Can Real Estate Transactions CRASH 50% AND Housing Values go UP 40% WHILE FED RAISES RATES FAST? YES

Closed Captioning:

good morning good afternoon good evening

folks michael zuber one rental at a time

have a special guest coming back who is

doing work

for you folks you’ve been following my

channel for any length time you know i

talk about a 50-year spreadsheet all the

time it’s it took me about 24 hours to

put all that material together and what

we have is we’re welcoming john back to

the channel who’s taking it a step

further it’s now 52 years

and he has added a lot of extra

information so john welcome to the show

thank you michael i’m uh glad to be with

you again yeah thank you for doing this

uh we’re gonna pull it up in a minute uh

but when you think about the 52 year

spreadsheet and all the extra fields and

data that you’ve added do you have any

quick takeaways or thoughts uh before we

bring it up

well um it’s a lot of work to put it all

together but i think it’s worth it

because uh

it does tell a story yep um

especially around those recession years

yeah and and the big thing for me having

talked last week of the week before

about what what we’re looking at i’m so

happy to see that we added existing home

sales and new home sales being this yes

exactly exactly because

i’m on the record of saying that higher

interest rates are not necessarily going

to cause a crash

at least in price i am saying a crash

will occur in transaction that is

predictable so we’re going to look at

that and the other thing i want to tell

people right now is i have already

loaded this

in my free course and paid course

just go to the vid so get the free

course if that’s what you want

go to the bonus section it says 52 years

there’s a video and there will be two

attachments

one and just pick which one ever you

want uh so the data is already there you

don’t have to ask it is already loaded

we give it away for free because it is

so valuable so john let me bring it up

sure

here we go

oh gotta hit the share button

hopefully you’re seeing that now

got it

awesome so let’s talk about the rows

that you’ve added so first and foremost

let’s give everybody a look at the data

sources something that is paramount to

me is everybody who get looks at this

data can check the data

this is where the sources of the

information come from if you want to

argue the quality of the source go ahead

we’re just inputting records

this is not fake stuff this is all data

you can go back and double check

but when you look at these new fields

these were the two that were important

for me u.s new home sales and u.s

existing home sales

yes green or red

if you see the numbers go down um

significantly

i made them red

got it

so really for me because again we’re

going into a rising interest rate

environment

so let’s watch this together so again

i’ve not looked at this data we’re doing

this together on purpose so let’s see if

i can do this we’re going to look at row

7 in row 5.

so let’s see where interest rates jump

so okay so 1973 to 1974 they went up a

point

transactions went down about a hundred

or five percent

no big deal

uh next time they jumped oh let’s look

at 78 to 79 oh not much

so 78 interest rates went from nine they

went to 11.

ah but look at what happened in 80.

folks this is why i keep telling you

that

everybody expects housing to act like

the stock market where it just

instantaneously

real estate’s not that way it’s some

it’s in economics we call it price

inelastic

think about it this way you think your

house is worth a hundred grand your

neighbor sold for 105 suddenly you think

yours is worth 110. you list it for 110

nothing happens

most of you just take it off the market

you’ll sell it later

right that’s time right it’s listed for

90 days it’s listed for six months it’s

not instantaneous

so the drop

in existing home sales from 1978 call it

4 million

to 1980 call it 3 million that’s

25

that’s exactly 25

and then it goes further look at 81. oh

my god look at 82.

we went from 4 million sales

to 2 million

in a five-year period that is 50

folks that is a crash

but now look at price row six

price went up

all the channels

talking about rising interest rates

causing a housing crash

don’t know history

we can have a crash in transactions

without a crash in prices this is what i

keep telling people and people don’t get

it they they want to argue with real

numbers and

that that is shocking 78

1978 to 1982 that is

that’s that’s what i think is happening

i think we are in a rising rate

environment look at that interest rates

went from nine to sixteen percent

yeah the data to prove it now yeah data

interest rates go up 700 they went up 80

they went that’s about an 80 jump

transactions crashed prices went up what

did pricing do from 78 so let’s not even

include 78 79 80 81 82

prices went up 40 percent people

transactions crash 50

prices go up 40

that is amazing you can

i wanna i’m gonna people ugh this pisses

me off people don’t get it that’s a very

telling period because i think that’s

that’s the environment we’re in

rights are gonna raise quickly

transactions gonna crash prices are not

going to crash nationally

it’s not going to happen

well we’re in an inflationary period

exactly and a little uh humor for you

roses are red violets are blue taxation

is theft and inflation is too ah i like

that

so the other thing to look at is wages

because again i’m a big believer in

wages so let’s look at what wages did 79

to 82.

look at that wages went up 30 percent

folks

interest rates are going up

so think about this interest rates go up

700 basis points what would that mean so

i think we bottomed out at like two and

a half

so that would mean rates go to nine and

a half

that would without question cause real

estate to crash by fifty percent

transactions

prices

don’t necessarily crash if wages go up

30 in four years real estate won’t crash

we have evidence you guys are arguing

when you’re not looking at the data it’s

crazy

sorry i this is the period i so wanted

to see when you were putting this

together

so i got a i got a little passionate

about that any other uh let’s actually

look at the last couple years let’s go

let’s go oh sorry there we go let’s look

at 20 and 21. so where do we go

yeah so 21 6 mil this is what this oh

god damn

so many people want to argue with me

supply versus demand and i keep telling

people we don’t have a supply problem

look at 20 21 verse 20 20. if we have a

supply problem people we would have less

flipping transactions

because there’d be nothing to sell

the only reason we had half a million

more sales

is because people wanted to sell we just

have a demand problem the federal

reserve took rates to an artificially

low level everybody could buy it two and

a half and we sold a lot of homes in 18

days or less

it was not a supply problem there were

plenty of homes sold 6.13 million homes

500 000 more than 2020 it was not a

supply problem it was a demand problem

created by the federal reserve

crazy well if you go from 2021 into 2022

um

if you could show this on screen

i got this from the uh

let me look at this national

association of realtors

oh yeah let me go back to you one sec

stop sharing

oh look at that

look how it drops yeah

it’s dropping existing home sales are

dropping yeah yeah

that’s what i keep telling people

housing crap we are going to have a

housing crash

in transactions not in price

oh hey we’re already there yeah exactly

yeah anything else on this i’m going to

go back to the spreadsheet because this

is amazing and again folks don’t ask

it’s already there just go to the show

notes below get the free course go to

the bonus section it is all there for

you i’ve already i may i took time out

of my morning to load it early because i

know everybody is going to want that

want this yes there is one more uh bonus

uh statistic for you affordability look

at that

yes

again

um these are national numbers not your

city red red or green

national numbers it’s all calculated

from the spreadsheet there’s no new

numbers uh awesome uh created here it’s

the spreadsheet gives us these numbers

oh look at you there’s the formula if

you want to if you want to argue math

there’s the formula

look at that i love this this is awesome

so again red would mean unaffordable

correct yes

trending that direction got it okay

oh my god look what happened and all

this is again 8

78 to 82 is the period that i’m looking

at

rising rate environment fast rising rate

environment real estate crash

transactions not price

of unaffordable because of interest rate

wages catch up and this stayed

unaffordable for how long

when did it go green oh it went green in

  1. well that’s a decade wow

yeah i think the entire decade

and then we have stock stuff still down

here uh people keep talking to me about

the stock market the stock market was

basically dead money for a decade right

so we go from 90.

like

so what is this so

from 90.3 to 90 basically 0.3

what year was that

78 from 70 to 78 the stock market did

nothing i think that’s the environment

we are in today as well

the only people that i keep i’ve said

this so many times are becoming

a broken record the only people that won

the 70s john were people that bought

homes in 70 71 or 72. 30-year fixed-rate

debt let in face inflation take your

rents higher let inflation uh make your

housing value go up and then oh by the

way when rates crash

because when did rates crash

so what was rates so rates were about

seven and a half no wait where are they

here they are eight and a half seven and

a half are there when did they go down

to like five i don’t think it was until

like 2000 let’s see

when did they see their first five so

here we go 2003

so then you refi and you get all that

cash flow yeah

it’s crazy

so john any other takeaways from this

this is this is a pretty complete

spreadsheet now i think we got yes it’s

uh

it’s a pretty good tool to examine

history of uh

real estate yeah and this is why we can

have a housing crash in transactions not

in price look at the data john has done

this work for you we’ve cited sources so

don’t argue with john or i it’s this if

you don’t like the data sources

i don’t know what to tell you uh but at

the end of the day john uh any other

closing thoughts i want to personally

thank you for doing this we’re giving

this away for free a day of my time more

of your time

it’s just

amazing to help everybody that follows

old rant rules that’s right one rental

at a time baby john thank you very much

for doing this greatly appreciate it

you’re very welcome thank you for having

me again you got it

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