THE HOUSING MARKET HAS TO CRASH BECAUSE OF: Price, Affordability & The Dallas Fed Said So. Thoughts?

Video Closed Captioning:

howdy welcome back to one rental at a

time

today matt and i are going to take over

the channel and we’re going to let

michael

devil’s advocate for us we are going to

interview mike because in this video

not that it’s his actual opinion but in

this video

mike’s opinion is the housing market is

going to crash so we’re going to hear

all the reasons why we should sit on the

sidelines and wait for the crash of the

correction before we start investing

so

mike

give us the first reason that we can

talk about

dude the first phrase in the market has

to crash is because haven’t you seen

prices prices are higher than 06. they

have to crash it never been this high

before it has to crash don’t you guys

understand it just has to crash because

it has to crash

it took me too long to find the mute

button

i’m going to report you to youtube

but dan you first go ahead were you

reading the comments and read it because

now mike

exactly

exactly

okay so in articulate if i can answer to

prices are what’s going to cause the

crash

why

do you think prices are higher

right now mike

uh because of fear of missing out and uh

everybody’s just uh buying because

they’re stupid and fomo’s taking over

and why the heck would people wave

contingencies and it’s just stupid

buyers

okay so

that’s one way of looking at it what if

prices are up because

there’s a lot of demand

it’s a stable asset

people have equity they want to deploy

in the last 10 years we’ve had youtube

university grow more than any time any

other education source for investors to

use to learn how to get into real estate

we’ve had record low interest rates for

the last two years

we’ve had record wage inflation people

can afford to buy more

um

matt

it’s not denmark let’s just start there

go into detail

socialized economy like with with all

these price controls and all these

things in place you know even japan

100-year mortgages right so it is just

purely

free

market supply and demand and the ability

and for that market to be functioning as

it’s functioning

and then the thing i’ll say before we

ask the next question to the person who

thinks we’re going to crash because of

prices is in 2006 we had high prices so

we have high prices now what we don’t

have now is adjustable rate mortgages in

two years we have about four percent

adjustable rate but in 2006 and seven we

had 50 adjustable rate mortgages so in

two years a lot of people will still be

able to afford the payment that they’ve

been making

um

okay so if prices

are your first argument as to why it’s

going to crash what’s your second all

right fine if you guys don’t want to

give me prices

what about affordability man interest

rates are up i was pre-approved now i’m

not approved there’s going to be all

these buyers that can’t get in because

rates are so high you guys tell me it’s

a payment-based society fine but now

rates are over five nobody can buy who

who could buy in an environment like

this there’s just no buyers left i’ll

let you start matt

i can’t believe the attitude we’re

getting

i can’t

we need to go in the parking lot for a

little bit and then come back and fix

this unbelievable

i do much better work out there so the

idea is again

supply and demand rates can be higher

but if the market can bear it

people are going to be buying based on

what they can afford

so

while the number of houses again

inventory remains extremely low

people are still going to have to buy

and in some cases have to sell

and so where it really comes down to

again is free market economy the fact

that people do buy payment and so they

will have to get either if they have to

move they’ll either have to get a lesser

house

or

they’ll have to wait now there will be

the time when transactions will slow

down and we’ll start to build some

inventory but don’t expect there to be

this explosion of inventory there might

be an explosion of overpriced inventory

because people will feel like they

should have sold their house six months

ago a little bit different of a market

but in my market where there’s still

such a shortage of demand even though

rates have gone up 250 basis points

every month we continue to break the

record of the cost of a median home

and and largely in these towns price per

square foot continues to break a record

in most of those cases so

what we’ll eventually end up having

we will see is that those rates will

start to impact people’s buying

abilities and some of those assets

will start to sit longer on the market

and then in turn we’ll need to see a

price adjustment

so i’m going to devil’s advocate and

take mike’s side on this

and let’s say we can prove that rates

have gone up affecting affordability

so if somebody is saying don’t invest

now because prices are going to come

down because rates are going up and you

wait

and the prices plateau and they stopped

going up as fast as they were but rates

continue to go up

even if you paid the same or less for

the property you as the investor in the

future with those high rates are going

to pay more you’re just sending more

money to the lender than to the seller

so it’s again still no reason to delay

purchasing always a good day to buy a

great deal

your buying power yourself might go down

but there are people who are doing 1031

exchanges who have a lot of equity

sitting in a property that they can

invest with we’re seeing people move

from high cost of living areas in cities

where they had to live close to where

their work was moving into low cost to

very low cost of living areas where they

can now work from a distance so they

have more money to deploy

and interest rates only impact

buyers who are buying with a mortgage

so if you’re 10 30 in 10 30 in a large

enough amount or if you’re able to sell

a house like matt talked about in a

previous video for a million dollars in

one area and buy another one for half a

million dollars even after paying taxes

if you had to you’d still be able to buy

that house in cash

so rates aren’t going to make prices

come down anytime soon and even if they

did if it was raising rates that did not

you’re still going to be paying the same

fine i got one more for you so price

isn’t going to do it

rates aren’t going to do it

well gosh darn it the federal reserve of

dallas

just had an article that said

they’re seeing a housing bubble and

they’re never wrong so you guys gotta be

wrong

okay so they’re right there’s a housing

bubble

tell me about the part where it pops

though

well they said they’re seeing the the

same kind of feedback loop where buyers

have fear of missing out and they have

these crazy expectations of appreciation

so they’re seeing the same animal

spirits that led to the crash last time

you have to watch out for those animal

spirits

we’re not seeing massive numbers of

adjustable rate mortgages

we’re not seeing ninja loans if you

tried to qualify for a mortgage lately

you’re not getting anything with no job

no income no assets no real paperwork

it’s kind of forensic still

so seeing indications

like higher prices

fear of missing out

creates price increase

none of that creates creates price drop

matt

free market still supply and demand

it still is what it is the market will

continue to do what the market does so

long as there is as much demand

as there is supply

prices will be stable

so long as there’s less supply and more

demand prices will continue to increase

and i have one last question for the

detractor

and then real quick lastly the other the

other piece of this too is

for those of you who aren’t paying

attention the fed has raised a quarter

point

and rates are up 250 to 300 basis points

the issue is

buyers of mortgage-backed securities

essentially the bond market that is a

far larger market than anything else

and so

in that market when you have people

saying yeah i’ll buy it but i want a

better return than this because i think

it needs to be better risk adjusted then

guess what price of that is going to go

up which means the rates go up which

means the payments get more expensive so

for all of you who think it’s only on

the fed

it’s

not on the fed just on the rate side

it’s actually on the mbs side the actual

debt side of the bond side of the market

oh that was above my head i’m not an

economist but i do play it on tv

play one on tv

nice

here’s the question mike yep

if we agree with you

bubble’s gonna pop

prices are down done video over

i said if oh darn it yeah what does an

investor do right now today

if you know prices are going to pop and

come down six months from now

what does an investor or a homeowner

investor

well if an investor knew

that prices were going to come down um i

guess they sit back and wait maybe they

list a couple in in cash out and come

back i don’t know

certainly

i’m trying to be myself now instead of

the other idiot um be the guy who hates

oh be the guy who hates you

the bubble’s gonna talk absolutely dude

the bubble’s gonna pop man i’m gonna

sell now i’m gonna kick back and like

sit on my big pile of money and i’m

gonna buy stuff for fifty percent off

it’s gonna be zero percent interest it’s

gonna be a party that’s what i’m gonna

do

so what we need is more youtube channel

saying that so a whole bunch of

investors sell everything

to us

and then they sit back and wait two

years and buy our stuff back at a higher

price

how do i do that

i don’t think anybody wants to do that

i don’t think anybody should do that

yeah

this was fun i uh hopefully everybody

realized i was i was i was over acting

obviously but those are some of the

comments i i i get so i thought i would

just go with it dion thank you for doing

that where can people find you

right here on youtube dion talk

financial freedom and i usually don’t go

full nicolas cage like you did but

good job

matt how about you want to know what

mike’s like in between videos there you

go there you go

lumberjack william on youtube and

lumberjack mail on instagram appreciate

you being a good sport and doing that

mike that was fun thanks guys

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