- We're heading into one of the biggest housing affordability
crisis that I've ever seen in my 14 years of being
a real estate agent. - [Woman] 42% of homes
this month are selling for above asking price
according to Redfin. - A month ago I asked my subscribers if they believe that the
average American could afford the average American home in their area. With over 5,400 people responding, an overwhelming amount of
them said absolutely not. 90% of you to be matter of fact. So today we're gonna be looking at what's driving the prices of homes up. Even though that throughout the summer, we're probably gonna even see
housing prices even go higher. Hate to say it if you're
buying a house right now. - For housing where prices
have gone up like crazy, higher interest rates is
not necessarily a good thing for buyers who are now
stretching because prices are going up at the same time. - So where is this
overwhelming wealth coming from in the middle of a pandemic? And I know you're scratching
your head as much as I am because you know darn well
that many people in your area have said they can no
longer afford a house. And home prices throughout the country have gone up more than 16% on average. In some areas even 20 to 30%. First, let's just talk about
the people from California. I know that everybody loves to blame them. And in many cases throughout the country people are seeing an influx of people that are coming from California that have a lot more equity coming out of their house and buying it in their specific area because the houses are a lot less expensive. But that isn't the only factor. Not only that. If there
was this mass exodus of people moving out of California, then the housing prices in California would be dropping like a rock. And let me let you in on a little secret. They're not dropping like a rock. They've gone up about 25% since last year. And I can show you charts
from all over the world. They're basically saying the same thing. I don't really wanna have to explain this but in some cases I'm just gonna have to. The law of supply and demand. There isn't enough houses for sale and the demand is really high that causes the prices to go up. With low interest rates
being where they're at, of course people are wanting to jump in the market more than they ever have. The supply of course went down because of the pandemonium since last year the start of 2020. And it continued all the way through now. And we still don't have
as many people putting their houses on the market. We're still hoping that that will change as more people become,
you know, get the shot and more bigger companies are willing to transfer employees to new locations like they would during this time of year. Normally we would have an abundance of new homes for sale at this time. - 38% percent of homeowners are concerned about the US economy tanking and creating a situation
where they are not able to sell or buy a home as planned. - We have had a shortage of new homes that have been on the market. There are several reasons for that. Of course many home builders had decided that they were going to hold off on building during the pandemic. And then when they decided to build again, they found that a lot of
the building materials that they were planning on
building these homes with have cost a lot more. - Builders say they are still
seeing strong buyer demand but are concerned about
rising material costs. Lumber futures had an intraday
record high just yesterday. - A home that would typically cost about $10,000 to construct and frame up, is now costing them 20, 30, $40,000 more. And of course, with the price of lumber and building materials, that cost gets passed on
to you as the consumer. It isn't just that that's
causing these prices to shoot up high and remain
high for quite some time. There's a couple more factors. Now let's talk about investors. Years ago with the last great recession, people loved to blame the house flippers for the problem with the housing crisis. - Buying these houses
in order to hold them for a couple months and
flip them for a profit. Back then there were too many homes,
- [Josh] Yeah. And when too many homes and demand falls that's the definition of a housing bubble. - This time, many home
investors, small ones, had sat out buying homes during the beginning of the pandemic but then began to buy homes again. They weren't necessarily flipping them and putting them back on the market. They were remodeling them
and renting them out. It's been encouraged by
many financial advisors for people to go ahead
and buy a second home and use that as an investment property. So people aren't buying
just their first home, they're buying their
second and even third home. So they can use that as
income earning properties. But there's another group of investors that's even more sinister. - Buyers are basically
just bidding as high as they can to get what they want. - Now in previous videos I had mentioned there's another group of people that are purchasing up
foreclosed properties within an area, especially big tech firms. Now if you look at markets like Las Vegas, Phoenix Arizona, and even Austin Texas, big tech firms have decided
to move their facilities over to these locations
to get out of California. And with that they have
created another entity that's buying up the foreclosures. And I know that might
sound absolutely crazy but it's actually happening. They create another subsection
of their own company. They're purchasing up the
foreclosed properties in the area. They're doing a little spring
cleaning and fixing up. Sometimes could refer to
as lipstick on the pig, and they're putting these
houses on the market for rent. So they're renting out
to their own employees making it almost
impossible to find a house especially in this housing market. - So of course there's just so much money in corporate balance
sheets and everywhere, in people's balance sheets
and in their bank accounts that has just driven prices
of everything higher. - The Wall Street Journal just came out with an article talking about the fact that big corporations are
buying whole subdivisions. National builder D.R. Horton was one of the companies that has had a big corporation that came through and purchased out the
whole entire neighborhood in Conroe Texas. Now with this investment
firm that purchased out the whole entire neighborhood, they ended up selling each individual unit to their investors. So then in turn, making D.R. Horton and that company double the
income that they normally would if they'd just sold one unit at a time. This was great for D.R. Horton, it was great for the company and in the investors
that were purchasing it. It was terrible for the people that are trying to buy a
house in that specific area. So why are corporations doing this? Well one of the biggest ways
that anybody can build wealth, even you and me is to
invest in real estate. And they know this. And one of the best ways to earn income from that real estate is to rent it out. They want to have a longterm
income earning properties that last a lifetime. As evaluation of the dollar goes down and inflation goes up, you can always count on real estate. It's always been one of the
safest bets you can put in when you're investing your money. The one thing you could always count on is that real estate does turn around and it is a very good hard asset that investors are willing
to put their money into. - [Reporter] Affordable so, while home prices are increasing, affordability is a relative term and we were seeing some
people take advantage of that. - Now I've spoken to a
lot of people that have a more economical,
analytical type of mindset when it comes to the housing market. I myself personally feel like this is a terrible housing market for anybody looking for an
affordable housing option. But they don't think that the
average American necessarily wants to buy a house. They believe that you
want to rent a house. Please put in the comment
section of this video if you believe that you
really want to be a renter or you want to own a house so you can let these people know. Because they watch my
videos and they don't think there's an affordability crisis because there's still just
as many people buying houses and they're buying them over asking price. I need them to see that there is a crisis and you do want to buy a house and you don't think that the houses are affordable enough
for you to purchase one. In my opinion, this is
a very dangerous way to be thinking about the housing market. Everybody knows that most
baby boomers acquired wealth by investing in real estate. Now it's looking like our future generations aren't even going to be able to afford
to buy their own home. So are we really going
to allow corporations to buy up all the homes
in our neighborhoods and we become a nation of renters? Well I hope not. And here are some things
you can do in your community so that doesn't happen. The solutions come from people
with the loudest voices. We need to demand more affordable housing and not allow corporations to be able to purchase homes in these neighborhoods. We can limit the amount of homes
that a corporation can buy. All you have to do is when
a new home development is being proposed in your local area, go to those planning and zoning meetings. Voice your concerns during those meetings and let them know that you
would like a restriction that doesn't allow corporations to buy out a whole entire neighborhood. Each planning and development of a new subdivision that's voted on in your area needs to have a provision that only allows a certain
percentage of homes to be rental units. The whole subdivision shouldn't be allowed to be purchased by any
one single corporation. And this can be voted on prior to even the houses being built. Now if you're concerned with
your own specific neighborhood, you can make a bylaw in your own HOA that says that a certain percentage of homes cannot be
turned into rental units. I guarantee that in most associations they already have that, but if you don't you can vote on that and add that to your association rules. You're going to have to have that looked over by an
attorney and voted on and make sure that that
is going to be something that you want for your neighborhood. All these things may not
be immediate right now, but as new neighborhoods
come in throughout your area, this is going to be some way that you can control some of the costs that have been going up exponentially. We can't afford another 20
to 25% in some areas to go up or no one's going to
be able to buy a house except for let's just say, Amazon. I can see it now, my house
is sponsored by Amazon. Who wants that? Not me. - [Man] If you move to
these modular methods, not only are you driving down the cost, you're making it easier
to assemble them on site. So you can stand them up quickly with less disruption to the neighborhood. - [Blonde Man] If you use
volumetric construction you're going to save anywhere from 35 to 40% of your construction time. - Now there's still
affordable housing options for many Americans that a
lot of people don't consider. And I want you to take a
second to look at them. Now manufactured homes
have come a long way throughout the United States. And in most cases you can
get a typical mortgage for a manufactured home. People have also gotten
pretty smart when it comes to buying affordable housing
and they're buying PMRVs or even granny flats
where they put this house on a property that they already have or in some family members driveway. Now another affordable housing option that many people are
turning to is modular homes. And they're not the same
thing as a manufactured home. A manufactured home comes in two parts, a modular home is just a home that's put in sections together and it's no different than
a traditional built home. If you want to know more about
modular manufactured homes, you're gonna wanna check
out this video right here. My name is Kristina Smallhorn, your real estate whisperer. And I tell you all this because good real estate
information matters.
