 Today, I want to talk about the real estate market. Are we going to go down another 50%? What is the outlook here? What are institutional buyers doing right now? How does that play into our businesses as real estate agents and real estate investors or even the everyday home buyer and seller? This is what I want to dive into today. And I want to start with, all right, so investors buying. OK, I want to start with this. Just to talk about this briefly, investor buyers are buying roughly half as many homes as they were a year ago. So this is your open doors. This is your redfin. This is your institutional buyers, your Blackstones, right? Investor home purchases fell 46% year over year in the fourth quarter. Investors bought 18% of homes that sold. That's down from 19% a year earlier. OK, the pandemic boom towns Las Vegas and Phoenix saw investor purchases fall over 60% more than all other markets, of course. Investors pull back from single-family homes more than condos, townhomes, and high-price properties, more than low-price properties. So they're buying lower-price properties, and they're more buying condos, townhomes, stuff like that. There's some other interesting data points in here that I was going to share with you. This is a nice chart going back to 2002, which shows the year over year investor home purchases, right? The percentage is year over year, and you can see we're right there a little lower than back in the 2006 range right there. And you see here in 2021, and so it spiked more than ever, OK? And one of the things that a lot of people talk about is the ease for these investors and big institutional buyers to be able to go out there and raise money. They raised $30-something billion like the first half of last year, and they've raised basically 20% of that on the last three quarters. It makes a lot of sense. People are, you know, there's uncertainty in the real estate market, and I feel like we still have uncertainty to go. See, here's what we know, right? With real estate, we want to think about two things, OK? As we move forward, and we're thinking about buying, maybe as an investor, maybe we're buying multifamily, you know, or even if you're trying to time the market out for the just perfect moment to buy, right now I feel like, OK, for the next six months, I don't know if prices are going to stay the same. I don't know if they're going to go up. I don't know if they're going to go down. I don't know for certain, OK? That's the definition of uncertainty. And so, right now, that's the state of the market. Now, as the market finds the floor of prices, and things improve, and then we see that continue, and we know that it's not a false run, a false rally, then we feel very certain about this 2% to 4% appreciation until the next recessionary period. And then we'll be back into a more certain market where we know what's going to happen. I think a lot of investors, and there's more liquidity, there's more cash on the sidelines than we've ever seen from investors, because everybody's sitting back saying, OK, what's going to happen? I don't want to jump in now when things go down. I would love to buy as things are appreciating. And as we see investors pulling back from the market, you know, over 60% in Las Vegas, 46% throughout the country. As we see this happen, in my mind, I'm thinking, OK, you guys, the investors, the big institutional buyers, you went in and you bought all the way into the overinflated market and you were still buying into the overinflated market. And now, as you pull back, I feel like that's lagged. I feel like the smarter investor, you know, may have pulled back beforehand, OK, beforehand. But what are they going to do now? They're going to overcompensate moving forward. They're going to wait too long. They're going to miss the bottom. But that's OK, because when they buy after the floor hits and it's on the upswing, then it's appreciating the day that they buy it instead of possibly depreciating. So it's actually smart in reverse. But here's what I want you to pay attention to. When you see articles, you know, later in the year or next year, and you start to see an uptick in investor and institutional buying, that's when you're going to work. That's going to be a nice signal that we have hit bottom and we're coming back up in terms of prices. But this moment in history is so different from 2005 to 2008. If you think about 2005 to 2008, you know, that's when housing started to come down in the late 2005. Actually, my market locally, it was early 2005 when things really hit a wall. And that downtrend happened for six years or so into 2011, 2012 was the first year. The end of 2012 was the first year we started to see that rebound and prices hit that floor. That happened over a course of five, six, seven years that we saw that slow downtrend that just felt like it would never end. Meanwhile, in today's current, you know, I don't want to call it a recession because that's a debatable situation. But the, you know, price swing, we're down 20% of some markets price-wise. Florida hasn't gotten hit as hard in terms of prices. There's plenty of markets that are already negative year over year right now as we speak. Nationally, we're not there yet. There's markets that we may not see year over year negative prices. But this has happened so fast, right? What took back then six years to happen has literally happened within less than a year. And so there's an argument out there that maybe because things have crashed, not crashed, I don't want to say crashed, it's not crashed. Maybe because things have downtrended, this down cycle has happened so fast that we're going to have a pretty quick recovery as well. But, you know, we don't know that. The differences are many differences. Back in the day, you know, I was actually walking into banks signing pieces of paper saying I made a million dollars, which I did, but they never checked it. They literally just wrote me a check for whatever the loan I want. Why? Because they called their buddy appraiser, they literally called their friend to go appraise the property, whatever price the banker told them to appraise it at. It was crazy thinking back to how that was. Today, we're on such a solid foundation of the third-party appraisal process, you know, the restrictions of lending and the whole process. Now, not to mention back then, the average credit score was 670, and right now the average credit score for someone with a mortgage is 770, 100-point jump. This is a very quality market. And I'm so happy, and I was happy when they did this. I'm so happy that they turned everything around to regulate so much in this area, because I knew that, because I went through it and I lost everything. I knew that that would protect us the next time we saw a market cycle like that. And although this market cycle is nothing like 2008, it's still, there's this layer of protection with the way that they have orchestrated the process and mortgages. And so we're just on such a better foundation right now. Something that is kind of concerning, and I think there's a couple of things holding prices up higher than maybe they should be. And only time is gonna tell if we're gonna hit that extra leg down. But I think there's two things happening here. Number one is inventory, of course. There's just no inventory. Single family housing is down 20% as far as new construction goes, as far as new permits and new construction is down about 20% overall. And so the builders couldn't even keep up pre-pandemic or even during the boom, how can they keep up if they're down 20%? So, and I think I saw a stat, I believe it was 80% of mortgages are below 4.5% right now. People that have mortgages, we're not gonna see an influx of inventories. Inventory is a problem, but I think another, something else is holding prices up that nobody's talking about that's just underlying is these two-to-one buy downs. It's kind of artificial, right? If the seller's buying the rate down and the buyer says, okay, my payment's gonna be this much. Sure, I'll pay this price because my payment's gonna be this much. It kind of feels like that's artificially holding the market up a little bit. I was thinking about this the other day. So it's real interesting to think about. Now the difference is, in today's world, you have to get approved for that end mortgage rate. So if you get like a, if mortgage rates are 6% and you get a two-to-one buy down, right? And now you're gonna walk out of there with a 4% interest rate for the first year, you have to be approved for that 6% to be able to qualify for that loan. So that's a difference in, I think now in 2008 as well. Back then, you didn't have to get approved for the end mortgage rate. You could just get approved for the very first mortgage rate. So again, solid ground, just a few things that's kind of concerning me with that. Another, something else that's concerning me is rents, right? Rental market tracker here, rents, rows. Well, let me go back to the investors for a second. Let me show you some more, some more interesting charts here from Redfin. Let me move this over so I could get this. There we go. So investors bought half as many homes and Q4s they did earlier, okay? We talked about that and this shows you the chart going back to 2002. Here, this is the chart I wanted you to see. Let me try to zoom in a little bit. So investor purchases year over year changed. Las Vegas, 67%. That's crazy. Phoenix, 66%. Nassau County, New York, 63%. Atlanta, 62%. Charlotte, North Carolina, 61%. These are huge numbers of investors who are pulling out of the market and they're just sitting on the sidelines. They're building capital and they're waiting on that floor and then come back up. When you see the articles of investors coming back, but the cool thing for the regular everyday buyers and sellers is that we're not competing with the institutional buyers. Now if they decide they wanna liquidate, which we haven't seen that yet, if they decide they wanna liquidate, then that's gonna be interesting to see how that plays out and I will report on that to you as that happens, if in fact it does. But let's talk about rents for a second, okay? Rents have skyrocketed, as you guys know, okay? Rents rose 2% in January, the smallest increase in 20 months. So we're already seeing some concessions. We're already seeing rental concessions from landlords saying, hey, we'll pay for your first month. We'll give you the first month free or they're taking a little less. These concessions end up being far less on the yearly return for the investors and this could present a problem when it comes to investor buying, the buying on the cash flow of the properties and if rents start to come down, which it looks like they are trending that direction, then that could potentially cause another leg down with prices, all right? I believe that this is something that could affect prices. Rental price growth is slowing due to increased supply, okay? And waiting demand. There are 11 metro areas where rents are already falling with Phoenix and Oklahoma City seeing declines of more than 6%. It's already coming down in some markets. So something else to note is that single-family homes, or the new construction is down 20% right now, but for multifamily, it's up 9%, which means what? Which means that more supply, more rental supply, which is going to hurt the overall rental market when you throw more supply into the mix. Let's look at this chart, okay? This is a year-over-year growth in January. Not in January, this is, no, this is January. This is every year, this is through the year. January to January to January, this is the growth. So of course, last year we saw this massive. I mean, 17.5% year-over-year growth with rent is crazy. Now we're down to 2%. This is nationally, and we are already seeing markets that are starting to come down. Oklahoma City and Phoenix down 6%. January marked the eighth straight month in which annual rent growth slowed. So eight months of rent slowing. Rents fell 1.9% from a month earlier, and we're down 5.4% from the August peak. So it's been trending down since August. Look at this guys. This is something to really pay attention to when it comes to the market, because this could in fact, interest rates was, the big shock in the market that really reduced demand. Now the investors are really pulling out, and now we're seeing rent start to come down from the peak in August. And here's a chart of rent from 19, where it was like 1640, right? And it peaked out at $2053, and now we're at 1942, right? This is for the entire country. So interesting to look at this and think about the possibilities of what this could potentially do to the market. Here we go, Phoenix down 6%, Oklahoma down 6%, New Orleans five, Minneapolis five, Houston five, Baltimore 4.6, Birmingham, Alabama, Roll Tide 3.4%, Chicago down. So we're seeing this. We're seeing this. Now here's the rent increases. Let's see, what is this gonna be for? Let's see, Phoenix median price. Let's see, this is large increases, right? You still got some markets that are increasing, which is what's balancing this out to see that 2% increase year over year. So this is all and just incredibly interesting to look at this, think about this, and what's happening in the market overall. So I think what we're gonna see, I think what we're gonna see is a couple of things moving forward. I believe we're gonna find that pricing floor sometime this year, mid-year, third quarter, late second quarter. That's kind of my opinion. And we're gonna see yearly, year over year price negative. Housing prices go negative year over year nationally. We're already seeing that in some markets, but we're gonna see that on a national basis. You're also gonna see May 10th, the CPI report come out and give a fantastic report. This is what everybody's arguing in the mortgage industry, that that May 10th is gonna show some incredible year over year numbers for inflation and really help that 30-year fixed situation out, the interest right there. And then we're also gonna see an increase in inventory. So, let's see what happened here. Let me expand this a bit. Let's see, let me expand this just a tad. All right, so this is new listings. Let me get to active listings, boom. Okay, so if you see here every single year, this is 2021, boom, it increased last year, 2022. It was lower when winter did into the year and then it started to take off. You see how it kind of takes off at the same time every year? And then it goes up pretty much the same time. And then around August every year, right here for the past couple of years, it downtrends. Let's look, let's bring 2020 into the mix. 2020 was the year of the actual shutdown for the pandemic in the beginning. So it's gonna look a little different. Doesn't look that much different. It kind of had that little hump right there where we added some listings there during the shutdown. And then it kind of leveled out and then it kind of took the same trajectory after that. So we're gonna see, it's already kind of leveling out. This blue line is 2023. We're gonna see active listings kind of bottom out here over the next 30 days and start to slowly climb up. Okay, just like we do every single year. So let me get back here, boom. So just think about what's happening right before our eyes. You've got some more than likely some favorable inflation numbers coming out in May. You've got inventory that's gonna start creeping up over the next 30 days and continue to creep up throughout the entire summer till August like it normally does. Then you've got rents starting to decrease just a tad. In certain markets anyway. So that's gonna be a very interesting, you know, May, June, July. And especially if we see real estate prices start to level out and find that floor, it's gonna be a very interesting summer and I'm really looking forward to it. So anyway, if you enjoyed this video, I'm gonna put another video right here. Click this video and watch this one. And let me know if you have any questions in the comments whatsoever and I'll see you on the next video. I 35 with the top down. Quit to tell a hater they should get like me. Seem like.