 is Prince Dykes. Welcome to The Prince of Investment. Coming to you guys and girls live all the way from a beautiful city and state of Denver, Colorado via Honolulu, Hawaii. Don't forget to hit that like subscribe button and share button. And as always, I don't have a lot of time and I definitely know you guys and girls don't have a lot of time, so we're going to jump straight into it. As you guys and girls can see in the description box, we're going to be talking about the housing market and why haven't we seen foreclosures on the market? You see in previous episodes, I talked about the economical slowdown coming and how it would impact housing. Welcome to the episode discussing how to find houses that go on foreclosure, but go into foreclosure. But as the market, as interest rates, well, first of all, we have inflation that is rising. And then from inflation, the Federal Reserve has become aggressive. Now he's slowly backed off the aggressiveness with cutting back off the interest rates. We're raising interest rates still. This has caused housing market to slow down along with stocks and along with all asset classes. So if it's slow down, people are kind of wondering, so what's going to happen in the real estate market? Is it going to crash like 2008? No, I think the people who live through 2008, like myself and who are investors and financial people, we have what we like to call post-traumatic stress syndrome. Not what I like to call, which is really a term. But when you become fearful that something is going to happen again, that was a very traumatic incident that you went to in the past, went through in the past. So why do I say that we're investors have post-traumatic stress syndrome? Because we saw 2008 when we had the housing market debacle with CDOs collapsing. And you guys and girls know that's for another episode. But as things started to turn, I started to look for foreclosures. I started to look for houses that have become on the market, things like that. So one of the first things I wanted to discuss and talk about today is what was the difference between 2008 and right now currently in 2022? The first thing is, yes, we had a housing market that started to decline in 2008. That really collapsed in 2008. So for a prime example, let's say I purchased my home for $400,000. I turned around today, the housing market collapsed. They said my home was only worth $300,000. I just lost my job. I can no longer afford the mortgage. I lost my job. I can no longer afford the mortgage, but my house is only worth $300,000. I purchased it for $400,000. And let's say if I still owe $400,000. Guess what? Now I'm less to foreclose on the home because I can't afford the home and I can't take the market to the, I don't want to take the house to the market and sell it because it's going to be sold for less than what I purchased for. Y'all know the simple concept. Buy low, sell high. Now buy high and sell low. So that was a dilemma that a lot of people fell into where they started selling their own homes. People just walked away from homes, all type of things, right? Hey, I lost my job. Plus I can't really sell the home and things like that. So currently what we're experiencing is, let's say back in 2020, we saw this economical push into the housing market. When we saw this economical push into the housing market, this was due to the Federal Reserve lowering interest rates as a way to stimulate the economy throughout the pandemic. These kinds of interest rates, what it always does is raise asset classes. So we saw stocks go up and rally. We saw real estate go up and rally. Crypto was even, everybody was rallying in the asset class. So now I purchased my house for $400,000. Now it's worth $600,000. As the market starts to pull back, now my house is only worth $500,000. I paid $400,000 for it. Now they're telling me I can sell it for $500,000. I lost my job. You see the layoffs happen. Amazon is laying off. This company is laying off. This company is laying off. Sprint Airlines is cutting this many employees. Frontiers cutting this many employees. And this is going to be a trend as long as the Federal Reserve continues to be aggressive with interest rates. Now my house is only worth $400,000. I mean, I paid $400,000 for it. It's only worth $500,000. I got put into that layoff. I lost my job. I don't have a way to, I can no longer afford my mortgage. Guess what do they're going to do? I have a house that I owe $400,000 on that I can take to the market and sell for $500,000. So I'm going to take my house to the market and sell it for $500,000. Once I sell it for $500,000, I'm going to profit $100,000. So most people who walk into situations where they lose their job, lose their careers, and they can no longer afford their mortgage in this current economy in 2022, people can literally just sell their house. Now we noticed the housing market has shifted. It went from a buyer's market to a, it went from a seller's market. Now it slowly turned into a buyer's market, like we always know what will happen. So before the seller, you could just say, Hey, sold as is, take whatever you can get from it. You know, great time to be a seller, but it's not a great time to be a buyer in that particular case. Now it just turned into the hands of the buyer. Well, I think it's going to be a great opportunity for buyers. Start about the end of next year, middle next year, end of next year, depending on how the inflation and interest rate things kind of play out, how that plane lands, right? So this is why you don't see houses going for foreclosure on the market currently. That's why you haven't seen that spike. Something that was waiting for a while. I said, okay, unemployment, people buy these houses. Some people stretch themselves very thin to get into houses at the peak. Now, I mean, they wrote checks, they did whatever they could do, they overbeated their homes, the house of praise for $500,000. They won the bid at $550,000. They came out of their pocket for $50,000 just to get into the home. The $50,000 they really didn't have. Now they have a pretty high mortgage. And the best thing that can happen to them is hopefully interest rates start to peel back down, which I expect to kind of start to happen the middle of the end of next year. So now let's say if you just got into this home, you stretch yourself in, then all of a sudden the housing market starts to pull back. What are you going to do? Right? So right now, people are just selling their way out of the problem. Hey, I can just sell this house, walk away with the profit. Good thing. But as we walk into next year, I changed my viewpoint on the foreclosure market because I'm paying attention to everything, how it changes every day. The one thing is, is that people who purchase at the peak, who may lose their job, the house may not, the house was, for prime example, in the situation I gave you, the house was worth evaluated at $500,000. They paid $550,000 forward. They had to come up with $50,000 to just close on the house. So they came up with $50,000, probably everything they had to close everything they had. Now they close out on the house for $550,000, right? And the house wasn't even worth $550,000 when they got into the house. They overbid it. Now the house and market start to cool off, meaning interest rates continue to rise or whatever. The house is no longer worth $500,000, the step is worth $450,000 now. You paid $550,000, the house is only worth $450,000. Here you go back into that situation. Hopefully, that person can still afford the mortgage. Hopefully, interest rates drop. If the person, if you're in that situation and you lose your job and you can't pay your mortgage and you can't do it for, not for abearancy, but a way to reorganize your mortgage, right? Have some type of forbearancy put in there and you're going to be in a hard spot. You're going to be in a very hard spot if you walk into that situation. My best advice if you do walk into that situation is to speak with your mortgage. The mortgage broker will own you a loan and say, hey, I can no longer afford the home, but let's reorganize the home. Let's reorganize the payments. Let me take about six months, seven months. Most mortgage lenders will work with you, especially in times of economical hardship. They know that you're having a hard time. They'll push off your mortgage. I'm sorry. They will rearrange your mortgage. You don't have to pay your mortgage for maybe up to a quarter. For most people, I know that speak with their mortgage companies. They give you 30 days, not 30, 90 days, three months, 90 days, and then they'll reevaluate it. They give you 90 days and they'll reevaluate it. Give you 90 days and reevaluate it, right? So when they give you those 90 days and reevaluate it, they'll allow you to do what? Change your mortgage if need be, all right? So that's one of the things you don't have to worry about when you are not have to worry about. But those are one of the things that you can do if you run into economical hardships and you own a mortgage. So that's the things they do to protect people. Look what happened in 2020, when you saw so many people lose their jobs, lose everything they had in 2020. You know, you saw restaurants and industry get demolished, right? Have a hard time. So many companies start to lay off and so many companies did freezes, but the government rushed to the printer and print out all this PPP money that we're dealing with now. It felt good because it fixed the problem temporarily, but in the long term, we have to hurt right now. So when the government did that, they did what they call forbearances. So forbearances was ways for people to keep their homes and to keep them in mortgages that they probably couldn't afford or they couldn't afford. But it was a way to reorganize your debt. How does that work? Let's say I owe $400,000 on my particular home right now. With that $400,000, I in return call the mortgage company and say, hey, I can't pay $3,000 a month for a mortgage because I just lost my job and things like that. They say, hey, we're going to give you up to 90 days. You don't have to pay your mortgage for 90 days. We're going to rearrange your debt where you're going to pay the mortgage on the back end. So when you do start to pay back your mortgage, your mortgage payments may be a little bit higher, but it gives you three months to kind of get on your feet or whatever. Hopefully, in that three months, you can get unemployment, something like that, to at least you can make one mortgage payment in the timeframe, maybe every other month, or maybe you can strap together something before you get back on your feet. Mortgage companies do this big time when it comes down to hard times. When you can't afford your mortgage, you can't pick up on some of the things that's going on. So right there, there you go. That's why we haven't seen the mortgage crisis. That's why we haven't seen foreclosures. This is why we haven't seen them because people now, the housing market is hot and I purchased my home back in 2020 and I can't afford my mortgage. I can just sell my way out of the problem and walk away with 50, 60, 70, 80, $100,000 depending on the situation. Why walk away and foreclose on my home when I can just sell it for a profit? That's why we have not seen a uptick in foreclosures because the housing market is still kind of hot. Now, if you're someone that caught the market at the peak, meaning you will use one of those people that overbid it for a home that evaluated less than what you paid for and you had to come up with all this money for closing because the home wasn't worth what you purchased it for, then the market starts to cool off and once the market started to cool off and let's say if you get laid off while the market is cooling off, now the house, if you did want to sell it, you're back in a bad situation where you may have to short sell because you're going to be upside down. The house would value it at $500,000 but you wanted to bid at $550,000, you closed at $550,000, meaning that you had to pay another $50,000 and the house was only worth a half a million. The market cools off. Now, the market cools off and then your house is only worth $480,000 and you're unemployed. Now that you're unemployed, what happens? What does that mean? You can't afford your mortgage. You can't afford your mortgage. You can't sell the house. Let's just sell it for a loss. You just don't want to walk away from the home. You can try to speak and reorganize your debt. One situation I just told you about earlier or you can be in that situation that a lot of Americans faced in 2008. Those are the people that may be getting into the foreclosure markets and short selling markets, things like that. Well, ladies and gentlemen, that's going to be my time for today. Hopefully you guys and girls took away something from the show. Notice and see, get something to understand of the economical machine, how it works, how is it different from 2008 in now? Why haven't we seen foreclosures but we see the cool off in the market? Things you can do to protect yourself, not protect yourself, but if you walk into one of the situations where, hey, you just became a first time shareholder, not shareholder, but homeowner this year and you supposedly got laid off and you can't afford your mortgage, what are you going to do? Can you sell your way out of it or do you need to afford parents your way out of it? Hey, ladies and gentlemen, I hope you guys and girls took something out of it. Hope you learned something from it. As always, y'all know my name. I'm Prince Dykes. This is the Prince of Investment and to the next video, podcast, cartoon or whatever it's crazy, y'all see me do around the globe. My name is Prince Dykes. This is Think Tech Hawaii. Peace, be safe. I'm out and thank you.