MASSIVE Housing Recession Just Started
Published: 2022-12-05
Status:
Available
|
Analyzed
Published: 2022-12-05
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Millennials experienced their highest rate of home ownership between 2019 and 2021.
"between 2019 and 2021 was a period of growth where Millennials saw the highest rate of home ownership ever"
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In 2022, the housing market flipped with exploding home values, significantly increased interest rates, and severe inventory shortages, negatively impacting Millennial homeownership.
"this year in 2022 the market flipped as we saw home values explode we saw interest rates go way way up and of course massive inventory shortages"
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The median age of individuals buying a primary residence increased to 53 years in 2022.
"this year in 2022 the median age of home buyers buying a primary residence has actually gone up to 53 years"
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Approximately 27% of Millennials own a home, compared to a 40% starting rate for previous generations.
"roughly 27 percent of Millennials could say they own a home today as compared to 40 percent starting rates for every other generation that came before"
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The rate of first-time home buyers has reached its lowest point in four decades, dropping from 34% to 26%.
"this is the lowest level of first-time home buyers in the last four decades we have dropped from 34 down to 26"
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A $450,000 house purchased with a 5.3% interest rate (as of July 2022) would incur an additional $360,000 in interest payments.
"if the interest rate went up to five point three percent like it did in July of this year then that 450 000 house you would pay an additional three hundred sixty thousand dollars in interest payments only"
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A $360,000 loan at a 7% interest rate over 30 years would result in approximately $502,000 in interest payments alone.
"we could use November's interest rates believe it or not some people managed to lock in a 30-year mortgage at seven percent interest rates that means that 360 000 principal or loan value at seven percent over thirty years would cost 502 000 in interest payments only"
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Following the 1970s and the decoupling from the gold standard, income growth decelerated while home values began to rapidly increase.
"after the 70s when we got off the gold standard that's when income growth slowed way down and that's when home values started to explode"
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A 10% increase in median income ($45,000) results in a $4,500 rise, while a 10% increase in median home value ($450,000) results in a $45,000 rise, showing a 10x greater impact on home values.
"if the median income is forty five thousand dollars a year and the median home value is 450 000 a 10 increase to both would mean a four thousand five hundred dollar raise for the 45k and a forty five thousand dollar increase to the home values we are comparing four thousand five hundred against forty five thousand that is a 10x difference"
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Between October of the previous year and October of the current year (2022), real average hourly earnings decreased by 2.8%, while home values rose by 11.4% year-over-year.
"from October last year to October this year real average hourly earnings went down 2.8 percent we also know that home values increased 11.4 year over year"
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The job market is considered 'too hot' by economists due to a shortage of skilled workers, leading to intense competition among companies for talent.
"economists are considering the jobs Market to be too hot and bad for the economy because skilled workers are really hard to come by and companies are competing for people's talents"
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An estimated $84 trillion will be transferred from Baby Boomers to Gen X and then to Millennials by 2045.
"something like 84 trillion dollars will be transferred by 2045 from Baby Boomers to Gen X and eventually to Millennials"
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Gen X is projected to inherit $8.9 trillion over the next 10 years.
"at first it's going to be the Gen X that will inherit 8.9 trillion dollars over the next 10 years"
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Millennials are expected to inherit $5 trillion initially, surpass Gen X by 2040, and inherit approximately $27 trillion by 2045.
"while Millennials will inherit five dollars no five trillion dollars but it's also estimated that by 2040 Millennials will surpass Gen X and by 2045 will inherit something like 27 trillion dollars"
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The New York Times' 'Rent vs. Buy calculator' is presented as a comprehensive tool to determine when renting is more financially advantageous than buying a home.
"it's called the rent for sources by calculator from The New York Times it is the most comprehensive guide on letting you figure out at what point it makes more sense to rent that house instead of buying it"
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The median duration a person stays in a purchased home is approximately 13 years.
"the median not the average but the median length of time that a person will stay at a house they bought is about 13 years"
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The mortgage interest rate reached 6.6% in November 2022.
"the mortgage rate which has reached 6.6 percent this month"
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A hypothetical home purchase scenario assumes a 3% down payment.
"let's just assume that I was only able to get to three percent of the down payment"
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A projected 4% annual growth rate for home prices and a 3% annual growth rate for rental prices are used in a calculation.
"for home price and Rental growth rates I'm going to put four and three percent"
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An 8% investment return rate is used in calculations, based on historical S&P 500 performance averaging 8-10% in a normal year.
"for the investment return numbers I'm going to put eight percent here because that's how I like to invest my money I like to invest the majority of it in the stock market into the S P 500 and in a normal year it should pay eight to ten percent"
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The current interest rate for a one-year bond is 4.7%.
"the one-year bond is paying 4.7"
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A mid-term inflation projection of 4% is used, with a hopeful long-term projection of 2%.
"let's put four percent that's what I'm putting here even though I know inflation is so much higher than four percent but I'm hoping that in the mid term we can come back to four percent in the long term if we're lucky maybe we can come back to two percent"
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The property tax rate in Nevada for the speaker is approximately 0.8%.
"for property taxes here in Nevada for me I'm paying roughly 0.8"
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An average marginal tax rate of 22% is used in the calculation.
"for the marginal tax rate I'm gonna put 22 even though that's not my marginal tax rate I'm just using the average"
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Closing costs are estimated at 4% for buying and 6% for selling a home.
"for the closing costs for both buying and selling a home I'm just going to leave it at four and six percent"
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Homeowners insurance is estimated at 1% of the home value.
"homeowners insurance I'm gonna leave at one percent"
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A hypothetical HOA fee of $100 per month is included in the calculation.
"and for the HOA I'm gonna put one hundred dollars"
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The speaker secured a rental property earlier in the year with a 2.5% interest rate locked in for seven years.
"When I bought my first rental property earlier this year I managed to get it at 2.5 interest and locked it in for seven years"
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The speaker believes a real estate correction is likely but anticipates a decline of less than 40%.
"I'm definitely one of those people that thinks real estate is going to correct but I don't think we're gonna fall 40 percent bad"
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