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  • When you look at the stock market, it's clear that the last 2 years have been some of the

  • best years in the history of the market.

  • The sp500 grew by more than 100 percent since the crash of 2020.

  • That's something unheard of.

  • That's not what usually happens.

  • Historically you can expect around 10 percent at best, and if we are going to be conservative,

  • then 8 percent annually.

  • But as we entered 2022, January proved to be catastrophic.

  • The entire market collapsed.

  • The sp500 fell by almost 10 percent.

  • Apple, Tesla, Meta, and everything else just went down the drain.

  • It was the worst month since March 2020.

  • However, while stocks have been suffering, the housing market continues to grow.

  • Extreme low-interest rates have kept pushing prices higher and higher, and experts have

  • been predicting a crash since the beginning, but the question is - where is the crash?

  • Why is the housing market still growing?

  • Why hasn't the real estate market crashed yet?

  • We will answer all of these questions and many m ore but before we do that, make sure

  • to give this video a thumbs up and subscribe.

  • The housing market is very predictable and easily controllable by the fed.

  • There is always a demand for a house because everyone needs a roof over their head.

  • And even if you have shelter, a house is one of the best assets that you can invest in

  • since it provides cash flow.

  • The demand for homes will always be there, but it fluctuates based on the prices.

  • From 2017 up to 2020, houses price didn't grow at all because the economy was at its

  • peak.

  • If they were growing prior to 2017, all that investors could see in the housing market

  • is stagnation.

  • Mortgage rates were around 4 to 5 percent, which really hurt the demand for houses, but

  • 2020 came in and lowered the interest rates to almost 0 percent, making mortgages much

  • more affordable.

  • Buying a home at 2 to 3 percent is one of the greatest financial decisions you can ever

  • make.

  • That's what fueled the demand and pushed the prices to grow by more than 20 percent.

  • The moment those super-low rates go away, that demand will vanish, which is what experts

  • have been predicting all along, but guess what?

  • In the last 2 years, the fed never increased the rates.

  • They kept them at nearly 0 percent.

  • At the time of this script, rates are still nearly at 0 percent.

  • But mortgage rates are slightly higher than they were in 2020.

  • Of course, Federal Reserve Chairman Jerome Powell has said the central bank intends to

  • raise interest rates this spring, but that's not certain because the fed usually doesn't

  • do what they say until they do it or sometimes misrepresent facts in order to not cause any

  • chaos in the market.

  • Back in 2020 and 2021, they kept saying that inflation is not an issue although the fed

  • has the best data possible, and they knew that it's a problem, but in order to calm

  • everyone down, they kept saying that inflation is around 3 percent.

  • Regardless, rising interest rates is not a matter of if but when.

  • It's a normal proceeder.

  • At the end of the day, if inflation is higher than 3 percent, that's unsustainable.

  • The main question is, will the market crash when the rates are raised?

  • The answer is - probably, no!

  • After the 2008 crash, the supply of houses has shrunk dramatically.

  • This chart perfectly illustrates how many fewer homes have been built since then.

  • The government understood that if it ain't going to control the housing market, then

  • we might see another such crisis, so the supply of houses was already tight, which kept real

  • estate prices to rise gradually.

  • However, the pandemic just destroyed whatever was left of that supply chain.

  • Although we are almost 2 years into the pandemic, the supply chain hasn't recovered yet.

  • So even if mortgage rates will rise substantially, there aren't going to take houses prices down

  • because there aren't enough homes in the market anyways.

  • We have been building this supply chain since the end of ww2.

  • To make a single timberland boot, for example, the materials would be delivered from 5 or

  • 6 different counties to a factory in Thailand, where it will be assembled and then shipped

  • all over the world, including the United States.

  • So, a closed factory in one place can affect the rest of the supply chain.

  • That's why companies are reshaping the ir entire supply chains in order to be ready

  • for another pandemic by relocating their factories closer to where the final product is sold,

  • for example.

  • That's going to take some time as we are learning how to live with this virus.

  • About 91% of the home building companies surveyed by Zonda reported struggling with s upply

  • chain problems.

  • The lack of material availability is making it take longer to build a home, and the delays

  • and higher input costs are contributing to rising home prices.

  • This is the most disastrous the situation has been since at least World War II.

  • These are not the only factors.

  • Corporations are buying homes to rent, around 20 percent of homes are usually bought by

  • corporate entities which further lowers the supply of homes in the market.

  • But the biggest threat is definitely inflation.

  • Inflation has a deep psychological impact.

  • If people expect their home to cost more in the future, especially in the foreseeable

  • future, then they will less likely to sell now and wait for another year or so.

  • Guess what does that means?

  • A fewer supply of homes in the market will keep prices rising.

  • Why would you sell your house now when you can sell for a 10 percent higher price by

  • the end of the year for example.

  • So until inflation is solved or supply chains are restored, it's difficult to expect houses

  • prices to calm down.

  • But why hasn't the fed increased the rates yet?

  • The job of the fed isn't just to tackle inflation but also to make sure the economy is growing.

  • And the last 2 years have been much more unpredictable than anyone thought.

  • At first glance, it seemed like as soon as we come up with a vaccine, the problem is

  • going to be resolved, however, the government struggled to vaccinate enough people, and

  • secondly, new variants of the virus kept coming out which were not protected by the current

  • vaccine.

  • And thirdly, by the time we figured out how to deal with the new variant or convinced

  • the rest of the people to take the vaccine, the people who took the vaccine initially

  • had to revaccinate.

  • It's a never-ending crisis.

  • Most government officials are coming to realize that no matter how dangerous this virus is,

  • there is no way we can get rid of it entirely, and even if we do that, that would come at

  • such a great cost that it doesn't worth it so we are learning how to live with it.

  • So the fed is keeping the rates low until its clear how the economy is going to move

  • forward under these new restrictions.

  • What we can say for sure is that we will not see a double-digit increase in prices this

  • year.

  • It's probably going to be around 5 to 8 percent, maybe even smaller.

  • Even those who cannot make the payment on their mortgages can still sell their houses

  • with a profit because of the shortage of houses in the market, which is another reason why

  • we shouldn't expect any housing crash this year.

  • If the fed manages to bring down inflation to under 3 percent, then things will get much

  • clearer.

  • At the end of the day, these are all predictions based on the facts on the ground.

  • Only time will show what exactly will happen.

When you look at the stock market, it's clear that the last 2 years have been some of the

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Why The Housing Market Hasn't Crashed Yet - What Banks Don't Want You To Know

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    Summer 發佈於 2021 年 12 月 10 日
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