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  • Searches for the phrase, "When is the housing market going to crash," are up 2,450% over

  • the past month.

  • That's when you know that you have to make another video on the housing crash because

  • apparently the last video we made on the housing market wasn't enough, and people want to know

  • more.

  • They no longer care about Dogecoin going to the moon or bitcoin finally replacing the

  • dollar.

  • They want to know whether the price of their house is going to crash this year.

  • Imagine what happens to all these people who took mortgage only to rent them and create

  • passive income.

  • what happens when home prices crash?

  • Rent prices will definitely fall as well, and that means that rents might not be able

  • to cover the mortgages, which could push many homeowners to sell their houses to be able

  • to pay their mortgages, and if they haven't acquired a substantial amount of equity in

  • the houses, the house might not pay the entire mortgage could drive prices down, which means

  • there will be an oversupply of houses in the market, which further could push prices to

  • fall which could result in a nationwide housing crash.

  • Oh my god, dear federal reserve!

  • What on earth have you done!

  • You tried to save the economy, but it seems like you are about to create a much bigger

  • disaster!

  • Fortunately, that's not the entire story, and things aren't as bad as they might seem,

  • so let's try to understand what's happening with the housing market?

  • Are we on the brink of another housing crash?

  • Or we shouldn't be worried?

  • And whether it's the right time to buy a house?

  • But before we do that, here is a little disclaimer.

  • This is not financial advice.

  • Everything that is said in this video is for educational and entertainment purposes and

  • now, give this video a thumbs and let's get right into it!

  • What some people haven't realized that home prices are rising at a faster speed since

  • great recession, since the 2008 crash!

  • I don't think anyone needs a reminder of how bad that crisis was.

  • It literally took down with it the entire global economy, and the world doesn't need

  • another global crisis after a global pandemic that shook the world, to say the least.

  • Many of you have said that it's unfair to compare current circumstances to 2008 because

  • we are living in different times, and the factors that are driving the prices today

  • are very different from what caused the 2008 crash, which is true.

  • I can't argue against that!

  • However, in every single crisis, there are always different factors that lead to the

  • same outcome, which is a market crash.

  • If every crisis followed a plain step-by-step guide, I think we would have long ago figured

  • out, and we wouldn't have another crisis.

  • When home prices are growing faster than incomes, we know that something is wrong, and this

  • is not sustainable.

  • When home prices rise by 15 percent, we know that it's not going to end well.

  • However, many critics say the reason we shouldn't be worried is because this time the rise in

  • prices is organic.

  • The strong demand is not driven by predatory lending practices.

  • Banks aren't loaning money to random people just for the sake of maximizing profits.

  • The 2008 crash pushed the government to tighten the control over the banks, and now it's much

  • more difficult to take a mortgage, and lenders are far more careful.

  • But take a look at this graph.

  • This chart illustrates the monthly supply of houses in the US.

  • We can clearly see that there was a huge oversupply of houses which triggered the 2008 crash.

  • And since April 2020, the number of houses in the market dropped significantly.

  • And that drop wasn't because there was an oversupply earlier, like in 2008 or because

  • we had a tornado or a fire that destroyed a great number of houses that caused such

  • a shortage in the market.

  • Nothing like that happened!

  • We have plenty of houses, but they are not listed in the market, and that's what the

  • driving force behind the tremendous increase in prices which is a problem.

  • We have a listing shortage, not a housing shortage.

  • Let's just assume hypothetically, what's going to happen when all these houses are going

  • back to the market?

  • I am not saying that's gonna happen but let's just try t think about that for a moment.

  • As of mid-April, around 2.3 million homeowner were still skipping their mortgage payments,

  • and we have no idea how many of these homeowners will be able to keep making their monthly

  • payments once that forbearance period is over.

  • Literally, the fate of the housing market lies on that number.

  • If that number isn't high enough, we will definitely experience a significant drop.

  • How many households will be in trouble when that day comes?

  • How many of them will sell instantly or foreclose?

  • How many desperate landlords will walk away from the rental business and sell as soon

  • as they can to get tenants out to minimize their losses?

  • The worst thing that could actually happen is a panic.

  • A panic literally makes any crisis a hundred times worse.

  • That's the point of having a central bank like the fed to prevent panic.

  • Because it could push many multi-homeowners to list their houses and get out before prices

  • drop further.

  • Once something like that happens, we are screwed.

  • It happened once last year, and we got out of it by printing an unbelievable amount of

  • money.

  • I don't think the economy is ready for another round of printing trillions of dollars.

  • The forbearance rate is twice bigger than what it was in the last crisis.

  • Imagine all these houses going to market at once?

  • that's why Consumer Bureau proposed extending the pause on foreclosures until 2022.

  • We are simply trying to postpone that scenario and try to at least minimize the damage somehow

  • by then.

  • Of course, i could be wrong and the fed can go for another round of pumping trillions

  • of dollars because government debt is not like personal debt.

  • When you or I take a debt, we can go bankrupt, the lenders can come after us, after our assets,

  • so we either pay the debt or declare bankruptcy.

  • But not in the case of the government because it can't go bankrupt since the government

  • is the source of dollars.

  • if you are the one who is issuing that currency and you have to pay back that currency, then

  • why worry.

  • Of course, the fed is an independent structure, but it's still part of the government in many

  • ways.

  • It just functions in a different way.

  • But when too many dollars chase too few goods, inflation starts rising faster than it should,

  • which is going to make the currency worthless, which is what has been happening lately!

  • Low mortgage rates pushed too many people to buy houses while the number of houses on

  • the market dropped significantly!

  • Which is causing house prices to rise too fast, which is what inflation is.

  • It's impossible to predict anything.

  • We just don't have enough data to make any accurate predictions.

  • I think the fed is playing with fire here.

  • Everything points out to at least a correction in the housing market.

  • A badly managed correction could lead to a crash, but that's just speculation and nothing

  • more.

  • A correction is when the market falls by 10 to 20 percent, which is what most experts

  • are predicting going to happen to the housing market, but it's very likely that some areas

  • would witness a much greater drop, maybe even up to 30 percent.

  • There are, of course, still some good deals in the market, because even during such circumstances,

  • you can still find a good deal, but it's not going to be east.

  • but I wouldn't personally risk buying now.

  • Why buy now when you might get it a huge discount later.

  • If you have enjoyed this video, you will most definitely enjoy this custom playlist that

  • I have created specifically for you that has our most popular videos on business, investing,

  • and the stock market that can potentially change your life.

  • And now give this video the thumbs up that it deserves, and make sure to subscribe if

  • you haven't done that yet.

  • Thanks for watching and until next.

Searches for the phrase, "When is the housing market going to crash," are up 2,450% over

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Housing Market TO THE MOON - Final Warning To All Investors!

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    Summer posted on 2021/04/27
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