 Elon Musk just tweeted this, commercial real estate is melting down fast. Home values next. So I want to break all of this down. I want to show you what I believe he's looking at because there are some similarities to the real estate market now and the real estate market in 2008. So I want to share all of this with you and I want to dive right in here. First off, I want to actually show this must outlook echoes the opinions of experts like Ray Ferris, the chief US economist at Credit Suzy and Ann Shepardson, the chief economist and founder of Paytheon Macroeconomics, okay? Ann Shepardson actually called the 2008 housing crisis but both of these chief economists predicted double digit home price declines in 2023. But that's not what's happened, is it? If we look at home prices right now today, according to this Redfin data, which is taken from MLS, all the MLS data, we started out the year at $349,000 per house. It went down to about 343 as the market was declining as it always does, as you can tell every year, we see a price decline there in January and February and then it picks right back up just like it does every year and it's shot like a rocket to the moon and we're at $378,000 per house on a medium home price. And if you look at this chart, you'll see that we're inching closer and closer to becoming positive year over year. We're still negative year over year, but the day is coming and the next 30 to 45 days where we will be positive year over year for home prices. And if you calculate this, if you look at the 349 that we started at and the 378 that we're at right now, we're actually up about 9% on the year positive appreciation. Last year we saw around 6%. This year we're already at 9%. Now prices could crash and burn, of course. I'm not telling you that I know what's gonna happen, ever. But what I can tell you is here's the data. Here's what we're looking at. Here's what I think is gonna happen and based on the 21 years of my career, watching the ups and downs and now actually studying the history of the real estate market, I'm starting to understand there's some very strong similarities in the cycles here and everything else. I'm not here to tell you that we're not in a crash. We are definitely in a crash. We're in a crash when it comes to inventory. We're in a crash when it comes to affordability. We're in a crash when it comes to the number of transactions. We are definitely in the same boat that we were back in 2008 in two of those categories. The inventory problem is a whole another story, all right? So I was kind of thinking about all this affordability stuff and I dove into this article. The worst housing affordability ever question mark and it showed us some really incredible charge to look at, okay? This is home payments going back to, you know, back over the years, the past four years and you see home price in 2020 and 2021. We're pretty similar. Then it jumped way up in 2022. That's due to prices already being really high and then when you double mortgage rates, what do you think's gonna happen? Really tripling mortgage rates. And then in 2023, you can see that we started out the year off the high. The high was in the late 2022 and then we reached a new high and right now we're sitting at $2,651 is the, I guess, average median home payment based on median asking prices. This is at a 6.79% interest rate. So that's interesting. And then you look at mortgage payments going back to 1989. You can see we're around 700 bucks for a long time. It got in over 1,000 back in the late 2000s during the crash and then it got even lower than it was back in the late 80s and 90s in the early 2010, 11, 12, 13 and then it kind of inch back up and then shot to the moon post pandemic. And then we are where we are right this second. Now, this chart's very interesting, the inflated adjusted mortgage payment. This is basically the chart we just looked at but adjusted for inflation. So you see back in 1989, we were at like 700 but in this chart it has us at about 16, 1700. That's because they adjusted for inflation. So this gives you a true visualization of what mortgage payments have been over the years. And you see we're not too far off right here from where we were back in 1989, okay? Yeah, did we go lower in between? Did we go really low in 2019, 11, 12, 13, 14? All that good stuff? Yeah, absolutely we did. But we're not too far from 1989, all right? And if you look at the mortgage payment as a percentage of median household income, you can see that we're definitely not where we were back in 89. Back in 89, we're close to 32%. This chart has us at about 30%. And you can see same thing, it was really low in 2010, 11, 12, 13, 14, 15. But you can see right there in the 90s, it was always between 23 and 28%, somewhere in there 25%, 27%. We're not too far off from that. So when I look at the Redfin data here showing me the monthly mortgage payment, I thought, okay, let me go to Google, let me pull up the mortgage calculator and see what they're talking about. So I calculated it and for the 26, 51 monthly payment, that's a loan amount of about 407,000, which, you know, the median home price is 378. You know, you're gonna put money down, you might put 3% down, you might put 10% down, 20% down, whatever. So I don't think the average loan amount out there right now was 407, maybe I'm wrong, but I don't believe that, but nevertheless, let's just go on these numbers here. Am I saying anybody's wrong? I'm just saying, I'm just trying to figure out how they calculated this monthly payment based on the interest rate of 6.79. But let's say we shave a point off because most people believe that we're gonna see mortgage rates come down a percent by the end of the year. Now that, who knows, right? That's another just wild prediction. We're hoping inflation is tamed to the point where senior treasuries come down and we see this decrease in mortgage payments. But if that did happen, if that did happen, and we get down to 5.79 on the same loan amount, we're looking at 2385, it's about $280 cheaper. So if we go here and we look at this adjusted inflation monthly mortgage payment and we knock $280 off, then we're definitely gonna be in line with where we were, you know, in the 90s, in the early 2000s, when we have more of a normal market. And on this, as far as median households concerned, that $280 would definitely help. And then at the same time, the median household income is increasing, right? It's increasing anywhere from around 5, 6, 7, 8% is what they have projected this year. And it's gonna continue to increase as time goes on. So we're not in as bad a shape as what it seems on the outside looking at this stuff. We're not too far off. When you look at this chart right here, the monthly mortgage payment, you think, oh my gosh, but when you adjust it for inflation, it's like, okay, we're not too far off from where we've been. And when you look at it compared to the median household income over the years, we're definitely not too far off. So we don't need a whole lot of things to happen. Now where the problem is, the problem is home prices continuing to increase. That's gonna throw all this off. And that is something that is going to happen. And that's what I'm more worried about. And I think what I foresee, I would love to see, let's not foresee, I'm not predicting this at all. What I would love to see is home prices settle out and level off for a minute and let all the dust settle and let affordability, let interest rates and let median household income and let everything kind of catch up to the prices. But that doesn't seem like it's gonna happen. Now something's gotta give. Something has to give, but it's not necessarily going to be home prices. So we have affordability that looks a lot like 2008. We have number of transactions that look a lot like 2008. So if we look here, sales in April, we're on track to do 4.28 million, okay? Back in 2008, we did 4.12. So we're looking a lot like 2008. We're not too far off from the number of transactions. Affordabilities also looks, you know, a lot like 2008. Not too far off from the 90s, but it's a little higher, you know, we're a little higher than we were in the 90s, okay? But inventory, right? This is the true housing crisis. Back in the 80s, we were anywhere between two and three million homes for sale. Got up to 4 million in 2008. That's the one big difference in now in 2008, plus the regulation of loans, you know, how much equity people have in homes. People have so much equity in their homes, it's not even funny. And, you know, it's like, if somebody becomes delinquent on their note, they can just sell their house and make a ton of money, right? Oh, I'm behind in my note. Let me just sell it, make 50,000, 100,000, whatever the case may be. The equity, the regulation on loans, solid these loans are and how low the interest rate is on most of these homes. It's ridiculous. 95% is less than 6%. 85 is less than 5%. And the list goes on. 4%, 3%. But we're sitting on 700,000 active listings right now. Look here, we're below 2021 and 2022 when it comes to active homes for sale, 729,000 homes for sale. We're down to almost 3% year over year. That is historic, ladies and gentlemen. That is unprecedented. Look at new listings coming onto the market. Where are they at? I don't know. They're not here. They're not anywhere. What's going to happen? And Elon Musk said home price is next, okay? So he's talking about home prices. He's not talking about transactions which have already taken a hit. He's not talking about inventory which is already taken a hit. He's not talking about mortgage rates which are already really sky high. He's talking about home prices. That's what he said, home price is next. But if you look here, not only during recessions but outside of recessions, home prices just historically do extremely well. We have the downturn of home prices in the 2008. Great recession. Great, awesome, okay? Whatever. If you're comparing every crash from here on out as far as home prices go to 2008, you're going to be in for a rude awakening. And then this chart, this kind of just says it all. We had the appreciation in the early 40s. Oh, it's going to crash. No, it didn't. It real estate did well after that. We had the run-up of appreciation in the mid-70s. It's going to crash. Rates are 18%, mortgage rates are 18%. It's going to crash. Appreciation, home prices did extremely well. Never went down. Never went down. And then we run up in the mid-2000s to the 2008 great recession where we saw that first real true negative downturn of home prices. And here, more recently, post-pandemic, we saw two double-digit appreciation years and then we saw 6%. And I just showed you how we're up around 9% price-wise right this second. For the year. And you've got people saying double-digit negative appreciation. Where? How? Why? And I'm not saying that it can't. Sure, it can. I'm just saying, what data are you looking at? That's what I want to know. What data are you looking at? And this is why I'm buying homes. I've got 3 DR Horton homes under contract 2 closing this month. The other one closing at September, as soon as it's done, why do you think I'm buying these homes? Because I know prices are going to... They've already raised the prices in those subdivisions. Since I put those under contract, I've already gained equity and rents continuing to be amazing. I just closed on an old one I paid cash for a couple of weeks ago. I bought it for $2.60. Those DR Hortons are between $309 and $343. Four bedrooms. Everybody wants an extra bedroom these days, so let Rick give it to you. And I'm not the only one. Here we have Petrium Partners. They're acquiring 4,000 DR Horton rental homes and a $1.5 billion deal. Now, what do you... Why in the world do you think that these guys are buying 4,000 DR Horton homes? Why do you think that I'm buying DR Horton homes? The writing's on the wall, ladies and gentlemen, that home prices are not going anywhere. There's going to continue to be a scarcity of homes. And there's going to be so many people... There's so many people right now who want to buy a home that probably can't because of mortgage rates or they feel like they're stuck in their home and they're really low interest rate that they have right this second. I'm telling you guys that, you know, we may be losing in the battle of transactions this year, but that's going to come back fast and furious. It's going to go from $4.2 to $5 million real fast. And you better be ready for the ride because when rates come down, it's going to be pandemonium in the streets, a tsunami, if you will. You've got so many first-time home buyers, more than we've ever seen in decades. You've got immigrants coming in that need places to live, rentals, they're buying houses and also just existing homeowners who just can't wait to upgrade. They're just sitting around waiting on the moment where there's more inventory to choose from or rates come down, whatever, whatever their situation is. So anyway, I just wanted to touch on this Elon Musk quote. I wanted to share my thoughts on what's happening. And also Glenn Kellman, he responded. He said, but the loss of demand for commercial real estate is what's driving demand for residential. People who work from home need more up space at home. Sales volume is down because of inventory. Today, home prices increase for the second straight month. This guy's the CEO of Redfin. I love Glenn. But he's right. You know, people are trying to connect commercial real estate and residential. I see it with Patrick Beck David. He's like, oh, it's going to crash worse than 2008. You know what he's talking about? Hey, because I sat down and had an interview with him, which I'm still in the middle of editing. So that I can put it out there for you guys, hopefully in the next couple of weeks. But what he's talking about is commercial real estate. He's not talking about residential, but people just, they mesh it all together into real estate, right? And they don't really, they don't realize it's two completely different sectors. People need places to live, right? And there's too many people out there, not enough homes. Period end of story. It's simple economics. So anyway, I hope this shed more light on the market for you and helped you understand a little better every video. I'm trying to give you a little more, a little more, a little more so you can understand what's happening in the market and hopefully be in position, whether you're a real estate agent, real estate investor to go out there and absolutely crush it. I'm looking for multifamily still. And I'm waiting on and I believe everything people are saying about commercial. I just don't, I think office spaces, depending on where you are going to get hit a lot worse. I've got office spaces, 2,000 square foot, 1,000 square foot. I've got different office buildings that are doing amazing. Rents continue to go up a lot of demands. So it depends on where you are and what you're doing. But I'm looking for multifamily and it's not going to get hit as hard as what people think, but it is going to get hit and we're underwriting deals every day. We're making offers on deals every month, trying to get something. When I find a deal, I'll let you know you're welcome to throw in with me. I'm putting my own cash into these deals. If you find a multifamily deal, please send it to me so that I can evaluate it and see if I want to make an offer. Outside of that, I love you. I hope you're doing super well. I want you to continue to crush it. Let me know what I can do to help and I'll see you on the next video. Take care.