Video Closed Captioning:
good morning good afternoon good evening
folks Michael Zuber won rental at a time
and uh pretty popular topic I’ve seen on
my YouTube feed I don’t know about yours
is
talking about the 2023 housing market
being worse than 2008.
I think this is a very interesting
conversation I I think it is uh full of
passionate opinions
I think there’s a lot of folks who
frankly want
2023 to be worse than 2008.
you have heard me talk about 2023
uh perhaps being the worst economic year
of my adult life
so I sit here today
not expecting 2023
to be a very good year
I think that on many many many measures
if not most measures
2023 is going to go down as a
record-breaking bad year but that said
when somebody says that 2023 is going to
be worse
than 2008.
and they single out the housing market
that’s an interesting discussion
that’s an interesting discussion because
unlike many of these prognosticators
I live through the 08
09 10 crash
in fact I bought my first rental
property in 2002 so I saw the crazy run
up up close and personal
also uh we got out of the way we sold
all our houses near the peak because
they didn’t make Financial sense
so I thought we should use the 50-year
spreadsheet or the 52-year spreadsheet
and I thought we should look at every
single metric
and ask ourselves
how will 2023 compare to 2008.
as I sit here before opening the
spreadsheet I could tell you that I
think 2023 will be worse than 2008.
on many if not most indicators
now I believe a lot of people are
talking about 2023
housing and price
being worse than 08
and I don’t see it
but we will pull it up we will look at
it together and we will have a
conversation
I will undoubtedly agree with all of you
that things are happening faster today
I will also agree with you that I am
wrong all the time
but
my opinions my opinion I wish I had a
different one
but without further Ado let’s pull up
the spreadsheet and really dig in
will 2023
be worse than 2008. all right let’s pull
it up
so again folks this is something that I
consider so valuable that we give away
for free
I don’t know where to put it so I put it
on teachable if you look below there’s a
link for a free course you can get this
spreadsheet with all the tabs just a
level set these aren’t my made up
numbers
uh we have taken the time to list all
data sources
so um
you can go back and check these data
sources we included them these are not
our data we just put them on the put
them on the graph or put them on the
chart
okay so let’s let’s level set everybody
so we’re talking about 2023 which will
be out here being worse than 08.
so that’s this year here
so we’re just going to go down every
record and have a discussion
uh so we’ll start with home ownership
uh the I guess the first thing to talk
about
yeah I think we should talk about this
first
the first
error
I see in a lot of uh people on YouTube
talking about 2023 and 08
is 08
or that crisis that event
was not a year
as you will see in this spreadsheet 08
wasn’t the worst year it was actually
- so when somebody is comparing 2023
to 2008
they don’t really appreciate
that the great financial crisis
was years in the making
and if you’re going to compare a year
you shouldn’t compare 2023 with 08 you
should compare 2023 with 09. 2009 was
when you really started seeing cascading
and in you know foreclosure inventory
getting over 2 million 08 was still
pretty close to the peak
so again all the numbers are here you
can look at them yourself
but the first thing I will say is when
you compare to 08
it really isn’t 08 it was really 2008 to
- or 2007 to 2011. why is that
important
it is important because every because a
lot of people are trying to force
negativity into a single year
and that’s just not how the housing
market works you can see here
uh the housing market
um
you know was really kind of five six
years in the making
right it was bad for six years
so again
if you are going to compare 2023 to 08
you’re missing the point you’re just
flat out missing the point but that is
what people want that’s what we will do
so the first thing is home ownership
you can see that in this crisis home
ownership went down
ultimately bottoming in 2011.
uh given we were at the end of 2021 we
don’t have 2022 data yet because the
year is not over I think it’s fair to
say that home ownership will be down
home ownership will be down home
ownership will be worse than 08. no
question
how about median home price well again
median home price it’s not really the
price so we will skip this it’s really
home appreciation which we will get to
in a minute so we’ll just skip over
price
homes sold these are new homes sold
again you can see that new home sales
were on a negative trend for five years
I think you will see that collapse as
well I think new home sales drops I
think new home sales in 2023 will be
less than 485.
so I think new home sales will be less
than 485. so again worse
how about existing home sales
existing home sales in 08 kind of bottom
which is interesting but here’s why
and here’s why 2023 in my opinion will
be worse I believe 2023 will be under 4
million
that’s wild under 4 million
why is that well because the crisis here
while new home sales were falling
existing home sales didn’t because they
were short sales and foreclosures we
don’t have that 2023 will not be
dominated by distressed inventory we
will have some but it will not be
dominated in my market of Fresno
California seemingly 50 percent of
listings were dominated by distressed
listings in this crisis it’s not going
to happen we will not have 50 percent of
inventory be distressed
so again I believe total transactions in
2023 will be less
than 4.6 million so yes 2023 will be
worse than 08.
now price appreciation this is the one
uh
that I think will be interesting
as you can see again price appreciation
started to decline in 08
oh sorry going the wrong way there we go
it fell for five years in a row
price real estate is sticky we have
already seen transactions crash 30 we’ve
already seen mortgage rates go up 300
basis points everybody is telling you
when mortgage rates go up three percent
they’re supposed to crash 30 like it’s a
rule
it’s not how it works folks it’s just
not how it works so again housing is
sticky inventory is down inventory is
going this way I do not
think that 2023 will see negative worse
than negative 4.6
I could be wrong I’m wrong all the time
uh but again that is my opinion so again
I think a lot of these stats are worse I
do not see home appreciation being worse
so it’ll be something less than negative
0.4 in 2023.
interest rates I think they’re going to
be higher uh even though Barry Habib is
talking about sub five I think they will
be over six I think frankly it needs to
be over six for a year uh just to level
set the market get us back to working
uh we’ll skip all of this affordability
Road 12. this will absolutely be worse I
think 2023 could be the worst year for
affordability either 2022 or 2023 will
be the worst year
price interest rate crazy
median price to income ratio will be
worse this will be higher this will be
bad
uh median income is obviously up here we
go nominal wage growth
nominal wage growth was basically flat
for the year of 08. I believe nominal
wage growth will be five six seven
percent I believe we have started wage
price inflation or weight yeah a wage
price inflation or spiral I believe wage
growth will be five four five six
percent next year
we’ll see but that is a much much better
we will be in much better shape in 2023
uh as wages grow I believe this decade
will kind of be like the 70s where wage
growth is strong
uh Unemployment uh 5.81 let’s oh wow
look at that unemployment rate again
08’s not the year folks you got to
compare to 2009 these people comparing
2023 with 08 don’t understand it got
look at how bad unemployment was
man damn it was bad for five years
oh yuck
uh unemployment I don’t think
unemployment gets to 5.81 next year I
don’t think so
that’d be a big jump right that’d be
what did that be like 2.3 percent I mean
it’s certainly possible but I don’t see
it
CPI CPI will be worse
CPI will probably be
if we’re lucky four and a half four
so I guess it’s close well uh that’s the
end of the year though what will that
average it’ll probably average four and
a half
the misery Index this again is Jimmy
Carter era stuff you just simply add
unemployment with CPI
let’s think unemployment
yeah it’ll be close it’ll be close S P
500 S P 500 was down three percent
oh wow look at 2009. again folks
comparing 2023 with 08 don’t understand
it wasn’t 08.
s p crashed in 09 not in 08.
I don’t know what the s p I’m not a big
stock guy
uh then you have some adjustments for
inflation real versus nominal these are
all real we’re up here are nominal
S P 500 adjusted for CPI home
appreciation all there
oh last one we’ll talk about is gross
domestic product
gross domestic product was negative
uh in 08
I think it’ll be worse I think 2023 on a
year-over-year base or on a year basis
all four quarters will be worse so at
the end of the day I think a lot of
these metrics 2023 will be worse than 08
I do not see price unfortunately uh I
will once again reiterate that anybody
that tries to take 2023 a single year
and compare it to 08 is missing the
point the great financial crisis needs
to be looked at really in totality it’s
these five years will 2023 be worse than
these five years
I don’t see it what was that a total
that’s a negative 22 drop
housing crashed 22 percent in five years
nine percent was the worst and this is
really 8.9 it just rounded up to nine
so it’s pretty interesting to look at
um I think wages so on the on the so
again so that’s home price wages where’s
wages so wage growth look at this what
was wage growth for five years
wage growth for five years was only 1.6
think about that 1.6 for five years I
believe wage growth for the next five
years when you combine them when you
simply add them together
could be 20 percent
eight I think it’ll be 18 plus
that is a huge difference
wage growth will be 18 over five years
instead of 1.6 huge difference huge
difference
what were the s p what was s p oh look
at this the S P 500
over five years was negative what is
that negative what is this let’s see
25
ouch is that right no that’s not right
so it went from 1378 to 1300 for five
years you lost you know you talk about a
lost decade
you lost five years
oh
lost five years I don’t know not a stock
guy I don’t want to play there
all right
so at the end of the day I think
comparing 2023 with 08 is absolutely an
interesting intellectual exercise
I think a lot of uh 2023 will be worse
than 08 uh home ownership worse
new home sales worse existing home sales
worse
um
what will be better wages
housing price
I hope the stock market but don’t know
so again you should play with this
spreadsheet you should understand that
2023
is not shouldn’t be compared to 08 if
you want to take 2023 compare it to 08
or yeah 08 to 2012 08 to 2011. uh very
fun exercise so
take care of yourself have a wonderful
day thank you so much