YOUTUBE HOUSING CRASH VIDS ARE FAKE NEWS | Jared Jones | Jones Group Real Estate | Central Florida
FULL VIDEO: https://youtu.be/mYx9TaXuNm0
All right. Hey everybody, Jared Jones, how hot is the real estate market? The real estate market is hotter than a jalapeno is the armpit. The state market is hotter than a pepper patch in hell.
I don't even know what that means, but here we go. Okay. Listen,
I get the common question has to be selling houses in central Florida, talking to real estate brokers all over North America and Canada and around the world. And the question keeps coming up, then what does the future hold? I
I really find things are interesting at this point. I just read an article today. In fact, I'll just pull this right back up about how this home buyer who was shopping in DC was making offers in the $800,000 price range, looking in the eight fifties. And they're not writing offers 50,000 over there. Writing offers like 80 and a hundred thousand dollars over. And they're getting beat by offers that are going 200 and $250,000 over the asking price, central Florida, same thing in a marketplace. That's actually very hot. The home will be on and off the market in five or six days. In marketplaces that are a little bit softer out of town. Those homes will last no more than a week, maybe two. And so as you look at all the data that's coming out, okay, you're seeing, you know, inventory is going down to record lows.
You have the reality of a lot of people that are still on forbearance, which these are people that were theoretically in trouble with COVID millions of jobs lost. They go to their mortgage lenders and they obviously got their mortgage stalled, the foreclosure action stalled. So they're missing payments or skipping payments without actually having, any detriment to themselves for that. Now understand this one of the major things that we're going to cause by most pendants issues down the road. Okay. Thinking even fourth quarter of 2021, looking at the real estate market, consider it concerned that there just might be problems because of delinquencies are climbing the number of people that were in forbearance, which is like 5% of all the mortgages alone is just in a pause position by based on forbearance itself. All these theoretically are homes that a good portion of them need to be put on the market because the person may not be able to handle the payment, all those kinds of things.
Now recently in the past six weeks, uh, all the white house and the different federal agencies are coming out and extending things like eviction, moratoriums for closure, more towards that for forbearance moratoriums. Okay. So what that means is there is a concerted effort to push the initial ripple effects, the progressive damage from the COVID situation down the road. Okay. So what I mean is in a time of crisis, you have an impact point. If you think of it like water, there's going to be a rippling effect from that main event that causes, you know, different bumps along the way that are in concentric circles, that these, you know, bumpy spots that, you know, this might be a job loss, it might be a market crisis. It might be, uh, changes in interest rates. It's going to be some kind of market consequences based on the hurt, the harm, the things that happened in the intentional, uh, trauma, the crisis of, of the marketplace.
Now, in our case, what the fed is doing, you know, what, what our central planners are doing, what our government is doing is they're pushing the ripples out further. Okay. So it's not mitigating the damage. Okay. It's not mitigating the harm to the person that is, uh, in a position where they can't make their house payment. It's kicking the can so to speak. Okay. Now, when you, when you look at the rest of the picture, okay, you have interest rates that went to record lows in the fourth quarter of last year, back in December, and ever since interest rates have been steadily climbing, you have nearly 1%, it's like 70 basis points, about three-quarters of a percentage point increase in interest rates since the end of last year. Now at the same time, you've got a lot of pressure on the supply channel.
Okay. So you had all the lumber companies, they all pause their operations last year. Like everybody else in the first 15 days STEM the tide of the COVID situation. And what happened is when they even came back and reopened the lumber mills, they didn't open them back to full capacity. And so the lumber is skyrocketing. In fact, I have a chart. I'll try to have that on the screen, where you can see lumber is, uh, is much higher. So the producer index, producer price index for softwood lumber, is us Bureau of labor statistic. It's up, uh, just over four 30, something like that. Whereas last year, it hovered around half that to 25 to 50, something like that. So labor costs are much, much higher. I saw a recent, article that said the average price of a home to build is $24,000.
And so that plus steel costs, steel costs are up 20%. So, that's an interesting monthly change of steel price. Uh, steel mill products, prices are off the charts, crude oil, other building materials. So hear me on this. How does a builder sell inventory? Well, they buy the material and, they lock a price in with a consumer to build a house out in the future. Well, how does a builder feel about the fact that in the future, the price of what they need be much higher than what they locked in with the consumer? Now, obviously, large builders are probably dealing with this better than the small builders, but I mean, can you imagine if you're a, an independent guy just building five to 10 houses, like, how do you slate in, you know, you just bumped the price 20% and hope that, you know, the cost of the material by the time you need it, doesn't exceed.
I mean, you could obviously warehouse it, but you can't warehouse everything, you know, storing the materials till you actually need them on the job site. I mean, nobody's doing that. The reality is you have that going on and then let's go back to the original picture. What are the central planners? What is the government, what are the puppeteers of our market going to do with the market? Well, some of the things that I report on the past, uh, this past Friday, uh, Richmond fed president, uh, was on TV saying that there's a lot of momentum in the economy, told this on CNBC. He said we're going to have a strong summer. We're going to have a strong fall, pent-up demand comes back in the economy as the vaccine rolls out. And all of those things are true. In fact, I believe that while we have massively high demand in Florida right now, massively low inventory, in fact, it's record low, that, that we're gonna end up seeing the vaccinations hit, particularly in places like up North, where there's a lot more hesitancy to purchase homes and those people are coming.
And I'm going to tell you another thing, second home purchases are off the charts and Florida is obviously going to become a benefactor of that. So into the fall, there's, I don't see any, anything softening the housing market even towards the end of this year. So the narrative about a housing crash is not even in the realm. There's nothing stopping this. Okay. Jerome Powell came out and said that the fed will consider the rise of inflation as temporary, but the fed will not do anything about it. So the fed is not going to stop any of the economic growth, any of the surgeon inflation, and they're going to let it continue. As I mentioned, mortgages are up 70 basis points, uh, mortgage refinances have dropped. So here's the other thing. When the fed dropped the interest rates in December mortgage refinances applications, people just getting refinances drop, but get this.
That's only for rate and term refinances. That's when people go to a lender and say, I'm going to go and refinance my mortgage, the ones that are taking cash out. So there's a whole lot of people that are still applying for cash-out refinances. So, so think of it this way, rates went up, people that were just getting rate and term refinance, the amount of those people, just trying to tune into a better rate, disappeared. The business, went away, dramatic, drop the people that were actually going to the bank saying, wow, rates are low, but I also want to use my house as an ATM. That number has not really changed. So you still see a high number of people cashing out of the equity of their home. And this is probably even stimulating more buying. Okay. And I'll kind of cover this in another video, which is the fact of, people are, using the cash out of their home.
Maybe go buy a second home, but not moving out of their first home yet. Okay. So you have this interesting thing where there's potentially shadow inventory. If people actually own homes, they, uh, they're in a position where they want to buy something else. They just go and buy it and all the other homes. And you'd say, well, Jared don't, they have holding costs. Yeah. But the home appreciation is going up faster than the holding cost. Okay. And that's something that's worth looking at, but the reality is this, as you look at all these things, on the whole, this is what I really want to punch home is you are in a position. If you do not own a home in the very, very near future being completely frozen out for good. And here's the danger. Okay. Right now in the marketplace, the way it is, you've gotten massive home appreciation.
So for instance, in the central Florida marketplace, our homes went up 16% since the year prior, exact same home, up 16% interest rates plummet last year. And then they spike. So when interest rates climb like 70 basis points, I mean, you know, 0.7 of 1%, almost the entire percentage point. They climb since December, not only do you feel a loss of value, you feel a loss of a man. These homes look crappier than they did when I was shopping four months ago and looking online. So essentially you're buying, you're getting less value for the price point because of inflation, right? It's just what happens. You, your dollar goes less as far, but the second thing is your payment's going up. So now you don't have a $300,000 purchase power with the same interest rate, your interest rate went up. So now you're at two 80. So, so now 300,000 where you were, looks worse because prices are higher, but now two 80 multiplies that.
And here's the thing that I would tell you, listen to this the way the market is going, okay. There, you know, people tell me all the time, Jared, what's going to happen. The housing market, the way I equate the housing market right now in the way the planners are running our world. This is everywhere. This isn't just America. This is the same story and narrative on every continent. All the central planners on this planet have decided that we're collectively going to inflate the crap out of our market. Okay. And I'm talking just real estate. So now there are some countries there's a nominal few that are actually reigning that in and doing things to hinder certain buyers from buying. Like they're trying to keep speculators out of New Zealand or something like that. You have those kinds of things. But listen to this in, in central Florida, in any of these marketplaces in us, you have, you know, the marketplace, I kind of equate it to a car and this car is running down the road and things happen, right.
There was a drama that caused the car, the engine to kind of get beat up. But the way the planners are working on this is while, while there are like issues, right? Underlying issues, 10 million people started jobs and there's gotta be economic rules. And, and people that don't have the same income structures that they had. pre-Clovis, you know, with all the STEMI, stimulus booing, booing things, but like, think of it this way, the car had like one of those refueling jets that fly over the car and kind of, they drop it down an engine and they take the old engine out. , this car is still going 150 down the freeway. And it starts to get, it's starting to clang. And the engine is starting to sputter. And the, and the planner's got the pedal down on the floor. The government's got the pedal, the fed reserve chair.
He's got the pedal down in the pedal is going to stay down. Okay. And everything that they can do is going to keep that car down on 150. And even while it's going, when that, when the engine started to ping and bang, that mid-flight engine flew that the mid-flight plane flew over the car, pulled the engine out, put a new one in, right. And now that one's overheating now, and it's like ping and, and bang, but it's still going down the road and nobody is, is there are no pit stops. There's no natural, uh, rejuvenation of the car and the, and the road always ends eventually. Right. But there's no end in sight right now. Okay. And so if you imagine the way, you know, this analogy, there's no intention of, and there's no, uh, there's no marketplace changes insight over and above. What's already happening. So what I'm saying is it's going to get hotter. Okay. If you're watching videos that say, it's going to crash, I'm telling you the opposite.
And if I, and if I could have a narrative that would be like, that's that awesome? You know, a lot of that sensational, uh, draw eyeballs, I would say it. But the reality is the people that are extreme and extreme delinquency, the people that are having economic woes with their homes, all those houses are staying under wraps. Easy money is still coming out of the government. Stimulus three stimuli for the rest of the plans are being made to pour capital back, into the economy. And what I fear the most is that number one, you do not need to sit on the sideline. It's a dangerous place. As much as it is brain damage, to try and buy a house in this market, you need to try as much as I know, you're going to feel like I hate the house. It's not what I want.
It's tiresome. Then, the flip side is you are going to be in a rental market where what's going to happen. You're going to save your money. Money's worthless. Okay. Your money-savers are losers in the economy. We're in when the car is overheating. That means the dollar buys nothing because the marketplace is being inflated. The fed just said it. I'm not going to stop and play in the economy. That's how people with cash in the bank go broke. Okay? He is, if you're stuck on the sidelines and you're renting, here's the next thing that's going to happen. A whole lot of renters are going to give up in there and do what they're gonna go compete in the rental market. So far, the rents have not kept up with home prices. They haven't for 10 years. That means there's a lot of ground to make up on rents.
That means if there's a whole lot of people that are going to decide to get into the rental market, then that's going to cause pressure and competition a whole new way. Okay. And the sad thing is I actually think that you know, as you look at the economy, you look at what the goals are. I think there are a lot, of people in high places that people that manage the, you know, the fed people that are the central bankers that are the central government. These folks don't care if there's a ton of people in rental situations, okay. They don't care. They don't care. If you never own a home, they don't care. If you ever get to the first rung of the ladder to get to the dream. In fact, I believe that there's a lot of that is in the planning. Okay. That part of the plan.
I mean, it's just out there, like if you go and read, uh, for instance, the world economic forum, which is visited by presidents is visited by all the prime ministers visited by heads of state heads of every company they meet every year. One of the things they put out about the plan for the world in 2030 is that you will be a renter. Sure. And the reality is every practically, every country on the planet is falling in line. They're all doing the same thing. They're all pushing the price. They're all making the idea, the reachability of homeownership. It's getting pushed out of reach. And I think we're at a point where you don't see a comeback, okay. You're not gonna see it. Come back. You're not going to see it come down. Like what is being done? Doesn't become, yeah. Okay. Unless there's a difference in the plan.
But if the plan is that you don't own anything, why would they re erase it? Why would it come down? So, so the point is being an owner, you have the ability to be on the ride. Okay. If you don't own anything you're in trouble. And that it means if you go to sell something, think about what you're gonna do with the cat. Cause you don't want to be in cash. Cash is a bad idea right now. But anyway, that's fine. Yeah. That's my take on the marketplace. But stay tuned. I got some exciting updates particularly about where the market is going. Where's the economy, where's the supply chain. Why is this supply chain getting squeezed? Who's buying all the real estate. And I think you're going to be interested to know that the people that are buying it, aren't going to be selling anytime soon.
This means if you don't get in the time, to get into the marketplace is fleeting. And if you can't get in it, you can't move up within it. Okay. That's just a fact. So, I wish it was a more exciting update. I think it is exciting from the aspect that if you are going to have the emotional juice to get in, it's going to be good for you in the long run, but it's going to take some stones. It's going to take, it's going to take a smart agent. It's going to take, a broker that knows what they're doing and I'm messing around about that. But it's, it's true. Like, new agents in today's market are getting squeezed home buyers. I think they could do it without an agent who are, uh, are definitely being led down consistently. And at the same time, I'm telling you as hard as it is, if you are a renter, you need to do it now because the amount of demand in the rental market is coming. It's going to change. And there's no, uh, controlling the rent. The rent is going to grow. It's going to climb, it's overdue, and I fear that once the market freezes you out, I don't know that you're coming back. That's it. That's my exciting update.
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