Epic Real Estate Investing - Housing Market: Will 2023 Be Another 2008 For Real Estate Investors? | 1253

Episode Date: February 2, 2023

It's the million-dollar question - will 2023 be another 2008 meltdown for real estate investors? There's a lot of uncertainty in the market right now, and Matt is going to be uncovering the facts and examining the evidence to see what the future of the housing market looks like at the moment, where it’s headed this year, AND what you should be doing about it. Could the market crash again? Stay tuned and find out! Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. It's the million dollar question. Will 2023 be another 2008 meltdown for real estate investors? Because there's a lot of uncertainty in the market right now. So I'm going to uncover the facts. Facts, just the facts. And examine the evidence to see what the future of the housing market looks like at the moment. And we're going to look at where it's headed this year and what you should be doing about it.

Welcome to the all-new, Epic Real Estate Investing Show, the longest running real estate investing podcast on the interwebs, your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience,

check out Epic Real Estate's YouTube channel, EpicR-E-I.TV. If you want to make money in real estate, Sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to r-e-i-a-a-east.com. Here's Matt. Maya Angelou, you heard her? Yeah.

She said, you can't really know where you're going until you know where you have been. And, you know, I never really understood that because what happened in the past doesn't necessarily mean it's destined to repeat itself, although it frequently does. So we're going to go with that. And we're going to start by taking a look at where we were

in 2008 with regard to what caused the housing market crash. The whole market, it started tumbling when homeowners started defaulting on their subprime mortgages, leading to the investment markets collapse of the mortgage-backed securities. It essentially brought the entire financial system to its knees. Well, that was then, but where are we now? Where are we? Well, for the most part, and you might find an exception here and there, but subprime lending hasn't existed since.

In fact, I'd argue that the banks have written, their best book of business in the last 15 years than they ever had. No doubt. I mean, have you applied for a mortgage in the last 10 years? They put you through some serious scrutiny, didn't they? So the primary reason that the market crashed in 2008, that doesn't exist today. That condition doesn't exist. But does the secondary reason?

Do you know what that one was? No, don't tell me. Tell me. Well, you see, we built more houses than we had people to fill them. And in real estate, we call that oversupply or high inventory. So what does our inventory look like today? Is it high or is it low? It's very, very low.

Almost at an all-time low. So the secondary reason, that doesn't exist either. And then let me ask you about the number of people at home buying age. Did we have more people at that age in 2008 or 2023? Most definitely today in 2023. The most ever in the history of the country, to be exact, which only puts more pressure on our low inventory dynamic. So we've got good lending.

And if anything, we don't have a household. housing bubble, but rather a people bubble. Good lending and too many people are not preconditions for a housing market that bursts. Absolutely not. Further, when supply is low and demand is high naturally, that only points to prices rising. So what could cause the housing market to crash? What has caused it to cool off? What's your guess? I'm thinking. I'm thinking. Well, if you said affordability, that's correct. It's the increased interest rates that have caused the housing market to cool. If they lowered the interest rates today, what do you think what happened tomorrow? You'd most likely see an uptick, maybe a significant one in buying activity immediately. Why?

I'm thinking. I'm thinking. Because people need a place to live. They need a roof over their head. And as soon as that window of opportunity opens, you can bet that that rubber band of demand is going to snap back. The demand hasn't gone anywhere. It's there waiting. It's waiting for houses to become more affordable again. And that will happen either via lower interest rates or lower home prices. So of those two, which one do you think is more likely to happen in 2023? The lower interest rates or the lower home prices? Kind of depends, doesn't it? I mean, I think one thing that the powers that be that didn't plan on when they locked us up during the pandemic is that we were essentially confined to watching the TV for long hours and or consuming tons of social media. They essentially

forced us to watch how they play the game, how the system operates. And so we all became more interested, more informed, and more emotional about how the system, the administration, the politicians, how they all operate. They don't play nice with each other. And they really do care more about being elected and reelected than they do about the well-being of their constituents. I mean, if you were awake, it was clear. And that's a bipartisan statement, by the way. And I say that because if you're the type that's likely to reply with something like, yeah, well, what about Trump? or you might say, what about Biden? What about the CDC?

What about the Federal Reserve? What about the SEC? The FBI, the Department of Justice, the Supreme Court. You know, when it comes to these issues, people love to play that I know you are, but what am I game? I know you are, but what am I? Remember that from grade school? Yeah, we're still playing it today, as grown adults. The point is, we've seen how they all operate.

We've watched that over the last few years. And I think most people were kind of surprised. I know I was. Those that were really paying attention and can think, independently, they were surprised. And I think now we're like, what's going to happen next? Nothing really could maybe surprise us. We live in a kind of a funny world right now. And I say that not to tap into your political leanings, but to open your eyes and look at your real estate investments in a different light. Because these are your investments. And they don't care how you feel about them

or feel about what's going on. It's just math. It's just data. That's what's important for your investments. Because right now, the real demand for real estate is being artificially suppressed by way of the monetary system, the economic policy. So what happens in the short term? Well, personally, I think that's flip of a coin. What happens in the long term, though, I think there's more certainty there where real estate values and rents can only go up. So if you're a speculator, maybe you sit back and watch it for a bit. Maybe. If you're an investor, you take advantage of the softer market and softer prices. Don't bite off more than you can chew, though, but be a buyer. You know what's funny? When the market is down, everyone

wishes they sold more at the top. And when the market is up, everyone wishes they bought more when the market was down. So, we're down a bit. What actions will you have wished that you had taken right now when the market is back up? Okay, if you're of a different opinion than me right now, rather than focusing on what you disagree with and why I'm wrong and what I failed to mention, consider your alternative. And that would bet the question, what is the alternative? What's the alternative? I mean, do you sit on the sidelines and watch? Well, you could. But you've got this inflation thing to consider. That's a dynamic that didn't exist to its current extent in 2008.

And its real estate, that's really the only thing that has kept pace with inflation. Holding cash right now, that might help you sleep at night for the time being. But it's still a losing proposition. 6.5% is what the CPI reads as of this recording. Meaning, if your investments aren't returning 6.5%, you're losing by sitting on the sideline. Inflation is robbing the purchasing power of your cash blind. Then there's stocks. bonds, funds,

treasuries, gold, commodities, and crypto, right? They're not on winning streaks at the moment. You see, the crash predictions today go deeper than just the housing market. The entire financial system is in question, isn't it? If you've got your retirement sitting in a 401k, an IRA, if that's what you're doing for your retirement, this is all probably of major concern for you, especially if you're approaching retirement age.

Michael Burry, you know him? Yeah, the movie The Big Short, that was all about him. He's the guy that predicted the housing crash of 2008, and he pushed in all of his chips that it would indeed crash. He put his money where his mouth was and it paid off. Big time. So did he get lucky? Well, if you don't know, you're going to want to know.

He's on Twitter singing a very similar song, the US in Recession by any definition for 2020. That's what he's saying. Is he right? I mean, there are some very smart people pushing back on his grim predictions. But they did that too in 2008. Will Bury be right two times in a row? We'll see.

But what we do now, know is, history does run in cycles. And right now, he's claiming the cycle is about to repeat itself. Now, whether he's right or wrong, 2003 could very well be a pivotal year for many. Making decisions based on what happened in 2008 might not make for the best decisions, because there isn't necessarily a correlation between the real estate market and the financial market. And most recessions, when your financial markets drop, it didn't mean there was an inevitable drop in the real estate market. In 2008, because, you know, that was the most recent occurrence, that's what's fresh in our memory, the two were closely connected because of the

financial market's willingness to make and invest in subprime mortgages. And we know that that's not the case now. That's a good point. But here's the real thing to consider when making big real estate decisions. You see, we've got a serious deficit in homes in proportion to the massive number of people we already have living in the United States. I mean, they're already walking around upright. At some point, that chicken is coming home to roost. And those that only property will be the beneficiaries and those that don't own property will be wishing that they did. But for fun, let's play devil's advocate and say, the housing market does drop another 15% as Michael Burry is predicting in 2023. What if you bought in 2008 when there was another 15% still to

drop? How would that have played out for you today? When the median price point nationally was about $235,000 with still 15% more to fall before it hit the bottom, and today it's $454,000, you would have almost doubled your money and 93% return to be exact. Would it have been worth the risk to try and time the market for another 35%. Well, if you had a crystal ball, of course. But you didn't. So no. My opinion, burden the hand's worth two in the bush. But what if Michael Burry is wrong this time and you wait for that drop and it never happens and you buy in after the market has bounced back up another 15%. You see, you don't miss out on 15%. You lose 25% for waiting. Trust me, I did the math. Point is, timing the market is a gamble.

Investing in income producing real estate right now, that's about as close as you can get to a long-term certainty. All in all, though, if you play this game like the majority does, the system doesn't benefit us, and it certainly doesn't pay to depend on it. It's making it increasingly more difficult to succeed. But if you make some adjustments in how you think, you can play the system against itself. This is especially important to understand if Michael Burry's prediction

turns out to be true in 2003. You see, you don't have to be true. have to just wait for other people to determine your fate when it comes to money. You don't have to rely on government decisions like printing more money or changing interest rates. To really thrive and get out of a place of merely surviving, you need to create your own financial plan. One that wins when the system wins. And face it, the system always wins. And if you'd like to see that winning plan in detail, it's right here. How to get stinking rich during a recession. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a

really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us. We got the cash flow. This podcast is a part of the C-suite radio network. For more top business podcast, visit c-sweetradio.com