California Housing Market Could Drop 50% By August. Inventory up 5% in a Week. FIND Deals NEW AREA

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good morning good afternoon good evening

folks michael zuber one rental at a time

it is tuesday and you know what that

means we bring on omar the real estate

entrepreneur how are you doing buddy

good what’s up michael what’s up

everybody how much man so the first

video we’re gonna do probably for the

next year

is just an update on the high desert

right for me it’s an important market

because the high desert leads california

right i can get a sense in fresno by

understanding what’s going on in the

high desert it reacts first it reacts

with the greatest variation so uh what’s

going on in the market i think last week

we were at like

1086 or 1087 listings where are we at

now

we’re officially as of the 12th of june

a few days ago

uh two days ago

1142 houses for sale

or just properties for sale yeah single

families wow so that’s that’s a five

percent move in a week that’s

inventory is piling up and

that’s it’s it’s it’s this is coming

right

man

in a week you got five percent more

listings in a week

11 42 michael i’m just you know i’m

taking notes like we always do um

11 42 and we’re at

we are at 158 new listings okay 118

solds okay

93 pendings all right

and

57 back on markets

uh yeah the one thing again as investors

there’s a couple of places that i would

hunt right back on market i hunt

the first thing i’ve already told people

is i have changed my search from first

day listings to 15 days i will very soon

change that to 20 or 25. the second

thing is exactly that i want to fish

with back on markets

why

you don’t know for sure maybe the

listing agent will tell you maybe they

won’t

usually there’s a reason why it didn’t

appraise

the buyer got cold feet there was a

condition something

i am fishing for better deals i am only

doing great deals so i want to fish

where my chances of motivation go up

days on market back on market hunting

ground hunting ground go to work

you know what let me add to this michael

the back on market okay i’m a seller i’m

selling a property right but i’m also on

the hook for another one and and i don’t

need to sell but i want to make sure i

get that other house now my motivations

changed if we back if if the buyer

backed out on my deal guess what you

come in michael and you say listen i’m

going to give you an offer right now you

write it up do whatever maybe you use

the listing agent

and you send an offer for 50 grand less

than what i was already in escrow for me

i’m like okay well bird in the hand uh

yeah you know what that let’s do it

because i don’t want the asset no more

i’m already emotionally attached to the

new property that i’m in escrow with or

that i’m closed on so guess what i just

you came up on a 50 000 um what do you

call investment yeah thank you very much

yeah again folks

real estate

and the other thing we got to talk about

is i don’t know if you saw this they

this may not have hit your radar

yet but yesterday

omar dude yeah i know 0.75 percent of

interest increase yeah but the mortgage

the 30-year mortgage rate the best rate

your best buyers are gonna get now

six point one eight percent

what have we been saying it’s coming

seven percent man yeah it’s coming with

bad credit at seven percent oh with bad

credit all day it yeah it might be seven

and a half now but the reason i bring

this up is we are going to see true

demand destruction right there are folks

in the high desert

who six months ago qualified for the

median home

they just don’t qualify anymore cnbc ran

an article with diana olek i don’t

remember where their numbers came from

might have been housing wire might have

been black i forget

but basically

40 of people that were qualified six

months ago aren’t qualified today you

want to talk about demand destruction

and the high desert in california is

going to feel that right your average

income is not orange county income

no not at all it’s it’s you know 100k

85k and nowadays that doesn’t get you

much it really doesn’t and this is what

i’ll share with you too michael this

makes a great point because if you’re

saying

6.18

on a traditional fha loan 30-year fixed

that’s going to put a lot of people out

like they’re not going to be this is

where you’re you as a seller you as a

professional are going to have to get

creative and give away some closing

costs so they can buy down that rate

give away some closing costs so it

doesn’t require that much out of their

pocket so you can sell your asset and or

investment so if you’re a flipper and

you’re making 50 gs on a house well

guess what go make 40 000 give away 10

000

to sell your damn asset 100

i’m dropping all mine because yes i was

in that same boat of throwing it on the

market it appreciated so much but i

bought so well that i’m able to now

compete with everybody else and i still

make a profit you cannot go broke making

a profit absolutely yeah

yeah there’s there’s a couple of things

again the high desert is going to be

very interesting i

you know it gets hot in the high desert

i.e the name right you think in july i’m

thinking july august it might be

crickets

it just might stop i mean i’ve seen i’ve

seen the housing markets in 22 years

stopped twice

once in q4 of 2018 for about a

six to eight week period rates jumped

everybody kind of got a little wonky and

then obviously march of 2020 the world

stopped for lots of things including

housing

i got a sneaky suspicion that

transactions i don’t know what what is

the record for at least i mean maybe

next time we can figure out what’s the

month you’ve done the least transactions

because i think you’re going to break it

i think august and the high desert

you’re going to break a record for least

number of transactions

you you might be right man i mean i i

don’t we’re training as a company as a

as a team

where we’re at

last last month we’re at 31

closed which is pretty good yeah and

then

net this this month we we might hit the

same but i don’t i think that we’re

probably gonna be 25 26 right then july

because june there’s not much

acceptances right now exactly this is

what i’m talking about man it’s it’s

even the best i mean like let’s just i

mean i’m

well it’s my show i can do what i want i

guess

so let’s say you did 31 last month

i know you’re the best of the best i

know you invest all this but if the

market’s not there the market’s not

there i mean you might do correct 14 or

15 in august because august is like hot

hot hot not a lot of people not

normally it’s the slowest month of the

year yeah or is it july

nah you’re right august august no end of

july august september yeah you know it’s

also the last video

yeah last piece of summer

and again if that happens to you think

about what happens to the entire market

the onesie twosie agents nothing

i really do think the high desert is

going to lock up in august

you know i i i don’t want to be a debbie

downer no but obviously we have not had

a

um a year that looks like this

in quite some time yeah i mean even this

was prior to covid this is 2019 even 19

we still had an increase yeah 18 we had

an increase

17

it was still good yeah and so this is a

different you know you’re saying q4 of

2018 that was a stop march of 2020 to

stop now question for you yeah if you

think that now i’m going to put

michael’s uber on the spot august

of 2022

okay

you think there’s might be a stoppage

there maybe the beginning part of

september now question for you with

inflation with everything this interest

rate hike of another 0.75 and then

probably another one before the end of

the year to recap or re you know to to

repopulate the cash flow that was

printed out right

do you think

that the feds will do that and then

there’s gonna be a absolute

destruction of the um

of the interest rate back down to four

percent three percent to get people to

start again

yeah so i get asked this a lot uh and i

think most people have it right but

their timing is off everybody wants it

faster

no i believe the fed is on a path that

takes the fed funds rate which as of

this recording is still 0.75

okay it will be one and a half i am

hoping fingers crossed tomorrow

i believe that funds funds rate is on a

path to it at least

four percent

whoa

yeah at least and that in my current

prediction was the summer of next year

it might now it might be the march of

next year at this point

right it’s happening fast so what does

that mean that means the real estate

industry the real estate market that you

are you and i in is about to get

very very slow because if you have a

funds rate at four the 30-year money

could be at seven

it could be touching eight seven and a

half yeah could be touching eight for

the non you know bad credit folks so

again housing market is going to slow

this is going to be 1981 all over again

where housing transactions crashed 50

and in some markets and it could be the

high desert right because again you you

happen first and react the most it might

fall 60 every every market is different

every buy box is different please go do

your work in your buy box folks but i’m

talking nationally

50

maybe 60 crash in transactions we are

crushing affordability we are crushing

the move up buyer builders aren’t

builders will

back off buildings starts are way down

this market

is about to get glacial slow

which is great for investors what have

we been begging for as investors

we want the market to slow down sellers

yeah congratulations they’re coming

um but it also makes the exit harder for

flippers right oh 100 but this is where

this is where you um you stack your

doors man

like

terms baby

all terms i’m taking this from you

michael i mean um

and being a what do you call a uh uh

you know a multi-faceted professional

with buying selling wholesaling sub to

hybrid type of investor and or agent

stack this is where you go and represent

if you’re a professional out there go

and represent

um a bunch of buyers and sellers stack

your cash out of flip make sure it’s

good if you’re not gonna flip then make

sure there’s enough spread so you can

still get

the 30-year um dcsr loan pull out some

money stack the door stack the door

stack a door with your commission checks

this here i think that this is probably

another

2011 and 12

um of being able to borrow some money

still inexpensive right because we were

paying 12 percent michael you i have i

have um and

you’re going to be able to get it at 10

at nine and a half ten ten percent with

a point or two but because of that now

you’re going to be able to be like all

right well i’ll i’ll you know burn this

one i’ll burn that one

you may not pull out all your money out

because because the appreciation is not

going to be there yeah but

you’ll stack the door man and that’s

like this is this is huge i will be

stronger coming out of this than going

in

yeah all right this is the time

again when i talk about the real estate

market you got to remember that owner ox

make up roughly speaking 30 or 70

percent of the market investors are only

  1. over the next couple of years it

might go 60 40. the investors that do

the work the investors that only do

great deals the investor who doesn’t

give a rat’s ass about the cost of

capital because you’ll do great deals

whether it’s 8 10 or 12. it’s time to go

right and again

i’m adding skill sets there are things

that i don’t know that i need to add

like pre-foreclosures and all this other

stuff

it’s time to go ham it’s

in real estate investors

you’ve always wanted a slow market

congratulations i think you’re going to

have the slowest market i’ve ever seen

in 22 years it’s a good time coming

yeah i love it this this is good michael

where can people find you omar

guys just follow me on ig at omar

underscore alfaro

or omar alporo.com thanks buddy

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