What I'm about to show you is a big problem for the real estate market, but it's not just for housing, it's also for the greater economy. Because in this bottom line report, we'll not only talk about this statistic from Real Estate that's a big deal and shows you where some of the biggest pain is, but we'll also be looking at the odds of a soft landing and how history has treated the odds of a soft Landing in Prior recessions or not, we'll talk about all of that in this bottom line report. So first you know, in order to understand this data that I'm going to present to you, you have to know that this data was inspired by on the ground work. I'm a big fan of not just sitting in an office and running numbers, but actually traveling I'm sitting in a hotel right now looking at one of the markets that we're considering investing in and what I do is I Visit Open Houses I Talk to Realtors I go to specific showings that we set up with the hundreds of different agents that work with us in my real estate startup.

If you're not familiar with that startup yet, it's Housak.com It's now raising money, so if you don't want to invest in real estate, you can invest in House Hack. It's a company that's leveraging the wedge deal model. Learn more there. anyway.

So what we're finding is that some markets feel like they're in much more pain than others. For example, last week I reported that I thought Boise and Austin were feeling a little weird like they had hit a wall. things weren't selling and the reason I identified that was because we're looking at fixer-uppers We're like oh, that looks like it's decently priced compared to the June July comps. Then we look at active listings and everything's like wait a minute.

No, that doesn't look decently priced anymore. Everything's dropping on the active side, which is a sign that everything was okay in the summer. and then now we have more pain and it's that change to more pain that we call an inflection that you need to pay attention to. And markets are well handling this very differently depending on the type of market.

So I've made a list. we'll throw it up on screen, but I've made a list of the pain in different markets by coming up with a ratio. and then we'll talk soft landing and some of the recessionary issues. So first, uh, Max would you mind lowering that sound just a wee bit? He's fire.

What are you shooting in Minecraft thank you. Anyway, so inventory to population ratio is what I've done. So what I've taken is I take I threw this together on the iPad right here. We'll go ahead and throw it up on screen, but basically we have an inventory to population ratio and so what I do is I write down in this case, somewhere around 20 different cities and I write the population as of 2022 for each of these cities.

Then you go to Realtor.com and type in the city name or the county depending on what you're using city or county and write down the level of housing inventory. You could also do this: Statewide if you wanted to take it a level further, then divide inventory by population, multiply that ratio by one thousand, and then you get how many houses are available on the market per 1000 people. And what we found is that the bubbly markets uh or or are usually the ones that seem to have the highest ratio and the ones where markets are still very very hot where people are still like falling over each other to try to get listings in bidding wars because inventory is low are the ones with the lowest ratio. What you'll find is that some of the areas with the highest ratio are some of the areas that really boomed during the pandemic.

Look at this: Miami Palm Springs Palm Desert You know, like the Airbnb Mecca where essentially people are facing this Airbnb bubble now where they realize wow, I can't always rely on an Airbnb or rental Arbitrage where I can make so much more money just airbn being a property out now I'm stuck between either having a negative cash flow as an Airbnb because I can't rent the place out or I rent it for a negative cash flow. Can't refinance Hard to sell in a market with this kind of inventory to population level without taking a haircut. You kind of see a little bit of a bubble reversal here in some of these high levels. Miami Palm Springs Palm Desert Vegas Atlanta Tampa San Antonio Spokane Washington Broward Boise Austin What's surprising is Boise and Austin which were the markets I identified last week.

We're only in the middle of this chart. That's those are actually the same two markets where you saw I saw Lennar that one of the nation's largest home builders complain that Boise and Austin were the softness out of all of their markets. When you look at the lowest levels of inventory to population, you're actually in California San Diego Los Angeles Ventura San Francisco Oakley Chula Vista Now I Thought even Sacramento's up there now. What I thought is really interesting about this is is it possible that as is usual in Market crises, you end up getting a reversion that undoes the prior movement.

So if the prior movement in 2020 and 2021 was leave, California go to Florida Miami Texas Washington Vegas maybe even Phoenix We should throw in here, right? You go to these different markets because you're leaving for pandemic restriction, actions or freedoms. Whatever reason, cost of living, income taxes, whatever you leave to those areas. so you get a surge of people there, Then all of a sudden you get a surge of building and now all of a sudden people maybe aren't coming to these areas anymore or they're going back to the office. And so you're getting this reversion where maybe some people are like, you know what? I'll pay the extra 10 13 Whatever it is to go live in Liberal California Which is fine, that's not an insult I Live in Liberal California Okay, the weather's beautiful I Love Southern California I will pay the extra 13 I will work 13 harder to pay that extra in tax because I love the SoCal weather.

but what? See what you're seeing is this potential reversion as an explanation of where you could expect markets to be the softest. Now the other problem that we face is data. Most of the data we're actually seeing now, especially when it comes to housing inventory, is totally a misunderstanding or a misrepresentation of what could actually be happening in a market. Think about this from a very basic point of view.

If you have 10 home buyers that buy homes every single month, then over the course of 10 months you need to have 100 homes, right? So 10 people buy a home every single month. If you have 100 homes on the market, that means you have 10 months of supply. Well, let's say that 100 homes is really low. Usually you have 500 homes on the market, right? and everybody's like oh my gosh, inventory is so low.

But what happens when inventory stays really low at 100 homes and then all of a sudden what do you get? you get? the home buyers going from 10 buys a month down to five? Well now you double your month's Supply It literally Supply stayed the same, but that will last you twice as long. It'll now last you 20 months instead of 10. So in other words, low inventory When somebody's like, oh, but inventory is so low that does not matter. What matters is how many buyers are there relative to that inventory.

This is why you want to use months of Supply data, but you can't readily get that online without calculating it yourself because you go to let's say, Redfin Data Center. It's sometimes six weeks delayed on the data and it takes time for some of these moving averages because Redfin usually shows you a 4 or 12 week moving average to actually show you changes so you have to look at your individual Market But it's also a little bit more challenging for us as individuals to calculate. Okay, well, how many people are buying? We just have to look at the absorption rate or you're out there on the street and this is the easiest way to do it. In my opinion, this is the practical way.

This is not the statistician's way. and then I want to talk about the soft Landing recessions. The practical way to understand this is you talk to Realtors you go see how many offers places are getting if you go into a market and you're like, all right, Here's a fixer-upper that's worth 450 and it should be worth 620 And then all of a sudden somebody puts on a house on the market for 5.99 and it's not selling then I Guess that house isn't worth fixing up 620 anymore. You have to really pay attention to this.

You have to be fluid to this because if you're trying to insulate Yourself by getting a wedge deal like I teach in my real estate courses I'm building your wealth so you're in a millionaire real estate. The new verse Pro crash courses which are really inexpensive. You can get in for under a hundred dollars while they're on pre-sale These are this is literally my brain dumped on you in a condensed easy to understand way. Just go to meet Kevin.com to learn more then you can actually understand.

How do I position myself? Do I wait, Do I get more aggressive in the spread in which I'm writing offers? You have to understand your markets. Point is, some markets are softer than others and it could potentially be because of this reversion to mean that we might see this in this next cycle. Now, the problem with this higher for longer is we're starting to see buyers hit a wall. It's entirely possible that buyers had enough cash to keep buying with high interest rates throughout the early part of 2023.

That's why we saw prices rise between January and August and I'm like I'm not buying during that time because I want to watch what happens. And sure enough, now what's happening. Now the buyers are drying up, things are starting to sit longer. This is a good time to be patient.

Don't blow all the money you have. Be patient. Be more aggressive on the deals that you're getting. Now, what else do we need to consider? Well, another thing that's very important to consider is this soft Landing call can frequently lead to a recession.

Consider this, and I'll throw this chart off on screen here. Soft Landing Calls have proceeded past recessions since the early 1980s. Consensus predictions that the economy would achieve a soft Landing have basically preceded each of the last four recessions that we had. So why is it often wrong? Well, because recessions can come suddenly when something breaks or snaps.

It's possible that the real estate market could be what breaks and snaps. Even though we think right now, the underlying borrowers are substantially more well positioned to weather this storm weaken at the fringes. See institutions offload real estate. Those are going to be companies like, uh, like American homes for rent or Invitation Homes.

They are literally selling parts of their portfolio, especially in some of the bubbly markets they are selling right now. And they're If they weren't buying portfolios from other portfolio sellers who are like, need to get out of real estate, they dump their portfolio in Invitation Homes and Americans American Homes for Rent tries to pick them up for pennies on the dollar, even if it's 80 cents on the dollar. whatever. Uh, they're picking these deals up.

If it weren't for those portfolio buys, they would be net sellers of homes right now. So people really sharpening their pencils for good deals right now as we are as well at my real estate startup. So if you don't want to get into real estate yourself or you can't, you don't have the time, money, credit, whatever, we'll consider investing with Househack. Read the offering circular we're offering it.

We're raising it essentially a one to one, uh, dollar valuation which the company's going to be worth the cash level we raise. Obviously they're offering fees and costs and stuff that go into while having attorneys and filing with the SEC and all that good stuff. but that that's not for you So much to worry about. Now you can read the offering circular and see all of those details.

But what matters is soft Landing calls. Throw this up on screen again here. What do we got? Look at this soft Landing calls and uh leading to the.com era. Boom recession leading to the 07 Recession Boom recession leading to the uh, you know, into where we are now, potentially the 2024 recession.

You could see this sort of skyrocketing here now. we did have our a recession in the early early 90s coming out of 89 and this is where there was talk about soft Landing But as you can see here: Recession Recession. Recession. recession.

we just regularly seem to predict a recession with oh, it's going to be a soft Landing Now that's not to say this won't be a soft Landing It's just to say as bottom Line practical advice for folks number one: Consider that I'm filming this in a hotel room using this beautiful web camera. It's a 4K web camera. It's really, really good. If you want to check that out I Have a paid sponsorship with this company.

It's amazing! Check out the link down below: Metcaven.com webcam I'll also put a link for the lights that I use and the microphone that I use I Think together. Like all three of these things together, you can have a really sick setup and it all fits in a tiny little box if you want to travel light with a little box. So much easier than trying to have a DSLR And it's so much better than the basic built-in webcams of these computers. as much as I wish I could just use those anyway.

Check those out by the link down below. Okay now. Practical, practical, practical, Practical. What do you do You have to focus on as much as possible.

Keep your job. Now is Not the time to quit. Now is not the time to give up on the job you're working because the jobs Market is going to be even harder out there. It's going to be harder for you to get a replacement job, do what you can to provide more of a value at your current job and increase your income.

Number two: Try to increase your income with a side hustle if you need to. Yesterday I suggested you go buy a 3D camera like the one at Medkevin.com 3D Buy that camera. Also paid promotion. Buy that camera and go do smatterport 3D scans.

It's a great idea, but not only do that, but recognize that I was getting a ton of comments yesterday of people going. bro Kevin You know, offering to do one matterport scan for free and then 99 thereafter for 30 minutes worth of work, you're under pricing. You could actually make even more money and I'm like great. That's more opportunity for you to provide value in the marketplace, so consider that as well.

Next, more income is number one. Uh, side hustle if you need to. Number two. Next number three.

Make sure you're being patient. Don't blow all in on this. Market it is. I Still expect the stock market to be a volatile Nike Swoosh but the real estate market.

You really want to be patient here because you don't want to buy what you think is a good deal like another soft Market is Oregon because everything looks like a good deal. but that's because the active listings are plummeting. So pay attention to these sort of ratios that we talked about. Pay attention to what's going on in the broader market and recognize the odds of us getting a rate cut this year or like zero and people still think the Fed's going to go higher.

But this fear that the Fed's going to go higher could be a great opportunity to buy when other people are fearful. You just have to be patient and aggressive and make sure you're good with your numbers. That's why I Always say check out the courses on building your wealth on Zero to millionaire real estate investing or the new Bruce Pro real estate investing ones. Those crash courses are in pre-sale They'll be out within the next six or so days, but you can lock in the best price now.

They'll probably be worth twice as much when we actually launch them. But anyway, point of all of this is to say be patient. Look at the numbers. Realize that people just talking about inventory or dated numbers aren't going to guide you through this crisis.

You have to be vigilant. Thank you so much for watching I'll keep traveling, exploring and Reporting What? I'm finding out in the streets as well as in the data. Thanks so much. Consider subscribing and we'll see in the next one.

Goodbye!.