Mon, 11 July 2022
Is an imminent housing market crash reality or fiction? Jason Hartman invites apartment syndicator Kyle Kovats to the show today to talk about where the housing market was in times of crisis and where it is going now. He presents housing, mortgage and demographic data that paint a very different picture from what many doom and gloomers are saying.
There is so much media sensationalism around the current housing market and lots of people predicting that it’s going to come crashing down just like it did in 2008-09, but few people are looking at the real data and making informed predictions based on the real numbers.
Leading up to the 2008 financial crisis, there were three things happening: we were overbuilt, there were funny money loans, and demographics were vastly different. None of that remains true right now! We have very different market conditions and Kyle makes the case that a crash is highly unlikely.
1:22 Welcome to The Creating Wealth Show Episode 1867
2:20 The 1970s was a very interesting decade with Nixon, the gold standard and rampant inflation
3:18 Supply and demand is the most basic law of economics
5:00 Raise rates, tighten the money supply and inflationary pressures will decline
6:43 In the 70s, our debt to GDP ratio as a country was dramatically lower than it is today
9:45 Today, CPI inflation is higher than interest rates
10:10 During the pandemic, we created so much new currency out of thin air
11:37 Negative interest rates
Kyle Kovats interview
14:57 Welcome apartment syndicator Kyle Kovats
16:24 Rising interest rates and recalibrating seller expectations
17:15 When you compare the demographics of 2008 to 2022, they couldn't be any different!
18:03 Adjustable rate mortgages are coming back
18:43 Percentage of immediate sales has slowed
20:49 Foreclosures are up by 130%, but compared to what?
23:32 We're hitting the largest demographic patch ever with millennials ages 28 to 34
24:54 9 out of 10 mortgages have an interest rate below 5%
26:44 The average person taking out a loan today has a credit score of 776
29:28 39 trillion of real estate in this country: 12 trillion is debt, 27 trillion is equity
31:28 We're at about 2.6 months worth of inventory
34:18 The Fed is creating demand destruction by tightening the money supply and raising the rates
35:37 Leading up to the 2008 financial crisis we were overbuilding like crazy
36:51 All time nationwide low delinquency rate - 2.8%,
45:50 We built 5 million apartments over the last three decades, however we've had more renters than that entering the rental market
49:02 Single family home rents nationwide are up roughly about 15% year over year
50:38 Class C renters are much more affected by inflation
53:39 Nationwide savings rate is about 4.4% of household income - a little bit below historical norms
56:43 We could be in more of a long term inflationary period, as we're starting to see globalization diminishing
57:57 What happened in 1981 when Paul Volcker went nuts?
1:00:52 Follow Kyle Kovats on Facebook and reach out to him via email
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