➡ The Economic Ninja suggests that understanding real estate cycles is crucial before buying a house. He explains that while house values generally increase over time, there are periods when they decrease significantly. He believes that we are currently in a confusing phase of the cycle, where people are unsure if prices will continue to rise or start to fall. He also mentions that the Federal Reserve’s inflation mandate, which aims to decrease the purchasing power of currency by 2% per year, impacts the affordability of homes.
➡ The Federal Reserve’s decision to raise interest rates can make borrowing money more expensive, slowing down the rate of home sales as prices become too high for buyers. This can lead to a decrease in home prices and an increase in unemployment as companies struggle with higher borrowing costs. The Federal Reserve may then lower rates to stimulate economic activity, but this often happens when most people can’t afford to buy. Therefore, whether to buy a house in 2024 depends on your predictions about unemployment rates, Federal Reserve decisions, and the overall economic situation.

Hey everybody, Economic Ninja here. I hope you’re doing well. Today we’re going to answer the question, should I buy a house in 2024 or should I wait? Why are we going to answer that question? Well, because we’re going to go over some very basic real estate cycle fundamentals that just aren’t taught. And the reason why it’s not widely taught is because people move in and out of the housing market and not a lot of people in the recent past were actually investors in the real estate market through the last great financial crisis.

And since I’ve been investing in real estate since 2001, I want to give people an idea of what they should be thinking about, what they should be considering before buying a house and diving into this because a lot of FOMO is going on, a lot of emotions. Tensions and emotions are high right now with our country experiencing crazy inflation, crazy high rates, everything seems to be going nuts, but it actually isn’t. Okay, so let’s break this down really simply. And if you like this teaching, I am having a 24 hour Memorial Day sale on two courses.

I turned two courses, took them from $1,700 and I’m selling them combined for $299. The link’s down below. All right, check this out and we’re going to talk about some of the things I talk about in the course. Should I buy a house or wait? Well, first off, the housing market always on a dollar amount, making money, the value of homes always does this. And that sounds really cool. Over time, if you would have bought a house in the 80s, anywhere in the country, it’s worth way more today than it was back in the 80s.

As a matter of fact, if you bought a house anywhere in the country, a mere six or seven years ago, it is worth more today than it was back then. But here’s the problem. That same exact answer was true when you bought a home in 2000, 2001, three, four, and then things started to look pretty bad. And people in 2009, 2010 could no longer say, well, my house is worth more because I bought it a while ago. Now, depending on that, in these cycles, people that made real money, big money in real estate, right? You can buy and hold and weather out ups and downs and issues with the government and your tenants and all that kind of stuff.

But the big money on a percentage basis is always made right here. That’s it. Right here. Right here. Those little areas, massive, massive opportunities, because what you aren’t told in the mainstream media is that between a peak, let’s say right here and a Valley, a lot of people lost their homes. And not only that, a lot of people weren’t allowed to buy homes because banks pushed them out. They didn’t know what it took to walk into a bank and say, I want a loan for a home and then go, yes. Instead, they got no’s because they weren’t prepared for that next cycle.

Well, now, ironically, you’d think we’re right here, but we’re already right there. And I know this sounds and you may not. Hopefully you can see it really good from the computer or from the camera, but that little spike down actually represents the exact amount, percentage of home price, either the median price or the average sales price of homes in America that downward turn. That little bit right there is as much on a percentage basis as a great financial crisis. And this time it is a lot worse. So it’s important to start to see where we are in this cycle.

So where are we in this cycle? Well, first you have to understand what a bell curve is. Very, very simple bell curve. It looks like a wave pattern of frequency and everything in this world is a frequency, right? So when you have and let’s talk stock market, let’s talk the difference of let’s see here. I’m getting totally thrown off right now. Sorry. I’m so thrown off all the time. All right, so here we go. A frequency, a bell curve. This is sad. I know it sounds crazy. This right here is happy. I know I’m gonna really throw you for a loop right now.

Then this is, huh? I know I’m going super weird. And then this is sad again. All right. I’m going to do something totally, totally easy going. All right. Sad. This is what happens when the housing market, the stock market or any financial market takes a downturn and we’re at the bottom. Everyone’s sad, right? Think about the word depression. All right. The depression was named the depression because people were depressed and that’s, and I’m not making light of it. It’s a very real thing. Now, as markets go up, whether it be because of government stimulus, lowering of interest rates or easing of credit markets, what happens is asset prices start to rise.

And as they rise, people get more and more happy until they find themselves where we are right now. And this is right here. This is where we are right now in the housing market. Confusion. See, the problem with the housing market right now is that people do not know if it’s going to keep going up because most people in their gut thinks there’s no way housing prices can keep going up. Others very few go, well, this is it. We’re in the crash. I’ve seen it before. I can taste it. I can smell it.

I can feel it. I can sense it. I know where we’re going. Right. And the reason why there’s a lot of confusion is because people were taught this is while the housing market on the long term, it always goes up. But the reason why is because the federal reserve has what’s called an inflation mandate. And currently that mandate, what they want it to be is 2% meaning that every year they are hell bent. And I use that word very poignantly on purpose, hell bent to destroy the purchasing power of your, your currency, what you make at work by 2% a year.

Right. So they want your dollars to be worth 2% less a year. Okay. If I can only spell, my courses are a lot better than this. All right. So now think about this. If you were to ask somebody how much they paid for their home and if anyone watching bought a home in around the early 1980s, I want you to put it down below how much you paid for that home and then put how much it’s worth now. And if you could also, these comments are going to be a little long, but you’re going to teach everyone watching this a very valuable lesson.

Put how much you made per year, your salary roundabout back then, and then put how much you make per year now and what you will see from everyone that’s going to start diving into the comments and putting this information, you’re going to see that people had more residual or extra income to buy a home back then, than they do now. And that’s why the reason why is because your, your wages, they’re not going up high enough, quick enough to be able to compete with the federal reserve, destroying the value of the currency.

So that’s why on the long term, it appears that real estate is a great buy. And I agree, and I have to be honest with you, I believe that every person should own a home. However, not everyone will. Why? Because buying real estate is actually a difficult decision and it’s a lot of responsibility. There’s a lot of ins and outs and that’s why I wanted to do this video today. So you’ve got this bell curve, right? The sad, the happy, and now we’re like, things start falling and everyone goes, huh? Wait a minute.

I thought, I thought everything kept going up. Why is nobody showing up to buy my home? Because I want to sell it now all of a sudden. I have a job change or I want to go buy something else. No one’s showing up just a year ago or two years ago when I was buying, I could barely buy a house because there was a frenzy. Well, it wasn’t a frenzy. It’s because the velocity of transactions were slowing down and there was just a small group of people going around and buying up homes.

And typically during these cycles, and here we’ll clean this up and I’ll share another cycle with you. What happens is during these cycles, the house of homes, the value of a house, right? We’re going to make a little house right here. They’re going up and that’s exciting, right? However, as interest rates, now let’s talk about rates. Everyone here has seen interest rates go up insanely high. As a matter of fact, I did a video in December of 2021, a clarion call to all of my subscribers. They say, this is your last chance.

Go and re-fire your house right now. As a matter of fact, I just got off the phone with a, an amazing, a great, a real estate flipper, a real estate investor, multi-decade real estate investor, very intelligent person. He said, I saved him tens of thousands of dollars because I warned everybody. The Federal Reserve is about to pivot and raise rates. Okay. So as home prices are going up because rates are low, so they’re low, they’re just sort of sitting here and they’re not doing much. And when I’m talking about rates, I’m talking about the rates, not only on your mortgage, but your credit card and all kinds of things, right? What happens is the Federal Reserve decides, let’s raise rates.

And they start to raise rates ever so shortly. Now, this rate increase was one of the fastest, most aggressive rate hikes next to 1980 with Paul Volcker. Well, as rates had higher, the cost of everything when it comes to borrowing money gets more expensive. So what happens is the velocity, the velocity of transactions. This is very important. You see, normally when home prices are down low and they’re not skyrocketing, the velocity is healthy. So it’s going up as well, right? But now if you were to take a line and dissect this entire thing, this line was a timeline, as rates start going up, what happens is velocity is still doing really well, but then it starts to plateau and then it starts to fall off a cliff.

And there are fewer and fewer homes sold in the country, right? Well, what does that do? Well, as velocity falls off, it means buyers and sellers have stopped transacting. Sellers can’t sell homes because they’re getting too expensive, right? Because the price is going up. Buyers, they’re not showing up obviously it’s too expensive. So what happens? The home price starts to stall and it’s going like this until it turns down. And right now, if you were to see a chart from the Federal Reserve out of St. Louis, they are actually telling you the truth.

The problem is our nation is following Zillow, Redfin, and the National Association of Realtors. Let me ask you this, type four, if you believe that all three of those companies or organizations are motivated by you believing that real estate is always a good investment, please go buy, please go buy, or please sell your property. Type six, if you believe the opposite. So we’re probably going to get a lot of fives, right? So as this turns right now, you will see that the data of the Federal Reserve shows that the median and average sale price of a home has turned negative.

Well then, as this is stalling, the Fed takes rates and they stall. Have you heard of the term higher for longer? That’s exactly what’s going on right now, correct? All right. So then, velocity hits rock bottom. This is it. Well, right now, if you were to go and check the national sales figures for homes that have sold both existing and new homes, you will see that we are at the exact same numbers almost to the tens of thousands nationwide of homes that sold in 2008. You see, in 2006, right? Let’s say we had this many homes sold.

All right. In 2007, because we have this exact phenomenon going on, rates were going up, and house prices were stalling, and then you have 2008. 07, 08, right? If you look right now, 2023 was the exact same amount of homes sold. So here’s another thing that’s really important to note. During these cycles, as home prices rise, rates go up and velocity goes down. Something happens here with the rate. Corporations start to find it very hard to go and keep doing business on an ongoing sort of a manner because their borrowing costs have gotten very expensive.

So in the last year and a half, you probably noticed that people have been getting laid off, that there are less full-time jobs because everything’s getting more expensive for the company. So as unemployment rises, that’s a long word when you’re on shock and you’re live. So when unemployment goes up, there are fewer and fewer people to go out and get into debt, to go take out a car loan, home loan, student loans, any kind of loan, right? Any kind of loan that they would need to start paying back right away.

So student loans, they could put them off for a while, right? But my point being is that unemployment goes up, then you have less people to compete. So velocity is low, and then what happens is what everybody’s begging for, fed lower rates. All right, so let’s talk about that. So the fed, they’ve got rates really high and everybody wants them to be lower. Well, you know, the last time everybody wanted the rates to be lower, it was 2006, 2005, 2006. So the Federal Reserve rates. All right, so the rates had went up, right? And then they plateaued.

Well, during this plateau, everybody was begging to lower rates, lower them, lower them, lower them. Unemployment as unemployment ticked up, it’s getting higher and as, so unemployment, and then purchasing, buying. At that same time, went down. What we have is hundreds of thousands of people, if not millions, all of a sudden found themselves one payment late or slowing to pay. They’re a few days late, maybe a couple of payments, maybe three payments late. Then it turned into all out chaos. Cars are getting repossessed, homes are going into foreclosure, and all of those people, even the ones that just missed a payment, were now out of the race to be able to buy a home.

And as home prices started falling, so you have your home price. Let’s just say the home prices were going up too, and they stalled early, but as they start to drop, that’s when the Fed goes, all right, it’s time to lower rates. And the Fed starts to aggressively lower rates. And it’s a stair step. And the reason why it’s a stair step is because they want to lower, see how the economic activity, if it picks up, they’re good. They hold it for a drop. They drop it again. This is actually when you know that we are in a sustained, very real bull market for real estate investors.

Why do I say bull market? It’s because that’s what I know is home prices are falling. I’m able to purchase the proper property with the proper amount of cashflow, with the proper down payment. And I’m not talking about putting a lot down. I always put the minimum down. And then I want to cashflow. If I don’t find those kind of deals, I don’t buy them. And then as rates go, I’m refinancing on the way down and my cashflow is exploding on a percentage basis. So you see, by the time the Fed actually lowers rates, and this is every time through history, nobody on the internet wants to teach us for some reason.

They lower when the mass majority of people can’t buy. So in conclusion, if you think that you should be buying right now, well, you’d have to ask yourself, do you believe that unemployment is going to go higher than it is now? You’d also have to ask yourself, do you believe that rates are going to magically turn around and the Fed is going to start dropping them based off of the current situation, right? Remember, Federal Reserve is still showing inflation around what? 3%, 2.9, 3.1 around there. They’re nowhere near their 2% mandate.

But then you’d also have to ask yourself, what is the actual current situation in the economy, in the country, in our government? Is it strong? Do people feel positive about where we are going as a country, or do they feel negative or more pessimistic? If you answer those questions, you’re going to actually know if you should buy a house in 2024, or if you should wait. I hope you got something out of this. If you want part of the bundled package I’m selling right now for the next 24 hours, the Real Estate Crash and Cycles course combined with Real Estate Media Master, teaching you how to use your own social media accounts to attract real estate deals to you right away.

This is not something you can wait for. So it takes it from $1,700 down to $299. The deal is good for another 24 hours. Hope you got something out of this. The link will be down below. The economic ninja is out. [tr:trw].

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