MASSIVE Housing Demand What Goes UP Must Come DOWN!
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- เผยแพร่เมื่อ 18 ก.ค. 2022
- One thing I have been hammering in my videos is how we do not have a housing shortage in the U.S. and today the FED came out and backed me up! They did a study that revealed that the recent "housing shortage" is actually due to sky high demand, not lacking supply and that the supply and demand aspect of real estate is always driven far more by demand than supply.
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Buyers and Sellers Time to WAKE UP! th-cam.com/video/iYA6443Qn-s/w-d-xo.html
Time for a Sunrise to go with your tank top, Michael. 🏖🍹
Hi Michael! I am new to your channel and just subbed today. I enjoyed your walk and talk, and wanted to ask you about what your thoughts are about some places we are considering moving to in Florida. Some of the cities are on the Gulf side, like Bradenton, Sarasota, and the other places both north of Bradenton and south of Sarasota. Also, more inland, like Parrish. On the Atlantic side, what are your thoughts and recommendations? Thanks!
@@poppylove3673 Thanks! Check out some of my older videos. I made a TON of them about FL including checking out different areas, and giving recommendations on places to live👌
Artificially low rates have thrown the whole system out of whack. It discourages saving and has helped cause inflation.
Thats right!
The amount of influence that the Fed has on our economic foundation especially past decade in; Federal, state, local Government spending, personal credit, car loans, Business loans for hiring and investment, and bond & CD deflation. We all benefitted to a degree from the low interest rates that the Fed fostered….now we are experiencing the consequences with Uncertain end!
Printing $$$$$$$$$$$$$$$Trillions caused the Inflation
For the greedy, not the needy, your so very right.
The Fed has robbed us blind! Our politicians could give two shits.
I was born in Miami and lived there in the 1960s, 70s & 80’s. My family lived in the southwest section of Miami (near FIU). We had a brand new 3 bedroom/ 2 bath house on a nearly .25 acre corner lot on a canal. My father was a union pipe fitter/ welder and my mother worked part-time at a Hallmark store. Our neighbor across the street was a photographer for the Miami News and his wife was a legal secretary. They had 3 kids. Another neighbor was a computer programmer at Eastern Airlines and his wife worked for an insurance agency. It makes me so sad that the average middle class family can barely afford rent today, much less a nice home in Miami. The government has stolen the American Dream from us all.
That is a nice snapshot of the past when everything was "normal" what happened...
Love your comment, but how did they steal a dream? Credit started filling the gap between wages and asset prices in the 70s to help folks with the "American Dream" of the 1950s. The American dream was a metric created to justify, allow, the theft of wages via inflation. Basically, if the American dream was easily attainable this scam would be just fine. Pimps sell dreams, promise nothing, and keep those promises. The American dream was pimpry to whore out this consumer debt based get women working and children spending economic culture. Goverments and the rich are the only ones ever meant to benefit from the American dream!
@@youngone1985 Capitalism cannot survive on a foundation of greed. As traditional American values eroded, greedy power hungry politicians and businessmen rose up. I watched Miami change after the influx of Cubans arrived. Assimilation didn’t happen like it had with previous immigrants because of the sheer numbers that flooded in. The good union jobs vanished as unskilled, non-English speaking people were willing to work for very little. The middle class started to erode away. By the 1980s it was difficult to get any type of job in Miami unless you were bilingual. And it’s only gotten worse over the last 45 years for the middle class in this country. Since 1978 the cost of college rose over 1,000% and student loans often take 10 to 20 years to pay off. Not to mention the recent anti-science government-imposed lockdowns that triggered the biggest transfer of wealth in history - all to the very rich. I believe we need term limits because politicians have become self-serving and they are in bed with the wealthiest corporations and foreign governments. Anti-trust laws are no longer relevant. Politicians put foreign interests ahead of our own. For example the current administration seems to be emulating the CCP whenever they can get away with it and few people even notice or care. If people don’t wake up it will soon be too late.
@@pamcornelius9122 We're nearly all immigrants who flooded in from slave boats to those escaping famine and devastating poverty. Some already spoke English, others where forced to learn because the market place of life demanded it. The American experiment is the facilitation of the market place of ideas, a sexual market place, and an actual market place of resources. This is the highest American value created by founders who saw slavery as more of an acquisition in trade than a serious ethical dilemma. A majority Cuban presence is a market that will demand certain adaptations seeing as we outlawed slavery and pervious extraordinary discriminations of the 1800s. There's no eroding of a "middle class." That term was created by 1970s politicians to create an expectation that would distract you from their thief of your wages. Attending a university for better wages is the same slight of hand. A university offers insight into the inner workings of the universe yet now is responsible for economic freedom of families who fail to perform an ROI on it. So government grants and federally guaranteed loans push up the price because politicians want to "guarantee" that dream of economic freedom. It's called the pursuit of happiness because some are savagely out competed in the market. Economic liberty is not promised and can not be promised because the expectations of how such a thing looks will always follow a competitive model. This is why folks serm not to care, status anxiety. How can I use politics to get more than the next guy so as to improve my status? Rich is having more than most. Most can't have more than most, hence market place winners and losers. I think that is what you are lamenting. The oppression of other groups are being removed just as the bill comes due on a long term debt credit cycle. The so called foreign interest is the interest of the rich and powerful as America exports its inflation. Other countries weaken their currency to attract business to capture cheaper goods and workers for their economic interest. This allows the government to print more money to pay for promises with a lot less inflationary effects. This is why jobs are shipped abroad to keep foreign governments cooperative with us giving them our inflation. You feel some kind of way because it is now more economical hence a more socially expedient narrative for the rich and powerful to throw the 1950s to 1980s "working middle class" under the bus because banks must create more money faster to keep the system going and that group isn't big enough. The culturally or ethnically stratified class structure is no longer sufficient to sustain the inflationary policies of the world elites. If they do it with you, they'll do it to you it's not personal it's business. Welcome to this side of the American experiment.
@@youngone1985 No successful country on earth has open borders like the current administration advocates for. In 1965 Ted Kennedy passed an immigration law that has brought 59 million immigrants here… mainly unskilled and uneducated people who are willing to work for less than U.S. citizens. These changes to immigration are entirely the result of government policies that were never debated or put to a vote. Then you had LBJ and his massive welfare state. Like Reagan said, “We declared a war on poverty and poverty won.” Prior to these two major policy changes in the mid-sixties we had a thriving middle class. Trust me, I was there. You don’t take in 25% of the population of Mexico over a few decades and not reap any consequences.
Prices are still crazy, at least in south Florida. My father just sold his home in Margate, which is about an hour north of Miami. Within days he had an offer for full asking price at almost 500k, for a home that was worth barely 300k just a few months ago. Until buyers stop paying these kinds of prices, the inflated home values will continue to be a reality.
South FL is the exception. Rest of FL is slowing down.
Can confirm realtor in South Florida after getting my license I took advice from my teacher to sell as he had done the same a month prior. Listed 399k someone came in put an offer for 425 in middle of closing right now it's crazy now I'll be debt free with 170k for when shit crashes I can invest and snag a few property's. I will say not in South Florida the prices along with APR rates just don't make any sense along with only option in 330-425k range are town homes 650k+ for single family nowadays. I'm looking at Texas market and beyond where I could get two or three house for a lot less that can be cash flow property's with rentals.
@@bicoma9857 Be careful where u invest - America is imploding
@@Kevinw4040 South Florida is no exception, it will cool down regardless, as the homes are way over priced. And more are coming to market.
Silly buyers are already at 0 equity, 0 appreciation potential, and underwater.
The trouble is, that 270k house that was affordable has become the 425k house now… same house just inflated price. So they aren’t buying a better house they are just buying a more expensive house, all thanks to super low interest rates.
...and you still have to put in $100-200K renovations to make it livable.
Zillow, Black Rock and other corporations that bought up properties are also to blame for the bubble.
Im sitting here with 100k in the bank and no mortgage or car payments. Bring on the deals!
Nice!! Good for you!
That will get u a used pickup in Calif.
@@gilbertgonzales3368 That’s why smart people avoid California like the plague.
I’ve been dying to buy a house. I’m a newlywed and haven’t been able to buy anything since the market is trash in Illinois. We’re trying to bide our time but it’s frustrating 🙇🏽♀️
Having some patience right now is key, your chance will come 👌
The key to play the market is Patience, if experts are saying the market is coming down, and we depend on the market movements, then it's coming down, they don't make it happen they just state the obvious! But, the obvious is not so obvious if you don't know what to look at! And also, specific to you situation, bottom price at top interest rate for some homes is not always to best deal!
Just think..your apartment rent may be less than many are paying for just property tax (i.e. 1/3) of home cost. If you don't need a house, that 2/3 of remaining cash can go to real investments rather than something that just eats money
You know what is frustrating? Buying your first home in 2004. Watching the economy slowly crash up to 2008/ 2009 which made my home and 401k under water for ten year's before it finally came back up in value at 2004 peak values. So after ten year's of a bull run and paying down the mortgage I don't want to hear anyone complain. When you are financially able to purchase a home in be ready to take major financial hits and enjoy the gains. Just took another 20% cut in my 401k. So this will probably the second recession I will have to live thru. After a stressful and twenty year's of scrambling to pay my home off I would never want to go through that again. Goodluck everyone!
You could probably find a condo in the hundred thousand dollar's range to purchase? I made a decision to stay in my two bedroom one bath home and will never take a big mortgage out again. Once was enough for me. Now I will improve my owned property and get ready to retire. This guy is spot on and I would take his advice. Goodluck everyone!
Hey Michael everyone believes the FED controls interest rates but in fact they follow the 3 mth treasuries. And in my opinion only we saw 18% interest rates in the 80’s ,well that was only a taste of what is coming, much bigger numbers now!!
Mike, here in Pinellas it has flipped. Went to several open houses this weekend, nobody showing up. Sharp contrast to just a few months ago when they were packed and going pending within a couple days. We are getting follow up calls and emails from the realtors; wasn't happening before. Some realtors were honest and said it has completely shifted; that the cash offers have dried up and the retiree transplants have also mostly stopped. Flippers all but gone; too much uncertainty. However most people are pricing like it was still 6 months ago, so the homes are just sitting, and gradually coming down but not enough. Will take a while for the market to adjust. Even what closes today went into contact a month ago when it was different.
It’s been fun watching pinellas. Inventory 3x’d in two months. Crazy
I'm not surprised, as basically the most overheated market in FL, they will probably get hit the hardest as the fall comes. Its already starting now and many of these sellers are way behind the curve. But hey thats good, bring on the stacking inventory!
My dad is Pasco County and was telling me a few month ago they were selling homes for $350K+. I said that is crazy as a 2-3 bedroom ranch home on 0.2 acres in east Pasco County should only be around $225K tops as the job market is not that big there.
Saw the first of the white foam board roadside signs, lettered with black marker, saying something like " Off market ! 3/2 block home " and a phone number. After 2008 I remember those signs littering the roadways in Pinellas.
@@jc1979af used to live in Wesley chapel, paid 137k for 2400 sq ft back in 2012
Artificial low rates coupled with the fact that sellers were scared to list their homes during Covid. Kudos for enduring the heat for us Michael!
Yep it was the perfect storm! You bet! Even though its hot I am enjoying doing this style of content. Looking forward to winter though 😄
I enjoy these walks, and the info. Thank you.
So glad to hear that thank you!
This is one of my favorite TH-cam videos.Michael has great common sense and thinks like an economist
Thank you very much Walt!
As someone who lives in FL as well, and to all the people asking how to know when the bottom is nearing, I say look at Disney.
When Disney starts struggling with Park occupancy you'll know the service sector has tanked (retail already tanking, services next). Disney literally has a monopoly on childhood, have been raising ticket prices, food, merchandise steadily over the last 10 years with little pushback. When they finally feel the crunch the services sector is dunzo
And next comes commodities 😉
Preach!
Disney has become a playground for the rich. They announced a 1
Month long around the world park excursion. All the Disney parks around the world air fare included for like 75k per person. Who’s got the coin for this!
Disney is a small fish in the pond
@@livingmybestlife365 that tells me you don't know much about them, lol, if you did you'd know they're pretty much the largest hospitality and tourist industry in the world. And generate more revenue than some small countries.
I used to think this way when I lived farther away from Disney, but you really have no idea how much business they do in a year until you live in the area, work there, or have friends that work there
@@lngtimesurfer sir I could give a damn about a theme park. I honestly don’t know many people who rely on Disney to be successful in life or who became successful because of them. I would never put all of my eggs in a them park basket. That’s not financially smart. There’s many many more great paying Careers in here than Disney. Desantis knows that. The people that may loose their jobs from Disney, are a small fish in the pond. to think home prices in Florida will crash and burn from a theme park is wishful thinking coming from people who need it to happen to buy. I don’t see prices continuing to go up but no crash either. A level off or up/down 10-15 percent
Its great owning my home outright. Taxes and insurance are low here. The energy costs aren’t terrible. The most recent grocery trip was major sticker shock. I am with you about living below my means. While I am experiencing some of those inflationary issues, it is manageable. Famous last words? Could be. With luck, guys like you and me are at most mildly pinched and will prosper when things go down
This was a fantastic vid. One of the best you have posted. Amazing insights.
Thanks a lot Matt!
What's amazing is the 100% markup. Price should go back down to 2015-2018 prices.
I have been following/subscribed to your informative videos for 2 years now. You have been on point and simple to understand; which separates you from many, trying to do the same. This is the first time I’ve commented to an informative TH-camr. Thanks for the inspiration of your diligence of staying on top of the game in your work and sharing to those that choose to watch/listen. Good job.
That is so awesome Charles! Best comment I've read all day, thanks for chiming in after all this time. And I appreciate you sticking with me 👌
He is absolutely right. We started watching you 90 days ago. It just took us this long how to figure out how to comment..lol
@@dadoffenway Thanks for being here 😀
thanks for the videos, look forward to all the beautiful land scapes.
You're welcome Eric, thanks for watching!
I really do enjoy all the different driveway treatments on your walks. Such art, really.
Thank you, so glad to hear that!
Waiting in Miami , to purchase. Listening and learning from you! Thank you for this valuable information!
Gonna be waiting for a minute there are literally no good single family homes for under 500k. Along with being extremely overpriced and high interest rates it's just not worth it. While prices have gone down everywhere not miami because so many people are still moving here with zero supply. As a realtor I literally check homes for sale everyday can tell you there's nothing down here other than townhomes which just arnt that attractive. Market speculation prices will continue to rise this year and next year total about 8% after that who knows. I do think by next election we will se a giant shitstorm handed to next guy and then first year after they take control I could see life getting a little better.
Good video Michael. You have covered a lot of areas and given a lot of good information.
I appreciate that Danny !
Thank you for this information. I'm moving to Florida next week I just got retired from school system but I got a job in Florida because I will not be able to afford the rent there if I don't. Still looking for apartments. It's crazy how much the rents have gone up since I started planning this move 4 years ago. I live in Massachusetts the rents and cost of living here can only be afforded by the very rich people
You're welcome! Yes the cost of living has gone up dramatically in the last few years. Good luck on your move Shaaron!
5:11. Distracted by the classic 996 (911). What is it about your walks and classic Porsches. Keep up the great work. This resonates here in Weston as well.
Haha thats awesome! Coincidence I suppose! Hopefully we'll keep seeing them
Interest rates have 10% with actual prices. Low demand areas relative to local supply have cheap houses. High demand areas relative to supply hqve expensive houses. Rates have 10% to do with it. Demand/supply is 90%. Builders slowing construction even more will just push pricing pressure higher, in normal markets not speaking to fomo markets. Fyi, Ive been investing in profitable real estate since early 1990s in great locations. Also evaded the 2008 crash by selling 100% holdings by Fall of 2006. Reentered summer 2010.. that was a once in a lifetime goldmine. It will never in our lifetime happen again. (And rates have been 3.5% since 2016, its been as Millennials are buying in record numbers the last 3yrs that supply was seriously liquidated + rona buildig halts) supply will not catch up nor will construction costs get lower for a decade or more if ever.
Very good one lots of great info,,,I was impressed with the comments about commercial investors effect on the market . Very insightful
Thank you Richard!
I live about 1/2 hour away from Vancouver Canada.
Houses in my neighbourhood that were selling for 1.7-1.8 million in February and march 2022 is selling in June 2022 for 1.3+ million.
Over a 300,000 drop in 3 - 4 months.
And it only the beginning.
Our realestate board of course won't report the drops, they want people to buy more.
Believe or not, the realestate board tells everyone on the news that house prices will be at least 13% higher this time next year. Unbelievable there is no law against this type of lies.
If people understand that house prices are dropping like a rock, they won't be buying until they feel we are close to the bottom.
We are far from the bottom.
It's going to be prices drops for years not months.
Get ready to get the cheapest deals of your life time.
I believe it! BC is basically the craziest prices in CA probably have a LONG way to fall. Sorry your local boards are reporting the truth.
It's truly amazing how in 2018 when rates hit 5%, the market started locking up. But that same theory supposedly didn't apply according to the "economists and analysts.". Yet now prices have doubled in many markets in that time and rates are higher lol. Nailed it again, Michael.
Demand is relative to supply and the supply narrative has always been silly.
I think the demand will keep falling as these rates continue to rise, it just not appear like that right now, since closed sales data lags, but I am confident we will see that number continue to drop as the year goes on.
@@MichaelBordenaro definitely agree with you. I can't tell if my comments was confusing. I meant that people kept saying that demand would continue indefinitely, but prices now are doubled. Now the rates are higher so there's really no way that demand can stay elevated when in 2018 prices were far less, and demand fell.
Just came in from the streets of Paris. Here it's 104 F with only 50% humidity; a scorcher. Especially considering that the vast majority of apartments here have no airco.
Anyway, I see you'll be hitting 40K subs soon, and I am watching every day for when that milestone is reached; this week or next?
I want add a few points to the lack of demand. That demand crunch must also be seen in the light of falling values of the share market. Lots of people were paper rich and could use their equity for large down payments. Fewer can now. Also, and especially in tech, a lot of income was from RSUs (restricted shares units). Vested shares are worth a lot less now, and many won't vest at all because they are performance based. This means two things a) less actual money in pockets and b) since the value of RSUs can be used to lower the debt-to-income ratio that is also no longer the case and people can't afford what they could before.
Keep up the nice work.
I heard they are having one of the hottest summers ever over there! Feels that way here too, but its daily lol. Very good points on the RSU's drying up in tech, I think demand will keep caving in from here, as rates continue to go up. Thanks on the 40k Nick! Its coming soon!!
Great insights, became a fan recently. I would be much interested to understand how you feel the rental prices will evolve in this new environment. Do you think those can go up because of less demand to buy, increasing the demand to rent instead? Thank you for your content!
Thanks David! Yes I think rental prices will remain strong even in recession due to lack of affordability and demand to buy. Once it becomes equal or cheaper to buy again, then we'll see that start to reverse.
@@MichaelBordenaro Apartments are popping up in the Daytona area like weeds.
That is true, demand to rent goes up because of people needing a place to live, but the homes that don't sell have a potential to go into the rental market, so that dynamic might not be as pronounced. So rental prices go up but not by much, some homes might even see a decline if they are not desirable. These homes come back in the market for sale at much reduced prices. This kind of home might be a great buying opportunity if you don't have top cash, but with some elbow geese you can make it the best home for you. Key word is Patience!
@@Andi_Doci This applies as well, thanks for adding this here!
Love love you; your data backed information, the way you present it and your opinion!! No one talks about New York (not NYC or Upstate🙁
I live in the Northeast, Suffolk County Long, Island New York. Home listings prices have gone COMPLETELY INSANE over the past couple years!! 100k to 300k and more than what they are worth! As of today July 18, 2022 people are still listing at those STUPID PRICES! People are still closing paying above list price, not quite as bad as it was. There have been price reductions - off of the STUPID INSANE INFLATED PRICES, many insignificant 10k some 50k 100k, still not enough!
Do you think listing prices will go down close to pre-pandemic prices? I would LOVE YOUR opinion on this area. I’m on the sidelines waiting to buy.
Thank you 😊
Thank you Karen! The demand in the NE still seems to be pretty strong and is still one of hte stronger markets. I think it will take a recession and unemployment going up, before that area starts getting hit significantly.
Thank you
thanks for watching!
We need honest realtors, and unfortunately, some are not ! Thank you for sharing your information and educating us! I have cut down and done just want you’ve suggested!
Yes there are a few of us out there, but pretty rare. Glad you are getting ready, things will get better for those who conserve now.
Thanks for your video. Great information. where I used to own a condo near FLL. There were many Canadians that bought places for the winters. I wonder with the RE downturn in Canada, this could force foreign buyers not to buy or even sell their US RE holdings. Going to interesting going forward .
You're welcome Ira! It is going to get interesting going forward. The consequences of Canada's housing market falling havent even begun to play out, so it very well could affect 2nd homes of people who are in trouble
Auto part manufacturers in Midwest all gave 20 % raises . Labor shortages forced them .
I got 20% in April 2022.
Still not keeping up w rising prices tho
That is good though! Surprised to hear that!
I met a roughly 35yr old man yesterday who had just got out of prison. I suggested that he get a job , he told me I can't work I was getting 2000 a month from ssi when he went away and that he needs to get back on it. He seemed quiet capable of working. Welcome to new york.
Oh man! That is so crazy! How can he even get SS at that age?
@@MichaelBordenaro It's SSDI: Social Security Disability Insurance. Different from old age insurance (the technical term for what we call SS).
@@y_yy_2844 Gotcha, that makes sense then. A lot people that get disability end up getting it for life.
THANK you so much! I do appreciate it.🌹🌻😊
You are so welcome
We’ve been listening to you and find so much wisdom and common sense in what you say. We are in the Northwest (eastern WA) where home prices usually don’t fluctuate much but we’re hoping prices tank. We’d like to get our daughter in a larger home for her expanding family. But we aren’t going to be stupid and buy at this peak market.
Thank you so much Lori, I appreciate that! Will be interesting to see what happens in that area as its always high demand.
Brilliant analysis as always, great channel to follow.
Much appreciated!
Great advice and insights to what is going on now a days. You should have at least a million subscribers for sure.
Thank you Joseph! That is very nice of you, maybe one day 👌
wear what you want bud i watch your video for the great content and why do we need to impress people that we don’t know, keep up the great work! love this channel 🤙
Believe me I will, just funny that people mentioned that and had to comment on it
I did enjoy this video and many other ones.....thank you blessings
Appreciate that Esther thank you!
Michael, just found your channel and very glad I did. Been going through the videos and it's a great education for someone new to the US. AND you are 100% correct about the current administration.
So glad to hear that Duncan, thanks for watching! Glad you can learn from me👍
I did same thing traveling while it was cheap.
I went everywhere I could !!
I was getting round trip tickets to places like key west for $120...
I tell people that I couldn’t do my trip to Arizona today ... everything from Airbnb to renting a jeep
Would be out of the question...
I’m glad I went to a lot of places when I did !!!
Nice! The timing was perfect!
It’s pretty simple. People can only buy what they can afford. The increase in mortgage rates has instantly made all real estate overpriced as people can’t afford the mortgage payments at current asking prices from sellers. The issue is that most sellers are financially clueless in this regard and continue to over price their property. If you want to know how far prices have to come down just look at what prices were when rates were this high then adjust for wage inflation which is around 2 percent per year. Sellers will not be happy with those numbers but people will only by what they can afford or can get financed for. Sellers can ask for what ever they want but, if most people can’t qualify to afford it the property will become a brick. It will not sell.
Thats exactly right, its a simple economic fact, thanks for saying that!
@@MichaelBordenaro I expect most of the deals that have fallen through in the last couple of months are due to the buyers’ income not qualifying for a mortgage payment the lender believes they can’t afford, or the house didn’t appraise high enough to satisfy the lender’s collateral requirements.
That 1st house sold in 2017 for like 2 mil and they are asking 16 mil.. oh mmm ggg...
Hello Mike. Excellent video. What goes up must come down is not just theory, or a clever saying, it is scientific fact. Why is it that the widely known and proven law of gravity has not brought the price of houses down yet? Thanks so much for explaining, my friend
Thats exactly right!
If you look at MBS purchases by the Fed since 2010, before that they owned zero mortgage debt and now they own 1/4 of all mortgage debt, you will see the prices track up, up, up as the Fed buys. Since the Fed is tightening, you can see the market reacts.
@Joshua: Are you suggesting that since the Fed is not buying that prices will drop or that the Fed will begin making purchases again and prices will rise? Or are you saying it's going to be a quick sharp drop down and then up, up, up?
You have always said that there wasn't a shortage of supply! BTW I agree with you 100% (I am certain you remember us talking about this before). Also people are spending and borrowing money to travel because the main stream and Government are telling them this is the greatest economy in 40 years. People are sheep and believe what they are told. I have sheltered up (not spending) like a hurricane is coming and going to try to make thru the recession.
Nope there isn't and its starting to show now as inventory continues to build. Why? because demand is falling. Excellent point, people see the news and watch the travel "deals" and think all is well. Good for you for being smart Ken
I avoided travel this summer. No point in blowing money that I might need later
Great episode Michael....!
Thank you!
Not only was demand driven by low rates but the additional work from home/COVID migration factor. The pain will come if anyone that bought in the last two years needs to sell as they'll probably have to bring considerable money to the table to close. Short sales may return.
Thats exactly it
Thank you so much for your opinion and time. Been saving a few years and was kicking myself when I missed the opportunity last year because I didn’t want to miss out on the low interest rates. Also didn’t want to pay 50k+ plus above asking price trying to compete the with everyone kinda seem counterintuitive…. Anyways, I’m hopeful that within the next 2-3 opportunities will present themselves as we didn’t really see homes drop to their lowest from the 2008 crisis until 2011. Stay strong and cash heavy for the future deals coming ups. Might be lucky to snag a duplex, I can only hope! :)
You're welcome Jose! Patience will always win if watching and waiting for the next deal while saving for it.
1-2 years from now will be the time to buy. Sit tight.
@@rorycalhoun1126 yes sir, can't wait!
I think jingle mail is going to be the most popular gift that the banks will receive this Christmas.
Maybe!
To me, the low interest rates are to blame for a lot of the speculation that has taken place. If a person cannot get yield in order to save for retirement above inflation, they go into further speculative bets which increases risk to their retirement portfolio. This opens up a lot of areas that traditionally were NOT a speculative market. Since there are funds available for less risky assets as real estate, financial corporations started putting real estate into investment vehicles that mostly had apartment buildings and started including single family homes in direct competition with people just wanting a place to live, creating a false market indicator of lack of supply. Eventually these funds will unload these assets because they will not have an ROI due to high prices and rents dropping back into affordability which is going to leave a glut of homes on the market which will drive down prices.
Thats exactly right, these low rates have been the source of all of these asset bubbles and will have the reverse effect as they rise.
Can you explain why you think rents will decrease?
@@andrewmartinez6716 increased interest rates and a few other things that the federal reserve are doing will lead to a shrinking economy, failed businesses, higher unemployment, less investment etc. This leads to people being able to afford less. It also leads to the housing market going down and if houses cost less, then rents need to go down or else it becomes cheaper to own a house than to rent.
Mom and Pop landlords and AirBNB owners are a big part of the problem.
Thats definitely part of it
Airlines and hotel resorts are offering crazy buy now pay later no credit check deals at high price. This is because their product is highly perishable. Once the plane takes off, all empty seats are worth zero. At midnight, every hotel room not occupied is worth zero.
Offering buy now/pay later deals works better than what they used to do, which was discounting empty seats/rooms close to the date, because more people just waited for the last minute deal and airline/hotel couldn't predict. By keeping the price high, they have a chance of collecting something for the seat/room that would have been empty.
I didn't even know about buy now pay later deals with these companies, but with that going on, its even nuttier than I thought! If people keep going like that, we're going to be like 3rd world countries that need to finance a pair of shoes for a year!
ty
Smart is empowering, patience is a golden virtue, education is key … Thanks Michael / please keep adding pieces to the puzzle
you got that right! Glad to keep adding to it 👍
Another Great Video Michael. Glad to see you posted one today. I was starting to have withdrawal symptoms. Keep wearing the tanks, they look GREAT!!!
Thanks Keith!! Haha good thing I have a huge catalog of older videos in case you get withdrawals 😄. Lately I've been posted Tues, Thurs, and Sat so you know 👌
I bought a bit over 2 years ago. Selling now and making around 60k. Moving to Orlando with that money and some more I got in my savings, to rent actually and sit around until I see a good deal I really like. No rush here. I WFH anyways and can afford paying 2K easy in rent. I’m not going to move a finger until I get what I want. Patience is key.
Good for you! That is the attitude ALL buyers need right now
Your Cam is hella fire now
Thanks!
I would like to know what is going on other neighborhoods such as Doral, Coral Gables or Miami Lakes.
Eventually I may branch out to those areas. Just don't like dealing with the crazy Miami traffic if I don't have to 😄
Michael, really like the way you paint the picture on the housing situation. With the lumber prices dropping and builders not working, I’m thinking of buying land in a year and build what I want. Currently I rent and have no debt, looking to use that to my advantage. Keep up the good work hope the nea sayers leave you alone.
If you can build your own house, that will be WAY cheaper than buying from any builder, keep me posted if you do that! Thanks for being a fan of the channel ✌️
Ridiculous pricing still happening in San Diego
That is and probably always will be an extremely desirable place to live and places like that likely will not suffer as much as many others.
I have gotten a 20% raise! But I also have a lot more work to do. I don't mind it. But you're right. The more you make the more you spend.
If you get a 20% raise, just don't spend more that half of that, and soon you'll be sitting really comfortably.
Wow good for you! Very uncommon, but sounds like you have to earn it as well.
Congratulations!
Good points about institutional investors. I think the main issue with investor risk to the market is the preponderance of 'small fry' investors. They seem to be snapping up the most properties and at record rates compared to the last bubble. Many of these people have little to no experience in real estate which is perfectly fine so long as the housing bubble is soaring. With little to no experience and almost no effort, you can buy almost anything and print money. Then the bubble pops and these guys get wiped out. If there's twice as many as last time, probably falls twice as hard and fast...
Yes and I think to small fry flippers will get burned real soon as these properties are sitting on the market and needing to lower prices. They are literally holding the bag.
I’ve read that the two markets where institutional investors have bought the most houses are Phoenix and Atlanta. Other areas aren’t apparently affected by investor purchases nearly as much
@@craftsmanctfl3493 Yep and that gives the perception that is happening all over
What these first time home buyers do not understand that you have to have a excellent education and a good-paying job to be able to afford to purchase property. It's the new reality. Working for minimum wage doesn't cut it anymore as it used to and it never will anymore
Hey Mike, do you think prices in South Florida are going to drop here soon because interest rates are going to go up again plus more inventory. I’m in a spot where I have to sell my house without contingent on finding another home but I need to be confident I’ll find some thing in my price range. Thx!
Realtor in South Florida no prices won't drop due to lack of builders and overall supply I'm selling my home now middle of closing currently I'm going to rent at a friend's until market cools but it'll be sometime. Your only real option right now are lennar town homes basically in 330-425 range still suspect these house will go up in value but still incredibly overpriced with APR rates mind you these townhomes are being scooped up super quick as well.
Probably not too much for now, unless we get hit really hard with a big recession, that can easily be a game changer. But demand here is still very high and we always have a large pool of cash buyers.
Investors definitely buy up large amounts of properties in southern cali. I am in Anaheim (near disneyland) and at least 6 homes we offered on are sitting empty. Like you said, they seem to focus on lower priced homes that they can fix up and rent. Oh wel.
Yes its in very specific areas and gives the impression that its everywhere but really in just a handful of select markets
Michael, I like your comments, the way you make your videos, and the way you speak due I’m not American, so it’s easier to understand. You fits well to be a teacher! 😃
Thank you!
When I went on listing appointments 60 days ago, I would tell these sellers to stop looking at what has closed and pended and start looking at what is active and price aggressively. This is a race to the bottom now. Of course, they didn't want to hear that and many of them are either still on the market or have gone back on the market from canceled contracts. The greed was real and now the panic is real.
You called it! And they should have listened.
@@MichaelBordenaro As I’m sure you know, agents who know the true area home values and agree to list a home for a seller at a way too high price are likely to end up spending a lot of time (and advertising/money) for nothing in return. But I expect some less experienced and knowledgeable agents are a bit desperate for listings at the moment. Thanks for your factual and common sense information in the videos. Love seeing the royal poinciana tree blooms in all their glory. Only in south Florida!
@@craftsmanctfl3493 Thats right! glad you are enjoying the beauty of South Florida in these too 👌
Lower prices is not always guarantying a sale. This is so complicated that just trying to get the public to understand the dynamics will feel like your trying to put someone through college! My solution is, If I understand the dynamics and I am the buyer, I try to probe for the right real estate agent that also understands or is capable of understanding! Otherwise your looking for a fight. So the safes solution is to really just wait for the storm, if you got your money in cash then your best prepped to weather the storm!
But high inflation can eat up your cash. Where to invest it in the interim?
@@ShowBizJunkie Inflation is happening, it can only get better. Its just going to take time. I would not recommend anything because I don't want anyone to feel like I am at fault for telling them to invest in something. I recommend patience so that prices come down, and learn how to manage some of the home improvements yourself, learn and be ready. A real estate agent you know and trust is also a must, and hard to find. I would never trust a real estate agent, all I try to get out of a real estate agent is ethics, they must have ethics. That's my recommendation.
@@Andi_Doci I’d add to your common sense advice about patience that folks should also save as much as they possibly can. Patience and some additional cash will ultimately pay off.
What about those of us who are would be first time homebuyers in Atlanta? Are we supposed to move elsewhere? If institutional investors continue to buy half the inventory even when (or especially when) the market collapses then we are left to compete with non-institutional investors for the remaining inventory. When they can make cash offers and waive other considerations, 99 times out of 100 we will not beat those bids. Atlanta's housing market is ruined.
It is a HUGE problem Korte, no doubt. I don't have any easy answers for that, but now that the market there is highly overvalued, chances are investors will be backing off, as its no longer profitable to buy there.
I live in Atlanta. Been here 20 years and been looking at listings every day for over a year. I can tell you that in Atlanta the hedge funds are only buying newer homes under $400,000. If you can afford something above that price or can buy a 30+ year old property, you stand a chance. Investors aren't interested in those. Or just wait. I've seen $50,000 drops already the past two months, so we might have a chance. I was also looking at moving to NC or SC, but those areas are now outpacing Atlanta price growth so it makes sense to just stay here. I have no idea what to tell you. I have a booming business and have been in desperate need to get out of my garage and into a home with a nice basement. It sucks to live in a state where you've paid taxes for decades and yet some faceless institution from Europe or who knows where just snatches your home right in front of you. I don't want to rent, I want to get contractors into my home to make it the way I want it...:(
I come here just to get my dose of good lecture and I love the accent. It's like that uncle to tells you straight up.
Hey thank you very much Ashley! Happy to give the smart uncle lecture 😄
what happens when you get a mortgage? A licensed "lending" institution creates a promissory note (your promise to pay a sum certain along with the terms dictated by the "lender") Once you sign that piece of paper (contract) the "lender" enters the specified number into the account of the seller and the transaction is completed. Thus the "money" is literally created out of thin air. You will pay monthly real money that is based on your labor for 30 years. Should you not pay ... the "lender" will seize the asset (a tangible hard asset of value) in return for its provision of air (in the form of a computer entry). Sound good to you?
Fckn crazy, I know.
But lenders started placing strict rules for qualifying buyers several years ago. The amount of buyers getting foreclosed on is dramatically lower than 12-15 years ago. If you actually qualify for your mortgage and payment, you’ll usually be able to handle it so long as you don’t lose your job for a long period of time.
@@craftsmanctfl3493 in what way does this comment of yours relate in any way what so ever to the statement made regarding how money is created? Seems like a desperate effort by the troll department you are employed by to influence the weak minded corporate cubicle clowns who were frightened by facts ... in order to rationalize their decision to victimize themselves via borrowing money securing a mortgage.
Michael thanks for all the work you do. Hey can you go walk around and show us neighborhoods must of us can afford? Coral Gables, South Miami etc. Thanks
Coral Gables is even more expensive in most cases. South Miami is more affordable, but its quite a haul for me with the traffic here. I will probably do more areas eventually once I have covered everything nearby.
@@MichaelBordenaro I understand, thanks for replying. I love your videos
Another good video, is that area an HOA area?
Thank you! They have a voluntary HOA here if you want to be a member of the golf course
1 % of single family homes owned by institutional investors is still too much
Yes but at least its not an alarming figure, like 10% or something nuts.
It's crazy to go on a trip via credit card... Me and my lady have not been on a vaca for a few years, we def plan on something soon, but we saved for it! So crazy.
It is crazy! And everyone feels entitled to the point where they think they have to have one regularly. Go back a generation or 2, people were lucky if they took a few vacations their whole life!
My Lakeland apartment complex just dropped the rental price on 2/2’s like mine by $60 per month. They’ve had three un rented for six months. They raised all units up $500 per month in December.
Glad to see the decrease. My lease renewal offer comes in Oct for a Dec renewal. It was going to be an increase of $350 for me. Now, it would be $290. I hope it goes down even more. These prices aren’t sustainable compared to wages.
Good thing is there is still time for that number to drop even more. Hope you get a good deal!
@@MichaelBordenaro Thanks Michael!
i bought my 2nd house in 2017. even if i could buy it for the same price now i couildnt afford it @these rates. but i did take advantage of the record low rates. we refinanced to a 15 year @ 2.5 in 2020
Nicely done!
Hey Michael can you recommend a good book or resource on "How to purchase a property that will cash flow?" I want to jump in again on a second property when prices are at the bottom, possibly a year from now........:)
Rich dad poor dad is my favorite
I heard all Canadiens and Australians have adjustable rate mortgages. It’s the norm over there
It is a lot more common in those places, and they will be feeling the pain from it soon
Do u have a link for those sunglasses your wearing?
I wish I did Criss! A bunch of people have been asking me about them. Need to figure out how I can make my own signature brand available to my viewers.
It's been in the news that many people from Colombia are now trying to purchase homes in Miami due to the political situation. I wonder how south Florida will play out one's the buble burst in other states?
We have always had a ton of buyers from South America here. But at this point, I don't know how people from these other countries can even afford it here, given the prices and the strength of the dollar. Only the elites of those countries can buy now
Michael, I grew up in Africa, in the heat without A/C. Then I moved to Arizona where I always think that I’m going to pop like popcorn. Yeah, I don’t blame you for wearing that. Thanks for the video.
Haha so you get it Tony 😄
All I'll say is the institutional investors have cheap money too, and they're chasing yields anywhere they can when interest rates are that low. I think the interest rates going up will push many of them out of the housing market too.
Thats exactly right, so many people don't understand that....
Michael, huge fan. Watch you every week from Hong Kong. What’s your view on when the best time to get into the market is? What do you look for that tells you, ok, now’s a good time to buy? I.e., when do you know you’re near the bottom of the market? Let’s assume interest rates are not a factor because the buyer has cash…Thanks!
Thank you I appreciate that! Interest rates aside, the bottom of the market can take years to show up. Right now, I believe we are at the tipping point and we starting to see listings sit longer and more price cuts. The next stage is homes starting close at lower prices. After that more listings come and sellers start to panic. Sometime after that will be the right time.
Many thanks!
30% raise last month....30% in 2020. Increased yearly bonus Make double what we did in 2018 but i know that's rare
Husband works for accenture, great company!
Both were promotions, but they have a promote or fire policy, so i mean most are getting promoted
Wow thats incredible rare for sure! That raise is coming in extremely handy right now 👌
@@MichaelBordenaro and we're making 300k off selling our home. So when people think all cash buyers are investors, not us. Not the ones who made offers on our home either, all families
@@lrm52283 Thats just it too, and right away everyone blames institutional investors, but the fact is, savvy folks like yourself have also done very well in recent times. Nice job!
@@MichaelBordenaro if we are in a recession, there will be others who do really well too. There's still money, the problem is the wealth gap... everything happening will create extreme wealth and extreme poverty and demolish the middle. Bad and good times are like the sorting hat in Harry potter or my husband job....up or out. It's been happening for decades now.
I think the biggest problem Is that builders only build for the wealthy.... the under 2000 sf home is disappearing.
Btw....i really appreciate your measured takes.... you aren't screaming fire, but not blind to shifts. You're advice isn't extreme and going to cause someone to buy a house they can't afford or pass on a house they can. Thanks for not clickbaiting or fear mongering like so many others. Also, its nice you take the time to respond to everyone.
@@lrm52283 All good points! I really appreciate everyone watching and I try to answer as much as I can, and just shoot it straight, giving the best info I have available at the time👍
I think the price out of paradise in the south where it’s warmer means more now when the people who have lower paying jobs can’t stay living in increasingly expensive areas. That creates a ugly labor shortage an is bad for businesses which need lower income workers. Eventually the failure of not understanding that will doom homeowners. I see young people today getting hired at the lowest of wages an there’s no way they can make it on their own if they don’t stay with their parents. That’s pretty scary regarding the rising cost of homes and rental apartments. It’s really insane the parents are not freaking out with what’s going expect these kids to do well out there where they can start a family. I think the rising homelessness problem will only get much worse but that’s the good news because eventually people are forced to see the reality of what’s necessary to cut the cost of living.
Michael; "This is just getting started". So true. I will add another truism from the trading industry. "Never try and catch a falling knife". Potential buyers should keep that in mind, imho.
Yes it is! I have heard that saying and it totally applies right now! Sellers are dropping the knife bc the potato is hot 😄
Interest rates is the main reason for the slowdown. It jump from 3 to 6 very fast
Yep and it will continue to slow as the rates get higher.
Yes but it would take a long time (sellers are stubborn). Years, maybe decades. Can the economy sustain "high" interest rates that long?
It wont take that long once most listings are getting stale on the market. Anyone who really wants / needs to sell will have to adjust to the new market conditions.
$30,000 annual income IS NOT middle class.....it's the new poverty income.... $75,000 is the new working poor....$125,000 is the new working class...$200,000 is the new middle class....$500,000 is new upper class, $1,000,000 is the new high class.... here in Santa Barbara, the cost of living is so high that even my college allowance of $120,000 is just barely enough to keep me afloat....
@15:00, The storm does not have to be here, lol, for the market to tank! The view right there is beautiful and peaceful but you could die there in seconds. You try to swim across and midway you find out you can not make it across, now you face the same distance to come back as the same distance as to finish, you drown there regardless. Or an animal is there that you did not see and it can easily kill you! Even a boat that does not locate you swimming hits you and kills you. So people should appreciate people trying to warn them, no matter how brutally honest they are. I mean, would you not try to swim there, it's beautiful. I would swim there if I had the chance, but I would keep these ugly facts in mind so that I can repeat it many many times again!
can u make a video about hoa
You won't see the lowest prices till 1-2 years from now. It's just the beginning. Sit tight.
I agree
"Revenge Travel" comes with a revenge debt.... my parents can easily afford flying first class any where around the world, but nope...they don't do that.... they still drive around in my dad's old 1991 Lexus LS400 that has 300,000 miles on the odometer.... they are not cheap...they're just FRUGAL...
That pays off big time!
What it means is that prices are dropping and few are buying because they know massive reductions coming giving buyers more to choose from then LOWBALL 5 homes , someone will take it.
Price increased more than 2 times it actual price. Not sure when it will back to normal