People need to push back , chose multi generational homes , keep the house in the family , pay it off and pass on generational wealth ! Buy a fixer upper and say no to over priced new homes poorly built Get roommates and rent / shared housing ! Buy cheap land and live off grid
Thank you for the comment. I agree with you on generational homes. I am an investor but owning a free and clear home that the FAMILY can feel secure that this is "HOME" is a truly marvelous gift. One of the goals in my seminars is to be secure and OWN your family home.......the continuity know the neighbors and the community is truly a blessing.
Thank you for the comment. I am told 49% of realtors nationally, in 2023 sold 0-1 property. I cannot confirm yet, but I am told 73% of Realtors in Arizona for 2024 have not yet sold a property? Thoughts? Michael Douville
@@michaeldouville690 So I check in a weekly basis the performance of friends and acquaintances that are in the industry, I haven’t found someone that hasn’t closed anything this year. The majority of people I’ve been checking are also down 40-50% from prior years. A few are down as much as 80% but not many. A small few are still killing it but they have a small team and big overhead.
I bought at the height in 2005 it immediately fell by half. In 2018 it finally got back to the original price and now it is $120,000 over what I paid in 2005. I own it outright but I wish prices were lower for people that work here can buy here. That is better for our towns. Housing is a place to live not an investment or should be. Investors changed that!
I agree with you, but it's not the investor's fault. Most of the price increases are from easing credit standards, long term low interest rates, and down payment requirements. If everyone can qualify for a mortgage - housing prices go up. Investors haven't been buying houses since the fed doubled rates. Investors get about 3-4% right after bills are paid now and a mortgage is 6-7%... That's before taxes, insurance, repairs, lawn care... Investors stopped buying when interest rates doubled. I also think people should be forced to put 15-20% down. I do think some of price increases from 2010-2021 were because of investors.
Investors like Blackstone or Rock (?) did buy up large swaths of house under many different names. Invitation Homes is one. They bought whole neighborhoods to rent out and they bought in some HOA communities in and near Atlanta. I am not talking about people who own 2-3 homes. You are right about when it happened. So if it is as you say easier standards, will we see another downturn in Fla?
@@JetJ321 I don't think prices will go down like in 2008, we might have a small correction though (up to 20% but probably less). People are locked in at low interest rates and have positive home equity. I think housing is just going to hang around these prices for a long time (and not appreciate). Also the cost of owning is going up, plumbing repairs, new roof, new appliances, ect...
@@Aaron_R Equity? Not for long. Friend bought in Texas outside Austin and home already dropped 25% in 18 months. Unemployment will wipe out golden handcuffs. People are House Poor bruh
The artificially low interest rates have caused this bubble. Generations past bought homes while paying 8, 10, or even 12 percent interest. The difference is that home values weren't many times yearly income, which is where we are today. The market needs a 15 or 20 percent downward correction.
@@mchristr values here in south Florida are 100-500 percent higher vs the start of 2021. It is a flipper and investor freak show. 15-20 percent doesn’t scratch the surface here. Many of the homes here could have their values cut in half and it would still be the biggest bubble in history.
Thank you for the comment. Yes, I agree, it is a Bubble. So many were caught up in bidding and paying over list price. So not only will you get the 15-20% downdraft, but it may also be significantly more for those that paid a premium for their property. Michael Douville
Thank you for the comments. Yes, I agree with you. There is an enormous market for housing, but it needs to be affordable housing. Maybe starter homes need to be built again. I have been told that local regulations have added $90,000 to the price of a new home. Just think how long it takes for developers to bring a subdivision online....... Michael Douville
Went looking for houses today in Tampa thinking it will be some deals after Tampa was hit with 2 hurricanes but the realtors are holding pre- hurricane prices and saying prices will increase. So after 2 hurricanes the property appreciates? Cant believe some of these realtors.
The same happened in New Orleans after Katrina. Anything that was still habitable was in demand as damaged homes would take a long time to get repaired. People still needed a place to live.
Personally seen almost all the 3-4 bed rental homes rented out after these two storms. I’m in Dunedin. The occupancy rate for single family houses has to be super high.
We sold our home in January 2024 to move cross country. Been renting since, I just can't justify spending 5 to 6 grand a month on a normal house. My real estate agent keeps trying to say interest rates will come down and prices will then shoot up. But I keep saying no. Honestly, I'm just waiting on prices to collapse. These prices are insane. They're often on homes with the same owner since the 70's or 80's, either no updates in all that time or very few. Probably bought for under 100,000 and they want close to a million or more in some cases. Insanity.
Price matters more than the interest rate and a multiple decade of free money was unprecedented and will likely not return anytime soon. We are witnessing fraud on a massive scale in regards to appreciation of value. It’s simple to analyze as Uniform Standards of Appraisal Practice, a Mathematical equation to back into valuations are not present. It is equity theft
It's not the value or price . The currency is po poo. We need way more dollars to purchase a junk home . It ain't worth more ; it's worth less and less as the dollar goes down and down
Not an economist, but you can feel it in your bones that the economy is on tilt. Commercial Real Estate after Covid-19 took tremendous hits. Residential Real Estate is about to pop as well, let's face it most of it needs a correction anyway.
Watched a Bloomberg story on the "shocking" failures - defaults of AAA rated commercial real estate Bonds, all across the country. They spoke as if it were the start of a trend. This was Today.
Thank you for the insight. I am finding subs are so much easier to work with and are available to work in just a few days' notice. That indicates to me that the construction industry is slowing quickly. I have been sent data showing large layoffs in the building industry which would validate what you are seeing. Michael Douville
Florida still highly priced even though prices are coming down. Single family homes that used to be 350 in 2019 are still on the market for 650k in SW florida.
Values are 100-500 percent higher here in Delray Beach vs the start of 2021. It is 99 percent out of control flippers and investors hoarding everything and trading to other flippers and investors. Many homes have been flipped 3-4 times in the past 3 years.
Contracting and we see it clear. Not just us but everyone in my space in Portland metro Aria. People are looking for work it's grinding down. Without a change we are heading back to survival mode.
Thank you for the comment. Yes, Arizona will not be immune from any correction in prices that may transpire. Fortunately for Phoenix Metro, Hi Tech Chip fabrication plants are moving here bringing in 50-100,000 tech jobs which will soften the coming turmoil. Michael Douville
There is no crash coming in residential real estate. Period. . Less than 10% adjustable rate loans. No ninja loans People have equity. Foreclosures at record lows. Commercial yes. Residential no.
Completely wrong. We are in the biggest bubble in history despite what all the scheming charlatans are trying to convince everyone of. There is more speculation driving the market than at an point in history There is more appraisal fraud than any point in history There is more private, schetchy financing that at any point in history And there are more risky financing that at any point in history The building are lying about inventory, and the existing market can only hide the tidal wave of speculator owned pocket listings for so long. The market is a complete, scpeculatjon driven Ponzi scheme.
Real Estate got caught up in an aggressive positive feedback loop. One portion of the positive feedback loop is 3% down mortgages.. when home prices are going up lenders can write these low downpayment loans with little risk. This creates more demand for housing, which makes prices go up even more, encouraging even more of these loans to be originated. But once that turns, now you have a problem. Now the bank has massive exposer. The borrower could be underwater in a matter of months. Now the bank suddenly wants 20% down. This decreases demand even as prices are falling, causing prices to fall even further... Up or down, the market feeds on itself until it finds an absurd top or an absurd bottom.
Great comment! Where is the excess supply? Lots of the US Housing Stock is no longer in the areas needed, Baltimore, Detroit, Chicago, St. Louis, Milwaukee. These are places people are leaving. Builders swarm to the new locations and build! That's what they do! Austin, Dallas, Houston, Las Vegas, Fort Meyers, Tampa, Port St. Lucie, Jacksonville, Memphis, Nashville; these are great "Builder Windows"! However, builders own land to develop; land is a huge cash drain on Builders. When the RE Market starts to slow and the Federal Reserve implements "Demand Destruction" which is currently underway, the builders need to get out of their Land Bank or PERISH!!!! So, they build their way out until their Lender says NO! Melody Wright is estimating over 1.7 million specs currently available. During the GFC, specs peaked at 1.65 million. To make matters worse, the new products are no longer affordable in the current financial environment. Hence, I am anticipating massive Short Sales and Defaults. Those that have access to distressed properties and the ability to buy........Fortunes will be made! Michael Douville
If liquidity is and has been receding, what has fueled the massive bull market in US equities? The rally in stocks for the past two years has been historic - Clearly not a moment defined by an absence of liquidity.
Excellent question. The removal of Liquidity has not been a straight line down, every blip up has had an effect. Just recently, the $1.8 Trillion "Inflation Reduction Act" has provided liquidity and the most Liquid Market is the US Stock Market where much of that has been parked. Also, when fear of war is present, Foreigners move their Capital to Safe Havens, one for certain is the DOW. Another along the same vein as "Safe Harbor" has been large Prime Luxury Properties that will retain value. Both of these are vehicles to preserve as much Wealth as possible. John Hussman is a brilliant mathematician and Portfolio Manager. He is extremely cautious on the Equity Market. It might pay to check some of the free analyst sites available. John Rubino, Michael Pento, Charles Hugh Smith, and of course Charles Nenner. Michael Douville
Excellent thoughtful question. Great thinking outside the box! March of 2023 saw a massive injection of Liquidity to ease the defaults of Silcon Valey Bank, Signature, and of course Crédit Suisse. The Fed poured in cash as well as the ECB and the BOE. The Bank of China has also injected funds, so the decline has not been a straight line. There was also the Bank Term Lending which is still active with billions outstanding. Just last Friday, the SWAPs indicated another injection of cash "Somewhere". The Federal Reserve is not buying CMBS nor MBS funds, nor extending anymore funds through the Bank Term Funding Program that had injected hundreds of billions. The very last thing any Administration around the World is to crash any of the Markets. That said, they all have admitted there is a Central Bank coordinated action to remove liquidity and hopefully not break anything. I am anticipating the policy response to a troubled Real Estate Market will be a Massive Injection of cash.......... Michael Douville
I am curious why you are saying that people are escaping St. Louis. In the midwest things are still cash flowing so I see a lot of investors buy in that city. What do you see instead?
Thank you for the comments. St. Louis is suffering a population and business out-migration. As the tax base shrinks, there is less and less funds available for government services such as schools, Police, parks and recreation. As the services decline, it reinforces the trend, and more and more people leave. It becomes a negative loop spiral with increasing crime and poorer and poorer schools. Homes would be inexpensive compared to many parts of the country and probably cash flow nicely, so the price point would be favorable. However, there are so many areas of the country where one can cash flow and anticipate future appreciation as housing demand accelerates. St. Louis would not be somewhere I would encourage investing. What are your thoughts? Perhaps I am misinformed. Michael Douville
Thank you for the comment. Governments like Inflation. They are able to payoff debt with cheaper dollars. You are so right about the Debt Service; what Government Services will be curtailed because of a $1 Tillion + debt service? Michael Douville
Thank you for your comments. Nature abhors extremes and this is certainly an extreme. Dial back prices to a few years ago and that will be a good start. Patience will be rewarded. Michael Douville
I totally disagree with this. Commercial has fell through the floor because of a structural shift in business operations not because of interest rates. Businesses have switched to hybrid and remote work schedules which has significantly lowered the demand for office space. While Residential has slowed significantly there is intense demand still for homes, but people are sidelined due to affordability. As the Fed lowers the interest rate demand should only increase. It’s also important to understand that if residential were to drop as he suggests there would be millions of Americans waiting on the sideline to buy. Making the price drop not a massive depression but more of the “mid cycle correction” style.
Thank you for the excellent comments. I agree there was a huge structural shift in employment operations. Remote working made office space almost completely obsolete. Vacancies soared. However, almost all S&P 500 firms are still honoring their leases. If you think 19% National Vacancy is bad, wait until the leases expire! If an Office Building is still viable with 19% vacancy, when the current loan needs to Rollover, that is when the "Lag Effect" kicks in! These Commercial loans are not for 30 years; typically, 5-7 years. Take a 19% vacancy and double your Debt Service and now see how viable the Investment is!!!! Much has been said about the 4% Unemployment threshold for a Recession. Currently, the Unemployment Rate is 4.2%..........officially! Some are going to be shocked at this, but there exists a very large discrepancy between the official Establishment Employment Survey and the Household Employment Survey. As with much of this current Administration, the data is suspect. If the Household Survey is correct, 725,000 Americans lost their job in the last 12 months and that places the Unemployment Rate at 4.8%.....YIKES. On top of that, you are again correct in that there is an enormous demand for HOUSING! It just needs to be AFFORDABLE...if you cannot afford the payment, no matter how much you want it, YOU CAN"T HAVE IT! The Market will resolve this issue....rates or prices need to fall....my bet is on prices. Great comments! Michael Douville
CMBS became impaired and now is selling at 50-90% down from the high. Let’s see if RMBS imploding is this time is different or residential dives. My personal non-emotional opinion is residential value is 100% correlated to RMBS and RMBS diving will send residential diving soon just like CMBS diving sent commercial diving. Real estate pricing is always a derivative of long term CMBS and RMBS bond pricing and bond price and rates are inverse. Rising rates means the bonds are tanking and the value of anything floating on these bonds for its price will be diving along with them and long term rates surge and bond prices dive when super inflation erodes the present value of long term bonds cashflows. Furthermore history being a guide inflation at a 17 year high in 2007 killed long bonds and residential real estate then and likely 2022-23 super inflation arrival at a 40 year high that remains high and rising in real non-fake goverment statistic terms will do the same again already having detonated CMBS first and coming for RMBS next.
Love your insight. So true. The FED has quit purchasing CMBS and RMBS driving rates higher, much higher and accomplishing "Demand Destruction". In 2007, one of the first signs of completion was affordability rising to unaffordable peaks......just like now! The Markets always resolve! Great comment. Michael Douville
We can see what’s actually going on here. Houses aren’t really that much more. The dollars are just worth that much less. How many oz of gold did it take to buy a house in 1940? And how many oz today? Damn close to the same Dollars ain’t worth a shite anymore
Your data seems to align with george gammons. I was framing houses in phoenix in 2007 and saw the whole thing unravel. The smart carpenters were able to transition over from new framing, to renovating foreclosures
Thank you for the comment. Yes, Phoenix was a "Construction Town". When Building crashed, hundreds of thousands of construction workers left imploding the local economy. Smart move on your part. Phoenix has changed considerably since and surprisingly, is extremely well diversified. The development near the Taiwan Semiconductor plants is off the charts and will employ another 70,000 workers....all high paying. However, Phoenix will not be immune........ Michael Douville
commercial doing and will continue to do a 2008 ... sure residential? not so much with all the inventory not being built, unemployment low, and most residential loans at
But nothing changes. People arent defaulting but layoffs are happening. Home prices are still incredibly high. Days on Market has increased but still low. People need a place to live and they are living in basements and cars. Because NOTHING CHANGES!
I’m a vet looking at using my VA mortgage benefit. I’m hoping to buy a home in the metro Atlanta area around the end of next year. Do you think I will be able to take advantage of the real estate deflation by then (regardless of relatively high mortgage interest rates)?
Thank you for your service. The two factors for you are Price and Terms. When it is 50% cheaper to rent the same property than to buy, you have to know something is out of balance. Even if rates rise, the price of homes should correct enough for you to use that precious VA Benefit. Patience is a great quality of a successful Investor. Many people will never be able to afford a home of their own. That is the function of RE Investors: to provide housing. I own many houses, but the house is my Tenant's home. It is not unusual for our properties to house the same family for 10-20 years. I am always very reasonable with rent increases and very attentive to repairs. It is a very good symbiotic relationship. I also always promote home ownership, but some families prefer renting. I say this to plant the seed to use your VA Benefits for your first property and perhaps eventually convert it to rental housing. Good luck and my best to you. Michael Douville
Thank you for the interesting comment. Yes, RE is very regional, However, all regions of the US were impacted by the Great Financial Crisis; some were devastated like here in Phoenix. Regions change and now Phoenix will probably be less impacted than other areas, but no region will be immune.' Michael Douville
Home values sank from 06/22 - 02/23 and then magically rose.. If SVB was allowed to fail & the BTFP Reverse REPO was closed it would be a much different story.. 15:05
Great Content as always Mr. Douville. What do you think about PBD Patrick Bet David's You tube segment: TELL YOUR FAMILY TO PREPARE? He makes the Hypotaical argument what could happen if the fed lowers interest rates again.
Insurance is only going to get worse, they will cause the crash. If you take the amount of insurance goes up, that's how much value that has to come off that house before it's priced right
I look at real estate will start to fall when these people have to start making these Student loans they didn't have to pay when the got approved for the house. Then they took out car loans on cars and paid way over MRSP and there Credit Card debt is out of control. Then when they get the job lose then that's when the houses start to fall it will be a race to the bottom 2 to 3% mortgage or not. One thing is for certain someone you tube is gonna be right or wrong.
Thank you for the comment. Real Estate investing is very, very simple. The Asset Class is in a Bull Market 14 years, then it contracts into a Bear Market for 4 years. Find an area with net immigration and good governance; start investing. Michael Douville
@MichaelDouville we are in the everything bubble Real Estate bond market, There is a derivative bubble the top 10 US banks have 3700 trillion in derivatives that’s 3.7 quadrillion! All these bubbles are gonna collapse so is the monetary system it’s a major bubble as well built on nothing. What’s going on in Venezuela Ecuador Sri Lanka Turkey Zimbabwe they’ve all hyperinflated their currencies into infinity with impunity and it’s going to happen to all other currencies, whatever happens in the micro in the macro! You know what’s not in a bubble gold and silver they’re just getting started real money!
15 years 0% interest rates and $25 trillion of liquidity that the federal reserve pumped into the markets! They cannot print themselves out of this one no more cans to kick down the road!!
Great, insightful comment. I agree 100%. Charles Nenner called the top of the bond market in 2020 during one of our videos. A great call and many thought the decline in rates which lasted almost 40 years would not end. However, I agree with you, so does Charles. The rates are heading higher along with Inflation. I believe as rates come down, CAP rates will rise reducing the price of many projects, a classic retracement. Michael Douville
Just hit $216k in my emergency fund, now I'm ready to dive into investments. I aim to avoid FOMO and look for dips to buy. Am I better off investing into Gold as it seems stocks are a little too unstable right now?
Overall, most investors still think this year would favor stocks, and other equity-based investments over cash-like investments. Don't put all your eggs in one basket; instead, diversify into different asset classes to mitigate risk. If you lack extensive knowledge, consult a CFA.
I’m currently working towards financial freedom with a focus on dividends & growth investing. Since 2014, I’ve built a portfolio made up of 30% NVDA, 25% SCHD and over 40% in digital and alternative assets, thanks to my CFA. This strategy has helped me earn $36,000 a year in dividends. Back in 2014, I only earned $21 in dividends.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
I work with the popular Aileen Gertrude Tippy, Who happens to be a is a hot topic among financial elitist in NY. Especially for her works during Covid. All the information you need to set up an appointment is on her web page.
Been hearing this since 2021. It’s not going to happen. Everyone is predicting the doom. Economy is just fine. Sure the market may go down, but it’s not dropping 50 percent you are wrong. And I’ll post this time next year
Many people can qualify. That's not expensive. The million dollar plus homes in Bay area and San Diego are a different story for example. @@eugenefirebird8938
Nobody is defaulting on mortgages like in 2008. In fact, mortgage defaults are at all time lows. Guys - buyers know the Fed is cutting rates. People are waiting and trying to time the market. It’s offseason for housing. Just wait until spring. This is all nonsense
Thank you for the comments. Most of my commentary is for discretionary Investment. Everyone needs a place to live. However, the affordability issue has magnified those affordable homes shortage, and it has spilled over into Residential. Sometimes, one cannot wait to purchase a home for the family; for those that can, I strongly believe better pricing is coming. \Michael Douville
The sky is falling.... wow how terrible. Maybe the younger generations will actually be able to afford a home when the sky falls. Sky falling for them - good. For the greedy boomers - bad.
Home comp prices are gonna crash in 2022!…wait no 2023…ok for sure 2024…i mean 2025 it will crash!!!!!…ok i mean it by 2040 all will crumble!!!😂. This is a “crash” in home sales transactions, not the comps. Sure austin, parts of florida, etc., have lost some value, but they went UP huge. No one really needs to sell and they have a lot of equity and low fixed rates. Also state and fed governments wont allow foreclosures, defaults, etc., so no inventory or price discovery.
Thank you for the comment. It does take a long while to change the direction of a major trend. The data does not lie; mid-2022 was the 1st Peak and it has trended down ever since. I use the Median House Price from the Federal Reserve Electronic Data or FRED which is NOT adjusted and NOT an Index. On top of the very slow beginning, there are regional factors to consider as every property is different let alone neighborhoods, communities, towns, cities, States............ However, the RE Cycle is completing; you can always try to be counter-cyclic! My Rule #1 is to NOT lose Money, so I am currently on the sidelines. Good luck with whatever you decide. Michael Douville
@@michaeldouville690 We are no longer in a free-capitalist housing market with price discovery. The FED and state & fed governments will never allow meaningful home price deflation. They will forbear & forgive debt, give out free $, $0 down payments, 40&50 year FHA loans, FED QE and low fed funds rates will be launched, on and on. Inflation and Home comp prices (not bloated wish-list) will continue to go "higher for longer" PS - John Rubino has been prediciting the "Big Crash" for over a decade.
People need to push back , chose multi generational homes , keep the house in the family , pay it off and pass on generational wealth !
Buy a fixer upper and say no to over priced new homes poorly built
Get roommates and rent / shared housing !
Buy cheap land and live off grid
Thank you for the comment. I agree with you on generational homes. I am an investor but owning a free and clear home that the FAMILY can feel secure that this is "HOME" is a truly marvelous gift. One of the goals in my seminars is to be secure and OWN your family home.......the continuity know the neighbors and the community is truly a blessing.
Great information, I am a realtor here in Arizona and my closings have gone down by 40%.
and that's not even speaking of the outer small towns with no jobs
Thank you for the comment. I am told 49% of realtors nationally, in 2023 sold 0-1 property.
I cannot confirm yet, but I am told 73% of Realtors in Arizona for 2024 have not yet sold a property? Thoughts?
Michael Douville
@@michaeldouville690
So I check in a weekly basis the performance of friends and acquaintances that are in the industry, I haven’t found someone that hasn’t closed anything this year. The majority of people I’ve been checking are also down 40-50% from prior years. A few are down as much as 80% but not many. A small few are still killing it but they have a small team and big overhead.
Good
I have 3 agents in my family. Two in Atlanta, one in West Palm Beach. ZERO sales ....
I bought at the height in 2005 it immediately fell by half. In 2018 it finally got back to the original price and now it is $120,000 over what I paid in 2005. I own it outright but I wish prices were lower for people that work here can buy here. That is better for our towns. Housing is a place to live not an investment or should be. Investors changed that!
i totally agree with you man a house is a place to live not a investment.
I agree with you, but it's not the investor's fault. Most of the price increases are from easing credit standards, long term low interest rates, and down payment requirements. If everyone can qualify for a mortgage - housing prices go up. Investors haven't been buying houses since the fed doubled rates. Investors get about 3-4% right after bills are paid now and a mortgage is 6-7%... That's before taxes, insurance, repairs, lawn care... Investors stopped buying when interest rates doubled. I also think people should be forced to put 15-20% down. I do think some of price increases from 2010-2021 were because of investors.
Investors like Blackstone or Rock (?) did buy up large swaths of house under many different names. Invitation Homes is one. They bought whole neighborhoods to rent out and they bought in some HOA communities in and near Atlanta. I am not talking about people who own 2-3 homes. You are right about when it happened. So if it is as you say easier standards, will we see another downturn in Fla?
@@JetJ321 I don't think prices will go down like in 2008, we might have a small correction though (up to 20% but probably less). People are locked in at low interest rates and have positive home equity. I think housing is just going to hang around these prices for a long time (and not appreciate). Also the cost of owning is going up, plumbing repairs, new roof, new appliances, ect...
@@Aaron_R Equity? Not for long. Friend bought in Texas outside Austin and home already dropped 25% in 18 months. Unemployment will wipe out golden handcuffs. People are House Poor bruh
The artificially low interest rates have caused this bubble. Generations past bought homes while paying 8, 10, or even 12 percent interest. The difference is that home values weren't many times yearly income, which is where we are today. The market needs a 15 or 20 percent downward correction.
50%. x2 and x3 priced crap shack flip attempts bought within the last 4 years will sit and rot until they default.
@@mchristr values here in south Florida are 100-500 percent higher vs the start of 2021. It is a flipper and investor freak show.
15-20 percent doesn’t scratch the surface here.
Many of the homes here could have their values cut in half and it would still be the biggest bubble in history.
Thank you for the comment. Yes, I agree, it is a Bubble. So many were caught up in bidding and paying over list price. So not only will you get the 15-20% downdraft, but it may also be significantly more for those that paid a premium for their property.
Michael Douville
1971: New house = $25,000 = 2.5 * annual salary ($10,000)
2024: New house = $350,000 = 7 * annual salary ($50,000)
Hmmmm........
Thank you for the comments. Yes, I agree with you. There is an enormous market for housing, but it needs to be affordable housing. Maybe starter homes need to be built again. I have been told that local regulations have added $90,000 to the price of a new home. Just think how long it takes for developers to bring a subdivision online.......
Michael Douville
Went looking for houses today in Tampa thinking it will be some deals after Tampa was hit with 2 hurricanes but the realtors are holding pre- hurricane prices and saying prices will increase. So after 2 hurricanes the property appreciates? Cant believe some of these realtors.
The same happened in New Orleans after Katrina. Anything that was still habitable was in demand as damaged homes would take a long time to get repaired. People still needed a place to live.
Personally seen almost all the 3-4 bed rental homes rented out after these two storms. I’m in Dunedin. The occupancy rate for single family houses has to be super high.
We sold our home in January 2024 to move cross country. Been renting since, I just can't justify spending 5 to 6 grand a month on a normal house. My real estate agent keeps trying to say interest rates will come down and prices will then shoot up. But I keep saying no. Honestly, I'm just waiting on prices to collapse. These prices are insane.
They're often on homes with the same owner since the 70's or 80's, either no updates in all that time or very few. Probably bought for under 100,000 and they want close to a million or more in some cases. Insanity.
Marry the house, date the rate.
Price matters more than the interest rate and a multiple decade of free money was unprecedented and will likely not return anytime soon.
We are witnessing fraud on a massive scale in regards to appreciation of value. It’s simple to analyze as Uniform Standards of Appraisal Practice, a Mathematical equation to back into valuations are not present. It is equity theft
It's not the value or price . The currency is po poo. We need way more dollars to purchase a junk home . It ain't worth more ; it's worth less and less as the dollar goes down and down
Not an economist, but you can feel it in your bones that the economy is on tilt. Commercial Real Estate after Covid-19 took tremendous hits. Residential Real Estate is about to pop as well, let's face it most of it needs a correction anyway.
plandemic
it could very easily crash "upward"... ie, downward in value but upward in price of ever falling dollars...
Watched a Bloomberg story on the "shocking" failures - defaults of AAA rated commercial real estate Bonds, all across the country. They spoke as if it were the start of a trend. This was Today.
I’m a residential designer, and the amount of projects for new homes have fallen 50% compared to years before.
Thank you for the insight. I am finding subs are so much easier to work with and are available to work in just a few days' notice. That indicates to me that the construction industry is slowing quickly. I have been sent data showing large layoffs in the building industry which would validate what you are seeing.
Michael Douville
@@michaeldouville690 will you plan to do a video on construction jobs...if the numbers are stable or declining or increasing? thanks
Florida still highly priced even though prices are coming down. Single family homes that used to be 350 in 2019 are still on the market for 650k in SW florida.
Like he said it takes time. There is a perfect storm going to hit FL, I have lived in FL, all my life, the handwriting is on the wall.
Values are 100-500 percent higher here in Delray Beach vs the start of 2021.
It is 99 percent out of control flippers and investors hoarding everything and trading to other flippers and investors. Many homes have been flipped 3-4 times in the past 3 years.
Florida is going to become to the states what Detroit is to the cities
@@shanerogers9386 its like a meme stock that will eventually come back to earth.
Contracting and we see it clear. Not just us but everyone in my space in Portland metro Aria. People are looking for work it's grinding down. Without a change we are heading back to survival mode.
The housing market in Arizona is completely overvalued. Some prices are still rising. The market is insanely inflationary.
Thank you for the comment. Yes, Arizona will not be immune from any correction in prices that may transpire. Fortunately for Phoenix Metro, Hi Tech Chip fabrication plants are moving here bringing in 50-100,000 tech jobs which will soften the coming turmoil.
Michael Douville
There is no crash coming in residential real estate. Period.
.
Less than 10% adjustable rate loans.
No ninja loans
People have equity.
Foreclosures at record lows.
Commercial yes. Residential no.
Completely wrong.
We are in the biggest bubble in history despite what all the scheming charlatans are trying to convince everyone of.
There is more speculation driving the market than at an point in history
There is more appraisal fraud than any point in history
There is more private, schetchy financing that at any point in history
And there are more risky financing that at any point in history
The building are lying about inventory, and the existing market can only hide the tidal wave of speculator owned pocket listings for so long.
The market is a complete, scpeculatjon driven Ponzi scheme.
Lol 😂!!
True. Never trust people online
Wait until we are 18 months into a recession. No idea when that is going to happen, but a recession will come with 100% certainty.
Go back to sleep, you don't have a clue!
Real Estate got caught up in an aggressive positive feedback loop. One portion of the positive feedback loop is 3% down mortgages.. when home prices are going up lenders can write these low downpayment loans with little risk. This creates more demand for housing, which makes prices go up even more, encouraging even more of these loans to be originated. But once that turns, now you have a problem. Now the bank has massive exposer. The borrower could be underwater in a matter of months. Now the bank suddenly wants 20% down. This decreases demand even as prices are falling, causing prices to fall even further... Up or down, the market feeds on itself until it finds an absurd top or an absurd bottom.
What about inventory? Where is it coming from? Yes , it the inventory that matters
Great comment! Where is the excess supply? Lots of the US Housing Stock is no longer in the areas needed, Baltimore, Detroit, Chicago, St. Louis, Milwaukee. These are places people are leaving. Builders swarm to the new locations and build! That's what they do! Austin, Dallas, Houston, Las Vegas, Fort Meyers, Tampa, Port St. Lucie, Jacksonville, Memphis, Nashville; these are great "Builder Windows"! However, builders own land to develop; land is a huge cash drain on Builders. When the RE Market starts to slow and the Federal Reserve implements "Demand Destruction" which is currently underway, the builders need to get out of their Land Bank or PERISH!!!! So, they build their way out until their Lender says NO! Melody Wright is estimating over 1.7 million specs currently available. During the GFC, specs peaked at 1.65 million.
To make matters worse, the new products are no longer affordable in the current financial environment. Hence, I am anticipating massive Short Sales and Defaults. Those that have access to distressed properties and the ability to buy........Fortunes will be made!
Michael Douville
When do you see a decent buy moment on the outskirts or Portland? Thinking maybe Summer 2025 it will 10% where it is off now. Thanks and great video!
Excellent commentary! Algorithm brought me here but the thoughtful presentation kept me watching. Subscribed
Thank you for your kind words.
Michael Douville
First the fall of money
Second fall of sins of the flesh
Third fall of man's pride
This is the type of info people should pay money for. Thanks Mike.
Thank you for the huge compliment. Michael Douville
If liquidity is and has been receding, what has fueled the massive bull market in US equities? The rally in stocks for the past two years has been historic - Clearly not a moment defined by an absence of liquidity.
Excellent question. The removal of Liquidity has not been a straight line down, every blip up has had an effect. Just recently, the $1.8 Trillion "Inflation Reduction Act" has provided liquidity and the most Liquid Market is the US Stock Market where much of that has been parked. Also, when fear of war is present, Foreigners move their Capital to Safe Havens, one for certain is the DOW. Another along the same vein as "Safe Harbor" has been large Prime Luxury Properties that will retain value. Both of these are vehicles to preserve as much Wealth as possible.
John Hussman is a brilliant mathematician and Portfolio Manager. He is extremely cautious on the Equity Market. It might pay to check some of the free analyst sites available. John Rubino, Michael Pento, Charles Hugh Smith, and of course Charles Nenner.
Michael Douville
Excellent thoughtful question. Great thinking outside the box! March of 2023 saw a massive injection of Liquidity to ease the defaults of Silcon Valey Bank, Signature, and of course Crédit Suisse. The Fed poured in cash as well as the ECB and the BOE. The Bank of China has also injected funds, so the decline has not been a straight line. There was also the Bank Term Lending which is still active with billions outstanding. Just last Friday, the SWAPs indicated another injection of cash "Somewhere". The Federal Reserve is not buying CMBS nor MBS funds, nor extending anymore funds through the Bank Term Funding Program that had injected hundreds of billions. The very last thing any Administration around the World is to crash any of the Markets. That said, they all have admitted there is a Central Bank coordinated action to remove liquidity and hopefully not break anything. I am anticipating the policy response to a troubled Real Estate Market will be a Massive Injection of cash..........
Michael Douville
I am curious why you are saying that people are escaping St. Louis. In the midwest things are still cash flowing so I see a lot of investors buy in that city. What do you see instead?
Thank you for the comments. St. Louis is suffering a population and business out-migration. As the tax base shrinks, there is less and less funds available for government services such as schools, Police, parks and recreation. As the services decline, it reinforces the trend, and more and more people leave. It becomes a negative loop spiral with increasing crime and poorer and poorer schools.
Homes would be inexpensive compared to many parts of the country and probably cash flow nicely, so the price point would be favorable. However, there are so many areas of the country where one can cash flow and anticipate future appreciation as housing demand accelerates. St. Louis would not be somewhere I would encourage investing. What are your thoughts? Perhaps I am misinformed.
Michael Douville
when the federal government is running debt so bad the interest alone a year is 1 trillion dollar s! There is no doubt the end is near.
Thank you for the comment. Governments like Inflation. They are able to payoff debt with cheaper dollars. You are so right about the Debt Service; what Government Services will be curtailed because of a $1 Tillion + debt service?
Michael Douville
Our government admits SSN and Medicare will be insolvent. Yet everyone wants to talk housing and nvidia. It’s mind blowing.
Thank you for your comments. Nature abhors extremes and this is certainly an extreme. Dial back prices to a few years ago and that will be a good start.
Patience will be rewarded.
Michael Douville
What what what? I just heard on am radio news that the economy is doing great! People are spending. It's all good....
How does “Everything Bubble” differ from “massive inflation”?
I totally disagree with this. Commercial has fell through the floor because of a structural shift in business operations not because of interest rates. Businesses have switched to hybrid and remote work schedules which has significantly lowered the demand for office space. While Residential has slowed significantly there is intense demand still for homes, but people are sidelined due to affordability. As the Fed lowers the interest rate demand should only increase. It’s also important to understand that if residential were to drop as he suggests there would be millions of Americans waiting on the sideline to buy. Making the price drop not a massive depression but more of the “mid cycle correction” style.
Thank you for the excellent comments. I agree there was a huge structural shift in employment operations. Remote working made office space almost completely obsolete. Vacancies soared. However, almost all S&P 500 firms are still honoring their leases. If you think 19% National Vacancy is bad, wait until the leases expire! If an Office Building is still viable with 19% vacancy, when the current loan needs to Rollover, that is when the "Lag Effect" kicks in! These Commercial loans are not for 30 years; typically, 5-7 years. Take a 19% vacancy and double your Debt Service and now see how viable the Investment is!!!!
Much has been said about the 4% Unemployment threshold for a Recession. Currently, the Unemployment Rate is 4.2%..........officially! Some are going to be shocked at this, but there exists a very large discrepancy between the official Establishment Employment Survey and the Household Employment Survey. As with much of this current Administration, the data is suspect. If the Household Survey is correct, 725,000 Americans lost their job in the last 12 months and that places the Unemployment Rate at 4.8%.....YIKES.
On top of that, you are again correct in that there is an enormous demand for HOUSING! It just needs to be AFFORDABLE...if you cannot afford the payment, no matter how much you want it, YOU CAN"T HAVE IT! The Market will resolve this issue....rates or prices need to fall....my bet is on prices.
Great comments!
Michael Douville
CMBS became impaired and now is selling at 50-90% down from the high. Let’s see if RMBS imploding is this time is different or residential dives. My personal non-emotional opinion is residential value is 100% correlated to RMBS and RMBS diving will send residential diving soon just like CMBS diving sent commercial diving. Real estate pricing is always a derivative of long term CMBS and RMBS bond pricing and bond price and rates are inverse. Rising rates means the bonds are tanking and the value of anything floating on these bonds for its price will be diving along with them and long term rates surge and bond prices dive when super inflation erodes the present value of long term bonds cashflows. Furthermore history being a guide inflation at a 17 year high in 2007 killed long bonds and residential real estate then and likely 2022-23 super inflation arrival at a 40 year high that remains high and rising in real non-fake goverment statistic terms will do the same again already having detonated CMBS first and coming for RMBS next.
Love your insight. So true. The FED has quit purchasing CMBS and RMBS driving rates higher, much higher and accomplishing "Demand Destruction". In 2007, one of the first signs of completion was affordability rising to unaffordable peaks......just like now! The Markets always resolve!
Great comment.
Michael Douville
We can see what’s actually going on here. Houses aren’t really that much more. The dollars are just worth that much less. How many oz of gold did it take to buy a house in 1940? And how many oz today? Damn close to the same
Dollars ain’t worth a shite anymore
Your data seems to align with george gammons. I was framing houses in phoenix in 2007 and saw the whole thing unravel. The smart carpenters were able to transition over from new framing, to renovating foreclosures
Thank you for the comment. Yes, Phoenix was a "Construction Town". When Building crashed, hundreds of thousands of construction workers left imploding the local economy. Smart move on your part. Phoenix has changed considerably since and surprisingly, is extremely well diversified. The development near the Taiwan Semiconductor plants is off the charts and will employ another 70,000 workers....all high paying.
However, Phoenix will not be immune........
Michael Douville
commercial doing and will continue to do a 2008 ... sure
residential? not so much with all the inventory not being built, unemployment low, and most residential loans at
But nothing changes. People arent defaulting but layoffs are happening. Home prices are still incredibly high. Days on Market has increased but still low.
People need a place to live and they are living in basements and cars. Because NOTHING CHANGES!
Some people still have not gotten the inflation memo..
I’m a vet looking at using my VA mortgage benefit. I’m hoping to buy a home in the metro Atlanta area around the end of next year. Do you think I will be able to take advantage of the real estate deflation by then (regardless of relatively high mortgage interest rates)?
Thank you for your service. The two factors for you are Price and Terms. When it is 50% cheaper to rent the same property than to buy, you have to know something is out of balance. Even if rates rise, the price of homes should correct enough for you to use that precious VA Benefit. Patience is a great quality of a successful Investor.
Many people will never be able to afford a home of their own. That is the function of RE Investors: to provide housing. I own many houses, but the house is my Tenant's home. It is not unusual for our properties to house the same family for 10-20 years. I am always very reasonable with rent increases and very attentive to repairs. It is a very good symbiotic relationship. I also always promote home ownership, but some families prefer renting.
I say this to plant the seed to use your VA Benefits for your first property and perhaps eventually convert it to rental housing. Good luck and my best to you.
Michael Douville
Excellent advice. Thank you for your reply.
housing is regional, you can't make a general statement like that.
I agree
Thank you for the interesting comment. Yes, RE is very regional, However, all regions of the US were impacted by the Great Financial Crisis; some were devastated like here in Phoenix.
Regions change and now Phoenix will probably be less impacted than other areas, but no region will be immune.'
Michael Douville
What area isn't affected by recessions? I want to move there, lol
What you don't understand is, it's all connected in ways. From material producers, shipping, etc
Sure he can. Housing is generally the same everywhere.
Home values sank from 06/22 - 02/23 and then magically rose.. If SVB was allowed to fail & the BTFP Reverse REPO was closed it would be a much different story.. 15:05
homes were already in a bubble in western usa before 2020 so i dont know why the pandemic is the mark people say the bubble was at
Great Content as always Mr. Douville.
What do you think about PBD Patrick Bet David's You tube segment: TELL YOUR FAMILY TO PREPARE?
He makes the Hypotaical argument what could happen if the fed lowers interest rates again.
Demand destruction because prices too high. While many think interest rates will come down; Jeffrey Gundlach is saying interest rates are going up.
Insurance is only going to get worse, they will cause the crash. If you take the amount of insurance goes up, that's how much value that has to come off that house before it's priced right
Prepare for the Great Depression 🧙♀️
GREAT VIDEO!
I look at real estate will start to fall when these people have to start making these Student loans they didn't have to pay when the got approved for the house. Then they took out car loans on cars and paid way over MRSP and there Credit Card debt is out of control. Then when they get the job lose then that's when the houses start to fall it will be a race to the bottom 2 to 3% mortgage or not. One thing is for certain someone you tube is gonna be right or wrong.
this is tip top info ...
Turns out none of us are smart enough.
Thank you for the comment. Real Estate investing is very, very simple. The Asset Class is in a Bull Market 14 years, then it contracts into a Bear Market for 4 years. Find an area with net immigration and good governance; start investing.
Michael Douville
good one mike
@MichaelDouville we are in the everything bubble Real Estate bond market, There is a derivative bubble the top 10 US banks have 3700 trillion in derivatives that’s 3.7 quadrillion! All these bubbles are gonna collapse so is the monetary system it’s a major bubble as well built on nothing. What’s going on in Venezuela Ecuador Sri Lanka Turkey Zimbabwe they’ve all hyperinflated their currencies into infinity with impunity and it’s going to happen to all other currencies, whatever happens in the micro in the macro! You know what’s not in a bubble gold and silver they’re just getting started real money!
15 years 0% interest rates and $25 trillion of liquidity that the federal reserve pumped into the markets! They cannot print themselves out of this one no more cans to kick down the road!!
Great, insightful comment. I agree 100%. Charles Nenner called the top of the bond market in 2020 during one of our videos. A great call and many thought the decline in rates which lasted almost 40 years would not end. However, I agree with you, so does Charles. The rates are heading higher along with Inflation. I believe as rates come down, CAP rates will rise reducing the price of many projects, a classic retracement.
Michael Douville
Just hit $216k in my emergency fund, now I'm ready to dive into investments. I aim to avoid FOMO and look for dips to buy. Am I better off investing into Gold as it seems stocks are a little too unstable right now?
Overall, most investors still think this year would favor stocks, and other equity-based investments over cash-like investments. Don't put all your eggs in one basket; instead, diversify into different asset classes to mitigate risk. If you lack extensive knowledge, consult a CFA.
I’m currently working towards financial freedom with a focus on dividends & growth investing. Since 2014, I’ve built a portfolio made up of 30% NVDA, 25% SCHD and over 40% in digital and alternative assets, thanks to my CFA. This strategy has helped me earn $36,000 a year in dividends. Back in 2014, I only earned $21 in dividends.
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
I work with the popular Aileen Gertrude Tippy, Who happens to be a is a hot topic among financial elitist in NY. Especially for her works during Covid. All the information you need to set up an appointment is on her web page.
Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.
Been hearing this since 2021. It’s not going to happen. Everyone is predicting the doom. Economy is just fine. Sure the market may go down, but it’s not dropping 50 percent you are wrong. And I’ll post this time next year
Still a shortage
Nah They can't move these overpriced crap houses.
So should we buy more real estate?
With what? Who can qualify for a $500k loan. And who wants to pay the mortgage, insurance and taxes?
Many people can qualify. That's not expensive. The million dollar plus homes in Bay area and San Diego are a different story for example. @@eugenefirebird8938
@@eugenefirebird8938 business owners and investors have funds
@@eugenefirebird8938 Okay stop being rational. It's not accepted these days.
Nobody is defaulting on mortgages like in 2008. In fact, mortgage defaults are at all time lows. Guys - buyers know the Fed is cutting rates. People are waiting and trying to time the market. It’s offseason for housing. Just wait until spring. This is all nonsense
Not if the democrats continue to govern this country
The economy is collapsing and rates wont matter.
But mortgage rates have increased steadily since the fed cut the short term rate.
nobody is defaulting because they don't have to. Are you not paying attention???, the mortgage forbearance is still going on.
@@theoptimist7510 Yes it is. I know this for a fact.
Buy a tent & gas stove ,move in the woods.😅😅😅
Thank you for the comments. Most of my commentary is for discretionary Investment. Everyone needs a place to live. However, the affordability issue has magnified those affordable homes shortage, and it has spilled over into Residential.
Sometimes, one cannot wait to purchase a home for the family; for those that can, I strongly believe better pricing is coming.
\Michael Douville
"The sky is falling, the sky is falling." - Chicken Little
The sky is falling.... wow how terrible. Maybe the younger generations will actually be able to afford a home when the sky falls. Sky falling for them - good. For the greedy boomers - bad.
People are leaving Florida
Home comp prices are gonna crash in 2022!…wait no 2023…ok for sure 2024…i mean 2025 it will crash!!!!!…ok i mean it by 2040 all will crumble!!!😂. This is a “crash” in home sales transactions, not the comps. Sure austin, parts of florida, etc., have lost some value, but they went UP huge. No one really needs to sell and they have a lot of equity and low fixed rates. Also state and fed governments wont allow foreclosures, defaults, etc., so no inventory or price discovery.
Nope, you need new buyers to increase for the supply, plain and simple. Unless we go back to 3% rates, housing is toast.
Thank you for the comment. It does take a long while to change the direction of a major trend. The data does not lie; mid-2022 was the 1st Peak and it has trended down ever since. I use the Median House Price from the Federal Reserve Electronic Data or FRED which is NOT adjusted and NOT an Index. On top of the very slow beginning, there are regional factors to consider as every property is different let alone neighborhoods, communities, towns, cities, States............
However, the RE Cycle is completing; you can always try to be counter-cyclic!
My Rule #1 is to NOT lose Money, so I am currently on the sidelines.
Good luck with whatever you decide.
Michael Douville
@@michaeldouville690 We are no longer in a free-capitalist housing market with price discovery. The FED and state & fed governments will never allow meaningful home price deflation. They will forbear & forgive debt, give out free $, $0 down payments, 40&50 year FHA loans, FED QE and low fed funds rates will be launched, on and on. Inflation and Home comp prices (not bloated wish-list) will continue to go "higher for longer" PS - John Rubino has been prediciting the "Big Crash" for over a decade.
@@primecash144 there is no supply. Inventory of existing SFH is still extremely low.
insects have disappeared. you have much bigger problems than home prices
They all came to my house.
Spoken like a true Chinese
What COULD happen?…..lol, useless guesses
Nah