The real estate housing market is notoriously volatile.
There are always predictions of a crash. But will this year really be different?
How did we get here?
The housing crisis, the mortgage crisis, the stock market, the bond market, and more.
As always, there are two sides to every story. We’re here to break it down for you!
Transcript:
Jason Bible 00:00
Do you wanna have yourselves some fun, go to YouTube, type in any year you want and real estate crash. And it’ll be hundreds of videos from Gurus and Economists saying that the world is gonna end and there’s this huge crash coming. And the reality is that was not the case. We do a big event in February where I let everybody do their predictions in January. And then, we host a really big event in February, where I give like the real market data analysis of what’s gonna happen in 22.
But I’ll give you a preview to that show. We’re gonna have another year of double digit appreciation, probably 20%. Rates are not going up. Everybody keeps talking about rates going up, they ain’t going up. So, the old adages, when inflation is high we can increase rates. Yeah, we could have, we could do that in the late 70s, early 80s. We can’t do that now. And there’s some reasons why.
When you increase rates, you pull liquidity out of the marketplace. That’s what’s actually what’s causing inflation. All these dollars out there, bring my back end. Well, back in the 70s, there was no China. Japan wasn’t even that big of a factor till the mid to late 80s. Now we have these international markets that they can play the currency game just like we can’t.
So, increasing interest rates is not gonna pull the quiddity off the market. It’s just gonna import inflation from other countries. The reality is that, we have really no tools to fight inflation, but for one, and that is a recession. So, I don’t think, when people are predicting increases in rates and all that it’s not gonna happen, it’s just…
Chris Bounds 01:35
My increases, are you thinking like none, or nothing substantive?
Jason Bible 01:40
Uh, I could, I could say 50% chance, we will actually see a decrease in rates. And then there’s a 50% chance we’re looking at a quarter point ball, made up.
Chris Bounds 01:51
So either way, it’s not changing too much.
Jason Bible 01:54
No, it’s nothing.
Chris Bounds 01:55
And so you actually said something, and I think this happened in I guess it was the 70s or 80s. And not that I live through it, but I’ve read it. And my grandfather, you know, talked about this was when they did try to increase rates to pull back the market and actually caused an inverse reaction of fear of loss, everyone fearing that they’re gonna miss out then which if that were to happen here, that’s a very real scenario where, “Oh, crap”.
Like, I better pay the three and a half percent, because I don’t wanna pay four and a half percent awaiting next year, which causes home prices to go up even further. Maybe that part of your calculus on if prices did go up? Now you’re gonna continue to see those, you know, that appreciation like we’ve seen over the last 18 months?
Jason Bible 02:41
You are 100% right. That is exactly what’s gonna happen. It’s called a melt up. So what’s gonna happen is, let’s play this scenario as if that’s gonna happen. Rates are gonna go, rates will go up. If you believe that to be true. There will be a run on hard commodities like real estate like you would not believe you think it’s hot.
You think it’s inflation is crazy now, wait till people think there’s gonna be 5, 7, 8, 9, 10% rates on houses. You will see people jump in just to beat them, just to beat the next rate hike. I don’t think that’s gonna happen. But in others, I don’t think the interest rates are gonna happen. But what you’ve said is absolutely 100% correct.
Chris Bounds 03:19
Now, that really influenced the refinance market. I mean, pretty much anyone that could refinance, you know, they’ve already done that, or had the desire to. The really- the only one, the only group of people that are enjoying or can enjoy low rates right now are people who are buying. And, you know, that has been due to supply issues and other things that’s been low as far as those kinds of transactions.