New at5 a shakeup in the housing market The Federal Trade Commission is hitting Tempe based open door with a 62 million Fine according to the FTC the online Home buying company misled customers and Misrepresented the benefits of selling Their home to them open doors Potentially facing Financial Rune as the Housing market continues to buckle good Morning happy Tuesday and welcome back To real estate mindset today's video is Going to be absolutely Bonkers now the Data is in and today what we're going to Do is go over what's going on exactly With open door and what we can learn From Open Door about what's going on Under the hood of the housing market What about the past can we learn from The challenges that open door is going Through right now and so today you guys I have compiled 19 data sets four Different videos before I jump into Open Door in the buckling housing market Let's take a quick trip through Pre-market conditions as we look at four Different economic indicators that I Think it's important to keep our eyes on The 5-year Break Even inflation this has Been under 2% since August 2nd and it Has plummeted this is really big news Because the FED has its eyes on the Expectations of the market so keep your Eyes on that fiveyear break even because Again this is the first time in a very
Long time that that 5year break even has Been under 2% the second indicator is The reverse repo market closing Yesterday Monday at $328 billion we need this to go away That's kind of like the evil inflation In the suspension system but regardless It's liquidity keep your eye on the Reverse repo the third indicator is the Inversion of the 10year and the 2-year Treasury we closed yesterday at 11 basis Points inverted now you guys remember The beginning of last week we came so Close to uninversity I don't know but regardless we ended Monday 11 basis points inverted the last Thing is not really an indicator it's Just an indicator that the market is Absolutely foolish here's see me fed Watch the Market's anticipating no Chance of no rate cut and 48% chance of 50 basis point rate cut this is at the September meeting with a 52% chance I Say chance it's just the Market's Expectation chance yeah right and 52% of The market is saying a quarter basis Point cut now now look in the bottom Left here obviously right now we're Sitting at 525 to 550 that's a basis Point that's 5 and 1/4 to 5 1/2 on the Bottom right one month ago the Expectation was 6% so it goes from 6% to 48% and that's why you can't trust the Market let's dig into what's going on
With Open Door starting with their Stocks and this isn't the open remember On Tuesday this is pre-market but we Ended yesterday with a stock at A166 absolutely in the gutter now the YTD on that is down 64.29% with the one Month on their stock down 37% something bad is happening with open Door I think the bad thing that's Happening guys is the housing market Right now is absolutely buckling and Values whether we see it in mainstream Media headlines or not are actually Going down let's look at what Open Door Had to say on their most recent Releasing want to remind you guys that These home flippers and these Speculators can absolutely ravage and Wreck local housing markets we observed Signals and leading macr metrics that Indicated slowing in the housing market Delistings began to rise and are Currently at a higher level for this Time of year than we've seen in our 10-year operating history these Dynamics Resulted in softness in month-over-month Home price appre iation which entered And here's the key you guys negative Territory in June that means deflation Now redin Zillow core logic they don't Want you to know that but I think it's Really important to pay attention to What Open Door is saying being that they Are actively buying and selling houses
In the market and so they're saying House prices are going down this Happened 2 months earlier than typical Again the leading indicators we been Following dayson market price cut active Inventory obviously we are ahead of 2022 We also increased home level price drops To maintain our resale targets and the Reason why I'm pointing that out is is Remember they're always going to be a For seller because their entire Existence depends on them flipping Houses and so if they need to cut values Under Market that could drastically Impact subdivisions in areas of high Concentration like in my market in Houston with house prices being flat and Even going down companies like this and Their whole premise of existence they're Dead in the water it just doesn't work Anymore this is showing us the revenue And homes acquired now I circled the Year of 20123 so that we can compare Q2 Of 2023 to Q2 of 2024 now I want you Guys to notice that their revenue Year-over-year went down roughly 23.5% Meanwhile the amount of homes that they Purchased went up 78% meaning they almost purchased double The amount of homes to make only 34s of The income typically flippers leave the Cads unchecked to continue to increase Our assessment values because flippers Don't care about the property taxes like
Long-term owners so they leave it Unchecked and some of the worst Appraisal values and assessment values Are actually on these flip houses I will Say that one thing that Open Door did Try to do is be relevant and think Outside of the box as you see here with Open Door exclusives now essentially They're kind of trying to beat the National Association of Realtors and MLS By discounting homes and I want to ask You guys do you think it's a good idea For open door to Discount Homes like you Can see in this screenshot here I don't Think it matters I think it's too late I Don't think they're going to win this Battle with the national Association of Realtors and the MLS I think their Company is going down and going down in Flames but again you guys that's only my Opinion I do not know what's going to Happen with open door but I can tell you That in my opinion flipping is not good For America in fact some experts say the Reason for the last housing market crash Was flipping and speculation and if you Guys really want to dig into an amazing Article and Report take a look at this From courts titled house flippers Triggered the US housing market crash Not subprime borrowers like we are led To believe I want to quote one paragraph From this article and again I encourage You to read the whole thing because it
Makes some very compelling points on how Subprime was just a distraction I'm not Saying it wasn't important it did lead To challenges but just listen to this Paragraph mounting evidence suggest that The notion that the 2007 crash happened Because people with shabby credit Borrowed to buy houses they couldn't Afford is just plain wrong the latest Comes in a new n working paper arguing That it was wealthy or middle class House flipper speculators who blew up The bubble to cataclysmic proportions And then wreaked havoc in local housing Markets as they defaulted and lowered Their prices in Mass the amount of Flipping that's been going on over the Last few years in the housing market is Record breaking that's why companies Like Open Door can even exist things are Only going to get worse for Flippers and For companies like open door but the Question is is what can we learn about What's going on with Open Door under the Hood and so you guys I'm going to go Over statistics and again on why the Housing market is essentially built on a House of cards but before I do that I First want to talk about how big and how Much there is to lose exactly in the Housing market and before that I want You guys to listen to this video from Fox News that is suggesting that Regional banks are actually in deep
Trouble and I'll tell you guys in 2007 And 2009 Regional Banks were closing Down on every single corner and Something similar is going to happen Like that now I want to see if they're Going to make any comments especially The Regionals about the real estate Problem everyone thinks it's contained Possibly to commercial real estate but We saw in 08 we saw in the '90s saw in The 80s when people can't sell what they Want to meaning the garbage because it's Illiquid they sell what they can so There should and there probably will be Contagion at some point in 2025 and 2026 Not limited to just commercial rail Estate I love those comments what I'm About to show you is not even counting Commercial real estate the amount of Distress on banks right now especially Regional Banks and remember basil 3 Hasn't even been started yet if Basel 3 Started and it's not even that big a Deal these banks are insolvent they're Bankrupt they've taken our money they've Bet with it and they've lost even though The value of the housing market as you See here is at historical Highs at 50 Trillion do you guys fraud has fixed These values the tax revenue on the 50 Trillion with the tea is Absolutely killing America and again the Municipalities the schools they're all Broke so when I look at that I start to
Realize that these major markets that Are super tight all that needs to happen For them to collapse in value is a Slight sneeze they can't support just a Moderate decline just from a taxing Standpoint and survive they're bankrupt Even with these prices you guys Something bad is going to happen I think I have my answer to how some of these Tyght markets will collapse and again Slight unemployment slight waking up of The public but take a look at the Trillion with a te Dollar Club these are The top most valuable Metro areas and Again you guys what I am saying is the Taxes alone are absolutely wreaking Havoc on the locals and quite frankly You guys it's not sustainable slight Sneeze but number one is New York with a Value of 2.4 trillion again I put T's Down all eight of those Metro areas to Remind us it's a t a trillion that's Insane number two is Los Angeles at 2.1 And then it goes down greatly starting With number three Atlanta at 1.2 all the Way down to Phoenix at 1 trillion San Diego at 986 billion very very close Order for the fraud to maintain these Municipalities and things of that nature These values have to continue to go up So if you're in one of these tight Markets expect the unaffordability to Continue to get worse until the whole Thing breaks there's a lot of money
Wrapped up in the housing market and Elites and the wealthy and the Government and the agencies want the Entire thing to keep going as long as They can they want us to continue to Spend Until the End meanwhile We're being taxed out of our minds we Can't fathom the amount of over Taxation And overvalue that we just saw there and Again ask yourself this question how Could they possibly be broke and and we Know they're broke because one thing we Can look at is the overwhelming deficit Spending let's listen to what Jerome Powell has recently said about the Housing market and then let's ask Whether or not we agree with what he's Saying and what do you think is is Driving these high prices The housing market is Um in a very challenging situation right Now you have this longer run housing Shortage but at the same time you've got A bunch of things that have to do with The pandemic and the inflation and our Response with higher rates so you you Have a shortage of homes available for Sale because many people are living in Homes with a very low rate mortgage that They can't afford to refinance so They're not moving which means the Supply of regular existing homes that Are for sale is historically low and Very low transaction rate that actually
Pushes up prices of of of other existing Homes and also of new homes because They're just not enough Supply the Builders are busy but they're running Into you know all kinds of supply issues Still around zoning and and workers and Things like that so so it's it's quite Challenging and of course rates are high So people who are buying a lot of the Buyers are are cash buyers or able to Actually pay without a mortgage because Mortgages are expensive I will say the First problem the longer run problem of Supply is a longer run problem the other Problems associated with low rate Mortgages and high rates and all that Those will Abate as the economy Normalizes first of all guys I don't Know what he's talking about I think He's absolutely out of his mind I think His job is to continue to hurt us and Boil Us Alive like a frog but I do want To go over some very interesting Indicators from Black Knight and I want You guys to understand that the Information I'm about to show you is not Is only including about half of the Market this is great distribution of Active mortgages I put that red line in The middle because that's the group of The millions of homeowners who at the Biggest risk of financial ruin in other Words they have no room for their income To go down and that toxic box of
Homeowners is growing bigger and this is Not even including refinances guys Refinances into higher rates is also Going up and I also want to note that Even though homeowners are typically in Way better situation if they purchase Prior to 2022 remember they're getting Ravaged by fraud by property taxes Homeowners insurance and overall debt And the cost to live you may have seen The interview I did with Carrie she had To get a second job just to afford the Property taxes and she purchased in 2020 At a super low interest rate the housing Market right now as far as values and Markets is incredibly split and broken The Northeast Coast is definitely Definitely Overheating it is going to overheat Until it completely melts down people Quite frankly are broke and it's not Working the level of fraud that needs to Sustain there is outrageous but look it As well you guys throughout the nation We're experiencing massive amounts of Price decline starting in June normally Values go up so to have Orlando Denver Sacramento Nashville Dallas Memphis San Antonio Phoenix Austin Tampa and Jacksonville on the one Monon price Decline list should indicate that the Housing market is in fact buckling to Further prove my point that the Northeast is overheated and will melt
Down look at the Zillow observed rent Index that area of the nation I don't Know how anyone any native or anyone That grew up there can be happy about Their situation and I'll also point out That there are two metros and one main Metro in Florida that actually have Declining rent and declining rent you Guys is a very big deal and it's not a Dynamic that we had during the GFC the Reason is it's not more affordable to Own versus rent it's generally way more Affordable to rent versus own this whole System is going to collapse it's just Not sustainable now digging in a little Bit more to the rental market going into Zillow again Zillow rent concessions Over 30% again very big deal sitting at 33.2% and the reason why I'm Highlighting that is actually we may Have rent declin because if 33% of Listings are given concessions is that Truly rental growth or is that Concession growth digging even deeper we See that the average person spends 30% Of their income to pay their rent and in Order to afford just to rent think about This you need to make $82,000 what is happening here around America is not going to work and I and a Lot of what happened I blame on fraud Inflation greed corruption and the Federal Reserve comment below let me Know what you think is going on I want
To end us out taking a look at the Foreclosure information because a few Points that the Bulls make like Lance Make and Logan make is we're actually at A really low level of delinquency and so I think that actually there is Merit There to acknowledge that historically Yes we are but I also think it's Important to acknowledge that the data That they're using is barely even Covering half of the total data and that When we look at the bigger picture There's more than double the amount of Homes and delinquency and the Delinquency rate goes from 3 and a half To 5% so remember when we're looking at This data this is the absolute most Optimistic data that the Bulls have and It's not even accurate things happen Very slowly and then it turns into a Flash crash of a situation and taking a Look at this chart negative and limited Equity growth what I want to point out Is the negative equity really Accelerated when we were already in Recession and after recession we really Can't compare what's going on right now To what happened during the recession During the GFC and I also want to point Out negative equity actually reversed in 2012 now I believe that's a direct Result of the FED purchasing mortgage Back Securities so my question is would Home prices have even gone up without QE
You guys listen know what I'm saying Would home prices had even gone up Without QE or the FED purchasing Mortgage back Securities Forclosure inventory does not really Spiral out of control until we're well In recession and also you guys well After recession what I'm trying to Demonstrate here as well is this Foreclosure inventory a lot of that Inventory didn't really affect home Prices the home prices really got Affected from short sale And Liquidations from the flipping and Speculation and so today we have the Same thing going on with companies like Open door and also the new home builders The new home builders are in the same Situation if not worse than they were Right before the GFC so the question is Is what does Jerome po want to see in The housing market take a listen it's Very important and the single best thing We can do is get prices under control Get inflation under control so that we Can have a long expansion with uh the The record is clear that a long Expansion really gives significant Benefits to people at the at the low end Of the income spectrum because the labor Market gets very tight inflation is low And they benefit more than anybody so That's where we were before the pandemic
And we'd like to get back to that place I don't know guys I think that we may Need a recession and a depression to get Us back to where we need to live an Affordable Life As Americans the fact That almost no American with a spouse And children can afford to live without Being an overwhelming debt is shocking I Want to ask you guys how do we let it Get this bad and then let me ask you This question was it even our fault was It really just the fraud comment below Guys if you're wondering what you should Do it's just my opinion you should Continue to lean on your morals and your Integrity and understand that what You're doing by having discipline and Self-sacrificing is the right thing to Do which means just re-budget stop going Out to eat and cancel your subscriptions Re-budget and in the meantime as we're Waiting on the sidelines to get back Into the housing market know that I have Made a free home buying course so that In the meantime you can learn how to buy Real estate and have a high probability As long as you're paying attention of Not getting taken advantage of now other Than that guys I hope you found Overwhelming value in this video have a Great Tuesday it's a pleasure to start The morning with you and if you're out There investing in real estate you know I wish you luck and I hope you you win
