Get Ready: The upcoming REVERSE Fed Pivot is Going To Cause A Deeper Crisis In the Housing Market
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- เผยแพร่เมื่อ 25 เม.ย. 2024
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The Fed is extremely confused about the future of inflation, and once they cut rates, they will unleash a next level leg of inflation that will undo all of their work and more. The housing market in particular will see a short-lived Boom followed by a catastrophic bust. Some parts of this video is parody. However, everything is grounded in truth.
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fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Consider reallocating from real estate to other reliable investments like stock, crypto or precious metals . Severe recessions offer market buying opportunities with caution, as volatility can yield short-term trading prospects. Not financial advice, but it may be wise to invest, as cash isn't ideal in this period.
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People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.
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The reason why the fed pivots is more important than the pivot itself.
This concept is lost amongst the average person.
Money is not meant to control people rather it is meant to be put to work producing more money for you. You cannot build wealth without putting money in its rightful place.
People don't understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments don't match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.
Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.
Having an investment advisor is the best way to go about the stock market right now. I was going solo, but it wasn't working. I've been in touch with an advisor for a while now, and just last year, I made over 80% capital growth minus dividends.
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Jeff demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit
The sky has been falling for a long time 😂 the market has been “crashing” for a long time. We’ve been in a “recession” for a long time. Every TH-camr has been saying the same thing since the pandemic. Turns out they aren’t nearly as good at fortune telling as they are creating fear in people! 💯😂
@@marksweeney5237 My comment has nothing to do with being a Realtor. It’s hard to deny all of the clickbait titles promising doom and destruction. Negativity gets more eyeballs than positivity and more eyeballs equals more money. Reference: Every news channel in existence.
@@marksweeney5237 😁 strong argument 😂
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Mortgage rates are not high enough. Home prices are too high, and so is inflation. The FED is not restrictive enough. Puny QT, low rates vs inflation, and no mbs sales🤡
Sales are down 60%. I think the rates are in a good spot
@@montuna4686 rates are still too low, well below real life inflation not the BS CPI. who cares about sales unless you are a realtor, builder, or loan broker. As a buyer, I care about prices and they remain “higher for longer”
@vitalsigns6403 for every sale of a home there are about 15 people who get payed, not to mention furniture or remodeling that happens. It's called the velocity of money. I would rather see rates high since I'm a real estate investor. I have literally no competition right now when I bid on homes
@@montuna4686 😂wow. Good for you my friend. Here in cali, homes sell in hours/days. Comp prices (not list) going UP
@vitalsigns6403 Well, California is like its own country. Regardless, some spots in Cali are down 40% in price. Most people don't understand this industry they only worry about their job and paying for a mortgage.
They will only lower interest rates if there is a crisis. Make the rates higher say 10%
FED rates of 5.5% are basically long run average. The new normal is simply the old one.
So don't buy a home until everything has fallen apart.
I"m renting, but really want to buy a home. Get married and start a family (I;m 44 yrs old). hopefully this can happen before I get too old. I have to decide if it's best to save up cash instead and live off interest and dividends or buy a home
@@nodoubtbbyour saved up cash better be in something that earns you interest or else you’ll never be able to buy assets.
@@kavikatta1845 that's a good point even if I make extra payments I'll be 70. Not sure if that's good or bad to own a paid off home at such a late age.
You are assuming a lot here. First, you assume the Fed will hastily pivot and then reverse said pivot. The whole reason they haven't pivoted yet is that inflation has not lowered enough. They will keep rates high until the economy slows down enough. Right now unemployment is historically low, company earnings are good, and only some tech and real estate (especially commercial) are suffering....both related to the high cost of borrowing and high interest rates. We'll see when the Fed actually pivots. I suspect inflation turns into stagflation as a base case instead of a reverse pivot later on.
Fed will probably cut rates and that will be the policy mistake, what everybody is missing
Nobody can predict, you can only prepare - Doom and Gloom guys get all the subscribers and all the drama - I totally agree too much assumptions , and real estate is not liquid like what he thinks it is , the real estate is strong- no credit issues, no defaults, no inventory- , FED doesn't need to pivot and likely won't in the first place because there isn't enough inventory in the market - they will keep rates up high until something breaks - this guy has been predicting doom and gloom and telling people to buy Chinese tech - true trader mentality - classic inflation period - buy and hold , don't trade- rates will come down only when people not able to buy a home anymore - no purchasing power from Stocks, and people don't have jobs. Real estate in this type of environment won't crash dramatically, it may wind down over period of few years.
@@daveybro I guess your thesis missed the 2008 Housing crash. Housing can absolutely experience a dramatic crash. The only question at this point is what sacred cow the FED/gov't is willing to sacrifice in order to keep the housing market from imploding. (e.g. the dollar, military hegemony, human lives, another Plåndemic, etc.)
Do you think the fed might increase rates within the next half year (without first lowering them like this guy thinks) or will they continue with the pause?
@@musashi4856, 2008 is not now- that’s was a generational opportunity - with over building and over leveraging, credit issues. Likewise listening to these fear mongers many have missed the opportunity to put cash to work at the end of 2022. Nobody can predict , one can only prepare. The trend is your friend until it is not.
What i really learned from the Redfin Quote, is actually the sentence at the bottom, under Fortune, where it says, " The Economy might be booming, but housing is in a recession " WOW, how out of touch is Fortune on the economy ? !!!
8:30 not gonna happen. mortgage rates of 6% is not going to make the housing market go crazy. That is more like sub-5%.
As long as the Fed puts some gaps between each cut, there should be no need to reverse pivot. In the last 75 years, this has only happened in the early 80s. But fed fund rates were like 17% then....
I agree. Cutting the rates right now would be like adding fuel to a fire that you are trying to put out.
Been waiting for a stockmarket recession for 2+ years thanks to youtubers: bank crisis, mortgage crisis, bank crisis 2.0. But has not happen, thus they killed most short sellers. Perhaps it's finally coming when fed pivots.
Unbelievably high mortgage rates? Do you know how high the rates were in the late 70s and early 80s? At the end of the 70s rates were at 12.9% and by the end of the 80s they were way down to 9.8%.
Good thing I kept listening because I 100% agree. The FED hiked late and they will probably cut early.. it’s obvious what’s going happen as a result- inflation will start to heat up once again. The FED will panic hike and give the markets whiplash.
No reverse pivot. The FED intends to inflate
Yup it Death by hyper inflation or death by insolvency .. both cause death
That is a helluva long ad in the middle
You are sooo right!
oh dang i just bought a house. however "massive turd, wrapped in turd" hilarious
What kind of financial advisor would recommend people to short sale a security? The upside is limited while the downside exposure is infinite.
I wouldn't be surprised if the FED hikes 1x this year and cuts next year.
Home sales are slow because there is zero inventory. There will be no housing crash unless unemployment goes up and people lose homes. There can be no crash without more inventory. Plenty of people on the sidelines that are ready to buy if rates are lowered
In Canada, we don't have 30 year fixed mortgages. Our mortgages are usually 5 years. This started in 2022. Next few years, I believe lots of homes will be coming onto the market.
Inventories are back to pre-pandemic levels in many markets. Texas, Florida, Arizona, and many others have increased inventory to triple what it was two years ago..
Those were the most inflated markets so they will slow first but no crash until more hone available
Zero inventory? There's plenty of inventory. There's just delusional homeowners who believe their home is worth more than it actually is. Should sold a couple years ago while everyone was willing to buy at a low rate. Rates will stay high and prices will come down due to financially stressed homeowners who bout the last couple years hoping to refinance.
@@ZuluNation05 easy way to check. At least around me in the suburbs of Chicago I look on Zillow and there is nothing available and when there is it still goes to a bidding war. Maybe where you live it’s different
Refreshing. I’ve been expecting it since they first announced cuts were coming. And here we are. Still playing out for a rate hike even though all the words in the news are for cuts with no fundamentals to back it up.
I think you're right, Larry. Reverse pivot coming soon. This is what we need to get housing prices back down. They are currently unaffordable at the median level for Americans in most areas of our country.
"Houses are for living in, not for speculation." - Xi Jinping
You want shrimp fried rice with that?
Overpriced houses with high interest plus everything costing double or more than 3 years ago is the reason no one is buying. Those who bought over the last year want out. They can't keep up. Those who bought when the rates were low 4 years and more ag[ aren't letting it go.
The economy sucks, good paying jobs are scares and personal debt is astronomical.
The fed pivot doesn’t have any difference on real estate lately because 34% people rent and further it’s going to make rents more appealing once again if the feds pivot and rental real estate too. So I don’t think pivot will have a significant impact on real estate until there are more units built in which case prices could actually start to go down and so will rent . Depends
There's no reason for the Fed to lower rates unless they see that shit is going to hit the fan like a recession and rising unemployment rates.
The majority of Boomers purchased their first home in the 1980’s with interest rates between 10% to 18%. We got a deal in 1985 at 12%. Today’s rates are about average for the last 50 years. Nothing exceptional here, unless you are young and have only experienced the market in the last decade.
Except back then the median home price was 2 or 3 times the median salary. Today it can be 5-8 times the median salary. That makes a HUGE difference to affordability. I wish for a housing market like 1985 where I get a 12% loan. I'll take that any day over what we have now. Any day.
The median home price in 1980 was about $48,000. Adjusted for inflation that would be about $189,000. The median home price today over $400,000.
@avenger1212 in 1970, the average debt to income ratio on mortgages excluding taxes and insurance was 55%.
To have a comparison that same debt to income ratio in 2022 was around 25%
@@montuna4686 source?
@@markclub8330 census.gov is the other source.
Totally agree with your assessment!
Good talking points. I think lowering interest rates will lower the shelter inflation that's reported by CPI as a lot of it is rent driven. People will rent less buy more. I also agree it can push back inflation on the house ownership side but i think your overall net inflation will improve between the two. At end of day, as long as there is a good balance between buyers/sellers, housing prices shouldn't get out of control. That's the last ditch hope to get CPI into the low 2%, otherwise it will take higher unemployment and a recession to get there.
I enjoy hearing your comments on the Fed, however I would argue that it really doesn't matter what the Fed does, the housing market is going to continue to correct. Typically, house values rise by 2.5%/year, however since 2016 they have been rising at 11% or more, thanks to ZIRP. The only way this situation is resolved is A. House prices drop in value, or B. The housing market stays frozen for years until incomes catch up to current prices, especially at normal interest rates. A house priced at $500,000 with a 3% mortgage rate at $100K down, is worth $330,000 @ an 8% rate, in order to get the same payment (ignoring taxes)
or C, high inflation and high rate environment become sticky, and high rate and high home price growth become the new normal. As for your hypothetical calculation, it just didn't happen. The house that priced at $500,000 with a 3% mort. rate is now north of $650,000 with bidders fight over. Not to mention the owner is not super motivated to sell. That's the reality.😉
@@derekkwong5025 The assumption that RE prices will continue to grow in a cost push inflation environment while rates remain relatively high (but historically low-normal) hinges on incomes rising at a much faster rate. Otherwise, people will increasingly have to choose between paying for basic necessities and the "nice to have" house payment. Incomes catching up to the multiple years of inflation is unlikely to occur. Layoffs continue to pile up as credit contraction (e.g. high borrowing costs) proceeds in damaging the business sector.
Incomes will NEVER CATCH UP its laughable to think that
@@toinengwyn3935 who says incomes need to catch up to inflation for asset price to continue to rise. Just watch the 70s 80s environment, high inflation, high rate, wage grew slower than inflation, some business grew some business died. Stop using the understanding you acquired after the 08 crisis, the paradigm has shifted.
@@bmoreblondie6301 Assuming you are correct, who will all the current home owners sell their house to if those wanting a house cannot afford one? If sellers exceed buyers at a certain price then supply and demand theory would argue the sellers will drop their price
Rates only seem high because of the insane prices.
The only reason the Fed pivots is when something breaks
Home values are declining in every state.
Not true. In NC, my property it still gaining value. It's strange, I know, but it continues to rise for some reason.
Larry: Im gonna guess every outcome there could be in the future.
Also Larry: See! I am always right about the future!
Haha some of my content is entertainment. Have a good laugh 🤝🤝🤝
Love your channel man, you are funny which is good for entertainment but also informational
Its turning into passing down power. Theres a plan here, i would guess you can predict what could be done?
6:48 Starts here
Thank you
Ty
I hope it comes earlier than later
HAHAHA Larry even reads the commercial.
Lmao 😂
Great granularity in your niche.. housing.... keep it coming LC
what happens if fed just doesnt cut tho?
Most likely will not cut.
Retires “can’t” sell and downsize? So they can sell their 3,600 sq ft homes for record prices, and downsize to a 1,600 sq ft home, pay cash, and have cash left over. How is that not possible?
What makes it not possible there are very few homes on the market right now. You have a lot of people that purchased homes during Covid and was getting interest rates from around 2.75 to 3.5. These people at these rates are not going to sell their home and go out and get a mortgage a new home at 6% which is double the interest rate that is why you don’t see homes listed for sale on the market today you can pull up realtor or Zillow and see very few homes listed. We’re on located most homes sale within 24 hours. Because there’s not many homes on the market.
Great job!!!!
You're the BEST! I love you! 😊
Great Video… Great Sponsor! Keep it up!
Thanks for a new video.
The last Larry I knew was a terrible investor. Known for being so bad, everybody did the opposite of what he did. He was notorious for buying high and selling low.
Bro, that video gave me the feels. Giving you a sub.
Thank you 🙏
Nope, too many sidelined buyers just waiting to sell and buy
BLACKSTONE Larry!!!
And he said unto them, Ye are they which justify yourselves before men; but God knoweth your hearts: for that which is highly esteemed among men is abomination in the sight of God.
too young too naive
Who the fuck wants to downsize a house that you've literally worked your entire life to purchase and build up? What's the point of that?
Rather vacuum 1200 Sq ft versus 3000.. my joints hurt!
I believe you may be exactly right about the fed and the housing market. A massive turd wrapped in turd wrapping paper 🤣
Conjecture. Reverse pivot probably won't happen.
I think there is some truth to this and it going to be a big mess despite the humor and parody here. The fed has been reactionary and used lagging indicators. There is also a lot of pent up demand, and I think buyers will overreact when we get even full point cut off of rates, which may cause inflation and rates to be pulled back up higher with a fed reverse pivot. Knowing this what should I do with my bucket of cash and too much money in equities? Is a cheap house at like 20% gross dti for total debt worth the hedge even knowing this. I kind of want a house, but don't need it for any practical reason outside of wanting in, and getting past the milestone and stop paying rent and fees. I can afford a house and maybe even a bad one or remote one with all cash, but it seems like a bad time to buy.
However, I do think this prediction will be wrong in certain local markets that are outliers, but nationally; I don't like what Larry's crystal ball is showing.
Home mortgage rates are not high. Stop pushing that narrative. Mortgage rates are just now back to the historical long term average. The problem is home prices which are at an all time high relative to incomes.
8:08, so that they can buy high and sell even higher😂
Rewatched this. I agree you are more right than the masses or the manically optimistic real estate peddlers, but I would temper your predictions and avoid some of the more grandiose dystopian language. I don't understand why people think massive rate cuts are basically guaranteed. I predict no cuts this year unless it is a lame 1/8 pt cut right before election being the bribe to voters unless the inflation data shift wildly positive or negative or we have some sort of economic crisis with jobs or the broader economy and equities.
Longer term. the 80s are calling, and prices are way less affordable now than back then. People think it is 08, but it is more like those two digits are flipped. 08 was caused by lax lending and subprime lending standards with toxic high risk mortgages, and we are seeing the reverse with restrictive policy to try to combat inflation akin the the 80s. People don't want to remember we had rates over 7 from 1970 to 1991!. I don't think we will ever hit the upper teens, but high single digit rates for a long time is real possibility if inflation remains stubborn.
I am not sure I would say the fed is confused, but incompetent. I agree on the noisy data and the fed being too data driven when the economic indicators are mixed outside of inflation. We would really need for those things to go south for rates to go down. Hikes could happen but they will be modest and likely not happen this year due it being an election year. Regardless, the people counting on the near term opportunity to refinance with slashed rates this year will be ruined. Also many lenders don't let you refi if you are underwater.
Also love your word choice and humor.
The work my fiance does only the good paying jobs is in shitty areas where u don't want to live but homes are cheap. It sucks can't find a good paying job in the nicer areas shit makes no sense all the good paying welding jobs making 30 an hour or more are all in Baltimore city or right under it but the crime in those areas are bad up in the county all the welding jobs only paying high teens low 20s its annoying cuz he has to drive so far to get to work cuz wanna live in a good area wit good schools
Good news is bad news
Just buy Bitcoin and chill... Larry have you looked into Bitcoin? dive into the rabbit hole!
What do you think will happen if housing prices fall? Investors will snatch them up before the ink dries on your offer. You're doomed no matter what!
you have to get a poducst
Why do people call this a housing market crash. Its not a crash, its a stalled or frozen market. Its not a crash for those with homes with massive equity and not buying and selling. It is only a stall for those wanting to buy.
Increase rates, i buy cd and buy gold just like 1970s😂😂
Adjusted for inflation gold is basically the same price at its peak in the 80s
Pivot? 😂
Inflation will get worse.... he should move the rates up much higher, but he cant.
Baby boomers need to sell at sometime. Might help increasing inventory.
There won't be a pivot. Inflation is high. Also from one of your last couple videos. Most Americans have locked in 2-3% mortgages over a almost 15 year span. NO one is selling. Unless the transaction is a paid in full purchase. NO one is interested in giving up their 2-3% locked in rate for a 7.5% rate. Also that 7.5% mortgage rate means you are buying less house for the same payment.
The locked in effect is highly overrated. Per Fannie, only 6% of current mortgage holders cite interest rate as the reason for not moving. Even then, financial stability trumps fixed low rates. And other housing costs besides mortgages are not only variable but also rising fast. The increasing overhead cost of ownership will inevitably negatively affect the value of real estate.
@@toinengwyn3935 You mentioned that costs are rising in the real estate market. Prices are rising, taxes are rising, utilities are rising, insurance costs, everything is. That is inflationary. The Fed is not going to pivot. They need to raise rates higher to stem the inflation. They won't do it because it will show that they missed the mark and inflation is not trending down. The Fed is going to sit here and pray that things work out. Raise rates and you cause a stock market panic. Wait and do nothing, eventually the market will catch on anyway and a crash will happen. Can't cut rates, that will make inflation go higher. You already said prices are rising fast. that is what inflation is.
@@seanmcgee3770 I was not arguing against higher rates. In fact, borrowing rates are historically still low given the vast amount of debt our economy is carrying.
My point is that the locked in effect of low rates is vastly overblown. Mortgage rates are just one of many components of housing costs. These other components, including jobs and property taxes are variable and can render the fixed low mortgage rate conundrum moot.
stop fear mongering :)
looking at his past video predictions, we have to do just the opposite.
I think you just got lucky
This channel has become an entertainment channel that is no longer based in fact. Full of assumptions not based on evidence with ads. I have been a watcher for a long time, but sadly, it’s now a content filler and ad revenue generator. Larry, you’ve gone from being a factual analyst to a follower hunter. Sad to see
Some entertainment is good. I have more fun with videos like this.
Being too serious all the time isn’t fun for me.
My favourite Asian, love your culture and approach to life.
If energy comes down then inflation comes down like magic. 😂😂
It won’t bust. Where is the supply? Prices will double and stay there
Nope. For the housing market to dump, there has to be a LOT of sellers. There's still more buyers than sellers. Construction also might be going down. That might actually drive demand higher. At some point, there will be pain, but a pivot likely won't do it. Sorry.
Get to the point!!!!!!!!!
49ers suck
joke
Larry I generally like your analysis but I don’t share your view all the way on this. The FED will have to lower rates igniting inflation. We agree on that. I just don’t think they will have the balls to bring the rates back up. In essence the US owes so much money and will most likely pay it back thru printing money. Thus, buying assets now couldn’t be a bad idea so long as you find something that’s relatively not too overpriced. Thoughts? @larrycheungcfa
I think the Fed is extremely reactive now and they might put anything on the table.