Devastating 35-60% Home Price Collapse of $100-150,000 Decline Coming?

No matter how I cut it, it looks like we're going to take a big hit in housing. I've talked about this in my last video, so I've had enormous amount of comments. I love these comments. I'd love to hear what's going on in your marketplace. I'm hearing this from people all across the United States. I'm even hearing people from Europe that are commenting things are slowing down in almost all major markets. So when you start talking about Florida, I love Florida, but it's overbuilt. At the moment, it's just over-optimistic, under-capitalized, and prices are, again, unaffordable for a lot of people. Happening in Dallas, certainly in Austin, going into Houston, lots of places in Texas. And it's happening here in Phoenix as my home market, not to the same extent that we're going to see. Remember, we were the poster child for bad real estate investments in great financial prices. We just lost, my portfolio dropped 70% on some of the properties. Now, it didn't matter to me because I'm an income investor, but 70% is 70%. It just opened up enormous amounts of buying opportunities. But those people who were over-leveraged, they were just in deep trouble. And that's what's happening now. So we talked about the fact that it looked like just doing my homework that here in Phoenix, which is a great, great market. Now, we're right next to California. A lot of people leaving California. First stop on the home watch is Arizona. Great governance, low, low taxes, great climate, and just a great business environment. I mean, we're getting chip manufacturers like crazy in a lot of startups. So this is a very, very good market. It's a great market. We've got the Taiwan semiconductor plant that's going to put like $65 billion, put in tens of thousands of jobs. This has really been a big boom for us. I'm thinking we're going to take a shellacking here on prices. It's awful. So the reason I'm talking about this is when you purchase a piece of property makes a big, big difference whether it's going to be successful for you or not. If you buy it the wrong time, you are in trouble because once you have any kind of variables in it, it becomes non-viable. That is what is happening to a lot of the office buildings and a lot of the multifamily. They have a new variable that came in and that is interest rates. So when they go to refinance, the rate doubles or triples, becomes no longer viable. A lot of these guys did infinite returns and infinite returns means I have none of my personal capital in the property. I've transferred all the liability to the lender. They walk away because they've already got their money. And we've talked about this before. That's a whole different, that's a whole different, we talk about that in my seminars. That's a whole different video just to cover that. But that's what's happening. Not so much in housing. And people are talking about my timing model that hasn't happened yet. It's happening like crazy because commercial properties are part of that timing model and commercial properties are taking a bath around the country. I read this morning Elon Musk and Vivek are talking about the fact that only 6% of the federal buildings are being used, 6% occupancy. What means 94% vacancy? Are you kidding me? You know, that's losing. And we're hearing things with like in Manhattan that they have 50% vacancy. Well, the building drops like a rock because investments only are worth what they are able to return to you. And if the returns drop or become negative, well, they get the value drops. So let's go through what we're talking about here. I'm talking about enormous jeopardy. Now, could I be wrong? Sure. I haven't been wrong for a long time. This model has been absolutely deadly accurate. It's really kept us out of trouble. And again, we don't want to take losses. This is going to resolve. Keep in mind, this is going to resolve. And when it resolves, we are going to make a fortune, which you have to be able to take advantage of it. If you get involved too soon and you're part of that drop, well, you're taking enormous losses. Now you can't deploy your capital when it's appropriate. So let me go to my first slide here and let's just talk about this. And I'll tell you, I got this from Daniel Demartino Booth this morning. It just goes on to the fact that look at the globe and the United States are deteriorating on the business. So the PMIs, the Purchasing Managers Index is continuing to deteriorate both here in the United States and overseas. Europe is a basket case. They are one of our big trading partners and they are in trouble. They're not a business friendly. And all of a sudden, they had such a great market, they thought that they could not pay attention to the business. And what happened to them? Business falling apart. And of course, the taxes are going haywire. I'm hearing that they have to raise real estate taxes and they have to raise the sales taxes and income taxes on people because the governments are going broke. This can happen to an individual investor and that is what we're talking about right now is we don't want you to do that. Let me tell you, there's going to be an absolutely outstanding time. Let's talk about why I think we have a 35% drop probably in Phoenix coming. Can you imagine buying now and taking a 35% loss and you put 25% down and it drops 35%. So not only does it wipe out your down payment, but now you're underwater. So this is the possibility. This is what I have calculated. Now, it's nothing. I'm not using a supercomputer to do this. Anyone can do this. Let me go to my next slide and let's just talk about what we see here. Now, I'm going to tell you that when we are looking at cycle completions, these things have to happen. They're one of the signposts. It helps tell us where we are in the cycle. It tells us to watch out for these things because these things have to happen. Now, liquidity, I've talked about this before, the liquidity cycle and the real estate cycle came up and coincided almost together. So liquidity peaked in March of 2022. Copper peaked in April of 2022, came up again and peaked again in May of 2024. So that's done. So Dr. Copper is telling you directly that the economy is in trouble. We've had several big banks get in trouble. And the federal fund rate has peaked and has dropped down. It dropped in August of 2023. That also is there. But it's interesting that it peaked the same time at the same amount as it did in the great financial crisis, right around five and a quarter percent. That also peaked. We had interest rates now are normalizing, and that's the big tell. I'm going to tell you right now, when interest rates start to normalize, that means that something is broken in the economy. And now the Fed is starting to reduce rates, and that's when all hell breaks loose. So let me just continue. All these things, all of our signposts that need to happen have happened. We've also had the major banks. The big one, of course, was Credit Suisse. That went down. But we had Silicon Valley and Signature and Republic. They went down. I imagine we're going to probably have some more go down, probably many more. So these things are just, these are tells, and these are our guideposts that go along, and they are telling us that this is happening. Let me go to my next slide, and let's just talk about what we have here. And I'm telling you that risk is very, very high. We are up here. We are completing. This is like a two-year plateau. And we're finishing it, and we're starting this journey down. Now I want you to look at this. I'm going to tell you that this is going to come down to where it is and level off right about here. And this is right around 2016, 2017. This was 2020, 2019, 2020. And I think it's going to come down below then. I think we're going back to 2017, 2018 prices just to stabilize. Now, you know, when the pendulum swings and it comes down, it never stops where it's supposed to. So it continues down. That's why I think it may go to 2017 prices, 2018. That would be devastating. So here in Phoenix, I am thinking that it is probably going to go to 35%, maybe goes 40% reduction. That would then cure affordability, right? That would certainly cure affordability. And that's the market curing an extreme. It happens all the time. That's what it does. I keep preaching this, and I know everybody wants to jump in. It's a two-year window. Let's wait. Let's wait. Then we're going to make it a little bit of, we're going to make a lot of money. So right here, this here, so it's 14 years up. You can't hardly go wrong when it's going up 14 years up, four years down. We're at the two-year plateau, right? This is where it comes up. And now it's starting to decide what it wants to do. If this is a plateau, then it comes down. This is fast and sweet, and it's brutal. And this, I think we're going to be looking at very, very shortly. I think that you realize that when liquidity, and I saw the market peak, so I haven't put any new capital in since 2022, since second quarter of 2022. I get paid by buying people properties, and I have told them not to do that. It's detrimental to me, but it's a great deal for them. Because if you lose 35%, you are in deep doo-doo. And I think that's where we're going. Let me go to my next slide, and let's just take a look at this and see what we've got. Now, I want you to look real close at this. I want you to look really, really close at this, because this is the work coming from Charles Hugh Smith. Now, I've alluded to this. I haven't really gone over this too terribly much. Let me go back here to the slide. Now, this is bubble number one. This is the great financial crisis that came down, and honestly, we did not really get to recover. It should have come down here a little further. But if you recall, the Federal Reserve started injecting all kinds of liquidity. China put a lot of money into this thing as well across the globe, and that filtered into us. But they started buying back mortgage-backed securities. They started putting in liquidity. And the rest, it never really completed. Now, then we came in. We finished this little bit of completion. Then it started back up. So, 14 years up. Here we went 14 years, and we are here. And just like in mine, his bubble and my bubble, my chart looks very, very similar. Completely different analogies to them. It's just a completely different look at it. We're coming to the same conclusion. Now, he thinks it's 35%. But we went down almost 70%. I'm going to tell you, some of the properties in my portfolio in Phoenix in 2009 dropped 70%. Now, the rent didn't really get affected too much. Now, remember, we have in my portfolio, we talked about maximize the tenant, not maximizing the rent. And that saved us last time around because we had very good tenants. We weren't charging more than they should have been. Remember, rents are charged in a range. There's a top range and a low range. We put it at the low range and made sure that our tenants were happy. That saved us. And even though the price of the properties dropped like a rock, the rents did not. And we're income investors, so our income continued. But now, that was 30%. He thinks it's 35%. I agree. I think that we're looking right in the face of a 35% drop, right in the face of a 35% drop. Here in Metro Phoenix, we're one of the better markets in the world. So we start talking about some of the endangered cities. We start talking about markets like Florida and Texas. I love Florida and Texas. They're just overexuberant. And they're ahead of themselves. And I think they're going to correct. And I think they're going to correct brutally. Some places, I'm hearing Fort Myers and some places in Jacksonville, and of course, Austin, Texas, and Dallas, Texas, and Houston, New Jersey, of course. Lots of places are really going to get hurt. And it's just a cleansing process. It is just a cleansing process because we are obviously out of whack. Let me go to my next slide and let's just talk about that. And let's just see what we got. So I looked at this in my last video. By the way, if you like my videos, would you give me a thumbs up and subscribe? I would go back and take a look at these because we've been talking about this. Remember one of the people I interview is Charles Nenner. He's been saying this for many years because he looks at a chart a lot longer. I have been saying it too, probably a little bit ahead of myself, but it's coming. This is just the simple rent to own, and we are really out of whack. So it's about $2,000 a month to rent the property, or you can buy that very same property for $3,100 and own it. It's a 32% overpriced. Could it be 35%? Absolutely. So I'm thinking we're at least 30%, 35% overpriced here in Phoenix. We're looking at a payment differential of $1,100. That $1,100 is going to buy you somewhere around $150,000 to $180,000 in mortgage, and that's the differential. So it's telling us that our median price home of $448,000 at the 32% overpriced would be $144,000 if we just do a simple differential on mortgage payments that overpaying on a mortgage, $174,000 more payment than if we rented the property. It's a really bad situation. So I'm telling you, the hardest thing for an investor to do is be patient. It's like Warren Buffett. They've been saying, oh, Warren Buffett's sitting on his pile of cash. Well, there's a reason he's sitting on a pile of cash because he doesn't want to deploy his money because he thinks better opportunities are coming. He's selling Bank of America. Why is he selling Bank of America? One of the themes that we have is banks go bad. So why is he selling that? He's getting out of Bank of America. What does he know we don't know? Why is he sitting on cash? Because he wants to deploy later on and we need to be patient. I'm getting all kinds of comments saying, no, I'm wrong. Well, maybe I'm wrong. Just wait six months or a year. It might be worth $40,000, $100,000 just to wait to see if you can't. If I am wrong, we're going to know pretty doggone quick. So let's see what we got. So this is where I am. I'm at this address. You can reach me. We are getting ready. We're taking names and numbers that you can reach us. For you to find out if you want to work with us, we are going to have a couple of different programs so you can join together with other investors. If you don't have enough money to buy your own property, we're going to put investors together, maybe put them into a pool so that you can take advantage of it. I think we're going to have an explosive market coming. I think we're going to make a tremendous amount of money, but not yet. I think this is coming down. I think we're going to make a lot of money at the time, but we do have to have the correction. It's obviously to me, I've been in business for 50 years. I've been made lots and lots of money for myself and for my clients. I am very, very cautious. I am not buying. We're doing 1031 exchanges because there are endangered cities around this country that you should get out of. You'll get into the better marketplaces. Certainly if you've got, I would highly recommend coming here to Phoenix. It's a very dynamic, it's good governance, great climate, great schools, crime-free and explosive growth here. We're stalled a little bit, but we're going to go. If I can help in any way, you've got my numbers. My very, very best to you. Bye-bye.