Foreign. Hey welcome back to the podcast. Buckle up Cause Today's show is going to be packed with real estate consumer data. What's going to happen next? Are we going into a housing collapse and so much more? Everybody's paying attention as I Am interest rates, inflation, negative news about housing, the overall economy. Are we in a recession? and as one of my followers, you know now more than ever we must be the knowledge broker to help even the most Discerning buyer seller make a good decision, navigate the noise of their local Marketplace Decide what they want to do when it comes to All Things housing Now in our continued efforts to help you do this, myself and the team at KCM I've got David Here with us we study the historical data. We look to experts like Ivy Zelman and John Burns and thousands of Articles and data points every single month to arm you with the facts so you can be empowered and ultimately help your buyers and sellers. Your clients make whatever is the right decision for them. Now today I've got a special guest Patrick Bet David someone that admittedly I have admired for a long time. He got an interview with the late great Kobe Bryant I used to train with Kobe As you know is you're one of my listeners so I was super stoked to watch that it was awesome and he said just a lot of great work Beyond Just his content though. like myself, he is a champion of small business. He's an entrepreneur, right? You know? he came from a situation where most people would say he's not going to make it and he hasn't Then some. and most importantly what I observe when I pay attention to him on Instagram and Social Channels is a family guy just like me doing it the right way. So I am super excited to have him with us to chat with David and I about basically six different issues that I think we might have some different opinions about. no right or wrong. You guys know me I am the no wrong way to do it. You got to find your truth and you got to make good decisions with your clients. So Patrick it's about time man. Welcome to the show. It's so funny. You said it's about time I Love you. Listen, you're a great marketer. You post a comment on my Instagram are you dodging an interview? you canceled a couple times on your book with us but it's good to be on with you. It's good to be on with you. That's the opening of the show right now. That's the only thing I want on Clips on Instagram Patrick that was money. So Patrick you know I meant everything I said like I I've been watching your content for a long time. Um, you know you. you bring a lot of uh, you know, heat and energy and positivity. You also are like David and I you believe in grit and work ethic and you know doing whatever it takes to serve clients. Um, and yet I was looking back at some of your content from four or five six months ago when I was like dming you and then I found out that it wasn't actually you somebody else on your team and that's probably why I did the hey, what's going on here but you made some comments about where you felt housing was going. So today I want to explore some of that with David Childers who He's a part of this incredible company keeping current matters. They've got tens of thousands of real estate agents and loan officers that rely on them to bring them actionable data. so they're the knowledge broker in their town, which I know you can appreciate. So we want to talk about predictions for the economy, predictions for house values foreclosures Consumer Debt the number of real estate agents and then I want to get into your perspective on and David's perspective on what should smart agents be doing regardless of what's happening in the world today to be more successful because I know you're tuned into that as I am as well. But I thought first for us to get started. There's a chance that someone listening right now or watching this hasn't seen your content. So so give us a little backstory like who is Patrick Bet David Yeah, thank you for that. So born and raised in Iran lived there 10 years escaped Iran went to Germany lived at a refugee camp for a year and a half then came to the states Glendale California joined the army After High School went to the 101st Airborne I got out uh, three years later I wanted to be a bodybuilder that was like my dream. So I went to Mr Olympia I hung out with a bunch of the guys and then I realized what was required to win in that game. I'm too tall for bodybuilding I'm six four six five and I didn't want to put my body through it I want to to have kids I wanted to have a family I wanted to, you know, hopefully live a long life and so I met a girl named Jean beer who worked at Morgan Stanley Dean Witter I started dating her and uh, she would pick me up in different cars all the time I said how can I work at Morgan Stanley Dean whether like you she had nice toys and everything. She said you got to get a degree I said I'm not going to school she was a UCLA grad. Long story short, I started working I'm working Stanley Dean with her a day before 9 11 on Monday yep and then after that I go to Transamerica for seven and a half years insurance industry and you know did very well there and then started my own insurance company. With 66 agents we grew to 38 000 agents that we've licensed. Obviously not all of those are active and then we just recently sold the company five months ago to a great insurance company called IMG and you know funding came from Silver Lake and we had a target audience that we marketed to. You got to realize insurance is not an easy product to sell, right? Real estate is sexy. Mortgage is sexy. There's nothing sexy about somebody coming to your house and saying John Mary you guys gonna die one day I'd like to make that experience easier for you. What a sweetheart of a guy Patrick is, but that's what we did and so that's insurance and then part-time I Started a YouTube channel on the side of 10 years ago and it grew. You know we have a few million subscribers today. a few online, billion views online. uh we do interviews, we to podcasts, we talk business, we talk money. but that's a little bit about my background. Yeah you know the thing that stood out for me because for the person listening you understand now why I wanted them on the show um what? I didn't know of all that is you were in the 101st so my my Uncle Frank who turned a hundred on October 1st I was just with him in Boston uh celebrating his birthday. he was 99 when I saw him. um but you know on my Instagram stories Patrick I took a photo of all of the medals but he couldn't fill all the purple hearts in right? But he was, you know, battle the Bulge Market Garden right? Just one after one after another. and I as I understand it, he's the last survivor of the 101st right? From that generation at a hundred so and to just just I wish you I wish he was here because he is tough as nails and even at a hundred gritty hard-working like Uncle Frank you know your your daughter told me you were at the dentist. yeah I was at the dentist I'm like I'm like what was that like for you? Is your mouth all numb? He's like ah, novocaine like he's one of those guys right? Like just it's the original man's man. He's like the OG of the man's man. You know we talk about we have some tough men today. This is the real generation of tough men one thousand percent and you'll appreciate this. I said Uncle Frank was like 25 years ago I'm like Uncle Frank why'd you go? Why'd you go into Airborne he's like I'm standing there in line with everybody else and he's like as I see like Army Navy and then it says airborne and this one said 125 a month he said these were a hundred. this one was a buck 25. that's what I went with. So there you go. Yeah out. All right Well David give Patrick just some context for keeping current matters and let's just jump into we got all these things we want to talk about. Great to be on here with you and love your story and thank you for your service. Um, you know, keeping current matters really. What we want to do is we want to have help. Agents have a relevant Market Opinion based upon the facts. There are so many opinions. So many things out in the business today that really having an opinion about where things are heading, where things are at right now based upon uh, you know what's happened in the past, not ignoring that, but certainly saying okay based upon what we see right now. where do we believe this Market is heading? Because that's the best way we can get great advice whether you're thinking about buying, whether you're thinking about selling, what's the wisest thing for your family. So the mission of KCM all the folks that support it and all the agents that are KCM members is to be the knowledge broker. Uh, the professional agent delivering professional advice in their market And that's what we strive to do. I Love it. I Love it, Love it. Good work. So let's just get right into it. So the first thing is. uh, predictions for the economy. So so Patrick I Think we're all paying attention to the news. We're paying attention to layoffs in our industry and others. What? What's your take? What's your prediction for 2023? 2024? What's going to happen? The economy? and then David I Want your opinion as well? So listen: I I Think it's fair to say this is a very unpredictable economy. Here's why. Uh, historically, anytime we've printed a lot of dollar, the first thing that moves is, you know gold. You know you're seeing gold gold. Gold's gonna go to 5 000. With all the money we're printing, it's going to go to 5 000. it didn't Yeah, it stayed at 1740, 1700, 1650 And so okay, so that marker definitely didn't work well. You're looking at. you know what's going to happen with that part. But at the same time, when you do print a lot of money and you know trillions of dollars are fed into the economy, you know it's gonna roll up to the billionaires. So what happens to a bunch of these guys? Their Network goes up 100 billion dollars? Wow, that's pretty awesome. Isn't that great? This is fantastic. Look at these guys. Well, they're getting a little too rich. Don't worry. Zuck Went from 141 billion dollars a year ago. Today's worth 39 billion dollars back to normal, right? You know the Bezos went down. You know a lot of these guys went down. The guys that have a real business, their net worth stayed up. Ellison is fine Warren Buffett He's fine. Uh, you know the Bezos he went down. But he's going to be fine because Amazon's not going away anytime soon. Even musk is fine. He's around a couple hundred billion dollars a net worth. but you saw total net worth of these massively Behemoth wealth drop in a big way. you saw Snapchat drop 85 percent stock. Uh, then you're seeing now the layoffs that's coming on. and you're going to see those numbers of unemployment going up next year. And then you set that part aside. and you could you look at interest rates. which by the way, um, you can only do economic expansion of 128 29 months for so long? You know you look at the world of bodybuilding. Uh, a lot of guys who stay on steroids year-round for 20 years in the bodybuilding world I have a lot of friends who stay on steroids for a decade. Matter of fact, there was a guy that passed away a few years ago I think his name was Piana a very big body, massive 22 23-inch guns and he made a video talking about how for 20 years straight he was on growth hormone and steroids. He said when he started doing growth hormone his hat size was I don't know, seven and a quarter or seven and a half. Now it's eight and a half. He says his, you know, feet were size 11. now it's 13 and a half. He Just flat out openly talks about it that he never got off of everything. Well, there's a side effect to it when you don't get off of steroids and growth hormone. Eventually, your body doesn't naturally produce testosterone. You have to feed it so your body forgot. So the longer we go without feeding it, the juice that was fed and you get off of it. Now your body's like I don't even know how to reproduce it. So we go 128 months. Uh, you know, zero percent? or you know, one percent or whatever. The interest rates were inflation. You know it wasn't really that wild. Now Uh, inflation goes up. Powell is sitting there increasing. you know, interest rates every time. Uh, three quarters of a basis point. Three quarters of a basis point that would drop down to 7.7 Inflation did. And you saw mortgage rates that climbed up to seven and a half now. So I think got six point six, three, five, or six point six today for 30. Or if you got a 740, you know, credit. Score. It's not the case if you got a 680 or 640. Yeah, uh, that's when you see it going up to seven and a half. Eight points. But again, if you got a 740, you're gonna be okay with it. So for me going into where we are and then the last Market that we we have to touch up on as well Uh with the market is the the role politicians play because uh, gas prices went up to 550, some places 650.

you saw 750 in certain areas in LA and then what do we do? We tap into reserves six weeks be terms that brings down the gas prices by Buck or a buck and a half. And so nobody's complaining about gas prices because now we have cheap gas prices. So middle and low income families are sitting there saying wow, must be working They don't follow the news, they don't follow, You know what's really going on? They don't follow the fact that we're tapping into our reserves. so you see that part is kind of looking okay. But uh, now that midterms is over with and I don't know, maybe they're going to go till the end of the month because of Herschel Walker and what's going on in where you're at right now for your vacation in Atlanta Georgia But uh, you know we're really gonna find out what's going to happen 2023 2024. we can fake the economy into looking good, but you can only do it for so so long. You can't permanently fake the economy to looking good. We did that for a very, very long time and unfortunately some of the people are paying a price for it right now. David There's a lot of data points inside there and most of which I agree with on just about every single one of them. What are your thoughts? What do you? What do you thinking about differently for the person listening right now regarding the economy? Well, I I think Patrick's absolutely right and we've been in this economy that's been propped up by the Federal government. You've ever been to a big a great party where there hasn't been a hangover and and that's the market that we're going into. I'm going to say for the next few years which is a much more normal market. Now you know at KCM we stay in the real estate economy. That's really the area that we live in and no doubt we've never been in a year this year. I'll give you a couple facts where interest rates have doubled and it never happened. Mortgage rates have doubled and I'm confused that with what the Fed's doing. Second thing, it's been the quickest rise in mortgage rates in the last 15 years 50 years since they've tracked the rise and you know, up and down of mortgage rates. So certainly housing is a driver of the economy. You know the average new home sold in this country contributes about ninety thousand dollars to local and National economy A existing homes about half of that and the breaks have been just you know, kind of jammed on on that and that's affecting, uh, the overall economy. Certainly not. I'm not going to say it's going to be the uh, the end-all be-all but but going into next year I Think what we're talking about is a very normalized economy and the biggest problem maybe in our business is people that got used to the inflated you know economy of the last several years in the historic housing market. So uh, that certainly be my perspective on the overall economy. the main base, you know, based mainly in the housing market foreign so I agree with both you guys and and I have very limited perspective on this, having gone through a few recessions you know, sort of being birthed Patrick professionally in 1988, buying my first house in 1989 at 19 years old, just in time for the entire real estate world to collapse from the you know, the stock market bust of you know 1987-88 Um, having gone through this enough times I Just want to remind The Listener that you know you can Doom and Gloom or you can recognize that all we're really doing is taking a whole bunch of people that are in our space real estate who were just sort of riding a big massive wave and thought they were a really big wave surfer and those people are going away right? This is a professionals environment. This is an experts environment. So regardless of what happens to you know, recession which Patrick I thought we were already in back in summertime. Yeah and everyone forgot about the recession we were in when the pandemic started. We went straight into a recession right overnight. But let's let's talk about for my audience I Think what they're really concerned about is what's going to happen and with home values. So you put out some content. Three four months ago and you were like, hey, this is like 2006 and we're going into Seven, Eight, Nine, Ten, right? and you know David and I've been doing this show how's the market for a long time this week in housing and we've got some different data points so it's going to be interesting to sort of not debate, but just I want to hear your perspective Davis perspective and we'll let our smart listeners decide which they believe is correct. So Patrick prediction on house values Talk to us I think it's going down and and I think if, uh, if you don't believe it's gonna happen, you're either in the industry or you're reading a little bit too much of Norman Vincent Peel Power of Positive Thinking uh or you're overly confident or you know you. you want to keep everybody calm and not panicking. Not any of that stuff now. I Want to say a couple things here. uh uh based on what you said and what David said. Uh, Number one, You know short-term thinkers are the ones that's going to get destroyed in the first place, but that applies to every industry. 100 Doran's stocks. Uh, Real Estate Commercial. Pick it. It doesn't matter if you're a short-term thinker, you're gonna get destroyed. You should have never gone in real estate the first place because you just have to know every five to ten years, real estate is going to take a hit. The reason why I didn't do real estate and I chose insurance was a completely different reason. Here's why: In in real Estate when when the economy like every five to ten years, when a a market correction does take place, it's dramatic for the average person in real estate. in the insurance side, When a major Market correction takes place, annuities blow up like right now I can't even tell you how much annuities we're doing and when I tell you annuities, annuities are being sold by guys that are not necessarily the best annuity sales people. Today we're up a hundred percent for annuities year over year and life isn't up 100. So I can't say. well. let me tell you, we're up Life and we're not up Life 100. We're definitely not of life, but we're up annuities 100 because people are worried. so that segment of the market is sitting there saying I got four hundred thousand dollars Do I want to put it into another you know equities account or do I want to put in something that's going to give me income with a bottom guaranteed, etc etc. I'm protected. They're interested in annuities and almost clients are selling themselves. We're not selling them on their annuities, they're just coming to us. So that's the insurance space under on the real estate side. Um, how many years in a row did Realtors and loan officers win? Let's process that. How many years in a row? 10 12 years great years now Tom You said you got into this in the mid 80s right where you're not mid 80s 88 you said 88 or uh I think said 89 Bought my first house and and started in the industry. Perfect. So I don't think you can say since 89 there's been a time where the Market's done as well as it's done 10 years straight. So when it does well 10 years straight, it's not because Realtors are great. It's not because a lot of loan officers are great. They're delusional. 80 of them are delusional and a time like this is going to expose them. Now let me give you an idea why I think next year is going to be a a challenge for real estate and and let's debate this and let's have a good time. So I'm looking forward to it. Here's here's my um, uh, my prediction: Uh I Just bought a Tiger Woods's best rookie card tonight today. last night I made the offer I'm making sending the money today wiring it over I Bought the best card today so it's a nice card. I've been wanting this card for a while and the same card 11 months ago sold for 396 000 I bought it for 140. yep, that's a pretty nice come up on the 140. Okay, a Michael Jordan rookie card PSA 10 A year ago, you're in 14 months ago, sold for 6.90 one you can buy right now for 141.50 If you're patient, you'll find them at 140 150.

the Luca Doncicar that sold on his birthday a year ago a year and a half ago for 5.2 million just sold for 3.2 million last week. Okay, that's a 40 drop off you saw Bitcoin go from 68 69 to what is it today 15K Yesterday 16k we can look it up. It's changing in FTX Scandal and how the folks at Binance are Furious over the same guy. A bunch of you know Crypto people are upset over him. Okay, Nfts 94 activity is gone, right? Okay. Jewelry watches Patrick Phillip watch or Rolex Watches or Hublot watches. People find them left and right and hey, I bought this for 60 Grand People want to pay me 110 for it Damn. A year ago. Sell it, Sell it, Sell it Great. This thing's gonna go to 300. that thing's coming back down to 60. Luxury Watch Market is a completely different market. so Patrick I can add in their boats, airplanes, cars. yeah, but we don't but we don't live in any of those. but I want to tell you this. so let me do this and then push back on what I'm saying with this. So so watch what I'm saying here. This is where I'm going with this. So to me to me which comes first, the drop of home value or that we buy that we normally would have never bought to me. First this goes down, then this goes down because we're living in reality. Is this what you're talking about Pat We're not living in those things I Just got got off a call right now right before my call with you at a call. They're trying to sell me these three planes. And the people that are selling me these three planes. Oh this guy's very motivated. That's of course. they're motivated. Everybody's motivated self-jets right now and everybody's motivated to sell Yachts right now I Live in Fort Lauderdale The yacht capital of the world every day I'm getting a call from my broker saying hey, this 13 million dollar yacht you can get it for 4.8 million The buyers. The seller's very motivated. Yes, I Understand why he's motivated. He owned five Yachts last year he's trying to downsize to one. why do you want five yards? So that comes first and then a data point that concerns me. temporarily. Not nothing concerns me long term time. and David this is what This is. what the audience has to realize. There isn't anything long-term that concerns me about real estate mortgages. Insurance Nothing concerns me long term, but short term it does. And as a paranoid Guy this is the part. So January 1st we have roughly as a nation 2.3 trillion dollars in cash. So collectively we're trillionaires. Okay, beginning of the year we have 2.3 trillion dollars do you know Q2 and Q3 we have lost that 2.3 trillion dollars by 300 billion dollars each quarter. So we went from 2.3 to 2 trillion to 1.7 trillion to today we're at 1.6 trillion dollars that we're sitting on. Okay, that's like somebody going from 23 000 in a bank down to sixteen thousand dollars. It's a little concerning. it's about a third of your money that's disappeared. Husband and wife are sitting there saying babe, it's not, we're not broke yet. but babe, in about six months if we don't do some, maybe you need to drive Uber on the side and not tell anybody. But but we got to figure something out here. So if the savings starts depleting, Panic goes up immediates. The guy who saw me the Tiger Woods card should have never sold it I told him when I when I bought it from him I'm telling you don't sell it, sit on it for two years He says I need the cash I said then I'm only paying you 140. and he said yes, he should have never sold it to me. but he needs 140 today. So I I went in this situation because I have the cash right? So all I'm saying to you is I think it's been going a little too long. Uh, people spending habits is concerning me a little bit. Uh, our savings is going down. All these people that were sitting on all this cash because we kept sending free money to people. Unemployment's going up. it's gonna go really up in the first quarter and second quarter if that goes up. Crime goes up I don't know I'm just not too confident about 2023..

all right. so Patrick lots of examples I know you'll appreciate this in uh, 2006 every seminar I did and I didn't get on YouTube until 2007 super early. Um, but you know out in 2006 I did have a audio podcast before we called an audio podcast about to sign a deal with Blackberry to put out all this content. but at the end of the day, here was my message: Sell Everything. Get cash the entire World's Gonna Fall Apart that was in 2006, right? by 2007 I was getting my clients REO accounts, helping them navigate the market, helping them get rid of leases, helping them recognize that the houses they were buying in. Las Vegas With you know, one percent down, three percent down that were going up in appreciation every single day, sell them as fast as you can and a lot of people listened. So I may be a super fan of the industry and yeah, it's super important to me, but make no bones. In 2006, it was obvious it's just not as obvious today based on the data we're looking at David Talk to us what's prediction on house values And by the way, I'm going to say this: home prices are going down Patrick In some markets and in other markets, they continue to climb up. So it's going to be a market by market thing there. There could be somebody right now in Dubai listening. This could be somebody in Berlin Listening to this. There's definitely people in Australia listening to this. There's absolutely people listening all over the US and Canada every Market is different, but we see the national numbers and then we gotta look at the local numbers. but David Fire away. Sure. So I think the housing market piece is where it gets interesting in this market. Um, so let's talk about that kind of Benchmark this year. What folks are saying for next year? This year, when you generally when people talk about house values, they talk about it on an annual basis. Now on a market like this, they start to talk about it on a monthly basis. But that's not. You don't go just your neighbor and say how much did your home appreciate or do you appreciate last month, but in a fast-moving Market that becomes the topic. So this year, if you look at Nationwide home prices, they will appreciate somewhere between eight and ten percent this year. No doubt that's cooled off. No doubt we've seen month over month depreciation. I'll get into that in a second. What do we see going into next year? We see a market that's flatter I Certainly don't see a market that crashes and values and not a market that's anywhere remotely near what we've seen over the last few years. I Would say that's an anomaly Market An unhealthy Market If We're honest about it in our business, but something that you know that nationally looks like. you know a percent appreciation or a percent depreciation in that ballpark. Now here's what's interesting: Uh, you brought up a point Patrick about folks losing their job and and sales You know, having to ultimately sell their home. I Think that's the direction of that uh topic. Well, we're not seeing a market right now where there are four sales and you could say okay, we're going to move into a market where there are four sales. But right now in this country, the average homeowner has over three hundred thousand dollars in equity in their home. The difference between today and 2008 in the housing crisis is, you know when people went to To to do something with their home, they didn't have any options and so they were foreclosed on. they had a short sale, a distress sale, whatever it is, and they lost money. If you remember back then, if you own real estate and you had to sell it, the topic was, you know how much are you going to lose and the topic today is going to be you may not make as much. That's the biggest difference in the market today versus the housing crash of 08. And so when you start to take a look at that, nobody's going to walk away from three hundred thousand dollars in equity in their home. And there's this term they use. it's called Downside Sticky In in products or in specifically in housing. If there's not a for sale, then you're not going to see a depreciation in values. What do we know? For the last four months In this country too, fewer homes have been put on the market because 92 percent of those with a mortgage have a mortgage less than five percent. they're good. You literally can't go out and rent something for which you can buy a home or what their mortgage may be. So I don't see a case being made for a massive decline in home values. Uh, across the country because the the data Tom just and Patrick just doesn't support it. Yeah and again, I'm going to make the argument literally. On a coaching session this morning with the one of the number one teams in all of the Phoenix Metro and we're talking about how Invitation Homes and all these companies about. You know whether it's 10 to 15 of the market and they were buying mainly guys in the outside you know, the outlier markets where they were getting incredible rents and fast appreciation. and there's no doubt if three homes sell at a lower price the new Compass said and and we're already seeing a phrase I haven't heard in a while tapes I was oh hey, could you give us a look on pricing of these 45 houses So I think we're going to see it but Patrick I think it's going to be again Market by market and David it's going to be some of these outlier marketplaces And then let's don't even get me started on New York City which never got good during the pandemic. right as the epicenter of of the pandemic. it never got good. Prices are still sitting at 2017 2018 you know, relatively based on where you're at. So let me say one thing. Tom Yeah and I think that is the point. What happens I'm in Atlanta You mentioned that Patrick what happens in Atlanta versus Miami versus uh in Southern California is going to be different And that's why today the expert in our business wins. The expert that can give the advice to say. Here's what's happening nationally. Here's what you see on the news. but here's what's happening in our Market So so let's just let's play a game. So prediction on home price decrease uh, annualized basis 2023. Patrick What do you think you say? It's going to go down by how much? 15 to 20 points Okay, David nowhere near I would say in the less than five percent worst case scenario, but we're looking at marginal depreciation in the worst case scenario I mentioned before I Think this is a market that's a flatter. Market You know that we're going to see very flat, uh, home values if unemployment stays at three and a half. Four Points it won't happen. but you have to realize where is it going to that would be? Well, so, but we think about it this way. uh, as an employer I I employ a lot of people and I employ them Nationwide in different states and so I'm I'm constantly having to work with these seven recruiting firms to find me the best people and I lost people during uh, the pandemic of people that were I had one guy give you a perfect story. Yeah, we hired him at 55. Okay, uh, two months later he got an offer at 75. We took him to 65. he used the 65, came back, he got an offer at 110. We took him to 95. within six months he went to 95 from 55.

then he came back with the last offer at 140 he got from another company. He kept updating his income his uh, what do you call it resume on LinkedIn and recruiters were calling because they're they're hiring people, they're Landing people and he says look, I got another guy that's paying me 150 plus this plus I said I can't afford that and he we eventually didn't end up working out. he went elsewhere from 55 to 140 150 within six months. The guy's only a 55 000 a year guy. Guess what's happening to that guy today? He's getting destroyed and they're calling us back today. So the part we're not aware of is a lot of these fake salary people that got paid a lot of money. Remember a lot of these layoffs at Uh Amazon that's a meta At these companies. these are not 50 000 all year salaries. These are 150, 200, 180, 170 that they were all fighting for. So if these 150 170, 180, 200, 130 guys say, well, listen, I'll take something at 90. I'll take something at 80. I'll take something at 70. if that happens, the first conversation that happened with their spouses, we have to figure out a way to downsize. So if they got three hundred thousand dollars of equity in it, they'll sit there and say, babe, we got to do something and sell this because we need the money we need this. We need that. So so if unemployment does move up, it's going to be 15 to 20 points. If they're able to keep unemployment relatively lower, I think it's going to be a softer landing at around 10 points. But if unemployment continues going up, I'm at I'm at 15 to 20.

it's a lot of what-ifs so it actually feels more like 89 90 91, 92, 93, 94 95 Like I Remember literally saying hey, you just got to survive until 95 because we had unemployment that spiked. you know interest rates were still I don't want to do it from memory David six or seven back then but the average home price in America was 200 000, right? The game has clearly changed, but it feels very similar David What are your thoughts on that? Well, thoughts on what on affordability or what on on what Patrick's saying. if if unemployment hits the way he is, you know, hallucinating and sharing here and there's data points that we already see on it I don't think it's gonna I don't think it's gonna be that bad I'm just curious what your perspective is I think I think we're speculating here on unemployment. That is the big question. What's going to happen in the economy? Let's just be honest: what's going to happen with inflation? What's going to happen with unemployment? Those are going to be the drivers of the economy. Um, you know if I were to look out here and say what do I think is going to happen I think somewhere between you know this soft Landing which is the Fed has said and maybe a little bit more turbulent Landing but I don't see a scenario that is, you know. sort of apocalyptic. Um I I think Always planning for the worst, expecting the best is what we need to do and we don't need to go into it with our head in the sand. But I Don't think there's a case to be made right now for that to impact the housing market for a number of reasons. Let's just kind of back up for a second and and look at where we're at in this country. We have the largest generation behind the Baby Boomers and Millennials that are moving through their Peak home buying years. We know that the average person is going country buys a home between 22 and 34 years old. That's Millennials right now. And Oh, by the way, depending on what you read, you would see that we're under supplied in housing by three to five million units, right? So we have a scenario like that: You're going to always see pressure on prices remain and even if you want to talk about the real crisis I Believe in housing. In this country, it's with rent. Rents have skyrocketed I mean that that is the reality of what what we see. So I have a tough time seeing. you know, kind of the wheels come off and housing prices go down by 15 or 20 percent because they're just not a case to be made for it. Now if you want to make an apocalyptic case that everybody's going to lose their job Mortgage Business breeds and all that, then I hear you. But that's not a likely scenario in my mind. Be very careful trusting when the government uses certain words like transitory or soft. Landing you. do not have a good track, especially a lady named Janet Yellen who is supposed to be the goat and she comes in having to finally apologize. Well, I was wrong. Well, we hired you to be right, but you were wrong and that scares the hell out of American people for sure. Yeah, I concur. So let's talk about something that also makes people nervous and we see it. You know Patrick with the our clients that are working with buyers and people that are on the fence that are waiting whether it's for rates to drop or affordability which is a massive issue right now in U.S homes So foreclosures you were You were on a podcast recently you said you know you know, do you think foreclosures are up 10, 20, 50, 100 and I forget the exact numbers like you know 230 percent see Dave and I Studied this every single day. We've averaged in the U.S about 200 000 foreclosed properties every single quarter minus the seven, eight, nine, ten, you know Global real estate economic meltdown. We've always had a section of that market, but the US government put a hold on at all because the pandemic. there was no more foreclosure. the entire thing just stopped. So I I just I Want to make I Want to make the statement I Don't wish anyone to lose their home. but if you're not making your payments and you have been making your payments and you've been basically living off the government, sure, rent free. I Would argue someone better should be in that home I Would make that argument every single day of the week that there's someone that wants to buy their first property and that's usually the properties we're talking about. So let's just talk about foreclosures. David I'm gonna go to you first. What is what is the prediction and forecast for foreclosures the rest of the year and then certainly in the next year? Sure. So a couple things about that: If you look at foreclosures through the third quarter: new starts this year, there have been 88 000 new starts. So if you extrapolate that out and said we continue on this path through the end of the year: 120, 125 000 foreclosures. Uh, in this country this year. To put that in perspective, in 2019, they were just under uh, 300 000 foreclosures In this country 2020 2021 anomalies because of the moratorium are not there. The the couple things I would say about the market right now: if you look at those um, loans that are in default right now, it's less than half of one percent now. Servicers would be okay with that number going up to one percent in their portfolio, so that looks very, very healthy. And the other thing that you have to look at you can't ignore right now is ever since 2010, we've seen lower foreclosures in this country every single year. and now I'm not saying that the past last 10 years is an indicative of where we're going in the future, but you do have to look at that and realize that the lending standards and what is happening or has happened in this country relative to the mortgage process has dramatically changed since 2008. None of the products are in the market. You know that we're around back then and we have a much stronger homeowner. And again, if if it does come to a scenario where somebody has to sell their home, uh, in in. Like you said, Tom don't wish that upon anyone. people have options today. they can pay a commission, they can put hopefully a little bit of money in their pocket, and you know, get on the other side of the crisis they in their family are facing. And let's let's face it, that's a gift of the last couple of years. people want to buy homes, even even look at this. What's Wall Street doing? They're investing in homes because they know real estate is a good investment. It's kind of go back to what you said. Pat It's the long-term game. That's what they're paying playing and homeownership always wins in the long term in this country. and there's no doubt if somebody's forced to sell they it could be a it could be a situation that you know they they don't want to have. But when you look by and large across the country, there's not a case to be made for a massive wave of foreclosures just based on the Dynamics in the market. Patrick Thoughts: Well, I mean we're gonna see the the concept of three hundred thousand dollars of equity. That's that's kind of helping out. that people are not going through it right now. That's definitely going to be helpful. Uh, how the market is doing right now, which is kind of like hanging on. that's helping out. but uh, look if if all the indicators are true where Powell says I'm gonna increase rates until inflation hits send. you've heard this. This is not me telling you this. this is pal saying this to you. So if he keeps increasing until inflation hits two. What What the? What's the first thing that's gonna hurt the more he increases that unemployment and and we have to go back to unemployment. There's a difference between having cash. Having Equity have an income each serves a different headache, right? Having cash, your pillow's a little softer, have an equity. You have some fake success because you ain't touching it because it's sitting there as Equity So you know it's like when I was for the longest time. Pat: What are you worth on what on paper? Okay A few hundred. You really want to know what I'm worth a lot right now because I'm not sitting on a lot of cash. I'll go okay I Get that until you sell and you're like okay now I really am worth a lot because I got so Equity could be fake success and I can fool some people sometimes and then you have income but you take income out. What does that hurt? The other? income goes away. Saving goes down. income goes away. You can't pay the mortgage payment. Income goes away. It's going to hurt a lot of different people. Let's hope that these increases that power is constantly doing to lower inflation to two percent. Doesn't end up sending unemployment to, um, some numbers that we don't want to go to Because if we go there, this story here is going to change 6 to 12 months from now. The tragic part is, they've already made it very clear that there's got to be pain. I Think we're all clear, there's got to be pain. that just it's what degree of pain? Yeah, what industries get impacted. Uh, one of my clients Patrick is the CEO of Home Services for the entire real estate division you know Nationwide and then around the world and you know, hugely successful guy. I've been in the industry for a long, long time. We talked about the six dominoes and the first Domino is if a business can't get a line of credit at favorable terms to keep growing and thriving. that's the beginning of that downward cycle. And again, the higher the rates go, the harder it is to to get those favorable loans to expand your business, to grow your Empire and do everything else. So I'm I'm cautious I'm cautious I don't I I'm gonna go back to foreclosures I Don't see if it's one percent David it's 1.3 million properties I Don't see 1.3 million properties going into foreclosure? No right. and and I see the numbers. don't suggest that and delinquencies don't suggest that either. No, no. and again, if there's even a hint of equity, I Do listen for the person listening right now. If I had to have a concern, my concern would be for, uh, the home buyer that bought January to April of 22. they bought in an extremely inflated environment with hope and expectation that home prices are going to continue to go like this, and in many cases, especially if they were in outlier communities, they've already seen whether it was a price reduction or a recent sale. Those men and women, they've experienced it right now. The question is, how much greater does it get from there, right? So Patrick We make the argument all the time. For the person listening, it's you need to be looking at the data, whether it's remind or any other data solution you can to get in and say who are all the people with an interest rate of X Who are all the people that have zero mortgage, who were all the people that bought in the first four months of the year David We did a show what three months ago and we said eighty percent of consumers that bought a house during the pandemic believe that they compromised on their home, their home purchase and 25 said they Patrick hated the experience and my response was hey, if you're a good real estate agent, if you care about your clients, you're going to call Patrick and say Patrick how's the home working out for you and if he pauses and says uh, he's made so much money since April May June of July right in equity that this might be the right time for them to make a move And a lot of those people were selling because of that, right? But again, for the record, every agent listening who'd you sell a house to January February March April May Those are the people that we got to be cautiously watching right now. And if you're a steward of this business, you care about your clients, you're gonna be reaching out to them to make sure they're in a good position. And if there's anything that's bad, get ahead of it now. just a little. PSA Okay, being mindful of time, let's not talk about consumer debts I Think we can all Google that and get to it I Want to get to Patrick We all believe whether they're an insurance agent, a loan officer, a real estate professional, and again, real estate agents and loan officers don't have annuity right? So they're You know they're They're basically kill eat kill eat kill eat. But we've all discovered by my you know called 27 Years of being a business coach. There are just certain things that in this kind of Market smart people are doing to be successful. I'm just curious for you what are some of those four or five things that you just found with your agents that are causing them to win and David I want to hear from you and I got a couple points and then we'll wrap it up. So I'll tell you what covid when covet first hit we got hit the insurance industry got hit because uh people first thing they wanted to cancel is their insurance policy. So I come to the office I'm sitting there saying I don't really know what's going to be happening. We're not used to selling through zoom, we're used to selling kitchen table. you know, kneecap to kneecap. We have to dramatically change the philosophy which we were able to do with within 30 days, but it was not the easiest transition. However, this is what we did: I held a meeting and I brought everybody in at the home office and I said we're gonna send a five dollar gift card to every Starbucks to every single one of our clients on the day just to tell them we appreciate you for your loyalty. Nowadays you see the value of loyalty more than ever before. Just wanted to send you this note for no reason and say thank you, thank you for being with us. If you need anything, here's how to get a hold of us. Let me tell you what happened. We send this to nearly a hundred thousand clients. Okay, that went out So it's a cost. It wasn't a cheap cost, It was a big cause. I'm not saying. you know the average Realtor doesn't have a hundred thousand clients that they need to send this to. Maybe they got 50, 100, 200, 300, Whatever the number is. So typically when a salesperson calls a client, there's a motive behind it, right? It's kind of like, you know when a guy calls a girl at 11 o'clock at night, you know he's calling for a motive. You know, if they're both single, he's like, hey, what are you doing tonight, right? You know? for those who are single, for those who are married, you don't know what I'm talking about. But in the single world I mean running a media company filled with a bunch of single guys, They're calling girls at 11 o'clock at night. So when you call them, you know what the phone call is. No one's calling a girl at 11 o'clock at night saying how's your mom doing right, Tell me your, how's your, how's your life, how's Health right? So, but if a salesperson sends a note and says I just wanted to say thank you that client does the following says hey, John look what just Larry just sent us What's that? Take a look at this babe. Oh he's probably trying to sell us something. no actually not look at this. He said he's just saying it for no reason. He's like wow, That's kind of cool if they were even thinking about dropping the insurance policy. Now they're saying how are we going to find another agent like this And not only that, when we send it to them, we got so many calls, those calls turn into activity. Those calls turn into a lot of different things. So one of the things that a lot of people during a time like this got to go back to his Biz Dev relationship gratitude Showing people you're thinking about them make the phone call when I was working on Morgan Stanley Dean with her 910 happen. One of the guys in the corner office that was making 700 a year uh in 01 and he was the top broker at the Glendale office. The the main branch office manager came in saying the phone feels like a thousand pounds right now. Pick it up and call your clients. Just open it up with a basic question. how you doing? How you feeling? What do you think about all the madness? That's my opening question. So John Mary what do you think about all the madness that's going on today? Oh my God so Pat How bad is it? Let's just let me just just tell you what we're looking at right now and then you reinforce poise. Confidence level of we don't control everything. Here's what we can't control. There's going to be some level of unpredictability here, but we're here for the long call. And if we are here for the long call based on the conversation I had with you John and Mary everything's going to work itself out. Historically it has, but we're watching everything very closely. Here are some suggestions so the key is to stay in contact during the times like that. and I think in the real estate world, the one thing a lot of people the last 10 years when it was you know Market was going up every month and you were selling million and a half homes and then guys who were accustomed to selling 800 000 home saying I'll never sell a house less than 800 000 and they start to sell a million and a half I'll never sell a house four dollars in a million I'll never sell. Send my guy two million dollars some Realtors need to go do leases nowadays and nobody likes to do leases. You don't want to get the first month's commission. Whatever. The structures are 10 of the first year or 10 the two-year lease. Whatever you got to do if you pack your pipeline with that the next six months with 50 of those 100 of those because we know renting's not going away. You follow up with some of those guys. There's going to be some business and every sale. Like in our being an insurance salesperson, people sometimes don't want to sell Total Insurance policy, but terms are great product to sell. The best part about term is if the client's life situation gets better than there's other opportunities, right? So in the real estate side, people can't be too good where it's like, do you realize who I am? do you know I'm like the my pictures is all all over these benches here. No one cares today. People want to be served today I Love it I love it. Uh David so good. um I think really this market right now. let's agree. it's a professionals. Market The last couple years have been anybody that wanted to get in and saw you know what? I'm going to make some money, got into real estate, got into mortgage, whatever the case is, this is the professionals. Market Two things that I think you have to do right now. You have to be a student of the market and of the world and you have to have a relevant Market Opinion That's what people are looking for. They're looking for your advice and and listen. Even this this call today we're talking about things that we may not agree on. We both got a relevant Market Opinion based on what we believe and that conviction I believe will serve you in this market. Second thing we have to do is stay in touch. Go back to what you just said. Patrick How are we staying in touch with people? Because in this market the difference between those that win and those that literally aren't in the business anymore will be the mindset that they have and they bring in every day. Whether you're showing up thinking you know what this is, this is a market I don't know if I'll make it through or this is a market where I'm serve people. There are still opportunities every day to serve people and get in front of them with our message. and I think that's critical and I'd work in 90 day increments. What's happening for the next 90 days? What's happening for the next 90 days because we're playing for this market and what's coming in the future? Yeah, so it's interesting. Uh Patrick listening to uh, some of your content this morning after the gym you talked about, you know? Oh and the pandemic hit. You know we weren't comfortable in that environment. What if I told you in 2017 in January I pulled my at that time maybe 140 business coaches and said all right, we're going on zoom and you should have seen the response oh my goodness, my clients won't like it. It's no, it's it's not right. You know, some of the some of the lady coaches were very honest I Get up in the morning I put a hat on and I just do my coaching sessions I'm just put makeup on and I'm like no one cares. We're gonna innovate, right? I've been on YouTube since 2017 videos 2007 videos taken over the world. So when the pandemic hit I Just said to all of our clients, hey, you know we do every one of our coaching sessions on Zoom you're now going to get your account and you're gonna invite clients to sit on we're gonna and and they absolutely cremated it because of it. But with that said, I'm going to remind everybody I Don't believe that this is like the pandemic I Do believe we're having a massive shift in the market. A massive shift in buyer psychology. So I'm going to share with you the four things that I'm watching coaching some of the most successful people on the planet. Sydney Australia Here in Newport Beach All over the place. the very first most important thing is to take care of your family. So you know here we are in: November December Whenever you're listening to this and and when I say take care of your family I mean like when I talk with a couple of my clients during the pandemic I would say Patrick things like lion or sheep now I say Predator Like you got to be an apex predator. You don't want to be prey in this environment and that Predator freaks some people out. but I think we all know what I'm saying like a lioness wakes up in the morning and only has one thought: take care of my family She doesn't say I don't feel like killing today she doesn't say I don't feel like making my phone call She doesn't say the interest rates are high, she goes out and takes care of her family. And the point that I'm making to everybody is you got to be in that mindset. No one cares that it's Thanksgiving and then it's Christmas And then it's the holidays Because the second part is if you're not loading the cannon every single day with high quality marketing content marketing Direct Mail Doing open houses, doing the work that builds your funnel for the spring selling season that's coming if you're not doing it today, I have clients David literally that were tracking how many hand raisers they have for potential sellers in March and April in New York City in New Jersey in Connecticut in Boston and we want to have hundreds of those. So when we get to that time, we're not scrambling as the market does what it does. but we are well prepared. So I want to remind everybody if you're not loading the Canon today. if you're not doing the open houses, doing your direct mail, making your phone calls, you're not doing that stuff. you're going to be in trouble. The other thing is if you're not reaching out to your past clients like I mentioned earlier especially anybody who sold the house to January to May of this year and checking in how you guys doing, how's the home doing, you know what questions you have about the market that group in my mind in Market by market they could be in trouble. So so you were great enough to sell them that house be even better to have a conversation about what could happen and what their options are and what they should do. Being really straight, the last thing I would say to you and I don't know who said this I think it was Stuart Butterfield um I remember actually sitting at the Sasser conference when he said and I just hired a new CFO and I went I invested in this company. He's definitely going public, but he made a comment recently that I was listening to. that said something along the lines of businesses that are going to do really well in any given Market are going to simplify, focus on quality and focus on speed and and Patrick in real estate, there's probably like Insurance There's hundreds of different ways for people to be successful. Some people only work referrals, some people want to knock on doors, Some people are going to do giant ads, Some are going to only do digital marketing. Some people are absolutely incredible on. Tick Tock What? I Tell people is you need to simplify and figure out what are the plays you're running that are working and do way more of that right now. Do way more of what's working. Right now. we're always going to be testing. We're always going to be on. you know, keeping our eyes out for the new new. But you need to simplify your marketing plan today to make sure you are reaching the highest number of quality prospects taking care of your past client since fear keeping them well informed on what's going on, asking for referrals in intelligent ways. That's one. And then everything has to be focused on quality, taking care of your customer at the highest level whether it's net promoter score or Csat scores at the end of every experience. So people can say you know what: I get Patrick a 10. I give David a 10. I gave Tom a 7.2 and that means I got to do better. Those little distinctions about business and environment like this will take you further and faster. It's not about motivation, it's not about hype, it is about doing the work every single day with tremendous discipline and yes, a great mindset. Now with all that said, Patrick's about time man! You flaked on me so many times to do this show. You're so funny. You are so funny. But you know what? man. First of all, thank you right? And David always thank you. We get to do this about Patrick You know Again, as I said for the person listening I am always admired your work. This was a super fun show right? I Don't think there's any right or wrong and this is just perspectives and data points. You know what would be fun is in a year from now. Let's do this show again, right? And let's let's just see where we're at. No right or wrong, just you know who was who is closest right? I Think that'd be a fun thing for us to do. What do you think? I Look forward to it. Awesome. All right closing thoughts guys. Anything you want to say to the Uh to the real estate Tom Ferry Ecosystem before we bounce Patrick Go ahead listen. I Read an article that said to follow and said what makes musk Buffett a lot of these guys special is they do the three P's They predict, they prepare, then they're persevere. Everybody has to make their own set of predictions or borrow somebody else's predictions I have my own I Naturally will lean towards being more paranoid because I I like the Andy Grove style of only the paranoid survive I'm more the military guy I grew up in a war, so naturally being Middle Eastern and all those things combined together. We don't trust a lot of people and we don't trust a lot of things too early so we have to really feel like things are going to work out. I Lean towards making my own prediction I Challenge the viewer for yourself. Whether you're a real estate professional or loan officer, make your own set of predictions, prepare based on those predictions, and then persevere during times like this, because if you can come out at these times, great times around the corner for you. yes and I like I like the adding the fourth p A little paranoia Yeah, listening to like Ray Dalio Who says if you don't worry I'm worried for you, right? right? David Closing thoughts: No, that's good, you know I Think this: Market No Doubt is a market that's turning and we are in the turn. almost like a race car driver would be in turn and this is where some will gain speed on others and and will build literally careers out of this uh, market. And I think going into it with that perspective is what we have to do. not with you know, our head in the sand and saying hey, I'm blindly optimistic but I think a good healthy dose of optimism is needed in this market to say okay I'm optimistic about My Success about what I bring to the table and how I'm going to deliver my clients and no doubt I believe that'll make a difference one thousand percent. So I'll just I'll just say this for you. Thank you so much as always for listening watching wherever you are. Small team individual on a subway. whatever you're doing I Just want to remind you it doesn't really matter how many homes are sold in the nation. the only thing that matters is the work that you do and how many buyers and sellers you help this year going forward. so go forward, do your thing. See you guys on the next show. Thanks so much guys! Appreciate your time.

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