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