Let's discuss the 2023 Recession, how the Federal Reserve might be able to perform a Soft Landing, what this means for home prices, and how the IRS may be changing - Enjoy! Add me on Instagram: GPStephan | GET MY WEEKLY EMAIL MARKET NEWSLETTER: http://grahamstephan.com/newsletter
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THE 2023 RECESSION:
As The Boston Globe Pointed Out, throughout the last 6 recessions that have been confirmed…there is an AVERAGE LAG TIME of 7.3 MONTHS between the time a recession takes place - and the time it’s actually announced. in the 44 years they’ve been operating, they have never ONCE had to rescind or change their declaration - which means, they’re extremely accurate - and as a result, the process takes almost a YEAR to compile. That's why: we only know about it…when it’s already over.
THE HOUSING MARKET:
Just recently, Goldman Sachs shared their thoughts that 4 US Cities could see a “2008-style housing crash” throughout 2023. As they say: San Jose, Austin, Phoenix, and San Diego “will likely see peak-to-trough declines of more than 25%….such declines would rival those seen around the country around a decade-and-a-half ago” - SIMPLY because: those were the areas which already saw some of THE MOST growth since 2020.
Obviously, that kind of price growth is completely unsustainable - and, with interest rates going up - we’re bound to see a rather substantial drop throughout some of the hottest markets. In fact, Goldman Sachs says that “Home prices are believed to have peaked in June of 2022,” which means - on a NATIONAL basis…we could see a decline of 10%, before growth begins to recover in 2024. On top of that, Morgan Stanley anticipates a 4% drop from stagnant demand, Wells Fargo seeing declines of 5.5%, and Interactive Brokers calling for more than 20%.
CONTROLLING RENTAL PRICES:
The White House just introduced: “The Renters Bill of Rights.”
Under this, The Federal Housing Finance Agency would examine limits on rent increases, and prevent tenants from being unfairly denied access to housing. In addition to that, lawmakers have called on the FTC to issue new regulations on excessive rent increases, enforce actions against price-gouging, and limit rent charged with properties that are financed with government backed mortgages.
However - unfortunately, studies have found that rent control does NOT help with housing affordability. In fact, a 1992 poll of the American Economic Association found that 93% of its members agreed that “a ceiling on rents reduces the quality and quantity of housing.”
On top of that, a Stanford study has argued that Rent Control actually has an ADVERSE affect on prices for renters and actually works AGAINST making housing more affordable.
-Rent controlled tenants were 20% more likely to stay in their unit.
-Renters were more likely to move elsewhere if they didn’t have the incentive of having their rent capped where they currently were living
-Landlords of rent controlled buildings were more likely to convert their buildings in such a way that it wasn’t rent controlled, reducing the amount of housing by 15%
-The loss of available housing drove up prices of rental units. It was found that a 6% decrease in housing supply led to a 7% increase in rental prices.
THE STOCK MARKET:
Michael Burry posted a rather ominous chart of the 2001 Dot Com bubble, showing that - the prior rebound was eerily similar to what we’re seeing today…before dropping another 30%…and, even though ANYTHING is possible, my guess is that we’re largely going to look to the FED throughout these next few months to determine whether or not the worst is behind us.
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GET YOUR FREE STOCK WORTH UP TO $1000 ON PUBLIC & READ MY THOUGHTS ON THE MARKET - USE CODE GRAHAM: http://www.public.com/graham
THE NEW PODCAST: https://www.youtube.com/channel/UCMSYZVlQmyG8_2MkIKzg0kw
The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://the-real-estate-agent-academy.teachable.com/p/the-youtube-creator-academy/?product_id=1010756&coupon_code=100OFF - $100 OFF WITH CODE 100OFF
THE 2023 RECESSION:
As The Boston Globe Pointed Out, throughout the last 6 recessions that have been confirmed…there is an AVERAGE LAG TIME of 7.3 MONTHS between the time a recession takes place - and the time it’s actually announced. in the 44 years they’ve been operating, they have never ONCE had to rescind or change their declaration - which means, they’re extremely accurate - and as a result, the process takes almost a YEAR to compile. That's why: we only know about it…when it’s already over.
THE HOUSING MARKET:
Just recently, Goldman Sachs shared their thoughts that 4 US Cities could see a “2008-style housing crash” throughout 2023. As they say: San Jose, Austin, Phoenix, and San Diego “will likely see peak-to-trough declines of more than 25%….such declines would rival those seen around the country around a decade-and-a-half ago” - SIMPLY because: those were the areas which already saw some of THE MOST growth since 2020.
Obviously, that kind of price growth is completely unsustainable - and, with interest rates going up - we’re bound to see a rather substantial drop throughout some of the hottest markets. In fact, Goldman Sachs says that “Home prices are believed to have peaked in June of 2022,” which means - on a NATIONAL basis…we could see a decline of 10%, before growth begins to recover in 2024. On top of that, Morgan Stanley anticipates a 4% drop from stagnant demand, Wells Fargo seeing declines of 5.5%, and Interactive Brokers calling for more than 20%.
CONTROLLING RENTAL PRICES:
The White House just introduced: “The Renters Bill of Rights.”
Under this, The Federal Housing Finance Agency would examine limits on rent increases, and prevent tenants from being unfairly denied access to housing. In addition to that, lawmakers have called on the FTC to issue new regulations on excessive rent increases, enforce actions against price-gouging, and limit rent charged with properties that are financed with government backed mortgages.
However - unfortunately, studies have found that rent control does NOT help with housing affordability. In fact, a 1992 poll of the American Economic Association found that 93% of its members agreed that “a ceiling on rents reduces the quality and quantity of housing.”
On top of that, a Stanford study has argued that Rent Control actually has an ADVERSE affect on prices for renters and actually works AGAINST making housing more affordable.
-Rent controlled tenants were 20% more likely to stay in their unit.
-Renters were more likely to move elsewhere if they didn’t have the incentive of having their rent capped where they currently were living
-Landlords of rent controlled buildings were more likely to convert their buildings in such a way that it wasn’t rent controlled, reducing the amount of housing by 15%
-The loss of available housing drove up prices of rental units. It was found that a 6% decrease in housing supply led to a 7% increase in rental prices.
THE STOCK MARKET:
Michael Burry posted a rather ominous chart of the 2001 Dot Com bubble, showing that - the prior rebound was eerily similar to what we’re seeing today…before dropping another 30%…and, even though ANYTHING is possible, my guess is that we’re largely going to look to the FED throughout these next few months to determine whether or not the worst is behind us.
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
For business inquiries, you can reach me at graham @night.co
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice. Public Offer valid for U.S. residents 18+ and subject to account approval. There may be other fees associated with trading. See Public.com/disclosures/
What's up? Graham It's guys here. So despite ongoing Mass layoffs, skyrocketing credit card debt, and a 2008 style housing crash throughout four U.S cities, a new theory is beginning to make its way through the markets and that would be the chance of no recession after all, our economy grew by 2.9 percent in the last quarter of 2022. Companies like Tesla reported record revenue and a strong outlook for this year, saying that they've seen the strongest orders year to date than ever in our history and Chipotle plans to hire 15 000 new employees as they get ready for burrito season. But with rent still skyrocketing and Michael Burry calling the latest stock market rally a mirage, we should talk about exactly what's happening.
if this is just another bear Market rally Why? Congress wants to eliminate the IRS entirely and if there's a chance of Nationwide rent control coming soon to an area near you on this episode of you probably shouldn't post your crimes on Tick Tock Although before we go into that, for anybody who wants to be kept up to date on topics like this, sometimes before I'm able to make a full video on them. Feel free to check out my newsletter Down Below in the description, it's totally free I post my full breakdowns there twice a week and I would love to have you a part of it. So thank you guys so much And now let's begin. Alright, so let's start off with the topic that everybody is wondering about a recession for the last year and on super warning Non-Stop about the downfall of our economy, the difficult times ahead in the Federal Reserve tightening, will the U.S government scales back on stimulus and from a stock market perspective, they were right.
On June 13, 2022, the S P 500 officially entered the bear Market. Having declined 20 from the peak technology, stocks suffered even worse with the NASDAQ falling as much as 35 percent and even housing prices began to fall with Bay Area Homes now selling for 30 percent less than a year ago. However, even though almost every indicator has been flashing, recession warning analysts are now saying that there's a chance there won't even be one. So what happened? and what's the catch? Well, technically a recession is defined as two consecutive quarters of declining GDP P of which already occurred throughout the middle of 2022, But since GDP isn't always a true indicator of the overall economy, the National Bureau of Economic Research updated their definition to include a significant decline in economic activity that could last for a few months to more than a year, and that's usually accompanied with lower employment.
Production and sales is tracked on a monthly basis rather than quarterly. The White House even prepped Us in advance of this definition with the understanding that there are no fixed rules or thresholds that trigger a determination of decline. Although the committee does note that in recent decades they have given more weight to real personal incomes, less transfers in payroll, employment, or in other words, we're not in a recession until they tell you we're in a recession of which is probably going to be when the worst is already over and they definitely take their time is the Boston Globe pointed out throughout the last six recessions that have already been confirmed. There is an average lag time of 7.3 months between the time a recession takes place and the time it's actually announced. why does it take so long? you might ask. Well, if they're 45 years of operation, they have never once had to resend one of their declarations, which means they're extremely accurate and that information usually takes about a year to confirm. That means we usually only know about it once it's already behind us. Now in this case, though, some analysts say that even though we did see two negative quarters of GDP, one of those quarters was only low because businesses were forced to pay for a stockpile resources in advance ahead of time by the end of the tax year to deal with supply chain issues and the job market is still relatively strong.
all things considered. In fact, when it comes to this one paper from the San Francisco Fed argues that an alternative measure of unemployment, which adjusts for those out of work temporarily but likely to be called back refined jobs quickly is a more accurate short-term predictor of a downturn than the yield curve. In addition to that, they also note the consumer's net worth is 145 trillion dollars up from the pre-pandemic 115 trillion, while average housing prices are still seventy thousand dollars higher than they used to be. Therefore, as they argue, we are not currently in danger of a recession and the Federal Reserve can continue raising interest rates higher for longer than expected until inflation subsides.
But keep in mind this is only really just the tip of the iceberg because some other markets are beginning to see a substantial decline. For example, we should look at the housing market just recently. Goldman Sachs Shared their thoughts on the four U.S Cities that could see a 2008 housing crash throughout 2023. And if you're curious which cities these are, well, Wonder no longer.
As they say, San Jose Austin Phoenix and San Diego will likely see Peak to trough declines of more than 25 percent. Such declines would rival those seen around the country around a decade and a half ago, simply because those were the areas which already saw such explosive growth since 2020.. for example, in one year, Phoenix went up 32 percent San Diego By 27 percent, Austin had one of the largest gaps between home prices and wage growth in San Diego tripled in value since 2000. obviously, that type of price growth is completely unsustainable, and with interest rates going up, it's inevitable that those areas will often be hit the hardest.
In fact, Goldman Sachs says that home prices are believed to have peaked In June of 2022, which means on a national basis, we could see a decline of 10 percent before growth begins to recover in 2024. And of course, they're not the only ones saying this. Morgan Stanley anticipates a four percent drop from stagnant demand. Wells Fargo sees declines of five and a half percent, and Interactive Brokers is calling for more than 20 percent. Or basically, they're saying the areas that saw the biggest increases will also be the ones that see the biggest decreases. Although even though housing prices are trending down, there is another topic that's gaining a lot of attention and that would be Nationwide Rank Control. First of all, it's no surprise that throughout the last few years, rental prices have been going higher. For example, a few months ago, median prices crossed more than two thousand dollars a month, which was their highest level ever in history.
So because of that, a new proposal from the White House is beginning to gain momentum called the Rent Enter's Bill of Rights. Under this, the Federal Housing Finance Agency would examine limits on rent increases and prevent tenants from being unfairly denied access to housing. In addition to that, lawmakers have called them the FTC to issue new regulations on excessive rent increases and force actions against price gouging and limit rent charged with properties that are financed with government-backed mortgages. Essentially, this would aim to place a ceiling on how much rent could be charged and some cities are already following suit.
Colorado for example, issued a proposed bill that would allow individual cities to implement their own rent control if they desired. California Extended a Statewide Rent Control in 2020, and members of Congress have already expressed interest in extending this throughout the rest of the country. But the real question becomes: does this work well as I'm sure you're already aware, there are very few things that all economists could agree on, but overall, the general consensus is that unfortunately, rent control does not help with housing affordability. In fact, a 1992 poll of the American economic Association found that 93 of its member agreed that a stealing on rents reduces the quality and quantity of housing.
On top of that, a Stanford study argued that rent control actually has an adverse effect on prices for renters and actually makes housing affordability worse. Like, here's what they found: Rent Control: Tenants were 20 more likely to stay in their unit. Renters were more likely to move elsewhere if they didn't have the incentive of having the rent capped where they're currently living. Landlords of rent controlled buildings were more likely to convert the building to an alternative use to reducing housing.
Supply by 15 percent. The loss of that housing drove up the price for all the other rent controlled units. In fact, it was found that a six percent decrease in inventory led to a seven percent increase in rental prices. And finally, if you're not already subscribed, this is your reminder because they post three new videos every single week. It's totally free and I got a really cool video posting next week so you don't want to miss out on that and it's I Said it's free, it's free anyway. The net result is that based on all of these studies, Rent Control actually restricts the number of new housing units that go on. Market Well, certainly some renters could get a bargain and win the lease agreement. Lottery Most people never get access to low rent controlled pricing, and if they do their incentivized to never leave because it's a lot cheaper than current market pricing and that lowers inventory regardless of how much the tenant makes.
This removes a huge chunk of otherwise available inventory on the market. Demand stays the exact same and because of that, prices go up everywhere else in. San Francisco For instance, it was found that most older Rent Control properties were converted into Condominiums and were typically sold to wealthier Residents thereby continuing to make the housing shortage even worse. There's also the argument that rent control leads to less property and income values, which in turn leads to less tax revenue for the city unless reinvestment back into the properties because there's no incentive to do anything more than the bare minimum.
So all of that is to say that in my opinion, based on all the evidence and research, that I could find, Rent Control is simply a Band-Aid fixed to a much deeper issue which is that we need more building, not restricting what's already there. But hey, you know what? At least on the bright side, you might not need to pay the IRS anymore because there's a brand new bill that aims to eliminate it altogether. That's because the house is scheduled to vote on a bill that would abolish the IRS and income taxes entirely in exchange for a flat 30 consumption tax. As they say, instead of adding 80 000 new agents to weaponize the IRS against small business owners in Middle America, this bill will eliminate the need for the Department entirely by simplifying the tax code with Provisions that work for American people and encourage growth and innovation.
In a sense, their thinking is that by eliminating the income tax entirely, people and businesses will have more money left over to expand and grow, thereby boosting up economic growth. But logistically, let's be real: this would be a nightmare to implement because each state has the responsibility for administering, collecting, and remitting the sales tax to the treasury, which would be almost impossible. Not to mention a 30 sales tax would be a hard pill for a lot of people to swallow. and most likely that would just lead to less spending is people try to find a way around it. Realistically, there's no way that this is going to pass, and unfortunately it. seems like wasted resources on an item that was largely doomed to fail right out of the gate. Personally: I Would love just to see a simpler tax code. Fewer complications Responsive IRS Agents who pick up the phone and online chat with a real person who could actually help.
Like, right now, the tax systems are so backed up that it's a 30 to 90 day wait to hear back on a simple tax inquiry. In the best case scenario in my opinion, that needs to be fixed before anything else is done. So frankly, I'm disappointed that resources were spent on this when it could have been used towards something that is way more productive that will actually make a difference. So personally, as far as what I think about all of this in terms of a recession, whether or not one is announced should have no bearing on the future direction of the market or any impact on what's currently happening.
After all, it could very well have just been a past decline in GDP and if the unemployment rate doesn't meaningfully increase, there is a chance that we could see these soft Landing the Federal Reserve has been aiming for and Michael Burry, on the other hand, posted a rather ominous tweet of the 2001.com bubble showing that the prior rebound was eerily similar to what we're seeing today before dropping another 30 percent. And even though anything is possible, my guess is that we're going to be looking to the FED throughout these next few months to determine whether or not the worst could be behind us. Sure anything can happen, more layoffs are likely I Wouldn't be surprised if spending continues to decline and we may very well see more rate hikes longer than expected, but only time is going to tell whether or not the current stock market rally is sustainable or if it's just another run-up that's going to decline just as fast. So with that said, you guys thank you so much for watching, As always, feel free to add me on Instagram And don't forget that you can claim a free stock worth all the way up to a thousand dollars with our sponsor Public.com Down Below in the description with the good gram.
When you make a deposit, they're also coming out very soon with treasuries that you could buy directly from the app. which means you don't have to go through the old Treasury Direct website which is extremely confusing and treasuries right now are paying a pretty good rate. so if you guys are interested the link is down below. Let me know what you think.
Thank you so much and until next time.
Rent control, rent regulations will destroy the housing market why would anyone buy a home if rents are regulated by government laws?
Goldilocks..sell it all
hi
Love the title !! 😮
I worked at Amazon and lost my job last week. I am in a severe recession right now..
San Diego has only gone down to 2.5-5% but also depends on which area. let’s hope it goes lower and Goldman Sachs is correct.
Graham would love to hear your thoughts on the petrodollar situation!
"What's up graham it's Guys here" 🤣
When you going to refund my money? FTX
Wow. Great synopsis of the pitfalls of rent control!
They give away 30 trillion dollars so of course consumers have 30 trillion more dollars
😂🤣😂🤣😂🤣😂
I wouldn't count my chickens before the war ends in eastern Europe.
2nd video I have watched with the intro, "What's up Graham! It's guys here". LOL
Wait for coming gdp reports let’s see what happens
They need to do away with the irs and just have a flat tax’s.
I live in a province with rent control. I cant move because if I do, my current unit would rent for probably $500 more rent and I can't find anything in my price range anymore.
I love your videos but your thumbnails make me angry lol
A 50% income tax is already a hard pill to swallow, plus state sales tax… don’t like your sour attitude towards lowering people’s taxes
I see what you and Andrei Jikh did dropping videos at the same time on the same topic. Gotta watch both.
Yea in 1992
What's up with the intro? 90% of your videos would have: "What's up Graham, it's guys here".
Are you doing it on purpose? Wtf
It’s only a few republicans members that want to get rid of the IRS and charge 30% tax across the board.. I wouldn’t say congress as a whole hah
No more recession
Love the summary in video description
Happy 🐇 🐰 🐇 🐰 year!
If sales tax goes up to 30%, all I would buy are food, no more shopping no more spending that's it.
Did you say what's up Graeme it's guys here
Genuine question, they say not to buy a house in 2023 because the real estate market is in shambles right now. Wouldn’t it be a good time to purchase one as prices for properties SHOULD be low?
Long straddles can profit in any market 📈