Name: The 2022 Housing Crash - 5 Signs All Millionaires Should Know
Uploaded: 2021-12-09T18:00:40.000Z
Duration: 11 min 34 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

We all have been complaining about how house prices have been rising faster than ever.

What happened over the last year we saw with something unbelievable.

People will stand in lines to be able to have a chance to bid for a house.

I'm not talking about being able to buy that house, But just having an opportunity to fight for it.

People page 1020 or 30% over the asking price just to be the one who is going to buy that house.

However, that has changed in the last few months.

The market seems like it has reached its peak and it doesn't seem like it is going to rise as it did before.

Data showed prices on active home listings are up a whopping 17.2% compared to a year prior in october that bomb declined considerably, falling to just 8.6%.

That doesn't mean prices are about to fall, but it definitely indicates the fact that they aren't growing like they used to, Some people are worried about a potential crush.

Others are coming as down by saying prices will keep rising but not at that pace.

Whatever opinion you're looking for it does exist out there.

But what we want to find out the facts because only based on them can we have a clear image of what's happening and what could potentially happen but before we do that I want to share with you a game that I have been playing lately.

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And now let's get back to the video real estate is such a market that it affects everyone and not only homeowners that includes investors, renters and so on, but the slow down in prices was expected.

It was not a matter of if, but rather when so whoever ripped the benefits of this housing roller coaster is smart because we aren't going to see anything like this in the coming future.

However, it is still impossible to predict the market because even the Almighty algorithm, which has all the data you ever need to predict the market couldn't make it.

Yes, I am talking about Zillow, if you haven't been living under the rock, you probably heard about The disaster that Zillow went through by trying to use its data to rip the market but their plan backfired and zero stock is crashing down in the last few weeks at the time of the script, the stock has plunged by over 46%.

That is literally worse than what happened during the March 2020 Ark invest for example, sold its entire portfolio of Zillow stock.

But to be honest, Zillow had a rough year.

Although judging by the housing market, it should have had a great year anyways since Zillow has all of this data, it tried to predict accurately future home prices.

So it purchased thousands of homes More than 14,000 homes in just six months.

It makes sense because Zillow literally has more data than anyone else.

Zillah had overspends and was sitting on massive losses in the months to come.

That resulted in a combined loss of $550 million.

And the end of business that had been rapidly growing.

The layoffs will pair 25% of zeros in charge stuff and the board decided to shut off the project.

So it comes to housing projections take them with a grain of salt because this market is literally uncontrollable, anything could happen.

But what is certain for sure is that getting a mortgage at a super low rate is a great deal.

Mortgage rates picked at around 5% in 2018 and reach their lowest point in january 2021.

Just to give you an idea how much with a single percentage make in your final house price.

For the sake of example, let's take half a million dollar house for a 30 year mortgage with three and 4% mortgage rates with a 20% down payment.

Of course, there are many other factors that would influence the price of a house, such as property taxes, insurance and so on.

But let's take those factors out of the equation with the 4% mortgage rates and a 20% down payment, that $500,000 house would amount to $859,000.

While at 3%, the total amount would equal to $758,000.

A single percentage in this example equals to over $100,000.

That is a pretty good amount of money, especially in the long run, it would make a real difference, especially if we count the opportunity cost.

That's why when the mortgage rates dropped to their bare minimum, people rushed to secure a mortgage at that rate.

Because even if they slightly over pay for a house, they will still win since their mortgage rate will cover it in the long run.

Especially if you factor in the fact that house prices genuinely rise over the long run either way you want to lose.

However, that astronomical demand led to the highest price increase in home prices in recent history.

At some point, prices began to rise so much that even a low mortgage rates wouldn't compensate for it.

I guess that's exactly what has been happening lately.

Imagine for a moment when you have that kind of demand, but there is still a shortage of homes in the market, I guess the answer is obvious.

It is not easy to build more homes, especially if you don't have the infrastructure in place.

So according to the basic laws of supply and demand, when demand rises, well, supply stays the same prices increase.

But what if the supply drops as well When the pandemic broke out, the future seemed unpredictable.

Even the stock market crashed, no one knew how to deal with this virus.

We had no idea when the vaccine would be ready.

So a lot of people felt hesitant to sell their homes, letting people to get into your house to check it out would create a risk of getting infected.

So even those who are planning to sell their homes postpone it, which drove the price higher and higher on top of that.

When you see the value of your house rising so rapidly, the desire to sell it now instantly disappears.

Why sell it now when you can sell it at a much higher price six months or a year later, that further diminished the supply of homes in the market creating a bigger shortage.

We've already made a few videos about the 2008 crash.

And if you take a look at the factors that caused the Great Recession, you won't find any of them in the current soaring market, We don't have subprime mortgages, we don't have fake triple A ratings to junk loans and the industry is pretty regulated.

Although the number of people who took mortgages did significantly increase due to the reasons we have explored earlier, most of them had good enough credit scores to keep up with their mortgage payments.

Well, house prices keep rising probably yes, but only time will tell however, we won't see anything like we have seen in the last year or so in the coming future.

But that's just one prediction out of many when you're buying a house, you should not concern your stuff with short term ups and downs when you're taking a mortgage, You aren't taking it for 23 or five years.

But for 30 years, you have no idea how many crashes and apps are going to happen during that period.

Median house price is 30 years ago, were around $100,000.

So 5, 10 or 15% crush wouldn't mean much in the long run.

Of course it is much better if you can buy right there at the bottom.

However, even if you don't, it doesn't matter you're still safe even after the 2008 crush home prices rose back to the pre-crisis level in 2014 and are much higher.

Now, that's the mentality you should use when buying a house.

And not a crypto mentality will, prices can shoot through the roof today and crush the next day.

The real estate market is as old as civilization itself keep in mind that it was not just real estate, that sword that much.

We had a huge inflation overall asset prices across all sectors of dramatic reason.

So it's difficult to come to a conclusion that prices might crush in the coming future.

What happened in the last two years is more like a boom and we might be at the end of it or it might just last a few more years.

Meanwhile you should learn how to take advantage out of this bomb.

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