most cases and also you have to wonder if it's a good thing for States and local governments to get involved in housing at all guys because some of the things that they've done already is you know they pass affordable housing initiatives so that way you know tax money has to go towards building affordable housing to give people free homes that don't want to work or things like that and also you know they they pass different laws to go in favor of tenants when it comes to evictions making it harder for landlords to get out non-paying tenants so some of this stuff really backfire and work against you now obviously tenants shouldn't be evicted if for no reason they if they're paying the rent on time and they're not doing anything that breaks their lease there's no reason they should be evicted and that's supposedly the reason that these eviction laws are in place however it goes way too far making it so that people can take advantage of it and live in a house for 6 months or a couple years for free and the interesting thing is this is an issue apparently with both parties you know both Republicans and Democrats are speaking out against this and most recently there was a quote from uh Governor Greg Abbott in Texas saying that corporate large scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home so this is something that's being acknowledged from both sides of the aisle however I think they're all getting it wrong because all they have to do is just look at this one data point to see that it's mostly small investors that are buying up these houses so a lot of people are for this hey let's block wall street from buying homes which is probably a good start you know you're going to eliminate some of the buying but not all of it and The Advocates or lobbyists that you know are in favor of Corporations still being able to buy up these single family homes say listen corporations only own about 3 to 5% of All American Rental Homes so this is not really putting a huge dent in the supply price problem but it depends you know because that's that's a nationwide stat you know in some metros most notably Atlanta 11% of all rental homes in the Atlanta area are now owned by three real estate companies so it depends on the market on how much saturation there is with real estate investing one of the Congress women from Atlanta also has a uh measure in Congress called the end hedge fund control of American homes act that they're trying to pass and they're all saying listen this is going to make an impact but it's not going to solve all the problems which is true it's not going to solve all the problems and the other thing that people need to understand is even though corporations are still buying homes right now a lot of the corporations over the past year and a half have actually become net sellers they're now offloading more properties and selling more than they're buying so yeah they're still buying but they're actually releasing more inventory back into the wild which are going to be their non-performers the houses that they're not making a return from but they also acknowledge here that smaller investors that own between 10 and 99 rental homes have stepped up their share of home buying this year and some of the proposed legislation would also Target these smaller investors and it should because it's like okay you can't really single out corporations and not really acknowledge the elephant in the room here guys the elephant in the room is that small investors are the ones buying up most of the houses so that needs to be I'm not saying that nobody should be allowed to invest in real estate I've even invested in real estate myself but I don't know you guys let me know what you think you think it's good if the government gets involved in this some of the bills right now would cap rental home ownership at no more than 50 homes for many companies requiring them to sell off many more they already own a bill in Minnesota would limit the ownership to only 20 homes well right away I can just see the loophole to this guys all they need to do is set up new entities new corporations and each one of them owns 20 homes you know they can can do that unlimited times they're a big company they have money that big parent company can own all these little small companies and bang they've skirted the rule just by opening up more corporations that can only own 20 houses each like that I don't think is really going to solve anything because these big corporations are always on step ahead of the government they're going to change something to try to regulate something they're going to find a way to skirt it in Ohio they're taking a different approach the Republican approach there is instead of banning it what they want to do is introduce a bill to to tax large landlords so heavily that they would likely feel compelled to sell their property they're worried about these big real estate companies developing developing a monopoly power in some of the neighborhoods while putting starter homes further Out Of Reach for home buyers that may actually be the way to go because then there's nothing to skirt right if the taxes are so prohibitively expensive just like this thing with the interest rates right now I keep telling you guys if they raise the interest rates so high that nobody can actually afford to finance a house or finance a car or Finance anything then they'd be forced to only spend the money that they have which would dramatically slow down spending and immediately throw us into the recession that we'd so desperately need so on that same front if they did this with investors and made the the taxes so high then it made it so that it's not profitable to own the property then this could also induce them to just not buy and sell things that they already have here we have a house that's pending sale and it was listed for basically 400,000 and they bought the lot back in 2022 for only 60,000 then built this brand new house on it but they've been trying to sell it since October of last year and only are now getting it sold for about 10,000 less than they originally listed it for but here's what people need to watch out for you see this brand new house has a property tax bill for $834 that's because that tax bill is based on just the land value with no house on it once you buy this house for 400 Grand now your tax bill is going to be about $5,00 a year because that's roughly what the neighbors are paying with their $400,000 houses so when you go to buy a brand new house you need to know that your bill is going to jump substantially if it was just an empty lot prior to you buying it you know what it's been a long time since I've gotten an email from my friends over at the Fairway Mortgage Company because they used to send out all these emails once a week and I haven't heard from them in months about any of the big incentives out there for people to buy houses and all of this well guess what guys we have some news it says here guess what's coming back Hometown Heroes $100 million and additional funds are being added Monday July 1st and we can start accepting contracts for this toward the middle of June this gives the buyer up to 35k toward down payment and closing costs enabling borrowers to come to closing with less than the cost of first last and security on a rental all at a low rate of 0% so that's free money they're giving people right there up to $35,000 first of all and it's $100 million Statewide they're also using this as an advertising scheme you can get into a house that you own that you're going to buy for less than first l in Security on a rental guys does that sound familiar when was the last time we started hearing about things like that oh yeah the 2008 housing crash when people that couldn't even afford their rent we going out and buying houses sounds pretty familiar and I've picked on this several times in the past guys Florida keeps juicing the housing market here at a time especially now when they probably need to the most because inventory is exploding here if you saw my video the other day talking about the housing bubble here in Florida bursting well it is starting to burst especially in different regions of the state where inventory is now at or above pre pandemic levels so and this is coming at a time when interest rates are way higher people can't afford to buy and those houses are just sitting on the market no one's buying them so the next thing that's going to come are major price cuts and people are going to start getting deals over the next couple years here so once again guys the government's always doing everything they can to try to prop things up and even on a state and local level this is happening not not to mention on the Nationwide level as well but one of the biggest problems that real estate is facing right now as we all know is commercial real estate it is completely crashing the prices of commercial real estate are down 50% or more in some areas but by an average of at least 20% right now there's now a record level of defaults with commercial real estate guys record level more than $38 billion of us Office Buildings are threatened by defaults foreclosures or other forms of distress according to the data firm msci this is the highest amount since the fourth quarter of 2012 in the aftermath of the 20082 2009 financial crisis hm right now they say office owners are paying back their loans at a much slower rate as of 2021 one more than 90% of office loans that were converted into commercial mortgage back Securities were paid off when they became due last year that figure fell to 35% the worst payoff rate in the history of the data which goes back to 2007 guys so clearly you can see that the trouble continues to mount with this and why is this a problem it's because it's going to cause businesses to go out of business that are occupying some of these buildings which leads to layoffs and leads to hardship with people that own these these businesses it also is going to lead to bank failures because the small Banks across the country are the ones that hold most of these commercial loans and you know what's at root of all this the high interest rates or at least the historically normal interest rates we should say because they're not really high historically they're just normal but this entire economy got so hooked on the cheap debt for so long that is literally crushing the commercial real estate market right now they say in a normal Market many landlords would still be be able to pay the higher rates but since the pandemic the office Market has been far from normal demand has nose dive as many businesses allow employees to work from home and have now been reconsidering the amount of physical space that they need and right now if you're looking to lease a commercial space you have to be really doing your due diligence to make sure the landlord's Financial Heth because you know you got to make sure that they're not going to be losing the building soon which can also make you go out of business you don't want to open up a brand new store imagine you're the one spending all the money on the buildout of the interior of some kind of storefront that you're starting and then 6 months later you get a notice that the whole building's being shut down because of a foreclosure so that's worst case scenario for a small business and guess what this problem is just going to keep compounding guys because over the next 12 months $18 billion of office loans converted into Securities will mature which is more than double the volume in 2023 and Moody's is projecting that 73% of loans will be difficult to refinance because of the property's income and debt levels and vacancy levels approaching the lease expirations there's nothing but problems right now with commercial real estate and it's only going to get worse from here on out is what this is saying and not only have the defaults in for closures hitting record highs right now with commercial real estate but the US office vacancy rate is also at a record high at 13.8% okay compared with the end of 2019 it was at 99.44% % guys you know part of the reason we had this banking crisis last year in March was because of all these commercial loans that are not being paid back and so if this problem is going to continue getting worse it's reasonable to think that we're going to see some more bank failures maybe by the end of this year or definitely going into next year in fact Regional banks in recent weeks have been reporting higher net charge offs due to commercial property exposure at PNC Financial Services they were more than $50 million in the first quarter and in the last quarter of last year was $54 million these guys are losing money hand over fist right now because of these commercial real estate properties that are going bust and the problem with all these commercial properties there's no cash flow they're not making any money so that makes them worthless in the eyes of any type of lender or buyer somebody that wants to buy these properties and so they have to sell them for pennies on the dollar and to give you an idea of how much these properties are being discounted okay there was a property in downtown Los Angeles that was purchased for 148 million but back in 2014 it sold for $269 million so imagine that level of discount just this one property guys this is very common right now and these companies that are buying these office spaces for pennies on the dollar are also trying to do their part to help get tenants back in they're trying to give them specials and lure them back into these buildings and make it so that they're not afraid of the building closing down again so it's also a very good time to be getting a great deal if you want to start a business and you need to have a physical space your negotiating power for this right now is basically higher than ever guys you need to make sure you're getting the deal of a century right now if you're going to be doing any sort of commercial lease if your lease is up for Renewal soon you need to make sure you're renegotiating the hell out of that thing to make sure you're getting the best deal because if you're not you should just move there's no shortage of empty commercial space right now that's up for grabs and is willing to give you a killer deal to move in now One Last Thing Before I Go I want to ask you guys just comment below do you want me to do a video on all the Airbnb problems okay when I came up here to Palm Coast I had to stay in a house in order to try to get a feel for the neighborhood to see if I would like to live here myself right this is advice I've given people in my past videos like hey if you want to move somewhere see how it is live in the neighborhood and uh see what it's like to live in that neighborhood the only way to do that is to rent a house short term so I did and man there are dozens of problems with these houses guys that for the price that we paid you wouldn't believe and so let me know if you guys want to see a video on all the problems that we had with these houses and how much it costs to rent and all of this just to bring it to your attention for anybody who uh might be looking to do the same and try out a neighborhood and uh things to look out for with these houses guys cuz you can rent a house some of it might not sound like a big deal but when you add it all up it can be a lot of small things add up to a big thing in the end so let me know if you want to see that and if you enjoyed this video make sure you subscribe to the channel and if you don't want to wait for my next video to come out check out this one on the screen right over here and I'll see you in the next one

Channel: Michael Bordenaro

Views: 146,885

Keywords: home prices crash, housing bubble crash, housing crash, housing crash coming, housing market, housing market 2024, housing market 2024 forecast, housing market crash, housing market update, housing news, real estate, real estate crash, real estate market today, us housing market, us housing market news

Id: 13I7ikCcH0E

Length: 19min 38sec (1178 seconds)

Published: Thu May 02 2024