Two quick notes: I'm gonna be in the air flying today so you can follow me on Instagram to see what I'm up to. I'll be at a special place and you're gonna see a lot of cool stuff. so follow me on Instagram And we did extend the flash sale to the end of the week for those of you who emailed us and for anyone else 69 off largest percentage basis sale for the programs I'm building link down below. Now we've got to talk about the housing market and the latest drama that's going on in the housing market.

First, we already know that we've got a lot of anecdotal evidence, especially from what we covered just the other day of New Construction Home Builders alleging that home builders are potentially rigging their current contracts to make it seem like they still have good contract flow to manipulate appraisals to make sure their existing deals that are already in escrow actually close. This is scary, but one of the big things that makes me want to really pay attention to what's going on in housing always starts with mortgage rates. Mortgage rates and housing are very correlated. This should be obvious, but a lot of people don't realize the connection.

For every one percent that mortgage rates go up. buy your purchasing power Falls by 10. That's because your payment for your Piti principal interest, taxes and insurance plus potentially HOA dues if you have, those actually end up going up by roughly that amount. Now that's because property taxes are usually based on what you're paying for the property, right? And uh, then of course, mortgage rates are based on uh, what's happening in the 10-year treasury market and what is the risk-free rate of return? And so that pushes up or down mortgage rates.

And so mortgage rates have obviously moved up from somewhere around 2.75 percent for a 30-year fixed rate mortgage all the way. Now for somebody with a 740 credit score, let's take a look at the latest data. Latest data shows us survey says 6.442 Now that has moved up recently as the 10-year treasury yield has moved up and this is a lot of reduced buyer purchasing power. Now one of the things that the real estate market really is going for it is that there's very, very little inventory available in markets right now.

For example, example, if I look at the market in my neck of the woods which is we'll look at the city of Ventura. For example, what I like to do is I like to regularly see okay, how many houses and how many condos are for sale and I remember when I got in the industry at the bottom of the last housing market? actually the market still had a little bit to go down. It still had another year of pain when I got in. so I was still on sort of that downslope when I got started in 2010.

uh in 2011. what you found was a lot of Agents were panicking because there weren't enough homes to sell and there were about 80 homes on the market at any given time that was really deemed lack of supply. And what I found throughout my career was that anytime that number ran up to somewhere around 400 homes. Uh, which let me let me clarify that when we were at 80 homes I was actually already that was closer to the bottom Market 80 homes on the market was 2012.

when I got into the market, there were about 400 homes on the market. So let me make that very clear. Bad: Market 400 homes on the market good Market low Supply Easy to sell properties right? prices going up 80 homes on the market. That was like the end of 2012 and that's when we really started seeing a pop-up and so what? I like to do and you could do this very simply in your neck of the woods is just simply go to our like Redfin for example, type in your city and look at how many homes are for sale in your area.

Right now we've got 98 homes for sale. That's pretty low. That's pretty dang low so inventory is still low. This is something that really has, uh, the real estate market propped up.

now. What's remarkable about that is we are seeing months Supply increase because fewer people are buying because that buyer purchasing power is going down and the big fear moment that we've been talking about. We can get the latest update here from the Redfin data Center which just updated I think actually this morning. the latest update from the Redfin data center is that nationally median home prices are stable at about 347 right now in the last week of January Going into the first week of Feb worry, a stable 347 hopefully moves up for people who own homes.

but if it stays stable is very soon going to start showing year-over-year declines. In fact, in about two weeks, we might see this blue 2023 line cross over the black line. and then anytime that blue line is under the black, you're going to have negative year-over-year numbers. And I think in a few months time, that's really going to start a media circus around.

Oh my gosh, home prices are officially negative year over year and that's going to make people pretty nervous. Now if you own a month's supply of homes over here, if you are a bull on the housing market, you want months Supply to come down. If you're a bear on housing and you want to see housing prices come down, you want months Supply to stay elevated. We ended last year at about 12.9 weeks of supply for the nation.

The year before that, we ended 2021 with about seven weeks of Supply. So already housing supplies skyrocketed. But right now, weeks of supply for homes is sitting at 16.4 more than double the level of housing. Supply based on how many people are actually buying than we had previously.

So even though there are very few homes on the market roughly, you could factor in. if housing Supply stays stable, you could roughly say half as many people are actually buying right now then would ordinarily Buy in sort of an average market. And so that creates some red flags for the housing market and potentially create some opportunities to buy homes soon. Now there are some markets.

Uh, that's because we would think that maybe once we hit sort of peak Fear: while mortgage rates are still high, there'll be some really good opportunities to buy real estate. So for example, if you look at Boise you could see okay, we have home prices. Let's go back to home prices over here. It's just the Redfin data center.

You could do this as well. You go to home prices over here, go to median sales price and we can see look at Boise dropping off a cliff. the more this blue line gets bad and it's already under last year's line. We're already down 11.

but imagine it stabilizes at 434 and then you compare up to this peak over here. 434 divided by what is this number over here, 547, 547 shows you declines of over 20 percent. That's scary. Now, if that continues to go down, that could be even larger.

So where are areas that are potentially leveling out? Well, let's look at Tampa Florida For example, look at this. Tampa Florida actually is starting to see home prices take up a little bit, which is great because if this blue line could Trend above this black line, you might not ever have a negative month over month. Read for homes in areas like Tampa Florida Tampa Florida Miami are getting insane amounts of inflows and you might actually not have a housing correction in Florida whereas in an area like Boise, you're absolutely likely to have one and prices are still falling. Go to for example: Austin Texas opposite of Florida What do you have in Austin Texas Negative prices year over year already and so I Think this becomes very important for if you're looking to buy real estate.

Is you want to know in what mark markets are you going? Are you already negative? or are you likely to be negative soon? San Diego seems to be starting to try to form some form of recovery here, though even just looking at at the end of November and December over here, the numbers are are not great, right? We're still at Lowe's and so we'll see if that can actually recover. If you go to, let's say Salt Lake City Let's take a look at Salt Lake Okay, that's interesting. Uh, how about Utah Okay, fine, then we won't look at Utah for the Redfin data. There's got to be Utah in here.

What if I just do SLC no Salt Lake No. Okay, fine, then how about we go to Phoenix So if we jump on over to Phoenix negative year over year, right? You're already negative five percent year over year and that gets worse when you're over here. So you've got a lot of markets that have really corrected. But then there are markets that are still booming and Florida seems to be one of those markets that's still booming quite substantially.

Seattle You have this major massive hump over here. It'll be quite fascinating to see if this hump uh, ends up uh, ends up negative if you get any kind of stability over here. so we'll see personally. I think a lot of it is going to be driven by those mortgage rates.

And again, one of the things that could be manipulating some of the data that we're looking at right now is we did have a lull in mortgage rates, right? Look at this lull in mortgage rates. We had a low in mortgage rates right around February 1st Maybe around. Yeah, but probably I mean here. The way we could probably look at this a little bit more clearly.

Just go to CNBC look at bonds, look at the 10-year and what do you do when you look at the 10-year Just go back, say about three months and look at this: Yeah, you had a lull in mortgage rates around February 1st, which that aligns with what we're seeing here now. Mortgage rates today are higher than where they have been almost all of January and the beginning of February So it's possible you could actually see sort of a micro double dip. Dare I say those words. Uh, if you go to the Redfin data center over here, what do you have you could potentially see going to median sales prices, you could potentially see a little bit of a flattening.

and Recovery thanks to mortgage rates being stable but potential. And even in Florida where you're seeing that increase and then potentially a double dip again, should mortgage rates stay stable. High So the longer those 10-year treasury yields stay high, the more pain you would expect for real estate. And if you combine High 10-year treasure yields with those year-over-year comps, probably going to have a little bit of a rough spring.

but if we can get through spring and we start seeing real housing disinflation in owner's equivalent rents and we start seeing inflation decline dramatically I Wouldn't be surprised and this is sort of my forecast of of what I see for the housing market. The following happens: so I Think you potentially go through this. You have this down sort of Correction of 2022 where home prices are falling and they're falling as mortgage rates are going up. Then you have mortgage rates temporarily fall which leads to a slight bump in home prices.

Because mortgage or real estate is very sensitive to rates, right? this is potentially your Jan Feb bump. But if rates stay high for longer like they are now, you're probably likely to see this sort of continuation where we go back to at least the lows of where we were here, potentially even a little lower. As what happens is you start lapping that year over year. Fear, right? This is where you get that March to May year over year.

Fear. But come June July maybe even sooner. Come June or July you're probably going to see a substantial set of housing disinflation drag CPI down when CPI inflation starts plummeting I Would expect the 10-year treasury is going to plummet very quickly. so I would expect over here, the 10-year will probably break three percent, so that break on the 10 years is likely to happen.

That's my opinion, right? So I think the 10-year breaks three percent and that actually leads to a support being placed under the housing market and you actually see your your slow and sustained rebound back to home prices doing sort of their usual three four percent perhaps? I think a lot of that is going to be dependent on mortgage rates actually coming down again by breaking three percent on the tenure. I Think you're likely to see that so the summer and spring might be difficult because you've got to get through fear and higher yields which we're about to hit. Fear and you're in higher yields. Uh, in terms of the market now.

and they seem to be pretty sticky around this level. they might be pretty sticky at this level until the next Fed meeting, which would be about March 22nd. Uh, but who knows, they could also be sticky through about May until we really get that summer disinflation from from lapping some of the owner's equivalent rents. So that's my thesis in timing.

If I had to choose when to buy personally, I'd probably want to be looking at uh July through December as my buy time. I think July might be when you have a lot of most of the fear in markets, but December is just generally usually a good time to buy because the people who are selling usually have to sell, right? So that really puts you somewhere between Q3 and Q4. You know, is it possible that that's you, know that Florida is already beyond that bottom? That maybe Florida bottoms right here, which ends up being something like a December and it recovers from there? Absolutely. Personally, Florida is probably, uh, not in in my radar for buying anyway.

So uh, that that you know could work out for your personal situation, right? You might be more motivated now in Florida and later if you're more West Coast you might be more motivated in the second half of the year. there's just some Theses about where the housing market would go and I really encourage everybody to get started in uh, real estate. I Think the easiest way to become a millionaire it's the reason I called my course secret to millionaire a real estate investor is I actually think everybody can do it. uh, people hear that and they're like you're crazy Man, not everybody can be a millionaire I'm like, uh, wrong.

like we can because bread will cost fifty dollars a loaf I'm just kidding. as if everything just inflates that much. Uh, but anyway, no I'm very, very optimistic of that. Anybody who wants to become successful in real estate can do it.

So uh, that's my take on some of the latest regarding the housing marker.