Video Closed Captions:
good morning everyone how you doing
today michael zuber one rental at a time
and as promised at the end of the daily
financial news this morning we are going
to talk about red fins
2022 yes 2022 is right around the corner
we’re going to talk about the 10
red fin real estate predictions
first thing i want to give you a warning
about
their uh predictions
can be twisted in a way that is
scary
folks that may have taken this data i’m
guessing some of them will use the
percentages versus absolute numbers and
if you wanted to you could take this
redfin report given red finn’s name or
cachet
and yes you could create scary fearful
crash crisis whatever you want to call
it videos
that is not who i am
i’ve been in the game for 20 now 21
years i’ve bought and sold in all kinds
of markets
i can take
data and kind of internalize it and see
where others are led astray so we’re
going to go through all 10 right now and
i will talk about each one individually
and then give you my thoughts on them
so first and foremost
redfin sees
interest rates on the 30-year mortgage
going up 20
yes folks i fully expect some channels
to talk about interest rates going up 20
percent
but let’s look at the absolute number or
even better the math
so here is the deal
redfin is talking about interest rates
going from 3
to three point six percent
if you’ve been watching my predictions i
actually think they are coming in low
but let’s do the math
folks
math i know it’s a it’s a four-letter
word i get it
i like that math is a four-letter word
that makes me laugh inside that makes me
chuckle
anyways
let’s see what a 3.6 versus a 3 mortgage
rate means to mom and dad who buys a
home
you have to make all kinds assumptions
about credits and credit and down
payment and all of that but here’s the
deal
roughly speaking average home in the
united states
a rise to 3.6 percent means
you pay
100
a month more
now normally speaking that hundred bucks
would hurt affordability and you know i
am a huge fan of affordability when
affordability gets too low i sell
however we are in an inflationary period
just like the 70s and the 70s brought us
wage inflation
so let’s just do the math again
one hundred dollars times twelve is
twelve hundred dollars a year
if you want to double that because of
taxes that becomes twenty four hundred
dollars
in the wage cycle that we are currently
facing if you get a wage increase of
more than twenty four hundred dollars
that house is not less affordable
it is more affordable
so these channels talking about price
or
price and interest rate only
are doing you a disservice
they are either ignoring the third
variable or worse
they are too inexperienced to realize
that wages is the third variable
of affordability it is all about
affordability folks prices can go up a
hundred percent
interest rates could go up but if wages
go up 200 percent
it is still
wickedly affordable
now i use those numbers just to be
shocking
but it is about affordability price
interest rate and wages
in a normal time
a 20 rise in interest rate would crush
affordability but does anybody think we
are in normal times
wages last time i checked are up five
percent
five percent on the average family of
four’s income of seventy grand
that is thirty five hundred dollars
thirty five hundred is more than twenty
four hundred so we may not like to think
it
price up interest rate up
it actually could be more affordable and
that’s what people found in the nineteen
seventies
so
i think redfin is low i think rates will
be just shy of four percent their high
is three point six that is number one
number two
they think price appreciation is going
to slow to three percent
um
that would be a real estate slowdown
i’ve been calling for a real estate
slowdown for a while
but let’s be really let’s just be real
with each other a three percent price
appreciation next year is actually going
to be below inflation
i i can’t wrap my hand around that
housing is an asset it is what people
want
there is no chance in my opinion of
housing going up less
than
inflation if inflation is five percent
i think housing goes up eight or nine
percent if inflation is three percent i
think housing goes up six or seven for
redfin to think housing only goes up
three percent
is to miss the impact of inflation in my
opinion so i think they are wickedly low
on that one
number three
where i yeah number i guess that was
kind of one a and one b
so here’s number two i guess they expect
new listings
to hit a 10-year high
i agree i’ve been calling for that for a
while i think there’s been a lot of
people sitting on the sidelines for a
couple of years and they are going to uh
we’re going to have movement we are
going to have movement i don’t think
we’ve had
i think we’ve had some i don’t think
we’ve had the real wave so i do think
that is coming
and again real estate slowdown i’ve been
calling for it do the work do all of
that stuff so i agree with redfin that
yes i think we will have record listings
next year i think they got that one
right
rents
rents so
excuse me rents are going to be up seven
percent
according to redfin
uh i will say this
they’re saying price appreciation of
three but rent of seven
i think that ratio is correct
again if you’ve been watching my channel
for any length of time you know that
prices go first rents go second
and what redfin is essentially saying
is rents will exceed price increases i
think that is correct as i said earlier
i think redfin is low on the three
percent but i do think they’re right i
think rents will exceed
uh housing price appreciation it happens
all the time rents lag values by about
nine to 12 months
number four
redfin i think is kind of talking their
book
on this one redfin is simply saying that
people will be relocating to cheaper
areas
don’t they always do that at some level
i know why redfin would want to put it
there right they
that’s what they do right they list
housing so you know i guess yeah i know
you know you’re going to leave la and go
to vegas you’re going to leave la go to
phoenix
you’re going to leave new york go to
florida
but
that one kind of feels like a layup like
isn’t that true every year
but okay
number five get a little political here
redfin people are going to increasingly
vote with their feet
if you do not like the politics of new
york or california you will leave if you
don’t like the politics of
washington or
illinois you will leave i think again i
think that is true i think these are
things
that we will start to see evolve over a
decade i think
i think yes we have become a more
politicized environment and if you don’t
like it you leave makes total sense to
me
number six
condos to explode both the development
of single-family homes can’t keep up
you can you can move up you can put up a
lot more condos together and they’re a
cheaper price point uh millennials and
gen z can’t afford houses so they’re buy
condos i think that makes sense
i do think condos uh condos could see
more appreciation than houses next year
that did not occur last year
houses were up quite more a lot more
than condos
seven kind of a
kind of punched zillow in the nose on
this one
redfin is saying that home uh i buyers
high buyers will focus on profit
not size
the
why do you want to be the biggest
company losing a lot of money that never
made sense to me
never made sense
next home buyers to focus on climate
change
huh
i don’t get this one does that mean
we’re not gonna buy beachfront
properties
i didn’t really know what they meant by
this
i uh
i don’t know i’ve never i’ve never met a
buyer who made a decision based on
climate
maybe it happens
maybe i don’t see it but maybe
affordable housing to become more
political
yep definitely that’s number eight
or nine i forget where i’m at and then
the last one i have
is real estate commissions to be under
attack
again the doj they’re saying the
department of justice to come after real
estate commissions
so again i think redfin did a good job i
think redfin’s essential message in
their list of 10 is
the real estate slowdown is real right
if i were to tagline what they said
right more inventory they’re calling for
higher rates and much much lower
price increase
sounds like the housing slowdown to me
i do expect some channels to take these
reports and make them uber scary
i don’t see anything here that is truly
scary it’s just a real estate market
that is going to have more inventory and
more choices and if you do the work you
can always find a great deal it is
always a great day to do a great deal
interest rates at 3.6 percent may sound
high when you’re used to three i’ve been
doing this since they were in the sevens
and had loans and ten
so it will be interesting to see what
happens so that’s what i have for my
first live stream i want to thank uh
faraz invest to wealth and eli for
watching i will do another live stream
here
shortly take care bye