Video Closed Captioning:
hi my name is michael zuber author of
one rental at a time
and if you’ve been following my channel
for any length of time you know that i
believe at least in this year and next
there will not be a housing crash
there will be a crash in transactions
but most of you want a crash in values
i’ve done my best to give you history
i’ve done my best to kind of share with
you my story but sometimes
a picture is worth a thousand words so i
want to give credit where credit is due
this idea came from a facebook post from
jason hartman if you don’t know who
jason hartman is go check him out he’s
been putting out excellent investing
advice for a long long time i’ve been
lucky enough to interview him on my
channel a couple of times so again if
you’re not following jason hartman
do yourself a favor and go check him out
so what i’ve done here is take jason’s
simple post
and i’ve turned it into a picture and
i’m going to answer
when will housing crash
and to be clear i am talking about
values when where housing
prices crash
a lot of you have been saying oh my god
interest rates are six percent housing
is going to crash
i do not think that is true and again i
think this picture
holds the answer so again remember
as somebody who studied economics way
back when what is one of the rules that
you and i talk about all the time
supply
and demand
supply is really easy to understand in
real estate it’s hey
how many active listings are there
got it
demand
is a different piece demand actually has
two variables
one is the desire
the want to
but there is a second test
and that is
can you
this is what we are seeing we are seeing
demand destruction because those who
could
those who wanted and could can’t at
higher rates
so this picture we’ll talk about it
so again let’s pretend let’s go back in
time
interest rates are three percent
that circle
is demand
what we have inside this square
is supply
and if you were paying attention in 2020
in 2021 we saw inventories drop
we saw days on market drop
so what we had was not a supply problem
we just had demand
that blew away supply
but okay michael great stop giving me
the history lesson tell me when it’s
gonna crash
well let’s continue this journey
together
obviously interest rates weren’t three
percent all the time they were rising
they’re now four percent
what happens
remember demand two variables the want
to and the can
when rates went up to four percent that
was a moment in time where everybody
rushed in
but some people couldn’t so i would
argue
that demand shrank
but it was still much much much bigger
than supply
this is why you could have case-shiller
index go up
19.2 percent
after rates went to four percent
because again demand dwarfed supply but
okay okay okay
now
what happens to five percent
well
now you are having true
demand destruction
right now you’ve got 200 basis points
you have a whole bunch of people who
were qualified can’t now you have a
whole bunch of people scared not doing
anything
but still
the demand
is greater than supply
what happens at six percent
[Music]
right
the big question is
will demand ever beat supply but
remember
i’ve been trying to help you understand
that given the sudden
rise in
prices or the price of money the cost of
money the cost of capital we are seeing
a very very interesting thing
this may appear
that demand is getting closer to supply
and maybe in some markets dem and would
be less than supply and the world ends
but if you’ve been following my channel
you know that the fed broke housing
because what happens to supply of homes
at six percent
let me get another color real quick
this is what happens to supply
what we are seeing today is not only
demand destruction these circles
we are seeing supply destruction
supply is going to get cut in half
and as long as supply
is less than demand and some might argue
two or three x less
we can’t have a housing crash now
in your market your buy box your
specific area
maybe
if you’re in florida
right no chance your demand circles are
way bigger than supply
folks real estate can not crash
nationally speaking
until supply
dwarfs demand
we need inventory to stack up not only
do we need inventory to stack up we need
correctly priced inventory today we have
a lot of hope and prayers i talk to real
estate agents all the time
they have hope and prayers
folks i am sorry
interest rates could go to seven percent
as long as demand
exceeds supply
no crash it is economics 101.
let me know what you think of this it is
all supply and demand one more time
shout out jason hartman for giving me
the idea for this picture for this video
i hope you all have an amazing day it is
friday is it friday yeah it’s friday
take care of yourself have a wonderful
weekend
if you want to start doing real estate
investing and learn your market your buy
box what average good or great buy the
course below how to get started one
rental at a time join the private
facebook group we will be going live in
that facebook group tomorrow at 9am take
care everyone bye