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The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.
But the usual suspects, real estate EVs AI and now cyber attacks. Look the biggest expense in almost everybody's life is real estate Whether you rent or own. You gotta deal with it. You got to pay it unless you own your house for cash which that would be a fantastic. option for a person to have and it's not as uncommon as you think There's lots of us lots of people that have a house that, you don't have a mortgage on.
and aspiring to get to that point is a good thing And you may not think it's possible We're going to do some math to show you how that is possible and where you'd be if that was the case. But in the meantime…
One of the things that people are having to face. Is housing market affordability. And right now it's as bad as it's been. For almost 20 years. Worse than at the height of the housing bubble in 2006.
Affordability has two factors. One is. price of the house. The other is the interest rate. Right.
So when home prices went up and they went up quite a bit, From about 2014 to 2022. Most of that increase happened from well about half and half from 2014 to 2019 or 20 half If it happened then the other half happened in three short years 20 to 23…
The problem is the first half happened when interest rates were low. So you hardly even noticed it. In fact during that time interest rates were going down. So the affordability may not have changed much from 2014 to let's say 2020 That was six years. Home prices may have gone up.
You know, they may have close to doubled during that time for maybe roughly one 60 to maybe three 20…
And. Real estate interest rate for mortgages went down during the same period So your mortgage payment on the same house probably went up a little bit if you were shopping, but it didn't go up that much. Now the home price has got locked in. They go up a little more on 21. Beginning of 22 but now interest rates spike from 3% to almost 8% And we think they're going to go up even more.
We talked about it before and we'll show some. Some data why really 9.6 to 9.7 is probably the sweet spot where it's kinda, it's kinda settle in. And don't try to think you're going to try to refinance cause it's not going to go back down anytime soon…
But the affordability comes from the prices but now that the prices are locked in at that high, high level, Interest rates are going to go up and people say well, if interest rates go up the prices will go back down That's not the case prices on real estate and have never gone down. Except…for the housing bubble in 2006 or eight…
It didn't. down because interest rates and went down because there was a one-time event. Of homes being sold to people who really couldn't afford them…
Large numbers of people…
And interest rates did go up but it was a variable rate So people got a teaser rate. Two or 3%. And then after two years it went up to seven or 8%. So lots of people who really couldn't afford the house were kind of suckered into buying it And then they got kicked out So there was some houses on the market and the fact that the mortgage underwriting business. Have to change their ways They couldn't just approve every loan.
That also kept some people from buying homes that happened in 2008 2009. Look three years later the market had fixed all those problems. There were no more. teaser rate adjustable loans. The mark the underwriting of loans was now locked in that you couldn't get a mortgage unless you could afford the house unless the.
The company giving you the mortgage or the government could really see you had the credit the income the down payment. All of the things you need to have, you aren't getting a house. So really for the last. You know, 15 years or so. Nobody's been able to buy a house that really wasn't.
Very thoroughly. Investigated vetted and approved for that mortgage So you're not gonna have that same event happen again…
If interest rates go up which they have and they will, that's just going to keep people from buying a house It won't kick people out of a house that already have one because your mortgage rate is already established When you buy the house. Unlike some other countries like England or, other parts of Europe, your mortgage rate doesn't change every four or five years. Right. It stays the same If you buy a house in 2019 you get a 4% mortgage for that whole 30 years. You will have a 4% mortgage.
Even if rates go up to 10%. Your mortgage will stay at four. New home buyers that buy later. different story. Right Those people are going to have higher rates because they have to get the rate.
Of the current market…
The housing market affordability is most affected by supply and demand Right now there is still a low supply They haven't built a lot of houses and this goes back Even before the housing crash they built a ton of homes in 2005 2006. It still wasn't enough to keep up with demand. And after the housing crash a lot of builders got out of the market. So for the last 10 years, We were under building. Now you might say well yeah builders are building a lot Now They are.
You know we're a licensed general contractor. we know the building industry very very well. But we're not seeing. Even construction happening at the rate that new homes are needed. And the reason why is because builders are still a little cautious when they see rates going up they're like, I'm not going to build too many spec homes.
Maybe the market will be okay Maybe not. I'm going to build one or two at a time I'm not going to saturate a whole neighborhood. Because I might get stuck with these homes. Like. We saw people in 2008…
Even at the robust building level that exists right now, there's still not as many homes being built as are needed. You can still find him. Right You've seen our website homes cheap. There are still many many homes out there for in the two hundreds to 20 to 30 to 40 that are perfectly good homes It's not your dream house. Doesn't have granite countertops.
Doesn't have marble backsplash Doesn't have hardwood floors. But you can find them all over the country. Coastal towns, beach towns big cities, large acreage large square footage. You can find. The basics of what you want.
The thing that happens is people have a tendency to not be able to look past the cosmetic. Does it need paint? Does it need. New kitchen Does it need new carpet? Those are the things that can be fixed later You can live in the house with those things.
The only reason you can't live is if those things get in your head. Or your relatives or your friends and you feel shame. The problem is that's going to if that keeps you from buying a house, you're going to be have more shame in 20 years when you're still paying rent…
No there's no shame in being a writer. There's valid reasons for it but if you have a financial strategy to have a certain amount of wealth at some period of time, You want to start that process of building the wealth? Getting. A home that you own with a mortgage is a step towards that Why is that the case Well, either way you're going to pay. Two three $4,000 a month for your house either way.
If it's rent, you know it's a cliche but it's kind of true…
You thrown away the money because it's going into the landlord's pocket. Fact. If you pay mortgage. Look for the first four to five years. Most of that money is going to interest You're not putting much in your pocket at all You're not putting much equity away…
But after four or five years you start now having more of the money go to principal The amount you borrowed starts to go down a little bit more…
And once you do that you start ramping up where look the last five years of your mortgage. Almost all the money is going to principal You're not paying much more interest…
You will never get to that point unless you start at some point and look you can actually, if you don't want to wait 30 years you can get a 20 year mortgage or a 15 year mortgage or you can get a 30 year mortgage with the lower payment and put extra money towards it each month. Look I know that sounds easier than this. But you're going to pay money either way for your house rent or mortgage. If you star now in 30 years it'll be paid off. Now, in the meantime you might want to move or sell your house or do something different That's fine.
But at least take whatever age you're at now. Add 30 to that age If you're 45 plus 30 that's 75 years old. That's old You may not think that that's ever going to happen You may not be able to envision that age, however it's going to happen. You're going to be 75 someday. Do you want to be 75 and still paying rent?
Or have your house paid off? Where are you now You can retire maybe. I don't know. Again there's no shame in renting and home prices are through the roof. And interests which are through the roof.
The reality is though they're not going down. Home prices are not going to go back down. Wishful thinking it's not going to make it happen. Interest rates probably aren't going to go down either. People when interest rates went to 5% said well I'll wait till they go back down to three Then they went to five and a half.
I'll wait till they go back down to three. Then they went to six.
wait for them to go back down They'd never went back down. They're still bumping up…
The reasons why interest rates are at 8%…
Our permanent reasons…
They're not temporary. It's not like the fluctuating. Price of, of stocks or whatever else you look at…
Every…other price has always gone up If you look at the price of gasoline…over the last 40 years, it's always gradually gone up. Look at the price of. Food It's always gone up things Don't really go back down to price a couple exceptions to that. Consumer electronics. For example a computer You look at all these computers behind us.
Most of these computers Now you can buy a pretty nice computer for three or 400 bucks. I just lost the video. Last week where…
They were showing old commercials. Of. Computer companies from back in the nineties. Late nineties early two thousands. computer back then was like 4,000.
For a Pentium 3 86. I mean. It was crazy. That way. down because of.
The efficiency of manufacturing and advancements in technology that doesn't happen with real estate, even cars. Right. Use cars depreciate. But the price of the same new car keeps going up…
Now I've set on that Speaking of cars. You might think that if you purchase a car from a dealership, You are safe. Well if you thought that you might be wrong, here is a dealership. In. I believe it's North Carolina.
Which sold hundreds of cars. With bad titles, the dealership employees are facing 400 criminal charges. Vehicles are offered for sale without disclosing salvage status And some of these. Didn't even have. The right kind of document the transfer titles…
Months long investigation. Misdemeanor charges rebuild San. vehicles. And. The documentation was forged…
137 charges of failing to deliver titles in 33 charges of disclosing damage criminal behavior…
Title cancellation…
Serious problem So if you're thinking you buy a car from a dealership, be very careful do your research, do some due diligence on your purchase to make sure that you know what you're getting into. For vehicle…
Speaking of vehicles What about EVs? What about EVs? Electric vehicles are all the rage. Governments are trying to push them. Companies are trying to.
Make them more common. you're seeing…
Incentives on these vehicles but…
Consumer demand is not there The bubble is deflating…
TESL slashing prices…
Evie price war. Chinese Eby startups. All kinds of things happening. With electric vehicles That's why you see. At our website right down here or use DVS, use electric vehicles are a deal screaming deal right now.
Because of the fact that the new ones are going down in price…
One of the things that is. factor in finance and the economy is employment. We've talked many times before about artificial intelligence. Coming in with taking over jobs. And this is causing…
Incomes to reduce pay for new hires is shriveling as. years of salary increases businesses across the economy are reducing starting salaries for recruits Remember we said that nothing ever goes down in price Everything goes up well here's an exception incomes. So while your home price goes up car prices go up Insurance goes up everything goes up. Your income is going down. And you might say well I'm not a…
I'm not a new hire…
It doesn't matter. If you work for a company that has new hires, they're going to peg everything off of those. Pay for new hires is starting to shrink. Wages. Our now.
Less than they did just months ago…
Because…there's. Yeah AI. There's more efficiency…
The posted jobs that this person was shopping for have fallen $10,000 from just a year ago. The market is completely different Now companies know they can pay less. and they can pay less because. They don't need the people because you have AI…
And…people don't need actual humans anymore. AI is just fine for most people…
Back to the subject of EVs. Another example where somebody bought one is getting rid of it because of the inconvenience…
and what's the biggest inconvenience. She hates that she can't drive around with a conveyor confident She'll be able to find a charge point when she needs it. You know this. Charger anxiety range anxiety or whatever you want to call It has been a buzzword for a while but it's real These are people that already have bought one. It's not hypothetical.
And. They can't count on. Being able to find a place to charge that reliable…
Last subject for today is something that you know, A lot of times. is overlooked. But the problem is it's affecting everybody. And how is it affecting Well, There is a huge amount of…hacks and attacks on businesses more so than people think. To the point where the federal trade commission.
That if you look at their tagline up here it says protecting America's consumers, they don't protect business They protect consumers, but what are they saying? They're saying that cyber insurance. Is a necessity. Is an option that can protect you from. Losses from a cyber attack.
For thinking about insurance discuss with your agent, what would be best And it shows what the different coverages are, but the biggest reason why the FTC federal trade commission is talking about this and they're protecting consumers is they're seeing. Lots of consumers be. Damaged or harmed by these hacks Somebody hacks into the company you do business with your car dealership. your insurance company. Your, even your dry-cleaner.
And they get your personal information your credit card number and they can even do identity theft. It's to the point where even some states now this is California. Is trying to pass a law. That the bill would require. That any contractor does that does business with the state maintain cyber insurance…
It's going to be a law…
Here's a college Tufts university. Insurance requirements for contracts, cyber risk insurance to. Million dollar. Policy…
Right. Another…
College in Nebraska…
$5 million limit…
For insurance…
The real. why you were seeing these more in contracts is because companies are starting to see the risk The risk is probably higher than other types of risks For example…
Fire. How often do you see commercial building burned down Knock on wood. Right Knock on wood. it doesn't happen that much Cyber attacks happen every day. And many times.
Hacker we'll get in lurk in your business for a month or a week. weeks at a time and then they'll attack. You can prevent these most of the time the insurance companies that provide this insurance also put monitoring on all your computers. So if you do get hacked it'll prevent it…
So you don't even need an it person for that…
I know that you have opinions about these things. EVs AI the job market real estate interest rates. Let us know in the comments below. What you think…
About any of these subjects? Is it affecting you do you think it's gonna affect you? Do you think it just all kind of go away by itself…
We'll see you on the next video. And make sure you check out our. direct YouTube channel. You could see it on the screen. Describe TV.
Is our YouTube channel…
If you're watching this on Facebook. Twitter rumble. The direct content is on Describe TV. We're glad to.