YesTalk-208 - Housing Market Forecast 2020 Factors and Does it Matter

Welcome to Kevin Ward's Yes Talk for Realtors. This is Kevin Ward. Let's talk about the future of the housing market. People are asking all the time, what is your housing market forecast for the rest of 2020? What's going to happen? I've been talking about that, that we are in for a downturn and yet prices continue in a lot of markets. Housing prices have kind of jumped back up. And if you listen to the NAR, national association of Realtors and their economists, they're projecting, along with Zillow and some others, that home, house, house prices are going to continue to go up for the rest of 2020. So what is really going to happen? Are prices going to go up or down this year and are prices going to go up or down after 2020? Well, in the short term, there's a lot of things, things that are happening that are very likely going to keep housing prices propped up, at least for the next few months. Okay. And through the summer and into the fall when you have an election season coming up. Right now, one thing you can know for sure is a President Trump is going to do everything he can to keep everything propped up, keep government stimulus going, keep the stock market up, keep people feeling good, and housing prices are going to continue to stay up, interest rates are going to stay low. All that is going to happen. So in the short term, what's going to happen? Probably not much inventory is still going to be low. There's a lot of people not moving. People are scared. There's not new buyers coming to the market. But there's been a pent up demand of people that have money and have income and have jobs and they wanted these interest rates that are low and they've been looking for the right house. When a house comes on the market because there's so little inventory, those houses are going to sell. And because of the bidding, the bidding wars and multiple offers, home prices are going to continue to get pushed up in a lot of markets. Now, there are exceptions to that. When you look in places where tourism and travel as an example, are massive parts of the economy, like in Nevada, you're seeing, you know, 25 or over 25% official, over 25% unemployment. Because of that, the economy is in a tailspin in places like Nevada and so forth. So in some individual markets, prices are going to be doing some different things. You get some places in West Texas that are being super hard hit by what's happening in the, in the oil industry. So there are some pockets like that that you have to Kind of pay attention to. But here is what, what is going to happen after 2020? Your home price is going to go up or down. Up or down after 2020. Short answer, they're going to go down. The only question is how much are they going to go down and when are they going to start going down? Now, I'm going to also tell you another thing. And if you're a real estate agent, most of my subscribers are real estate agents. So if you are a real estate agent, my short answer to you is, does it matter? No, it does not matter to your success. Okay. Gary Keller said this way back 10 years ago when he wrote after the global financial crisis, he wrote a book called Shift. And the subtitle of the book was it's not about the market, it's about what you do. And that was true back then and that is true today. If you know what to do in the real estate market, regardless of the real estate market, you can sell a lot of houses, help a lot of people, make a lot of money. So you, you know, it's not like, is this a bad time to be in real estate? It's a great time to be a real estate agent if you know what to do. Why? Because number one, there are always going to be people who are motivated to sell their house and people who are motivated to buy a house. There's just, there's always going to be that. The key is you got to know where to find those opportunities. And I did a video recently on why now is the best time to be in real estate. And I talk about where the best real estate opportunities are right now in 2020 and beyond. Then learning how to connect with, learning how to find those people and learning how to connect with them and, and inspire them to hire you. That is what matters. And it does not matter what is happening in the economy or the housing market. If you know how to do that, you are going to be successful in real estate. Now, why it does matter for you is your ability to advise your clients and be able to give them good information and accurate information so that they can plan their moves and you're actually representing them well. And so I've already done some, I've been doing some videos on what's going to happen in the real estate market and so forth. But I just want to take into it kind of further that conversation here and add some of the factors to watch that are going to have a dramatic impact on what's going to happen in the future of the housing market. How much is going to go down and how soon it is going to go down. So here are, I'm going to give you four key factors to watch that are going to be the drivers of the real estate market. In terms of residential real estate market. Now the commercial real estate market is a little bit different animal because there are a lot of things that are happening in the economy and in the job and business world that are dramatically affecting, affecting commercial real estate, the travel industry. So hotels are in, in a hotels that kind of real estate, hotels and motels, office space is going to be major and retail, all that massive hits. And they are going down. All of them are going down. Okay. There's going to be some other stuff that's going to be depending on. It's going to be regional. There's a lot of different factors, but this primarily I'm talking about homes, housing, the housing market. What is going to happen with the housing market? Here are the four factors. Factor number one is the real economy. The real economy, not the stock market. That is a phony economy. That is a economy that is based on federal stimulus, the, the Federal Reserve System stimulus and all that kind of stuff. It is not attached to. You cannot tell me that when a company's revenue has been plummeting and their debt has been going up and they're laying off tens of thousands of people, you cannot tell me that company is worth more today than it was a year ago. And yet their stock prices are through the roof in a lot of cases. So the stock market is detached from the real economy. So when I talk about the real economy, I'm talking about real jobs, real consumer spending, real consumer commodity. 70% of the US GDP is consumer spending, okay? So when consumers, when people are scared and when people are not making money, they're not going to be spending money when they're, when their businesses, if they're small business owners and their jobs, their businesses are closed or their revenue has dropped dramatically, which is true for almost all small businesses across the country and big businesses across the country with their exceptions. But for the most part, if you don't own Amazon, in that kind of a situation, your income is down, your revenues are down. If you own a company, people are getting laid off, they're losing their job. And many of the jobs that have disappeared and people have lost their job, those jobs are never coming back. So when you have all of that happening, that is the real economy, there are going to be fewer buyers for houses and there are going to be fewer, they're going to be more Sellers, people that have to sell their house because they can't make the mortgage payment or they don't have the money to support their lifestyle and they're going to downsize, they're going to sell their house and so forth. So the real economy is the biggest factor to watch. Now, as long as this government is stimulating, stimulating PPP and all that kind of stuff, there's going to be some stuff like that. The second factor which is attached to that is the forbearance, the mortgage forbearance in America right now, because if it is, pretty much is nationwide, if you have most mortgages, and again there's the exceptions of mortgages, but most mortgages are, most lenders have allowed you to take forbearance, which means you don't have to make a house payment for six months. And then after six months, if things are still not bad, you can extend it for another six months and then after that, who knows? There's a lot of things we, nobody knows, okay? But right now we are in the fourth month of six month forbearance. So by late September, early October, the first wave of six month forbearances are going to be coming up. At the end, people are going to either renew, extend that forbearance, they're going to start making their house payments again, or they're going to go like, you know what, we're just digging our hole deeper and deeper. We're not making payments. Because when they're not, you're not making payments. Forbearance does not mean that you're not accumulating debt, you're still being charged interest. If interest is still accruing, your payments are not being made, it's all going to have, it's all going to be paid at some point. And when people can't make their payments and they look at it and go like, you know what? I'm afraid they remember 2008 and they go like, you know what? I don't, I think the housing market may start going down. I just don't feel confident we're going to be able to make our house payments. So even if we extend another six months, I just want to keep putting ourselves, burying us deeper and deeper. It's time for us to sell. So when October and November comes, you're going to see a first wave, probably a first wave of inventory hit the market in a real estate market that has had extremely low inventory. And so that's, that's a factor. The other factor is when will the moratorium on foreclosures be lifted because there's got not only these people in forbearance, which is nearly 10% of all mortgage holders in America. You got millions and millions of homeowners not making mortgage payments that are in forbearance, but you've also got millions that are not making mortgage payments that are not in forbearance. They're just not making their payments. They're in, they're in default on their loans. And the good news for them right now is they don't have to sell because nobody can foreclose on them. But when that moratorium on foreclosures is lifted, all of a sudden you're going to have now foreclosures coming. People are going to be distressed sellers having to sell in default. Some of them are going to be short sales, some of them are not. But what's going to happen is you're going to have another wave of inventory hit the market. And there is not going to be all of a sudden more buyers being created. It's going to just be sellers. So supply is going to go up. And when supply goes up and demand does not go up with it, prices come down. And all of that is going to happen between October of this year. You got then the presidential election. That's going to be a factor. We'll get to that in a minute. You're going to have the presidential election. Whenever after an election, things typically change, sometimes fast, sometimes slow, but things change. And people are passing, they start, they breathe again. And then next April, when the first 12 months from the beginning of the pandemic and the first round of of mortgage forbearances comes due, unless you have more government intervention and another opportunity to extend forbearance, you're going to have another wave of inventory hit the market. Now you're going to have it trickling in all along this thing. And if foreclosures start happening and all that, you're going to have more homes hit the market. And unless there is a major turn in the economy, which there's not really an indication that that is going to happen again. I'm talking about the real economy, jobs, people making money, spending money, the things that drive real economic growth, then you are going to have a high probability that prices are going to drop. Now here is the third factor to watch, and that is government stimulus. How much is the Fed going to continue to print money because all the government stimulus, the government doesn't have any money. Okay, just to be crystal clear, the government, U.S. government, is broken. They are now projecting the 2020 complete federal federal revenue to the entire federal government. All the money they're going to make is about about two and a half trillion dollars. They are spending way more than twice that. The more stimulus they do. And now we're talking about another trillion dollars of stimulus. Where's that money come from? It's going to come from thin air. U.S. federal Reserve System is going to print digital dollars. They're just going to pump it in there and they're going to. And if they do stimulus to us, then they're going to be sending out checks, sending out checks, sending out checks of paper of fake money just going to be coming out. Lots of people accept it. It's still good money. Still good. US Dollar is still strong right now. That's will be the fourth factor we'll get to in a minute. But government stimulus, how long and how much is there going to be of that? That will continue to kind of prop up the economy, prop up people's bank accounts, prop up people not freaking out. Okay. So that you don't have panic. Because if you have panic and then it hits the stock market, it's bedlam. All hell breaks loose. So there's going to. They're going to continue to this federal stimulus and I don't see any end to that, certainly not until the election. And then after the election all bets are off. We'll see. And that's still with this government stimulus thing. This third factor is still the election is what's going to happen in the election. So if the Republicans win and again I say Republicans, not just the presidential, but you also have Congress, you have the Senate and the House is you've got the possibility right now you have the House is still is Republican president, the executive branch is Republican and the Senate's Republican House is held by Democrats. But what happens after the election if Republicans win or maintain what they got. Okay, then you what's going to happen is the con where it is going to be the same, more of the same. You're going to have the current fights and the current policies will continue whether you like them or not. That's what's going to continue. If the Democrats take control and again it may not just a Democrat winning the White House but Democrats take control of Congress and House of Representatives and the Senate, then the government will grow and taxes will go up. That is their policy. They are saying we're going to be taking more, we're going to be spending more money making the government bigger and more government stuff. And out of that, they are saying, we are going to be raising your taxes. We'll be undoing the tax cuts made by this administration and we're going to be taking more taxes. Now who pays higher taxes? Well, people that make more money, higher income earners who happen to be the people that buy and sell houses, they happen to be the homeowners. Okay? So what's going to happen is homeowners are going to get hit harder by a bigger government and higher taxes tends to hit homeowners more. So they're going to have less money to spend on houses. So you're going to have fewer buyers and more sellers. So if that happens, that is going to be another driver to push housing prices down. Okay. And then fourth, the fourth factor, and this is not an immediate factor, but I think it's something you need to be aware of. If you're watching this and you're a real estate agent. I just think we need to have more than just this short term perspective of what's going to happen in the rest of 2020. The long term factor that must you have to keep in your mind because you don't want to just make money this year, you don't want to just make money next year, you want to be making money 10 years from now. You don't want to be broke five years from now. You want to have a long term perspective of what's going to happen in the economy, housing market and so forth. So I think the bigger factor is something that is not even being talked about right now for the most part. It's because it's not something that focuses that is going to hit us immediately. And when you're in pain, what do you look at? You look at where you're hurting right now, but you don't look at the problems that are coming. So the long term factors is the US dollar and financial system and the US debt burden and all of those things. Right now our entire US financial system is a disaster. It is a time bomb. And when you just look at the amount of government spending and government debt, the federal deficit, our national debt, it is growing at 20 plus percent this year. I mean it is just like we're talking adding trillions and trillions of dollars to that and there's no money to pay for it. And all that is, the only thing is paying for it is fake dollars that are being printed by the Feds. Well now you're just pumping more dollars in the system. When, when you do that with your currency, which is called a fiat currency, which means there's no gold or silver backing up. It's just paper money that over time you put more dollars in the system, it makes every dollar that's already in the system worth less. It buys less. So now you have the possibility of massive inflation in the future. Again. Is that going to happen right away? No, not going to happen right away. But at some point that kind of stuff happens. And all of a sudden you have the possibility of when other, other currencies and other governments internationally stop looking at the US dollar, which is now the world reserve currency, if that ever collapses or you start having other monetary systems around the country collapsing, it could go really, really bad, really fast. Because currencies, when they become fiat currencies, meaning it's just paper money, there's no, there's nothing backing up the US dollar other than the good faith credit of the US Government, which is not getting stronger. The credit and good faith and at some point, and the debt bubble growing, not only just the federal debt, the federal government's debt, but our debt, US consumer debt, continues to explode, or it's already, it's not really growing that much more right now because people are saving, they're not borrowing anymore. But it's already so sky high with both mortgages, car debt, auto loans, auto debt, student debt, credit card debt, it is through the roof. And when all this stuff stops being paid and there's over 100 million loans in default in America right now. Over 100 million. Well over 100 million. And that was as of a month ago, I'm sure it's higher now. Those are things at some point come home to roost and the price we'll have to pay when that happens is going to be huge. So what's the bottom line for all this? If you're a real estate agent, make money, my friend, you need to be selling a lot of houses today, making a lot of money and getting ready for when the things get really, really bad. There's always going to be opportunities buy and sell real estate as a real estate agent. But when the economy gets worse, it gets harder. And so right now is a time to be mastering what you're doing, getting out there, finding as many people to help as you can help and helping all of them. And stop obsessing about what's going to happen in the real estate market and obsess with, with what you can do right now to help grow your business and your financial strength. If this video has been helpful for you, make sure you give it a thumbs up. If it's not been helpful or you disagree with it, feel free to give it a thumbs down and make a comment. Tell me what you disagree with. Tell me what your thoughts are. I like it. I like to know about what you're thinking. If you like the channel, make sure you subscribe. If you're new here, thanks for watching Play to Win and always expect yes hey there, it's Kevin.

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