 What's up everybody? Ricky Caruth here. So one thing I wanted to address this week was housing affordability. We see article after article headline after headline bashing housing affordability and yes, housing affordability has come down. That is an absolute fact but these media outlets seem like they just want to grab on to anything and just ride it out as long as they can. And I get it, they're trying to get more clicks and so am I. But the difference is I'm trying to get clicks by showing you the real facts and why housing affordability is not that bad. It's not as bad as it seems. It's getting better every single day as we speak and it's going to continue to get better as time goes on. I'm going to break down the numbers for you in this video and I'm also going to tell you exactly what you should be doing if you're thinking about buying a house right now. And real quick before we get started, I just want to talk about my four events kicking off the new year. The first one is January 9th through 12th. That's going to be in Vegas. I'm going to be speaking on stage with Ryan Panetta. If you know who he is, he's a really up and coming business influencer, real estate investor, so on and so forth collaborating with some of the biggest names in the industry. That's going to be an incredible event, a very forward thinking group. That's going to be with three people, real estate people, entrepreneur people. It's going to be amazing and I strongly suggest that you go to this event and I really want to meet you there. The second event is going to be in Long Island. That's going to be January 19th, another incredible event with phenomenal speakers. So if you're in the Long Island area, you're anywhere in New York, Connecticut, anywhere up there, do what you can to get to this event because I would love to shake your hand and see you there. The third event is going to be a banger. That's going to be January 25th and 26th in Orlando. This is going to be Gold Bar Live number one. The first day is going to be from 10 to 1. It's going to be multi speakers, panels, so on and so forth. Incredible group. The second day is going to be an all day workshop with me. You can work out with me in the morning if you want. Lunch is included and I'm going to be collaborating with you on how to become the top real estate agent in your local MLS, which I've done eight years in a row. I've helped many other agents do the same thing. I'm going to be talking about social media and how to use social media to build your platform that you can go out and build any kind of business you want to offer that platform and also real estate investing. Whether you're just starting your portfolio or looking to expand your portfolio, I'm going to be covering all that in that day's workshop. And the fourth event is going to be in my hometown right here, Gulf Shores, Alabama, where I grew up on the beach. This is one you could actually make a mini vacation out of, come down and check out the white sandy beaches, but it's also going to be an all day workshop. And this one's going to be cool because it is going to be in my hometown. I'm actually doing it right here at the clubhouse in the Soda Vision I live in. And again, you'll be able to work out with me and then we're going to spend all day. That won't actually include breakfast and lunch and I'm going to be covering a lot of the same stuff, how to become number one in your market, social media and real estate investing. So I'm looking forward to seeing all of you in Vegas and Long Island, in Orlando, and here in my hometown in Gulf Shores. Come out and see me. I would appreciate the support and I'm going to link in the bio for all those events. Let me know if you have any questions on that. And with that, let's get into the video. Okay, so first off before actually break down the numbers of buying a house last year versus this year and where it's headed into 2023. Let's just take a look at the National Association of Realtors Housing Affordability Index. Okay, you can see the price of homes here in this column. We've got the mortgage right here. This breaks it down month by month. Okay, you got your mortgage payment, your payment percentage of income, the medium family income, qualifying income, what you need to actually qualify for the loan and then the fixed affordability indexes. So this affordability index is red, whereas 100 is really balanced. It's right there where it needs to be. If it's at 100, if it's above 100, that means that the family has can can over afford. There's there's more money there. They're making more money than they really need to own the house, which is good. And then if it's under 100, that means it's it's getting into that borderline, you know, unaffordability range. And so when you look at this month by month, back last October, when, of course, rates were around 3% and all that, the affordability index was at 143. That is insane. That is just absolutely insane. And that was largely due to the mortgage rates being 3%. And you can see that when mortgage rates started to come up in January, that the affordability index started to come down into the 130s. Okay, so they were in the 140s until started to creep up there in January, February, it took another big jump, and it jumped jumped into the 120s. And then we get into the one teens. And then in May, when rates did go well over 5%, we were looking at under 100 at that point. Because remember, at that point, prices were peeking out, prices peaked out in May and June. So here we have interest rates jumped up into the mid fives, along with historical highs on prices. And so that's what caused that. Then you see the affordability index kind of settle out. And then in August, it actually got back over 100. So it fluctuated back to over 100. And that was largely due to the fact that prices came down. You see right here, prices are starting to come down in August. But then interest rates jumped back up, started to come up higher, not back up, and they continuously went up. But they went from August 5.29 to 6.18 in September. And that caused the affordability index to come back down under 100 to 97. And then on October, which is the last reading, the affordability index was at 91. Okay, now keep in mind, prices are down lower now than they were in October. October is two months ago. Okay, and also the rate in October was 7%. We know the rate right now is at 6.3. So this number here, the affordability index, is better than what this is showing, because this was in October. And now we're almost in January. And we know things are better now because prices and interest rates are lower. So I feel like when the next readings come out on this, it's going to be at 100 plus. And we're going to be back in that very balanced area of the affordability index. So you see right there, it's not as bad as it seems. Yes, it came down, but it's really coming down to really where it needs to be. Now let's break this down for buying a house last year versus this year, what it looks like with monthly payments, with the increase in interest rates, and then what it looks like moving forward. Okay, so right here, I'm going to illustrate loan value, the rate payments, and income, right? The median household income. So last year, we buy a house, the loan value is $400,000. We get a rate for $3.5 last year, and our payments are $1,796 with the median household income of $9,000 per month. All right, so we jump to this year. This year, prices went up 10%. So our loan value is at 440 now. Okay, so we went up there. Interest rate is also up. Okay, 6.5. All right, our payments now with the 10% increase in prices and nearly doubled on the interest rate, we're looking at $2,781. Okay, now that right there is pretty much where the media just stops. They pretty much say, oh, look at this, the payments went up $1,000. There's no way that people can afford this. Let's go ahead and put out some headlines. This looks like some really good, juicy, negative media that we can put out there. But what they're not accounting for is the increase in household income, which increased 9%, $810. So the difference here, when you look at this, was payments did go up higher than your income. Okay, $985 difference on the payment versus $810. And also you have inflation of other things, gas, food, travel, etc. So there are other factors here that make things a little more unaffordable than they were due to inflation. And we'll talk about inflation in just a second. But I just bought all my tickets for airfare and travel and hotel and rental cars and everything for these trips I just told you about. And let me tell you something, it was way cheaper than last year. I got a fight to Orlando for the whole family for $300 last year, it was $1,200. I got a fight to Vegas for $2,200 for the family. It was $3,500 last year. And there's more to choose from too. And the rental cars were about half the price. You can tell if you're out there buying stuff, you can tell inflation definitely in certain areas of the economy are definitely coming down. You can feel the pressure of less demand and these companies and businesses trying to reduce prices to spur demand. That's what happens here. And that's good for us as the consumer. Now let's look at next year. Now next year, we're calling for basically a flat year with prices. So let's just say 440 again for the loan value. Five and a half percent interest. I'm going to talk about that in just a second and why I feel like that's going to be a reality. And so now we're looking at 24.97. So we're looking at less payments. Our payments are going to be cheaper next year than they are right now. But our income is going to be higher. Why is that? A lot of factors are factoring into the reason why our income is going to be higher. But this year, we had a 9% increase in household income. Next year, we're looking at a 7.6% increase in household income. We're going to be at $10,655. And we look at the difference there where your income is increasing, but the monthly payments are decreasing. So right now, as it speaks this year, it's not as bad as it seems with the increase in income. And when you think about next year, the monthly payments going down quite a bit and your income coming up, then that creates a phenomenal situation where affordability is actually going to come up substantially. Now you might be thinking, okay, I'm a home buyer, and I'm still looking at 6.5%, 6.3% interest right now. I'm going to tell you in just a second how you can get that reduced right now as we speak and go out there and buy your dream home. But first, let's look at inflation. So we know based on this chart right here that the 30-year fixed is really tied to the 10-year treasury. You can see the spread. The spread is always 1% to 2%. It's always been 1% to 2%. You can see that right here. This is going back to 2010. But if you go back even 40 years, it's the same thing. It's the one to two-point spread between the 10-year treasury and 30-year fixed. Now what is the 10-year treasury? What is it correlated to? Well, it's correlated to inflation. So look at this chart. This is the 10-year treasury and U.S. inflation. The blue, the purple line there is inflation. And the orange line there is the 10-year treasury. This is going back 40 years. We know that the 10-year treasury is tied to inflation. We know that the 30-year mortgage is tied to the 10-year treasury. So what do we need to happen? We need inflation to come down. When inflation comes down, then that's going to cause the 30-year fixed mortgage rate to come down. The 30-year fixed is not tied to the federal fund rate. When they're increasing the Fed rate, what they're trying to do is combat inflation, make inflation come down. But that rate does control credit card debt, auto debt, HELOCs, things like that. But it's not tied to 30-year fixed mortgage rates. And so everybody, every article you read, every news outlet has negatives they want to be. All the gurus and everybody that is talking about inflation and knows what they're talking about, everyone's on the same page. I haven't found anyone that says inflation is going to stay the same or even go up next year. Everyone's on the same page that inflation is coming down next year. And it's already come down some and it's going to continue on that trend. And as it continues on that trend, it's going to continue to carry the 30-year fixed rate down. Now, let's look at the inventory situation. Because I want to put all this together for you and really paint a picture. And I showed this in the video yesterday. Here is the inventory. When you look at inventory, when it was November 21 and it dipped down and now it's up, but it's kind of trending down a little bit right this second from the highs. This is a zoomed in version. And I showed this chart yesterday of the normal cycle throughout the years, 14, 15, 16. Look at that. It's a wave every single time. And what happens? Inventory plummets every year, plummets, plummets, plummets. And look, it's already started to have that same exact pattern right here moving in to the new year. So we expect inventory to plummet just like it does every single year. So the opportunities in 2023, we have an increased household incomes due to wage growth and other factors. We've got less inventory. We know that's going to happen just due to the seasonality of new listings coming onto the market and inventory and supply and demand. And we're going to have lower mortgage rates because this inflation situation is getting under control and they'll continue to taper that down more and more and more. So that all leads us to this, a very healthy housing market. I'm just showing you guys the facts here. This is just pure numbers. And right now, it could be your best opportunity to buy. If you're looking to buy a house, I don't think you should wait till spring, let's just say. If you're looking to buy a house, I think sometime in the next 30 to 60 days, you need to make your move. And that's even if we're thinking interest rates are going to come back down. If you're waiting on interest rates to come back down, you're waiting with everyone else. And as soon as they do come down, what do you think is going to happen? Everybody's going to be fighting over the same house again. That's not the situation you want to be in. You want to go into a house now and I'm going to show you how to get a lower rate right now. And you want to go into that house right now with no competition. And you're going to be able to go in and negotiate your terms and actually get the seller to pay for that buy down to get yourself a cheaper interest rate. So let's look last year. $400,000 asking price. What happened last year? You're going to pay $50,000 over that asking price with no terms. Sometimes more than $50,000. That was a horrible situation for buyers. The purchase price was $450,000. This year, the same house were up 10%. So it's $440,000. We're negotiating two to three percent with great terms and we're getting that purchase price around $430,000. Now, what we're going to do is we're going to take that $10,000 when negotiated and go get a two to one buy down. And if you don't like the two to one buy down, I have another option for you. But the two to one buy down, get your mortgage rate, get your mortgage rate drop 2% year one. So the first year of your mortgage, you get a 2% drop. So if it's 6.3 right now, you're getting 4.3. 1% year two. So it's going down to 4.3 first year, 5.3 second year. The current fixed rate is 6.3. You're getting a house right now for 4.3 with no competition from other buyers and you're able to go out and negotiate a good deal on your dream home. And that's what's very interesting right now because I think you're going to be fighting over houses when interest rates get down into the five and a half range. If you remember the last time interest rates were five and a half, that was a dream market where things were still flying off the shelf. We were still getting full price, over asking price for properties at five and a half percent, 30 year fixed. I think that's what's going to happen again because inventory is going to be just as low. But prices are going to be even lower this time around. So I feel like there's going to be a little frenzy there. And even if it's not a frenzy, it's not going to be a frenzy like it was. I'm not saying we're going to go back to that market at all. But what I am saying is that for the few houses that will be on the market and then out of that group, the nicer houses out of that group that are on the market, there's going to be several buyers that want those houses and you're going to be competing. And so why not go out there right now and get that dream home for four and a half, 4.3 percent interest rate for the first year and then as it tapers down to 5.3 and then it goes to 6.3 that second year, that third year, you can go out and refinance before that happens. If interest rates do go down to the 5.5 or even five range, you can go refinance it before that third year. You can go refinance it and you could take the money that the seller paid for the two to one buy down. That's actually your money, the seller's technically paying it. But it's actually your money, the buyers are paying it technically. And so that money is actually your money. So whatever's left over there, you can apply towards the cost of refinancing. So get that. And if you don't like this, if you feel like, oh, this is a little bit too risky, which I don't think it is at all, okay, at all, then you can go out and just get a permanent buy down and just buy it down 1 percent or 1.2 percent and just have that permanent fixed 5.3, 5.1, 5 percent interest rate. And this is great for sellers who are like, I don't want to get out of my 4.3 percent interest. Well, yeah, you can still have 4.3 percent interest, go get a two to one buy down and get into a house where you can freely look at different houses right now and get out there and find the one you really like before inventory goes to nothing, before inventory goes to nothing. So I feel like this is an opportunity right now, guys, honestly, and I feel like waiting is not going to be a smart move if you're a buyer or even if you're a seller, because if you're a seller, you're looking to buy something or replace it. And so essentially, you're a buyer as well. And for agents, I think you should have this information at your open houses. I think you should be using it at your listing appointments. I think you should be making content around this. I think it should be in your weekly emails. I think you should be talking about this a lot right now, because as the market changes, moving into the new year and into the spring, the dynamics are also going to change quite dramatically. And I feel like you're going to look back and say, I wish I would have taken advantage of that opportunity and let more people know about this. In tomorrow's video, I want to talk about real estate investing and why I'm going to go out there in 2023 and buy $50 million worth of real estate. I want to break it all down for you. So subscribe if you haven't already. And also my book, List to Last, How to Survive Every Real Estate Market Crash. I wrote this back in 2017 specifically for this moment. So I'm going to put a link in the bio for that. Also, if you haven't joined my group text, just text me right now and add yourself. It's at 251-312-8844. I send motivational text all the time. You can also keep up with my events and everything else I have going on. And also, I write in every single text and I read every reply. So when you get a text, I actually typed it out right then and sent it out. And every time you reply, I'm reading those replies. And I reply back to as many of them as I can. And as always, guys, thanks for watching. We'll see you tomorrow.