Meet Kevin The Coming Housing Disaster. Protect Yourself w/ This. What is He Missing if Anything?

Video Closed Captioning:

it’s a sunday morning getting ready to

speak with todd baldwin dan bird

and uh about a dozen of you

have already forwarded me meet kevin’s

discussion about the housing market

uh over the last couple of weeks we’ve

seen meet kevin talk about housing we’ve

seen him talk about rising interest

rates

reducing purchasing power

last couple of videos have talked about

the 1970s

and why maybe the 1970s art affair

comparison

so i went ahead and watched that video

this morning kind of taken my notes and

as usual i think meet kevin has a lot of

very valuable stuff however

i think he is missing

perhaps the most important variable of

the 1970s and i’m

and he’s

i’m not sure why he keeps missing it so

what i thought we would do is summarize

what i heard kevin say

give you some actual numbers

and then we will dive in and highlight

what kevin is missing

so

first and foremost this is for me

kevin’s video i think without the last

12 or 14 hours i think it’s called

housing crash or housing problem or

something like that

so what do we have so first off he’s

talking about the 1970s and he’s

basically saying the 70s

yes he’s basically saying in the 70s yes

housing went up yes interest rates went

up but it was because of the 30-year

mortgage one second

so what he’s saying is basically don’t

look at the 70s the reason the 70s

kind of make his thesis break

is because there is the introduction of

the 30-year mortgage

which

on the surface

if you don’t do your research makes

perfect sense

what have i told you

that real estate is based on it is

always based on a payment

so if you go from an environment where

maybe the traditional mortgage is 15

and

then you go to 30 your payment is

smaller so of course if kevin was saying

that the 30 mortgage launched in the 70s

and

interest rates went up housing went up

but the payment term went from 180 to

360 which are months

that would make perfect sense to me

in fact it made perfect sense to me so i

had to go research it this is what i

found

the 30-year mortgage

was actually introduced not in the 1970s

it was introduced in 1948

for new construction

and it was later introduced in 1954

for existing home sales

so the 30-year mortgage was not

introduced in the 70s it wasn’t brand

new it wasn’t suddenly a way for mom and

dad to buy a home on 360 months payments

instead of 180. it was in fact available

since the 1950s so that is

not

um

not a correct assumption

sorry this is what happens when you do

these things live and yes i’m doing this

live because i want to get ready for my

next call so

i didn’t know i didn’t know when the

30-year mortgage was introduced again

1948 for new construction

1954 for existing home sales so that

kind of argument doesn’t quite work but

again i think there is something so

vital or so flawed

that we’ll get to it in a minute so

let’s look at what the 1970s were

the 1970s 1970

the 30-year interest rate was 8.5

percent

by 1979 we’re staying in the 70s it was

11.2 percent

so this is roughly speaking a 300

percent basis it’s actually 270 points

so again

given the thesis of the day

real estate should crash 27

but it didn’t

kevin says it’s because of the 30-year

mortgage

which it isn’t

or at least not entirely housing went

from twenty four thousand in two dollars

to forty eight thousand eight hundred

and thirteen dollars

housing

doubled

this is why meet kevin is talking about

the seventies because it doesn’t match

his thesis

interest rates went up 270 basis points

real estate is supposed to crash 27

where in reality

it went up

100 percent

i keep telling you folks it’s not about

price it’s not about interest rates

there’s this third thing

that unfortunately meet kevin

either ignores

or doesn’t look at and we will get to

that in a minute

so again there’s a thesis that interest

rates go up one percent pricing should

fall 10

it’s already gone up one percent and

housing is still on fire

now in that in that video i watched this

morning that again a dozen of you sent

me

he’s talking about rates going up two

and a half percent

wow

and i think he’s right i think rates can

go up two and a half percent

i do not think house is going to crash

25

and in fairness in this latest video

he is not talking

crash 25 percent he’s talking a loss in

purchasing power

which

mathematically speaking he is absolutely

right but again

there’s this thing that meet kevin is

not talking about

that can neutralize

that 25 loss in purchasing power

so if you’ve been watching my channel

for any length of time

you should know what that third variable

is

if you think you know what it is go

ahead and leave a comment below because

we’re going to flip this white board

over and we’re going to look at it

together

kevin if you ever see this or somebody

who watches my channel sends them a note

just ask kevin to look at this because i

think it’ll be eye-opening

and then when you look at this decade

the decade we were in you can at least

ask the right question so

let’s see if sonny will stop making

noise

let’s turn this bad boy around

so

hopefully you can see that now again

make this a little bit lower

so the answer is wages it is not housing

price

right housing went from 24 grand to 48

grand it is not interest rate it went

from eight and a half to 11.2

the big thing that kevin and so many

other people are missing is wages

houses for the most part are bought on

payment

yes

interest rate and price are important

but they are two

of three

factors that make this work

so let’s look at wages in the 1970s

the wages start and this again is median

income for a family of four

can you believe this some of you make

this in a month now some of you might

even make this in a week

eight thousand seven hundred and thirty

three dollars that’s what the average

family of four was making in 1970.

can you imagine living on anyways can

you can you imagine man

by 1979

the average family of four

is making 16

hundred and sixty one dollars

that is nearly an increase of one

hundred percent i don’t know where this

sixty-six percent came from

what is that

why was that there i don’t know anyways

so again

went from 87 to 16 four so a little bit

less than a hundred percent

the average increase in wages for the

decade

for the decade was 7.3

this is how

interest rates could go up

prices could go up it’s because

everybody’s wages were going up 7.3

percent this is the average for the yi

for the decade

the range

the min

max

the minimum wage increase for the 1970s

was 3.4 percent

the maximum was 11

again we buy houses on payments

prices could go up rates can go up if

if

wages go up that’s the thing that meep

kevin is not talking about it’s not the

introduction of the 30-year mortgage

because we’ve already looked that up and

it was sourced in

1948 and 1954 if memory serves

so again

payment so i did some math

this eight thousand three hundred and

no eight eight thousand seven hundred

and thirty three dollars

produces a monthly income of seven

hundred and twenty seven dollars can you

imagine living on 727

a month

wow

again this income here converted to

monthly is 13.71

so one of the things i wanted to do is

figure out

what 25 of this gross income is because

again a lot of people spend that on rent

and mortgages

so 25

of 727 is 182

that’s a comfortable mortgage payment

obviously you wanted to be lower but

that’s what 25 is and again 25

of 13.71 is 343.

so again that’s an increase of

one dollars

it’s about payment and the third

variable that meet kevin and so many

other people miss is wages

me kevin is talking about if interest

rates go up two and a half percent

and frankly i think he’s right i think

rates can go up that much from the

bottom to the top the floor to the peak

i think he’s right but then he talks

about a loss of purchasing power of 25

percent

he’s forgetting about wage increase

if wages go up eight percent

eight to eight and a half percent

it neutralizes that loss and purchasing

power

wages go up eight and a half shoot wages

go up ten percent

there is no loss in purchasing power

because housing is bought on payment

you’re not paying cash for a house

your payment will still get approved

if interest rates go up two and a half

percent at current prices

so

he’s just not doing the math he’s

missing a third variable it’s not x and

y it’s x y and z

z wages you’ve got to look at wages if

wages go up 10

over the next two years

housing is still affordable i’m not

saying wages will go up 10 i’m just

saying kevin

let’s complete the picture

it’s about wages you’re missing wages go

look at the 1970s i’ve given you the

numbers it’s a simple google search you

can download my 50-year spreadsheet in

my free course all the sources are

listed

it’s free go get it

so again

very interesting

at the end of his video he’s talking

about how to take advantage or maybe

protect yourself

i think most of that is correct from

memory actually didn’t write these down

get rid of consumer debt obviously he

does talk about maximizing your real

estate debt

i think that was said maybe without

caution i think some of you should not

do that

certainly shouldn’t do that if you’re

going to go buy something else a boat or

a car or a second home you also need to

make sure there’s you can still cash

flow

it’s not about maximum leverage i don’t

like that it makes me feel uncomfortable

also some of you hear what kevin said

and you’re going to take equity out of

your home where you’re where you your

wife your husband your kids sleep for

some of you that is very very dangerous

this next this coming recession is going

to be interesting

we will have a fed that is raising rates

we will have inflation probably double

digits very soon

cpi in fact if you watch my channel i

did the math for you cpi is actually 11

2

before gas increases

yeah so do me a favor meet kevin go back

and look at the 70s it’s not because of

the 30-year mortgage rate i didn’t know

i did the research it was in the 40s and

50s not the answer the answer kevin is

wages wages increased

every year and every year every year in

the 70s wages averaged seven percent

increase you can afford a lot more home

if your wage goes up seven percent a

year the the min was 3.4 max was 11 so

again folks it’s not about price

it’s not about interest rates it’s about

price

interest rate and wages and oh by the

way those three factors

make up the affordability index which

you if you’ve read my book

uh one rental at a time you know that i

watched that and it saved my butt

during the great recession we got out of

the houses at the peak

bought apartments and then we got in at

the bottom so again i have done it i’ve

been doing this for a long time

uh so again it’s not about interest

rates and prices kevin please go back

and look at wages take care everyone

thank you for doing this live

sorry my puppy he’s sitting right here

was kind of a distraction hope that was

okay

bye bye

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