Flipping America 553, NO CRASH Coming! No Housing Crash!

Opening:

Ignore the click-bait wannabes. They have routinely declared the housing crash is imminent every year since 2017. Perhaps eventually they will be correct. But not this year. Interest rates are worth watching and I predicted the current uptick in the rate of foreclosures (Covid-related). This will go back to pre-Covid levels in early 2023. Other indicators show a continuing strong demand for not-yet-enough supply.

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Questions:

Angela, Austin TX, “Real estate is outta site here in Austin. I can’t find any rentals that will actually break even in terms of cash-flow. Do you experience this? What can I do?”
Carlos, from Houston, asked a couple of questions on the live call the other day. I’m going to play them for you now.

Topic: Is the Market About to Crash?

Real Estate Leading Indicators

Indicators

Pricing Trends. Impact: Informs our Offer strategy
1. Where is the market heading in the past quarter?
2. What is the year over year difference? Which direction is it heading?
3. Housing Data Report from realtor.com
4. Realtor.com Data
Average Days on Market. Saturation rate. Impact: Informs our Offer price due to hold time.
1. How long does it take to sell a house?
How many months (or weeks) supply of inventory is out there? 3 months is balanced. At the rate properties are selling, how long would it take us to sell out the current inventory?
Housing Starts
1. Housing Starts US Gov
2. Housing Starts from Trading Economics
Mortgage Default and foreclosure rates: Google: “Foreclosure Data” and “Default Rate”
Interest Rates: Impact – Rates determine relative affordability. Can impact sales.
1. Bankrate
2. NerdWallet
Overall Economic Conditions: Strong Economy, low unemployment = buyers. Weak or uncertain economy will slow market down.
Construction Costs: Affect our rehab and holding costs, impact our initial offer.
1. Turner Cost Index
2. NAHB Economics

Resources:

Housing Data Report from realtor.com

Realtor.com Data

Redfin Data Center

National Association of Realtors Research Data

NAR Research and Statistics

Zillow Data

Market Data for Realtors (Subscription required)

Housing Starts

Blessing of the Day

May your glass be ever full.

May the roof over your head be always strong.

And may you be in heaven half an hour

Before the devil knows you’re dead.

Tags: real estate, real estate investing, Flipping America, Roger Blankenship, rental houses, flipping houses, real estate crash, housing crash, housing market

Twitter Tags: #realestate #realestateinvesting #realestateinvestments #realestateeducation #flippinghouses #RogerBlankenship #FlippingAmerica

Expected Air Date: Monday 9/12/2022

Transcript

Flipping America 553, No Housing Crash Coming

2022, Roger Blankenship

https://www.flippingamerica.net

[0:00] Ignore the clickbait wannabes.

Every year since 2017,

And I predicted the current uptick in the rate of foreclosures that are COVID related. Now, they’re gonna go back to pre COVID levels sometime I think early in 2023

Other indicators show a continuing strong demand for not yet enough supply.

[0:42] More on that in just a couple of minutes on this episode of Flipping America.

[0:46] Music.

[1:04] Wherever you are, whatever your situation, there is an opportunity for you and now, here.

[1:09] Music.

[1:26] Is it it just frost my pumpkin because they’re lying to the public.

And and I I guess also because of the sensationalism. Yeah, I’ll give you that. Okay, yeah, we’re having a little discussion in here. Sorry about that. About.

My motives for being upset by the cliff

Might wanna be. I guess upset is probably too strong of a word.

I also know that.

All of the news and all of the clicks are driven by sensationalism and you know that that’s why Clickbait is a thing.

And you know the old aphorism in the news business the cat that got down out of the tree by itself.

Did not make the paper,

So, people are looking for the dramatic. They want to see news like this and the sky is falling kind of people. The the chicken littles of the world are always going to get attention.

[2:40] People do learn just like they did in the tale of chicken little people do learn that there are some people that are not worth listening to but because of the way social media works now there are always some new people around that didn’t hear

The morons last time around and so

They get 300 1000 views on YouTube by announcing that the housing crash is about to happen and it doesn’t happen and so next year they do it again and they get 300 1000

Different viewers and the following year they do it again and they get another you know there’s.

I guess there’s an endless lineup of gullible people who are willing to let someone else do their thinking for them.

[3:23] Okay, I’m glad you’re not that. Well, I’m glad you’re here with me.

At one of the things now I’ve got a what what started all this is this question came up on our live call in the past flipping America rea meeting in case you don’t know.

Nearly every Wednesday we do a live zoom call.

[3:54] So, if you just, you know, go to Flipping America. Com, you can get details on when the meeting is. It’s a 12 30 Eastern Time. It’s designed to be sort of a lunchtime,

Midday meeting,

On Thursday on the third Thursday of the month we will do a gathering.

We took July and August off for those Thursday meetings but we’ll be back in September on the third Thursday evening of the month.

[4:33] Now.

We’re producing a lot of different content and people sometimes get

Just a little bit confused about what it is where actually doing. So, here’s a quick rundown of the flipping America brand. I haven’t done this on the podcast in quite a while. So, it’s probably good for us to do.

It started as this

A radio show that is broadcast coast to coast three times a week 730 to eight monday wednesday and friday right after it’s over it becomes a podcast and is released to all of the podcast platforms,

And this is how many of you are listening to the show not quite half of our audience comes from the podcast but still,

It’s been worth doing and we like it.

[5:25] After that the flipping America is a training institution that provides,

Coaching, you know, courses, coaching, and mentoring in the world of real estate investing.

[5:39] You can take home study courses online.

You can get them right from our website flipping America. Net. You can also bring us in to what you can hire us to be.

Your own personal real estate coach and guide you in the world of real estate investing and we do that kind of a year at a time and you also can hire us to do consulting with you on a deal by deal basis and that involves a little bit of,

Money upfront and a little sharing of the profit on the back and all of that information is available to you on the website. So, it’s media.

It’s training,

I I have talked about flip calcs, flipcalcs has been a sponsor of the show. This is a really just an excel spreadsheet that I developed for my own,

House flipping business to answer basic questions that seem to be coming up all the time.

[6:39] Do a financial model on a creative deal structure.

[6:43] Well, we are rolling that into a new product that is already released.

There’s not most valuable player it’s minimum viable product and so we are at MVP.

With the product that we now called flipping America go but we are still.

To manage the process,

We have been working for a couple of years now on what I think will be the end all be all treating platform for the buyers and sellers of investment property.

And it’s called the flipping America network.

I I’m just loving what I’m seeing and in fact this morning I set through another meeting where we were talking with the teen that’s designing the user interface,

I’m loving what I’m seeing.

You’re gonna be able to identify the zip codes where you want to purchase houses.

[8:09] Yeah if you’re a seller of investment real estate you’ll be able to put your property.

Let’s review. We’ve got media, we’ve got coaching and training, and we’ve got technology

Products.

We also have restarted the YouTube channel and if you haven’t subscribed to the YouTube channel please go look up YouTube. Com,

They,

People who are developing a new media platform called U 42 which is Y oh U and then the number four and the number two

Dot com U 42. Com and we are creating an entire network for you 42

And it will be the Roger Blanketship news and entertainment network,

Over there. That’s something that we’ve been working on for a while and hope to get it live before the end of 2022.

Now they’ve they’re flipping America reap it came out of.

[9:29] Aria is a real estate investors association for those few that don’t know sometimes called real estate investors alliance but.

I used to just,

Meet in midtown at just announced it 1 day at a meeting. Hey, I’m gonna start having lunch every Wednesday at baronda Italian restaurant in Midtown.

And it’s a nice little Italian place. I like it and if you wanna come and talk real estate, we’ll do that. Bring your deals. We’ll analyze them. We’ll talk about creative solutions to get deals done and what to do when the numbers don’t exactly fit and,

We’ll make a go of it.

So, you know, the first week I was there, we had two, the next week, no one showed up and then we had three and

15 and then 18 and then 40 and then 50 and we settled in around you know 20 to 30 every,

Every week i never promoted it except I mentioned it here on the show but I don’t think anybody who listened to this show actually ever showed up it just kinda grew by word of mouth.

[10:32] And.

We we moved offices and went to a different restaurant for a while and it’s still picked up and grew and it was happening meeting and mister Gordon Cats my friend and mentor suggested that we,

We should take this momentum along with the momentum that’s coming from the flipping America show and form a national reap then we talked about it for some months and and started planning and thinking about it and we launched it in

In January of 2020

We are,

Kind of sorting out what we wanna do about that and you know we we offer range of training and products you have to,

Trying to make everything fit. So, there is the rear which is a membership organization. There is training where you can buy courses. There’s coaching where you can hire us to coach you.

[11:44] There’s a lot a lot of free information because the Rhea does of meeting every Wednesday are almost every Wednesday and third Thursdays this show is three times a week can you listen to it on all the podcast platforms and there’s just,

A lot of information coming from blipping America

I just released my book Flipping Houses in 10 days.

[12:10] Now call it flipping houses in 10 days not because you can become an expert house flipper in 10 days.

[12:20] Because it’s 10 short chapters and you could read one chapter a day and easily read the entire book in 10 days so flipping houses,

In 10 days,

Publishing House and the Chief the book released actually released yesterday and has already achieved best seller status on Amazon.

That is pretty cool.

[12:47] Go to Amazon and get the book flipping houses in 10 days if you get the paperback in you find me somewhere out speaking one of the events I’ll be happy to.

Autograph that book for you and

I’m gonna be travelling some and speaking in Knoxville and Chattanooga over the next few days and if you want to track my speaking engagements then you definitely need to subscribe to the weekly wit

The weekly wit wit stands for whatever it takes this is the newsletter of the flipping America

Family.

To 205858 flip that’s (205) 858-3547 205858 flip.

Text the word wit.

It can be upper or lowercase doesn’t really matter and you’ll be a subscriber to our weekly newsletter. It has the week’s real estate news and flipping American news and investing tip a joke

And a blessing. It’s usually about a 7 minute read with some optional links in there and of course you get links to our YouTube,

Video of the weekend are podcast and saw right there in the weekly.

[14:13] So that’s a little bit about flipping America and I appreciate you indulging me and giving me the opportunity we know ever really spend a lot of time talking about everything that’s going on but.

[14:24] As you can tell it’s a lot now I’m about to jump into this question from the live meeting I’m gonna play my.

Indicators in the correct order but the indicators and this isn’t today’s show notes the indicators that we are tracking and have been since we started this show in 2017 pricing trends average days on market

How many months or weeks of supply of inventory is out there housing starts mortgage default in foreclosure rates interest rates overall economic conditions

Construction costs and if you get the notes and if we maybe maybe we’ll put this up as a blog post you’ll have links to all of the places we look to get the data

That we rely on.

Did they bring you the information that’s most up to date.

[15:26] Okay, we got a break coming up and I think we got time to do at least take one audience question. Remember, if you have questions,

Angela from Austin Texas.

Said real estate is out of sight here in Austin sound like you’re from the 60s kid out of sight,

Well Angel I think that your experience is similar to a lot of people that live in mid to larger cities in across the United States real estate has just priced itself out in terms of,

Providing opportunities for

Second tier markets for buy and hold and third tier markets for my seller finance because even in this in the third year

Properties are still in demand but in the second tier we can still find affordable houses that cash flow quite well now,

It’s not just the overall,

Price that we’re looking at. We’re also looking for a lot of factors industry variation, you know, but a lot of different sources of jobs and schools and that sort of thing. We’ll be right back.

Flipping America go allows you to sift three thousands of single family properties and find the best deals fast.

[16:56] Go is built for everyone whether they’re brand new.

[17:00] The season veteran. You could save your preferred property assumption so that when you see a green light, you know the property meet your criteria and is a good deal for you.

If you’re new to investing don’t worry go comes with settings already created and used by experienced investors which will help you get started.

Would you analyze spreadsheets or scan the MLS whether the house is on or off the market go we’ll help you find and analyze the property.

It comes with the money back guarantee and a 7 day free trial just go to flipping America go. Com.

Flipping America go. Com.

[17:39] Some of the most knowledgeable people who actually track what’s going on and and compare that to the basic laws of supply and demand.

Do not believe there’s going to be a crash.

[17:54] People like Logan Motashami, Bill Gross.

The people who are saying there’s gonna be a crash and I could name some names of some of the YouTube clickbait wannabe boys but I’m not gonna name their names

First of all, I don’t call people out that way. And secondly, i wanna bring them any more attention because they’re doing it just to get attention. They’re doing it just to get clicks,

There is no.

[18:29] You hear me.

And and I’m confidently telling you because i know that real estate moves slowly i also know what the market indicators are and we’ve been tracking the market indicators

Since the inception of the flipping america show in 2017 we are watching

Rates of foreclosure. We are watching interest rates. We are watching days on market. We are watching

New construction we’re watching the cost of construction we’re watching at least eight major factors.

And none of them not even one of them are pointing to a crash.

Item that might give you some concern is recent increase in interest rates and by the way I don’t know if y’all know this but.

I think that we’re gonna see another 75 basis point increase next time the feds meet.

So, they’re gonna go up again. And mortgage rates will eventually follow but guess what?

When I checked yesterday the mortgage rates nationally averaged 6.8 %.

[19:42] The first house I bought was in 1981.

No problems, not a single late payment everywhere, anywhere, and so I got the best interest rate you could get in 1981.

Interest rate was I paid on my first house cuz I looked this up yesterday.

[20:27] 18% on a home mortgage in 1981.

[20:33] 18

The historic average for interest rates on home mortgage is eight%.

[20:51] And there are a lot of things that don’t really work very well when it’s less than eight% you know what doesn’t work very well,

What doesn’t work very well is the moderation of of supply and demand.

Prime borrowing right near oh and interest rates got down as low as two. Eight and then three. Four for a good part of last year.

[21:16] When interest rates get that low,

And so they wanna go out and buy that house and so there’s a lot of buyers that are injected into the market and if you have a lot of buyers and not enough.

Inventory,

Those buyers are gonna clamor for that inventory and since the how the prices of real estate and the houses

Are not necessarily fixed they’re not anchored by the cost of the underlying dirt or the cost of the materials used to build the house there they cost is created by demand,

That’s why location is such an important issue in real estate okay but when there is increased demand and people are bidding each other up.

Prices can.

One of the houses I looked at in preparation for today’s show.

Is a little 800 square foot house in Savannah.

[22:31] I can’t imagine paying $300 thousand for 800 square feet.

[22:39] I’ll pay something.

But this is supplied demand at work.

[22:59] What it’s doing is it’s decreasing the pressure on the higher level what I call this second home purchase and not like a vacation home second home it’s when you’re moving up from your first purchase your starter home you move up to that,

And you go into a higher price you know cuz your little older you’ve gotta raise in pay you’re doing well now and you’ve got.

Disposable income and and your investments are starting to pay off or whatever it is you’re at that next tear in life,

In that second level of home and luxury homes,

They’re not so affordable anymore.

[23:44] It just so happens that I I’d research all this for the show that I did yesterday but the average the median home price in America as of today.

The median income in America is $79 thousand.

Mortgage rates were three. Four% national average. Today they’re doubled after six. Eight%. At three. Four%.

[24:14] A person making $79 thousand can qualify and afford to buy that $428 thousand house,

And they will end up with the principal and interest payment of just a little bit over $2000. I don’t remember the exact,

But when the interest rates are at I know it’s $2300 but when the interest rates are at six. Eight%,

That payment goes up to $3000 and now you have to have $115 thousand in household income to qualify and so people,

Canal the average person can no longer afford to buy the average house in this country that’s not a disaster in the making that’s really the way it’s been for a while but,

None of that matters. People can find a house that they can afford. It just won’t be the luxury homes and those middle homes. So, what what is that gonna do.

[25:04] That’s increasing the demand on starter homes and you know what is not being built in this country for the last 5 years? And for at least 4 years I’ve been saying on my radio show,

If anyone can figure out how to make money building starter homes there is a fortune awaiting you the demand has been there,

And hot and pint up for the last 6 or 7 years but the reason it started homes are not being built is because of,

The the economics for the builder and I know this is way beyond scoping your question but you have to give builders a reason to build a starter home and if if the the development of a lot,

Just for bureaucratic compliance with all the red tape and the things that you have to go through if you have to pay $45 thousand per lot.

Why would you build $100 thousand product on it?

[26:02] Just donuts and numbers. In other words, the builders are gonna build those second tier homes since the demand was just as high.

And not build the starter price. The starter homes. So, there are no first time homes. There are no starter homes. I mean, they’re few but,

Even what I consider starter homes when I when I moved away from Henry County in 2016,

The starter homes were still around 10010 1000. Those houses in that same neighborhood are $100 thousand more.

40 years old.

[26:45] All I’m saying here with all of these words is the market moves the market changes the market adjust but,

Real estate is going to plot along at its own pace and real estate is not gonna respond,

Foreclosures are starting to pick back up yes that’s true because the.

The deferrals that people achieve during COVID are gone and so I know that notice of default and and the rates of foreclosures are on the rise.

[27:24] They’re they’re going to be at elevated levels for a few months and then they’re gonna be back to the levels they were right before COVID hit what which was and I distinctly remember reporting on this in February of 2020.

The lowest rate of foreclosure in history and a lot of this has to do with provisions that were built into the consumer safety finance protection anyway. Lot of history there. The point is we’re not going to see a big rash of foreclosures.

We’re not going to see,

We we may see some lowering of prices.

We are gonna see some correction in the sins that this the rate of increase of homes is going to slow down. Alright, I promise I will not,

Make all my answers to questions that long but you kinda pick one of my pet topics there because it bugs a fool out of me to see these guys getting 300 1000 views on a video just by saying the sky is falling.

Yeah, chicken little got some attention too until but you know, I will say these are the same people who said it in 2019.

And again in 2020 and then after the after COVID hit the world a lot of them came on at sea I told you so the real estate market is gonna crash these are the same people.

[28:45] And now they’re saying it again and guess what the market found a mills don’t say it.

[28:50] I’m sticking with the market fundamentals because that way you will always know that you can trust.

[28:57] I’m telling you the way it is. That looks like that’s all the time that we’ve got for today. Thank you so much for joining us. We love you and appreciate you and thank you my friends for buying the book flipping houses in 10 days.

Your effort help make it a number one best seller on Amazon,

Here’s your blessing for the day. May your glass be ever full. May the roof over your head be always strong and may you be in heaven half an hour before the devil even knows your dead.

Okay, my friends. You know what to do. Keep your eyes open.

You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app free in the app store,

Be sure to like us on Facebook find and follow us on Twitter and Instagram and keep your eyes open.

[29:50] Music.

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