California Real Estate Will Crash And This Is Why | The Economic Ninja

Hey everybody, Economic Ninja here. I hope you’re doing great. California is totally screwed. They are. Home prices are going to dive, and it’s not going to happen tomorrow. It’s already started, just so you know. We’re going to talk about it today. I’m going to, or tonight, I’m going to answer some of your questions. And this came about because I was sitting on a live stream watching another live stream channel, and they were talking about home prices and where home prices are going to go. And somebody got on. That was from Ventura County.

And they asked the host of the show if they thought that Ventura County would see a significant price drop as things get worse, deteriorating economic conditions and so forth around the country. And the host didn’t really have a good answer because, quite frankly, the host doesn’t come from California. Now I started chiming in, and some people got pissy. So I said, yeah, you know what? I’m going to go off and start my own live stream. Because not only am I from California, born and raised, and there are a lot of amazing people in California.

There’s only a few little morons out there. They’re called liberals. But I flipped home since 2001. There’s not a lot of people out here on YouTube that can talk about that. And so I will talk to you about my experiences. I’m going to bring you some data because the person asked, or the host asked, well, what’s the average income of California? I mean, sorry, Ventura, is it over $100,000? He said, oh, no, it’s like 170. So real quick, let’s just dispel this with a simple Google search. The average income for the Thousand Oaks Ventura County area is $87,000.

With the family size adjustment, it’s $66,400. And the caller obviously has a house in Ventura. I was lucky enough to have my next door neighbor in the central coast of California that worked for Ventura County Fire. I knew a handful of guys from Ventura County Fire. And he lost his butt in the real estate crisis because as I was selling my last flip home in the central coast, he had moved up to the central coast from Ventura County. And they had all kinds of issues down there. One of which is that firefighters lost pretty much all their overtime.

They went to nothing. California High Patrol, all those guys during the Great Recession, they severely limited overtime, right? Because there just wasn’t any money. And so the bottom fell out all throughout California. In my area, in the central coast, I saw a 46% drop from peak to trough of what I bought. And I actually bought the home telling my wife we were going to lose 50% of our value. We were selling off our small portfolio of homes, which is 14 properties. And that was small. And I wish it was bigger, but I didn’t know anyone else flipping homes or buying, you know, renting homes back then.

I was trying to find more amazing entrepreneurs on the real estate side. I just couldn’t. We didn’t have things like social media back then. I just, I couldn’t find it, right? So we’re going to talk about why California is going to crash. Now, first, I want you to understand this and we all know it, but you really need to know it. California is the largest economy in the country. As a matter of fact, compared to any other States, it just blows them away. Not only in population, but GDP. Another thing you have to understand is it’s one of the largest economies on earth.

I believe it ranks eight. It might’ve changed a little bit. So let’s do this. Let’s throw out a handful of facts, okay? Because there’s a handful of things that are going to cause under normal circumstances, a normal real estate cycle for California to collapse in price, right? Just a normal cycle. That’s like a federal reserve interest rate hike and drop cycle, an unemployment rising and lowering cycle, all these different cycles that are normal as far as the last 40, 50 years. But this time it’s not normal. We have a massive inflation wave.

We have an insurance crisis. We have wars, multiple wars going on. But on top of that, these wars are very important because they’re splitting the economy and the world in two. Okay. So to say that things are different this time is an understatement. But let’s just start with some fundamentals. Oh, I mean, we could throw in too that California is about to put a 30% per mile tax on gas or sorry, no, not on gas. They’re doing that. I think there’s like a $1.50 proposal right now on that per gallon. They’re actually wanting to put a 30 cent fee per mile that you drive in California.

So let’s just throw all the craziness of California aside. Let’s just talk about normal fundamentals. Well, first off, you have unemployment. So before we get into unemployment though, let’s talk about the actual amount Californians make. Now, Neil, Neil lives in California. Say, hey, everyone, say hi to Neil. He’s not crazy. Let’s see right here. Oh, it’s right here. Sorry. All right. California has the highest debt to income ratio in the country. Residents of the Golden State make about $28,000 annually on average. They’re just, you know, this is a brand new, this is new info coming out of 2023.

Okay. So $28,000 on average. Everyone thinks that everyone in California is a multimillionaire. And yes, there are a lot of people that make over $100,000 a year, but that when I say a lot, it’s not enough to offset this. Okay. So let’s think like demographics, big numbers, like really easy things to digest. So on average, people make about $28,000 a year, right? Oh, and here’s another thing real quick. If you don’t live in California, type down below what state you’re in. And you need to understand that no matter what state you’re in this time, California is going to drag all of you down.

I’m not joking. It’s way more than the justice system or the governmental system. We’re talking because it’s such a big powerhouse. And just remember, the reason why everybody’s real estate went up in the last year, two years because of California. Okay. So it’s a powerhouse. So no matter where you live, I’m sorry, you’re just going to have to deal with this. All right. So this is according to that $28,000 average annual income is from the Census Bureau. The New York Federal Reserve Bank shows that Californians have a per resident debt balance of $65,740.

Okay. Now, I want you to understand something. Most Californians don’t own a home. Can we agree on that? Type 1, if we can agree on that. Most Californians rent. They do not own homes. All right. So when we’re talking about the average amount of income, $28,000 per year, and the average per resident, resident. All right. We’re not talking head of household. It’s bad. $65,000 per year. This gives California a debt to income ratio of 2.34% on average. Like many other states, most of Californians debt is held up in their mortgages. Californians owe $51,190 on their mortgages on a per capita basis.

All right. So let me explain something. If I did, hold on, let’s do this real quick because I’m doing this live. Okay. This is why people freak out. They don’t want the Ninja on their show because I say you got to do it live. I’m not going to let you cut up what I say. So watch this. We’re going to put that same Google search I just read from you. That was said average income to debt, average income to debt ratio for California residents. I hit the 2003 number. Let’s hit the 2007 because we could probably all agree everything was okay in 2007, right? I mean, it wasn’t.

I was selling my homes in mid-05, but that’s okay because I’m one of those guys that sees the trends and I can tell you that real estate is going to crash because of this is happening. This is happening. This is happening. And then when those three things happen, this will happen. Then this will happen. Then this will happen. And then when those things happen, crash. So you either want to get ready or not. So, hey, just so you know, holy cow, this is Carrie clean roof. Just gave me an awesome super chat and I’m not asking for super chats, but she says, uh, a curry can root.

Maybe it’s a guy. I don’t know. It’s a business thing. I believe a crash is coming. I love crypto like you. How do I justify buying crypto right now when the entire bottom is about to fall out? Ooh, that’s very good question. Um, this is a real estate video though, carry, but I will answer it and it’s really cool. It’s because things are actually bad right now. Now I don’t put all my money into crypto. I balanced my bags. You guys all know that I don’t go crazy. I don’t follow in, but people are starting to see that how corrupt this government is in the money system.

So I always suggest if you’re going to get into crypto, you go like the big boys, XRP, Bitcoin, you know, things like that. Um, maybe some Solana. I got all those, right? You know, barely dip your toes and trade and that stuff. But anyway, that’s not a, it’s not a crypto thing, but, um, it’s because people are fleeing the dollar. They’re fleeing a system. And, uh, just, you know, when the stock market cracks, Bitcoin is going to take a hit. It’s going to take a big hit because all the derivatives involved. All right.

But see, this is what’s really funny. Um, real estate prices always project a, a upcoming, uh, uh, stock market crash. Why it’s actually, again, another very basic fundamental simple to explain when economic productivity slows down. And I don’t know if you know about this Rubio’s, uh, restaurant chain, a Mexican fresh Mexican restaurant chain, which I actually like is closing down like 48 restaurants because they simply said we can’t pay the employees $20 a month. You know what Newsom did? Cause he’s not bald, but he probably wants to crash the market on purpose.

Type two, if you agree with that, it’s like saying, everyone needs to wear a mask and stay home. I’m going to have a party and invite all my friends to my winery and no one has to wear a mask. That’s what’s really going on over there. Right? So the fundamental is when, um, economic activity slows down, then what happens is there are less people investing in the stock market. There are less people speculating. So then the stock market starts to, uh, decline, right? But before that, the reason why economic activity is slowing down is because people don’t have access to cheap money, credit, debt, whatever you say.

And the housing market turns first. So you have the housing market build up. Then it turns. Why? Because there’s more sellers than buyers. That’s happening right now. Then as, uh, there are more sellers and buyers, people have to take concessions price drop on houses. I think price drops right now are at what? Six and a half percent. Uh, people start pricing their homes lower. So you see the prices come down. We’ve already seen that on the, the St. Louis Fred charts, median and average home prices have dropped in the country, what around 8%, eight and a half percent since December of 2022.

Who can deny this? I guess a bunch of morons. But so as that comes down, then what happens is there’s less people to put money in the stock market. Then the stock market falls and the stock market starts to decline just like the real estate market slowly, slowly, slowly, and then whack. And it comes down and it scares the piss out of everyone. And then then all of a sudden it’s like the president comes out and goes, well, uh, so I guess you guys already know we’re in a recession now, I guess we’ll, uh, yeah.

And the funny thing is, is a recession is determined on two or, oh, I’m sorry, Biden changed the rules. Two or more consecutive quarters of negative GDP. Well, I guess we just need to change the, anyway, sorry, little goofy time. But when you’re talking about crazy town, you got to get a little crazy to feel normal. All right. So again, we’re talking about California and how not insulated is from a crash. This is just really logical stuff. Let me ask you this real quick. Because I think that the people that watch this channel are incredibly amazing.

Why? Because you think a little different, maybe a little nutball. It’s okay. I am. And the reason why I say that is because you think completely different. It’s this really baseline logic that sort of comes out and goes, wait a minute. If a government forces businesses to pay their employees more, that means you’re gonna have to raise prices until the fact that nobody shows up to buy things. So they’re going to go out of business. See my, my subscribers like that. So type three, if you’re one of those people, you sort of just get it.

You’re like logical. You’re not, you know, we don’t need to get all emotional and irrational. I don’t need to wear something fancy or show up in a fancy car. You know, I could do that right now, but I honestly choose not to. Why? I could have done it when I was 25. You’ve heard the Ferrari story, right? But that was because I did it to try and impress people. I can give her crap now. The older you get, the less you care. Type four, if you know what I mean. All right. So we already have established that California makes an average income of like nothing and they have a debt load of like nothing times 2.5.

All right. Does that make sense? All right, cool. So now let’s look at this. This is out of the Sacramento B, the head crazy town in California. Average household debt carried is $10,000 on credit cards at the second quarter. Oh, oh, wait. I was going to do my little thing. This is perfect. I’m going to type 2007 in now. We’ve already heard the 2023 numbers. Stand by. Oh, gosh, I’m not going to be able to find it. Oh, here you go. Here we go. Wait, no, not yet. This is awkward. You’re live, ninja. You got to hold it together.

I mean, I’ve got some of it right here. I mean, this is out of the Sacramento B from 2007. Oh, sorry. No, the average household carried $10,170 in credit card debt at this end of the second quarter, which was $2,200 below the 2007 record. So in 2007, they were holding an average of $12,000 in debt. All right. So this is what we’re going to do. Average California. This is really hard to do when you’re live. All right. California, credit card debt. 2007. Good. We’ve got AI to answer this. According to MarketWatch, the average credit card debt for all families in the United States peaked at $10,490 in 2007.

This was a significant increase from 1989. Gosh, dang it, Chet. GPT, you suck. My point being is these live streams don’t work out very well. We need to think about the logic. Right now, the state of California are paying people to stay poor. They’re giving lower income residents more money to just barely make it. Most people that live in the middle class of California, making around $130,000 to $180,000 a year. Everything you see of theirs is 100% leveraged. I know this personally because I know a lot of people in California.

They have very expensive cars that cost anywhere between $60,000 and $100,000 each, and none of them own them. They own boats, ski boats, that I’m not joking cost $150,000 and up. They put all of their stuff on credit cards and they don’t always pay off the balance. California is fat in debt. And as a matter of fact, I was going to show you this story right here. It is right here. It came out June 3rd, so what, yesterday? I don’t even know what the day is. This is how bad it is.

It’s the fourth. This was yesterday. It’s entitled, California has a car debt problem. This is out of Newsweek. It says cities in California are facing sky high inflation and a major housing market problem, but they might also be headed for a car debt crisis. In 2023, California Policy Lab found that about 8 million Californians owed on their car loans, 8 million, with an average debt of $24,900. On May 30th, a new report from WalletHub ranked the cities where auto loan debt was increasing, with two California cities making the top five, Fremont, number three, and Chula Vista, number four.

Just so you know, those are two in the Bay Area. Another two California cities on the top were Anaheim and Bakersfield, which took number 14 and 15 spots, respectively. The point is that California is majorly in debt. It’s all fake. If you go watch social media, you go watch mainstream television, the people coming from California that seem to be all rich, they’re not. They’re the exact same type of people or personality that were around in 2007. As I was selling my homes and warning everyone of a real estate crash for two years, I got made fun of too.

I’m not going to be made fun of anymore because all of my predictions are on the internet now. It’s time to get ready. By a show of hands, throw me up like a hand emoji. Give me a virtual high five if you’re actively getting ready for this. You’re calming down. You’re thinking clear-headed. You’re like, our government’s going to crap in the hand basket. Things are going to get tight. Lending’s going to get tight now. I want to get ready for it, or I’m getting ready. All right, here we go. We got some fives.

Sweet. Thank you, Steve-o. Thank you, NGO. Richard. DMAC. Brown eyed girl. Think of all these people right now. They’re slapping virtual fives. Bam! And they’re getting ready. The question is, what are you doing about it? You need to get out of debt. And I’m not saying completely, but you need your debt-to-income ratios at a really proper rate because the fact of the matter is, banks are going to tighten their lending because the government is going to slow their role. This summer, the government is going to authorize the purchasing of loans through Fannie and Freddie Mac, second mortgages that are going to do a slight burst of inflation.

Get ready. Your mouth will drop. And what it’s going to lead to, it’s not going to lead to excessive home purchases. It’s going to be people that are handcuffed that want to live and go crazy, and they’re like the Californians that got too much in car debt and stuff. So they’re going to pull seconds against their properties to reallocate it to paying off debt or possibly buying new things, which is going to reinvigorate it. It’s going to reignite inflation. But what it’s going to do for the first three months after Fannie and Freddie start these products, and I’m going to be tracking them.

That’s why I did the mortgage master course. For anyone that’s never had a mortgage, to people that have got tons and tons of properties, I’m going to blow your freaking mind because what it’s going to do is it’s going to reignite the nation. And a lot of money is going to get tapped. It’s going to spark inflation. But for the first three months going into the elections, it’s going to feel like things are good. The consumer came back. People are buying RVs. People are buying boats. That’s weird. Where did all these buyers come from? Well, it’s the exact same buyers that went into the HELOC craze and the second mortgage craze in 2004.

See, these cycles are very easy to figure out, and the Fed’s going to be able to lower rates just a little bit, just about 75 basis points, which won’t do much. And then it’s going to turn because then after three months, the first wave of inflation data is going to hit the market. And by then, the election will have already happened. So this is the question. And I’m going to tell you my goal. My goal is to turn 100,000 people, I’m not joking, into grade A solid borrowers where your life, your written personal, not your credit score, but your entire being the way you do your finances.

When you walk into a bank, they are going to turn around and go, this is a prime lender, a borrower, and we want his or her business. And because everything’s going to come crashing down around, you will have been prepared. See, that’s the difference between some moron or tool out there on the internet that just reports the news and what’s going on and someone that can actually put it together because they were investor way before. End of story. If you agree with that type 10, because that’s very rare. And I keep saying it because they all watch, have me on your channel live, get me on the news channel, put me on live, ask me whatever question you want about economics.

Because if you think this is fun, I’ll thrill you. And that’s not me being cocky. You see, I didn’t have anyone that believed in me growing up. My mother did until she passed. And when my mother was gone, I didn’t have anyone. So I said, you know what, I’m going to be the one that believes in everyone else. See, I believe in every single one of you, everyone that put their hand up and gave that little high five emojis because, hey, I’m getting ready for this. Those are the kind of people I want to hang out with.

People that see something that no one else does, and they go crush it. You are the next elite. I’m not joking. I don’t even care if you’ve never owned a home. Because remember, there was a day that I never owned a home. There was a day that I never had a full-time bump. There was a day of a lot of things that I didn’t do. And then I did one, and the next, and the next, and every single one of you. And I meet you all the time. You are amazing human beings. Some are there.

They’ve made their millions, some even a billion. Others, you haven’t yet, you’re young or maybe you’re in your mid-40s and 50s going, okay, I got to figure this out and I’m going to do it. And you’re cranking it out right now. And you see every day the potential in yourself, you’re going to get there. I’m not joking. We are a ninja nation. We are a group of people, humans, worldwide, and there are only men and women just, you know, ninja nation. There’s only two types. Type seven, if you agree with that. We’re going to absolutely dominate this.

And we’re going to take this financial crash by storm, but you got to be ready. So you don’t have to buy a course. I mean, everything I teach really, except for real estate cycles, you could read a ton of books and watch a bunch of YouTubes. But if you want a time hack and time cheat, there you go. It’s a pre-filming discount. That’s the QR code for it. I’ll put a link down below. Once we’re done with the courses, the filming will be done and the price will go up. But I will surprise you.

I hope you got something out of this. Thank you so much for watching. The economic ninja is out. [tr:trw].

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