Housing Buyer Demand Destruction Underway! Plentiful tenants!! - YouTube

well here's a lesson in supply and demand  the basic economic principle you know when  

there's too much demand and not enough supply why  prices go up but in the housing we're just not  

able to bring in more supply and the demand is  just off the charts we've got one of the greatest  

demographic shifts we've ever had in the us  history we've got people leaving with their feet  

moving to better places and that's going to the  organic growth marks of florida texas and arizona  

and there's just not enough housing there for them  so in order to get that supply demand equation  

back in balance they've decided to destroy  the demand what we'll do is we'll make it  

harder and harder for you to purchase a home  and therefore the supply of homes will go  

into balance with the people who can afford to  buy a home what they'll do is they'll destroy  

the demand you will own nothing and you'll be  happy but i don't think you're going to be happy  

i don't think that's something we any of us  want you to do now this is what's happening  

is that the federal reserve has been talking  about inflation of course and everybody's  

talking about inflation 11.2 at the producer  price level that's that's pretty doggone high  

ppi is not so much there and that's where 11.2 so  we expect inflation to go higher now personally  

i think inflation is going to moderate i've been  wrong so far but i do think it's going to moderate  

and home prices are going to start slowing down a  little bit i don't see them backing up whatsoever  

but the federal reserve has decided we're going to  really slow the economy down we're going to slow  

down housing and we're going to raise interest  rates and they have we as baby boomers we need  

income we need we need money coming in each and  every month there are very few places we can go  

to you can't get any money in the in your savings  accounts or cds so a lot of us have been forced  

going into the bond market where we get a little  bit of interest and a little bit of income now i  

have been talking about this for the last year and  a half or two years saying that we are going to  

getting to the end of the interest rate cycle and  it's time to get out of the bond market i know in  

my consulting but a lot of my clients uh still a  lot of money in bonds and i'm going to tell you  

look at this spike this represents probably  uh fannie mae and freddie mac their 30-year  

conforming rates right in the first part of the  year uh interest rates are running around two and  

a half percent to three percent 30-year fixed and  look at this interest rate spike go up and up and  

up and last week at april 19th it ended at 5.13  percent it's almost a double in interest rates  

huge huge interest rate move going to cause  lots of problems with people's mortgage payments  

and as an aside for all those baby boomers that  we've been trying to get out of bonds this spike  

represents the worst quarter for bond investments  in 157 years you have to go back to the civil war  

to find a worse time to own bonds and this is  from the federal reserve now they've only raised  

once they're talking about doing it nine times  i don't see how that's even going to be possible  

my personal prognosis is that they may be raised  one more time maybe because the economy is going  

to react very very negatively to the breaks that  are being applied to it and i think the economy  

is going to slow and slow dramatically in q2 and  q3 and i think by the end of the q3 we're going  

to see the federal reserve start to loosen up on  their monetary tightening and actually maybe even  

go over to quantitative easing because i think  it's going to scare them because i think we're  

going to slow down pretty precipitously although  we do have a we do have a a government that's  

doing amazing things and not things that you  would expect it to do so maybe they won't do that  

but i do expect the economy to slow and slow  precipitously and i think interest rates will will  

come down but in the long run rates are going to  go up now they're talking about demand destruction  

this just came out from zero hedge and it looks  like pending sales and existing home sales have  

dropped about seven and a half percent now i think  this this chart is a little suspect because it's a  

seasonally adjusted annual rate so often  times it's an accounting uh that takes place  

sometimes in february to adjust some of the under  the numbers and it really throws things off for a  

month and i think maybe this might be uh evident  for february because this is kind of a 60-day  

chart here in phoenix arizona we had absolutely  no slowdown whatsoever in demand we had absolutely  

no slowdown in price appreciation absolutely  zero that's why i think this might be suspect  

it certainly bears paying attention to for the  next um you know month or two we'll know if it's  

actually in place or not now this is courtesy of  uh charles nenner research a doctor niner a lot  

is allowing me to use his proprietary chart we're  talking about here this dotted line is april 26  

and this is the peak of interest rates for the  10-year according to his forecast this is going  

to give you a window maybe 30 45 days i don't  know how much it's going to back up i don't even  

know if it's going to it just forecasts that  this is a strong likelihood that it's going to  

in which case gives you a chance to lighten up  also gives you a chance to to refinance maybe buy  

something with a with a 30-year mortgage here's  a window of opportunity it's coming we're talking  

about home prices in the united states this again  coming out of federal reserve electronic data it  

is uh you know it is like 60 90 days old but it  shows absolutely no slowdown in prices whatsoever  

we see home appreciation continuing all across  the united states this chart clearly shows the  

explosive phase going up right here it's just  clear as a bell i see absolutely no slowdown in  

home prices anywhere this is this is my  proprietary stylized chart this doesn't have all  

the squiggles it does show the corrections that it  absolutely called so this doesn't necessarily mean  

it's going to have to remain accurate doesn't  say that at all but it's been deadly accurate  

it certainly forecasts the corrections and it  forecasts the accumulation phase just beautifully  

now we're leaving the accumulation phase and we're  going into the explosive phase now according to  

my chart we have another leg up a significant  leg up so i don't think that this slow down is  

going to be the big one i think this is going to  be for a couple quarters and then i think we're  

going to be back in and business will start  up again and up here this is probably another  

18 to 24 to 30 months away is the cycle completion  now my lifetime i've gone through three this is  

nothing to be concerned about it's just something  to be aware of the 2008 was a cycle completion it  

was also a bubble now i don't see a bubble at this  point and i'll tell you that in the great markets  

of florida texas and arizona where population is  just pouring into people want to make their lives  

there they want their lives to start all over  again they're going to these great organic markets  

i don't think if we have a cycle completion that  they're going to be affected anywhere near as  

much as say the midwest like chicago or illinois  st louis madison wisconsin minneapolis new york  

city new jersey anywhere on the west coast and of  course places in california and the san francisco  

where prices are just out of whack and people  are leaving population is leaving california  

in a great big exodus those places would probably  have more of a decline than the great organic  

growth markets are just because the population  is shifting because literally we have one of  

the greatest demographic shifts our nation has  ever seen underway right now now the good news  

to all this is that we are investors we're  in landlords we rent our housing out now if  

this demand destruction where they're trying to  move out the buyers now it's not going to affect  

most of the investors cash buyers are totally  unaffected by interest rates just absolutely  

not affected by them at all a lot of my investor  put forty fifty percent down sixty percent down  

we put leverage on just as a business decision  not necessarily needed to acquire properties so  

what this is doing it's removing the fha buyers  the va buyers the marginal buyers are three  

percent down five percent down ten percent down  people really are struggling and they're not going  

to get a house they are going to be forced to rent  because they still won't be able to own a home but  

they're going to need a home and they're going to  be renting from us which goes back to that saying  

that's prevalent right now you'll own nothing  and you'll be happy i don't think this is what  

for you should be doing i think you should be up  buying a property i think you should be scrimping  

everything you can together and go buy a property  if you're my age you should have two if you're  

getting ready you should follow our strategies and  get 10. if you get 10 free and clear properties  

your income stream is just phenomenal your life  will become so much better but you need to go  

buy something and look at here rent is going up  and is continuing to go up this little leveling  

off is the great financial crisis the greatest  bubble in real estate history in the united states  

and rent never declined it just leveled off rents  just continued to come in those people that had  

the properties their rentals acted as a lifeboat  form because their income kept coming in month  

after month after month and if you were owned a  business and your business was affected by the  

recession your rentals just kept sending you  money month after month after month and your  

family was just fine that's called a lifeboat  that is what this is supposed to do and it's  

showing that what we expect is going on in our  forecast is being confirmed and look at this  

rentals just continue to go up this is the markets  all across the country it's not just in one market  

that's skewing everything all the markets across  the country are doing well the highest of courses  

in the west that would be arizona nevada and  texas they're just doing absolutely outstanding  

now i would talk about looking at our tenants  we are thinking if things slow down a little bit  

we want to consider getting to a little more  conservative underwriting want higher credit  

maybe a little more reserves a little higher  fico scores sure their job is stable because  

our tenants are going to be sending us money  we want to make sure we have very good tenants  

we want to maximize the tenant not necessarily  maximize the rent i am an author you can get my  

book anywhere in the united states it's uh most  prevalent in barnes and noble amazon of course  

you can get all across the globe how to create  a real estate money machine retire with income  

is my business plan i think if you follow it  you'll do very very well please subscribe please  

make comments and read our comments descriptions  down below my very best to you bye now