The Storm Housing Is Coming| The BUBBLE Will Burst| The Real Estate Market Going To Crash?

The Storm Housing Is Coming| The BUBBLE Will Burst| The Real Estate Market Going To Crash?



hello everybody Randy Patrick here welcome to housing bubble 2.0 news of the week or as I like to call it another episode of as the housing market turns or some of you guys say burns crashes whatever as I always say every week the information and data is picking up lots going on in real-estate world in the housing market so we got lots to talk about today just it is what it is you only mean so once again fair amount of news going on today is Friday June the 21st I almost got the date wrong again there so it depends on what I'm reading here simple as that today's topics we're gonna focus on the Fmoc meeting and interest rates nar releases their May 2019 existing home sales report redfin released is their report as well to shifting trends in the real estate investment market real estate and the SNP student debt hitting another all-time high and Freddie Mac announces a new mortgage program it all ties together here anyway so but first of all please take a second if you're not a subscriber just click that button and subscribe to my channel it helps us grow and I really would appreciate that so thank you very much all right also many of you have reached out to me regarding real estate questions buying selling real estate investment discount of properties whatever I think I've pretty much responded to pretty much everybody that's inquired with the past couple days by responding back to you and let's see if we can set up a time to talk etcetera so I want to make sure you guys know that I responded to you so let's set up some time that we can get talking today the weekend early next week whatever it is so again I'm here to help you with any of your real estate questions on buying selling real estate investment or whether you're looking to purchase a property for a sub retail you know discount prices again never pay retail is my motto all right so here we go so let's talk about what's going on today so of course big news of the week was the Fed they had their I guess it's called the Federal Open Market Committee they had a meeting this week and guess what through that those discussions interest rates remain the same the Fed did not raise interest rates nor did they lower interest rates and this is consistent with what they've said that they were not going to change rates for 2019 so this should not come as a surprise to anybody the Fed kind of even stated that saying you know this is what our policy has been we're not going to really deviate from that unless we see some major shifts in the economy which whatever their triggers are they haven't quite seen that yet and it's again it's as they've planned you know no rate increases for 2019 so I don't think so that was obviously positive but people were sort of looking for maybe a rate decrease and I guess clearly for about six months everybody was hearing that maybe we're going to have a rate decrease and you know it cut at the next meeting so basically what it boils down to is that it's the media and analysts and economists suggesting and this should happen and could happen it wasn't the Fed saying this so if people are disappointed it's really investors in the media who we're talking about rate cuts and stimulus I mean the Fed now is is holding on this cutie which is quantitative tightening as opposed to QE which is quantitative easing we've had ten years of quantitative easing so now obviously they're trying to slow things down or tighten things up with respect to what they're doing the market place here so again as much as this was a highly debated topic whether they would drop the rates to stimulate more buying more production it hasn't happened so they're they're holding fast and that's that's the news as simple as that all right existing home sales sonar which is a National Association of Realtors today we are which is June 21st released its I guess a May 2019 existing home data so I've got that right here so the I guess their headline is existing home sales rebounded in May recording an increase in sales for the first time in two months according to NAR each of the four major reasons regions saw a growth in sales for the Northeast experiencing the biggest surge in May so I guess you could say that the existing home sales for all transactions which include single-family homes town houses and condominiums and coops jumped two point five percent from last month so from April from April to May it was a 2.5% I guess you say jump so that's that's a positive thing for the housing market so sales increased slightly from April 2009 teams in May 2000 19 so my opinion is that I'm we're gonna see the media jump all over this and we're gonna be talking about how the housing markets rebounded and using the great words that show growth and everything's good but what is not really us spoke enough too often here is what happens your every year so realize that total sales however are down 1.1 percent from a year ago so sales compared to May 2018 are actually down 1.1 percent so no growth on the annual side of things so of course lawrence yun on NARAS chief economist said that the 2.5 percent jump shows consumers are eager to take advantage of the more favorable conditions in the marketplace the purchasing power to buy a home has been bolstered by falling mortgage rates and buyers are responding ok a 2.5 percent increased in me there's not a resounding a response to be honest with you and again when you're looking at a 1.1 decrease compared to previous years that's not a overwhelming response either however the median existing home price for all housing types was up to two hundred and seventy seven thousand seven hundred dollars which is up 4.8 percent from May of 2018 and this price increase marks the 87th straight month of a year-over-year price gain on the monthly basis here so the inventory is up the month supply remains near historic lows which has a direct supply on price so this is according to realtor.com nar lawrence yet so should demand along with an adequate inventory of affordable homes have pushed the median home price to a new record high that's that's what a blos data so please realize that it's not necessarily the market responding it's the lack of homes that are pushing prices up a little higher still so that's the scoop there and again what I want to make sure everybody understands is that you know we can see there's some trends happening here and I want to go through them right now so existing homes by sales by region the West had 21% of the sales and northeast 13% of the sales the Midwest 23% of the sales overwhelming was the south that 43% of the piece of the pie so the south was the biggest generator of a real estate sales for the month of of me if you want to look at some of the market conditions here for 32 percent of all sales were first-time homebuyers that's up a percent from the year before sales to investors were 13 percent that's down from 14 percent the year before cash sales were 19 percent and distressed sales were 2% which is down from 3 percent from the previous year and they noted that less than 1% of the sales on the distressed side were short sales so short sales are making up less than 1% of the all the equation all the real estate transactions across the marketplace across the board in the u.s. here now if you do look at their total existing home sales percent your change you're going to see they just do a 12-month I guess you say a 12-month chart here and for the past 12 months the year-over-year sales have declined whether it's you know 1% or actually everything's pretty much you know 1 almost 2 percent or if not greater but again realize that as much as you know we have a month-to-month increase that's not a year-over-year increase and we're still showing the trending is less sales les says Leslie also please even though was not as much less sales it still is significant because it's less sales and you know as I mentioned we're probably going to see and I've talked about this in previous videos with previous comments we're probably going to see a little bit of an uptick now as this you know this you know we have may now June and July hits we're probably gonna see some uptick May June July August with respect to sales activity and then what I what I what I person expects will happen we'll see a slide right after that and the drop will happen a little faster than we've seen before that's my prediction so sales by price range and I want to point this out because when you take a look at the fact that our home sales the out of the median price has gone up again so you look at going well if sales are decreasing in volume and we know there's more inventory out there and we know that sellers are offering less there's more price reductions whatever how do prices keep increasing well it's because excuse me because of a shift in where people are buying so if you take a look at where they're buying the 250,000 and above market accounts for about 55 percent of all sales so you know we're looking at 250 to 500 segment we look at the 5 to 750 segment the 750 one-million segment and the 1 million above segments so you know when you're taking a look at that level going up that's where all the transactions are at and the majority quite frankly is a 38% of the sales for the 250 to 500 range now on the sub 250 100 to 250 is 37% and 0 to 100 is 8% so you got a 45 55 split here obviously to 15 above the greater share so if prices you know so if more homes are being sold in the greater share or the Confucians the pie that's going to derive your average price up as well too so so please keep that in mind and again that's where we're at with respect to the affordable housing which I call sub 250 marketplace still has the the least amount of inventory if you look at the charts and statistics the sales are decreasing at a faster pace in that segment because there's less properties in that market segment simple as that unsold inventory is at four point three months that's up from four point two months them from the April of this year and it's up from four point two months a year over a year from May of 2018 so slight increase which shows a little bit of inventory on the marketplace and that's really kind of it so again we're not seeing a dramatic rise in home prices we're seeing still showing trending slowing down yet a little uptick from a month-to-month a little bit of a median increase in price but we're still not seeing significant jumps as a matter of fact if you look at things from a macro perspective it's still trending down and just to kind of verify what's been said Redfin i guess does their own I guess you say analysis as well too so whether they are looking at their statistics their personal market or whether they're just reviewing what NAR put so I don't know but Redfin basically said in May home sales rose only 2.5 percent from the previous year so they said according to the company's analysis the number of homes for sale the end of the month rose by 2.5 percent a year over a year this means may experience the smallest annual increase in home supply from the last eight months red friend economist chief economist says that recent searches in mortgage application reflect heightened homebuyer demand a lack of inventory continues to prevent and grow so these guys are pretty much saying that they don't expect sales to increase just because the inventory is not there to support it which you know seems to make sense and whatever they said here I'm just look at some of the information here yeah that's kind of it is this really you know we can't have sales growth unless there's more inventory out there so we're gonna see a little bit of price fluctuation here and there because people may you know pay a bit more just to get in that property range we know that people are actually probably buying above their market peak just to go to the next segment to get homes and we know that there are powers that be you know Fannie Mae Freddie Mac FHA etc you know offering a lot of programs now to get people in to purchasing homes and help them extend their or you know extend their availability to purchase homes by stretching you know income via DTI and low downpayment or no down payment through grants etc so we know that's going on and we're gonna see that suddenly you know increase in home value and medium price which ways we've seen right here so there you go to tag into that though shifting trend and housing investment I think it's actually kind of important because the amount of homes purchase for investment has increased to its highest level in 20 years according to core logic very interesting so we know that a lot of investing going on from from you know small investors always the institutional investors as well too and we talk about this often but however CoreLogic did notice that this increase this the increase is really from smaller investors rather than large institutions and basically the current investing rate is about eleven point three percent that's the highest rate since 1999 but they're seen that the smaller investors are driving increases in investment activity as ma and pas or mom-and-pop investors grew from 48% of all investors that were purchasing homes back in 2013 to more than 60% of purchasers in 2018 that's a pretty that's at what it's a twelve percent increase so obviously we see that going on here and large investors I want to qualify that to small investors are really one home okay it's as simple as that and you know maybe well they look at maybe one to ten homes but I get a mom ha to find mom positive in one home indeed two homes a year if that large investors those who purchase more than a hundred and one homes you know the nearly double their activity from two thousand two thousand thirteen but they've pulled back since the foreclosure crisis and now said that fifteen percent of the purchases now having said that that's that sort of plays into what's going on with our market here so we see the smaller investors the law and pause growing we see the institutionalized investors pulling back began and they course did a lot of damage back after the last housing crisis so when we hit the trough we're coming out they were buying you know in this in this area right here because they were getting great deals and even what they see like the medium size of the size investors who they say purchase beam 11 and 100 homes have they've seen their share steadily fall as well too they've dropped their peak from 30 percent to twenty two point seven percent so you know again I want to be clear here and this is some comments on this this is what shows what's going on here so you know why are there more Mon pas investors out there well I call this once again the HGTV effect all right and that's home and garden television effect I mean listen we all can either in the evening time daytime weekends you can sit in front of your TV you can flip through the evils of channels and chances are you're gonna see at least a couple of real estate shows on at any given time and they give an hour of the day some of the network's that are out there you know cater to this and have way more shows on average in other than other television show or other other channels I could say so for me there's more people in the marketplace who are involved in real estate investment today and that's that's a cause-effect because when prices appreciate so this is a this is charted and this is this can be verified so when prices go up people want to jump in the marketplace we call that FOMO fear of missing out because they go hay prices are getting higher and higher by getting here and it keeps going up to here I've now made that nice little gap a bit of appreciation or income and I can sell and do whatever I want whatever whatever turns you on I guess but that they want to catch it on the way up they don't want to catch on the way down so that so people are jumping in so you know along with that factor with the media with all the sort of investment shows that are out there I don't know where you live but here locally where I live every other week there is investment I'll call them dog and pony show coming through our marketplace here they stop you know they do a couple of you know Southern County you know they might do a Thursday presentation two on Friday two on Saturday two on Sunday one on Monday in a general area and they kind of move it around the bay area where I live here in the Tampa area so they advertise on the TV the average late night advertising the radio advertised on Facebook you get the Facebook thing so these are this is always going on and you know this increases when values increase because that's what people want to see in here so you know people are looking to add income to their bottom line looking to add and build wealth you know and leave their jobs or augment their their jobs or their current income right there's nothing wrong with that but my point though is that you see a shift here so as appreciation is going up and as property values are rising we're seeing the mom pond Bester's increase their activity and we're seeing the institutional investors or I call them pro investors listen if you're doing you know what's the what's the number here if you're doing oh you know 10 – you know 10 plus homes a year as far as I'm concerned ten to one hundred or hundred above you're a professional investor or that's that's going to be your livelihood so you know what you're doing you've got a lot of experience that you're you're going to be doing things better than the mom PHA who were just learning and just trying to get out there on the weekend so to speak so when we see the mom paws raised and institutional and professional investors drop okay that's a ship these guys they have analysis they have professional people who are looking at markets and trends in the whole bet they're buying less because prices are up so they're not going to make as much money flipping properties fix acclivity and they're not going to make as much money on a long term hold appreciation whatever they're going to do so they're buying less whereas the mom paws buy more so for me that is an indication of where the market is headed alright so and so more Mon PHA want to get in that game now and they're actually being sucked in by the fear of missing out and everything else in the environment that goes around the social media and TV shows to go hey get in the environment right now do some real estate fix and flip flip a property make a bunch of money so that's what goes on here so I just want to you know when again when the pros decrease their investment that's a telltale sign that the market has hit a very high level of value and they don't buy peak values when they're investing they need to buy at discounts through different sources but again they don't go buy retail at peak value simple sell so to me that's your number one indicator going the markets changing and we're not just we're not seeing it at that point right now because we're looking at the media and the hype going oh you know again we've just sales are up 2.5% for the previous month that's going to be spun as a great opportunity to get in the market and now look Real Estate's rebounding I mean I can just see what's gonna happen over the next 48 hours and how the news is gonna report this so please this is to me is a very very important piece of information right here all right having said that okay I'm listening to a video today on CNBC and they talked about real the real estate sector leads the SNP what I mean they mean by that is performance in the S&P 500 and the top so REITs REITs real estate investment trusts are performing well and the top performing REITs believe it or not our single family rental REITs or real estate investment trusts and their returns year-to-date are thirty four point six five percent it's pretty good return on your investment isn't it you know thirty four point six five year to date return the next best one was warehouse others or infrastructure type of REITs but the point is single family rental is the new house nothing new but it has been the best-performing hottest asset class out there so again you know REITs are performing well going back to the fact where we see I just spoke about having the institutional investors investing less because markets at its prime you see so they're buying less markets are valued higher now so the reefs are performing better but I know that the real estate investment trusts and other hedge funds have a mass of millions of dollars of capital they're waiting to deploy when the market changes so again please keep that in mind there you go and sort of bringing this together here Freddie Mac announces fixer-upper mortgages and they have something they released this past week it's called the choice renovation loan program and sensitive them immediately to avail immediately through all their approved lending arms and lenders lenders have two paths for delivering the loan to Freddie they can either wait until the renovations are complete or for approve lenders they can deliver the loan while working work is ongoing if they're providing the oversight for the project so the whole idea is that this is a new offering that allows people to purchase a home that needs repair or allows existing homeowners to renovate without having to do a cash out refinance okay looking at this going okay let's see what's happening here and going back to let's look at the marketplace where if we see sales are slowing down and people aren't buying as much anymore they're being pushed up in segments a lot of buyers and I might say buyers I'm not talking this is not really designed for as far as I'm concerned for investor buyers so this is designed for average people retail buyers the normal you know the normal population just wants to live in a property but can't find a home that suits their needs or is cost effective so what this is doing it allows them to get a home that maybe they that fits what they need in price range knowing they have to do some work has given them some opportunity to fund the real estate rehab as well to to fix that home up and they can live in it so this is kind of like I call this a retail rehab as far as I'm concerned so I think we're gonna see more and more people going down this path quite frankly I can tell you based on some of the comments I see and inquiries I get more and more people who are out there looking for properties I mean the thought is why do I need to pay premium I still don't want to pay top market prices and I'm willing to look for something that may not quite be you know the number one best property but it's in my price range I don't mind putting a little bit of sweat equity or some rehab into it if I can swing it so this is just one loan by Freddie Mac if you start talking to mortgage brokers I mean going to your banks and credit unions they don't normally have a lot of choice with respect to rehab type loans if you go to a broker mortgage or of course one at lender you might find more you know there's more more play in those type of programs that are looking at the property opportunity there so again we're gonna see more of this again based on the fact that where the market is so you know if we if you can't buy or don't want to buy that premium price property don't move up your market segment and pay more and stretch yourself then this will be an alternative and there are already more loans like this and I'm sure there's more coming down so realize that as far as they're concerned the renovation market has grown 50 percent since the Great Recession ended in 2009 Freddie Mac stated and nearly nearly 80 percent of the nation's a hundred and thirty seven million homes are at least twenty years old and 40 percent are at least 50 years old so you start taking a look at that so you know when you have it when your home is 20 years old what's typically going to happen next well your your number one renovation is probably going to be a roof right roofs are 25 year 25 30 years shingles so that's your next big renovation so that's so you have to think about that next few years you may be outdated or out of style so you've probably want to update your kitchen or bathrooms those are the big-ticket items for renovations and people who want to grow their family and need more space they're gonna add on structure there got a square footage in rooms to the house as well too so you know it's interesting that that you know people are picking up on this and again it's all about as I say innovation and if you start looking at the trends the people who were out there working to supply products services loans money whatever they're gonna find ways to get into that marketplace and deliver what what people need if they see opportunities so again I think this is this is good but it's goes to show you that more and more people are looking at this Avenue to buy their home as opposed to the retail true retail marketplace and I think this is a good thing as I said before you know I have ways that I can help you and I look at everything distressed and there are ways that you can you know go after properties like this especially as you got a loan when you're pre-approved with its gonna make it a lot easier to put a deal together etc so that's good news for that just to sign off here on student debt I guess you could say hit another record high it's one point four trillion in 2019 so realize that this is like the big three the big three debt is mortgage student loan and auto loan and lease it looks like student loan has now overtaken auto loan and lease as the number two debt segment out there very interesting the average student loan debt per borrower is about $35,000 and the Washington DC has the average amount of loan debt per student at 55 almost 56,000 and South Dakota has the lowest average student loan debt at about 29,000 so there you go so interesting to see that again mortgage student loan auto loan lease are your top three and why this is interesting is because it's a concentration so basically they say about fourteen point four percent of the population has student debt so when you take a look at that numbers 14 is almost 15 percent overwhelming not not necessarily overwhelming but it's the concentration so student debt is concentrated in a specific age group which I think we know we're that age group is most like the millennial generation that have few assets student Dennis concentrate age groups that are struggling with credit card debt so not only do you have student debt you're struggling with but another debts on top of that and most importantly student debt mostly impacts those in age groups who may want to buy a home get married or start a family so so you know when you hear this it does affect real estate and even though it's not a huge segment of the overall population it affects a large segment that are looking to move on with their lives and you know create more economic stimulus by buying homes and things like that and that's not happening that's the number one drawback as far as a lot of statistics show that Millennials you know just can't afford to do life things until that student that's taken care of so keep that in mind already so that's it for today I want to do as much as I could in a short period of time but the big news is obviously NAR releasing the fact that you know existing sales up 2.5 percent month-over-month not year over year your viewer they're down so please don't get swayed by that and the media all right so again thank you for all the likes for the views the comments please feel the questions you know can hit my email off the information section of the video send me a direct email I'll get back to you as I mentioned I think I've gotten back to everybody as of now that I that I've got as far as who's even emailed me so we need to start communicating and getting into things I prepared to do that prepare to make some contacts for you and help out here and there where I can you know please reach out to me regarding real estate particularly real estate investment you know for me my focus really is the pre foreclosure market and if I go back to this is a future discussion I tell you guys have lots of future discussions I'm building a lot of videos and a lot of playlists that I want to release shortly they just do take time to formulate and get out there but you know when you take a look at the NAR statistic I mentioned earlier that only 2% of all the transactions for May were distressed sales and they're either real estate owned REO s or their short sales and short sales make up less than 1% that means a couple things that that market isn't being serviced and to that there's a ton of opportunity there so that's what my focus is it's been that for a number of years now even since the last housing crisis was our focus but this is a renewed focus because I really believe that well if you go down that path you can you can invest and make money but I've noticed that I think there's a lot more out that you know just trending here and what we talk about like all these new loan programs and what sellers are looking for now sellers or sorry buyers are now more willing to and I don't call the sacrifice I think it's just you're you're willing to – I guess they say purchase a home for less and get a discount and offset that with maybe a little bit of sweat equity or rehab you know cosmetic work whatever you want to do to make the place yours and that's a pretty good trade-off because you know I can prove to you very easily that the distressed property you know median sales price is much different than a retail median sales price and which seems to make sense clearly so anyway everybody thank you for watching have a great weekend looks forward to speaking with you early next week take care

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