How Will a Second Trump Term Impact the Housing Market?

I'm going to show you some resources here that I think will make whatever we go through, you'll be able to navigate it with a mindset of I'm going to keep my head down and do the work regardless of what the market says is going to happen. Just a general market update, of course. This one, it's too easy to attach politics to it. This has nothing to do with politics, really, just my thoughts. After having been through the great the great financial crisis, the real estate industry.

Has failed to create create a clear path to time and money freedom. Having helped over 5,000 families in my real estate career and coached thousands of agents to scale their businesses, I know what works and what doesn't. And my goal on this podcast is to share it all with you. The good, bad and ugly of building a highly lucrative lifestyle business so you can focus on what truly matters in life. You won't find any hype or fluff on this show, just real world tactics and strategies that get results. You just gotta do the work.

All right, real estate business builders, let me share a resource with you that I think is going to really give a little bit of context to this. So I follow this guy, Jason Puzzino. He's a crypto guy. So I am a crypto guy, so don't judge me on that. This resource here, this book, the Secret Wealth Advantage by Akhil Patel. It's a worthy read and it's based on 200 years of data pinning our economic cycles to this macro 18.6 year real estate cycle. I have my opinions on if this happens, which I do think it's going to happen. Cycles are cycles. They go up, they go down. We have been since 2011 on a tear. We had the little blip with the C word that happened mid cycle slowdown. They always tag it to something that, that, that happens. So that was a mid cycle slowdown. Kind of recovered out of that and now we're in what the author of this book, the Secret Wealth Advantage calls the winner's curse. This is a two year rapid appreciation of asset prices, specifically house prices. Real estate is the biggest asset among stocks or bonds or any asset class. This is the biggest asset class. So this sort of leads the market, so to speak. So this, this 18 year cycle is split up in seven years and seven years and then there's a four year sort of peak and collapse and a major recession. This is one of those politics aside sort of thing. Unfortunately, this has little to do, if anything to do with who's in office. These cycles are going to happen. And it's proven you can hope and pray that the next four year, four years goes really well. It's unlikely that this won't happen. Not that they're all exactly, you know, 18.6 years, a seven, seven and a four. But we are due for correction in the housing market in terms of prices. That said, I think it's going to be an awesome thing for real estate agents and here is why I say that I want to go through, and this is straight from keeping current matters. It's a resource that I've used for many years. The drivers of the real estate market and what we care about is real estate agents. And this is where I want you to think about not getting caught up in the FUD and the headlines. When you see headlines like this where someone says that the market is going to collapse, the housing market is going to collapse, that may be, I don't even think it's going to collapse. But even if it does collapse, that just means that house prices are going to come down at the same time that mortgage rates are likely to come down. Houses are going to be more affordable on both ends. So the seller that has been holding on because they can't afford to go from that $500,000 house to the million dollar house because rates are, and the million dollar house was just 750,000 two years ago, but their $500,000 house that they're living in was 400,000 two years ago. So they've made a hundred, but they've lost, you know, that 250 appreciation if markets reset 20% in terms of prices over a 12 to 24 month period. Ultimately I think it's going to be a really positive thing. Who knows what's going to happen. None of it should impact your mindset and your ability or drive to do the work on the daily, all of this goes away. So me being new to real estate and me being new to sales and just deciding that I was going to focus on what I could control, which is what I do every morning, my lead generation time, keeping my database, my follow up sequences and building this massive pipeline, it's the only thing you can control, right? And all of that is still relevant as we go through this. You can have your own opinions on what's going on with the economy and the jobs report. Most of the job growth, if any, is coming from, you know, the government, which that's a bit of a political hot topic in terms of what might happen with some of the inefficiencies in the Government, which is a good thing for everyone. Both sides, right? Inflation, they've been trying to tame inflation again. So the current administration I think inherited some stuff that had nothing to do with the prior administration. But it's just the timing of some of this stuff and the stimulus that was injected around the pandemic that we went through. So let me get to mortgage rates. Pretty much across the board we've had the 50 and I think we just had a 25 cut in terms of fed funds rate, which ultimately mortgage rates are linked to that overnight funds rate. And across the board through the rest of this year and into 2025, we're going to go from 6, 75 to 7 to 5 and a half or so percent. That's all the forecasts are pointing to that which I think is a really good thing. And when you couple in the fact that prices may, they're, they're still projected to increase in 2025. But generally speaking, if we think this is going to happen in 2025, 2026, coming out of this potential reset here with asset prices, specifically the real estate market, it's going to take a few years for that to work its way through. 2029 is when we reset this entire cycle and we start the 18.6 year cycle again. Other asset classes, this is something that you'll personally need to deal with. This book goes through how to capitalize on these macro trends. So just from a personal finance standpoint, this is something you need to understand. Your job as a real estate agent is to do the job of real estate agent every day regardless of the market. And that's generate new business, sign that business, those clients and then service them personally. The reason why Warren Buffett has been exiting his positions over the last two to three years. You can Google, how much cash is Warren Buffett sitting on right now? It's like 350 billion. And it's not that he, he can snap his fingers and get out of all of, all of his positions. He's been getting out of his positions for the last couple years in anticipation of this macro cycle. Once this corrects, which it will. You could see all, you know the, the NASDAQ, the Dow, even the Russell 2K which is smaller cap stocks, they're all just pull up Google and type in all of those indices and you can see they're all at all time highs. It doesn't stay that way forever. So this will happen. Warren Buffett will take one to two to three years to get back in those positions at 20 29, 20, 30, when asset prices are low, then he'll just spend. I don't know if he'll be around to realize the next 18.6 year cycle to come to full cycle. But that's the game that he's playing. I'm guilty of this as well. If you're caught in the daily on some of this stuff, and this is really an aside from what I wanted to cover, but I think it will bless you if you really understand this. Let's say you're 35 years old and you're consuming this now and you really embrace this secret wealth advantage and you understand it. You know how you can profit from the economy's hidden cycle. You may have roughly call it 20 years. You have at least two full cycles. This is not financial advice. None of this is financial advice. I can't tell you what to do. I just want to make sure you have an idea what's going on here. Rates are going to come down, right? That's a good thing. The challenge that we've had is this. We are in a unit recession, bottom line, full stop. The reason why this current year 2024 and 2023 has been so hard is that in 2021 we sold 6.9 million homes times potentially 2 commission checks. We went from 14 million commission checks to 9 million commission checks, right? That's like a 50% decrease in income available to real estate agents that is going to trend up especially as rates come down and even as prices come down. Because I think that'll unlock some sellers looking to trade, make, make a trade or they've got kids that have left the, you know, they want to even do a lateral move. Definitely trade up will be, will be motivated more so with interest rates coming down and higher price homes coming down a little bit as well. This is the major factor, me even sharing this stuff with you is just to tell you that none of this stuff really matters. You need to know what's going on so that you can stay in the game. And that's really why I want you to know this. I think all of you should be doing a weekly market update on some of these things. Even using a resource like keeping current matters and just do a live like this, a recorded loom where you send it out to your database or even do it live. I think you could still do lives on your Facebook personal page where you share your screen. It's a little bit more technically hard. Uh, but you can use services like Streamyard is a service that you can go to YouTube with and you can all these ways you can figure it out, but you want to become a resource to folks and you want to let folks know that more homes are coming on the market. If you look at January 2022, March 2020, this is cyclical as well on the annual, seasonal rather. And then this is a, a bigger cycle here during the tougher years where we had the global pandemic, that's when everything sort of came off the table and we just haven't Quite recovered in January 2022 is the lowest amount of inventory. You could see the spring season here. Then this is a higher low, which is good. And then we have another higher low in 24. So I think we're going to have another higher low in terms of number of homes on the market. We're still not back at normal levels, quote, unquote normal level, which is, you know, a million homes on the market, we got down to as little under 400,000 and we're still only at even more than that. 1.3 is about where we were 1.2, 1.3 is kind of the normal peak in markets and we haven't even gotten back to a million. So we're still 30, 40% off of where a normal market is in terms of inventory. So that's good. We'll have now coming out of this, we'll have higher highs and higher lows, which is good. Very, very, very bullish. From a consumer perspective, it's not good. Consumer debt is at an all time high. Even if you take these different categories of debt, debts, mortgage heloc, auto loans, credit cards, student loans, all of these bars are expanding, there's a lot more mortgage debt. The good thing is that when people think that if this happens, as I think it's going to happen, the thing that you need to guard against when you see the headlines in the news is is that the amount of home equity right now is ridiculous compared to what it was in the great financial crisis. So when people want to compare what might happen with a correction, right, let's say this is going to happen. Home values will come down. The real estate values are at 48.2 trillion. The equity is at 35.1 trillion, with debt only being at 13.2 trillion. Do we have a record amount of mortgage debt right now? Yes. The headline will not say because if it bleeds, it leads. The headline you read will not say that we have a record amount of equity right now. Even if real estate values came down from 48 trillion down to 40 trillion, a 20% correction. You're still in an awesome equity situation. Look at these years here. This is the gfc. The impact of the GFC where your home loan amount, your home mortgage liabilities were greater than equity. So right here, this is what they say, underwater. For a good four years, homeowners were underwater on their homes. Ever since 2013, equity has gone from being at a break even with so not a lot of equity in homes to now the delta is significant at 35.1 trillion. You, as an, as a, as an expert, as a home selling expert, you can't accept the headlines. You need to be able to come into their world, buyers and sellers and explain this stuff. So as much as you know me coming on here and explaining my thoughts around what's going on, you need to grab some of these materials and go into your Facebook communities and friends, post stuff and start to do a weekly Facebook live. During the housing crisis, the GFC, the housing market value was 17.9 trillion, debt was 9.7 and equity was 8.2. So there was a delta of 1.5 trillion underwater. Right now we're at a surplus of 35.1 minus the debt. Even if you take a ratio, 8.2 divided by 9.7 is 0.9. We're not even covering the debt here. You can see we're almost, not quite at 3x but 35.1 trillion divided by 13.2 trillion. We're at a multiple in terms of covering the debt that's on the real estate that's, that's out there. So hopefully this is helpful for sales forecasts. It's definitely projected to rise rates. We've already covered that. We're still calling across the board appreciation in 2025. I do think that feeds in 100% into what's going on here. I do think there will be a house price correction and, and I don't think it's going to hurt us because of this chart here. And so hopefully there's encouragement here in a few ways. I want you guys to be prepared for what's going to happen. Get the secret wealth advantage. Understand that there is a macro cycle at work here. Also understand that it's not going to impact us. I think it's going to free up home sales. Right? We're going to get back to six plus million homes being sold every year and that's going to be a good thing. And also inventory is just coming back. It's going to be a more balanced market and there's going to be more inventory out there, there's going to be more supply prices aren't going to go up as high, but it's not going to be such a frenzy right where it's multiple offers for every home. So much love. If you guys want to help with anything around any of this stuff, building out lead gen levers or lead conversion systems, We've got a 90 day program. Million DollarAgentMethod.com Essentially, within 90 days, we're going to help you build out all the lead generation systems, all your conversion systems and sales frameworks so that you can add two to three plus transactions per month at a run rate where they'll continue forever. You own all of it. No cold calling, no paid leads, none of that stuff. Organic inbound leads coming into your business. If that's you, go to milliondollaragentmethod.com and we'll see you soon. Be good.