The Biggest Mortgage Crash In American History

Right now, the typical monthly home payment for fresh home buyers in America is $2890. That's almost double what it was before 2020, and it's spiked by nearly 15% in just the past year. This sharp rise is a major reason why many believe we're in a housing bubble. Experts consistently point to this figure to illustrate the significant surge in relative prices.
But here's something important to understand about the real estate market: the sticker price you see isn't the whole story. Unlike buying most things, purchasing a home typically involves a 30-year mortgage. On top of that, there are additional costs like taxes, insurance, and, perhaps most significantly, interest. All of these factors contribute to the actual amount people pay each month—the mortgage bill.

CNBC Clip

[Riggsnic_co]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[tatianastarcic]

Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market

[XennialGuy]

This is actually not comparable to 1980s. It's worse. You forgot to mention that The DTI ratio of a home in 1980 was about three times the average wage. Right now it's 5, 6, even 7 times the average wage now. This alone is the number one reason why this affordability crisis will collapse on a massive scale.

[pensarfeo]

What this is missing is that in the 80s people could save enough to buy a house without a mortgage because of the low prices, now you MUST take a loan.

[avenger]

Dude you better be right if you're going to make videos implying people should buy homes at a time of the worst affordability. You're FOMOing people in on something that could ruin their financial lives.

[benlake]

Median home prices were $47, 200 in 1980. In the intermountain west even lower, and now it is ~$500, 000. I can say with confidence that it is much worse now than in 1980, at least in the west.

[EmanuelAmbriz-mlnk]

What amazes me is that so many people don't understand where our country is financially and on a world stage.. Mr Taggart is very conservative, yet he's ringing alarm bells. Most people I've talked to feel something on a world stage that's so devastating will happen before November this year. The banks run on lending money... which is a major slow down. Real-estate and construction are on a serious decline nationally. Are debt level is climbing wherein in 3 years are interest will be more than our total revenue annually. Right now in the first time in history the feds cannot bail us out in any major emergency without serious inflation. This all spells a reset which none of us I would buy Bitcoin and buy hard assets like gold /silver as a store of value while also actively to grow a nest egg of around 100k to a decent 432k in the space of a few months... I'm especially grateful to Kerrie Farrell, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape....

[rickysilver]

WTF are they talking about? 1982 was not the "best time to buy". There were negative real returns 5 years later. These are houses, not stocks. This "real" return doesn't account for the fact that at a mortgage rate of 15-18%, debt is compounding at a rate FASTER than the real return. It is abundantly clear that the worst times to buy were 1980-1982, 2004-2007 roughly speaking. We are just waiting to see how 2022-2024 will pan out.

[beamteam]

What a crazy statement to make to end the video on. Definitely should’ve hashed that out a wee bit more. in both of those eras, you didn’t have corporations and foreign entities buying properties like they are now and we were building a lot more back then, it is a nightmare now, regulation and cost wise, to build new housing developments of any kind.

We need to stop the immigration floodgates. In my city, there are Ukrainian real estate agents selling to Ukrainian buyers. These fools are coming over here with money and then getting free money from the government and saving it for down payments easily. They all have 3 to 5 kids. Aka 3 to 5 grand a month cash money. Them and everyone coming through Mexico are also keeping the rents competitively high.

We need to also stop foreign buyers who aren’t even coming over here and just let properties sit empty and accrue value.

Also need to stop corporations from buying too.

If we don’t take care of all 3 of those asap USA will continue its speed run to becoming the world’s toilet

[qtnqxlm]

I got the good news!!! Tents are cheap and overpasses are plenty 🤣

[ohoxhzc]

Ok. So in 1980 the median home price of $68000 which was 3× the median income of $22000. Now the median home price is about 6× median income. So your analysis is way off.

[honkhonkler]

The housing crash won't happen until the broader economic crash happens. High unemployment will force abandonment of all of those low rate mortgages, either through foreclosure or panic selling.

[colinscrypto]

7:55 - you read the chart wrong. 5-year real return. Thus, bought in 1980 (blue) return in 1985 (red). Or, buy in 1995 (blue) and sell in 2000 (red).

[Hallettjs]

Bring it!! I bought my home in 2006 for way too much and watched everyone I know walk away from their mortgages in 2008 and 2009 and they all questioned why I stuck around. I am now setting in a home which is now approaching 18 years old with a mortgage @ $1, 100 and even if I loose 1/2 the equity in my homes price now still puts me $90, 000 positive equity over the remaining balance on the mortgage.

[mle]

This video is brought to you by the American realtor association..

[drewbsn]

Can you do a whole video about the stuff you threw in at the end? I don’t quite understand that. The part about how when it was most unaffordable was actually the best time to buy.

[robertfrey]

This dude is trying to fool all of you the 10 year yield is still inverted and it’s only happened 3 times in history that it’s been inverted this long and those times are 1929, 1974, and 2008

[BangMaster]

The PRICE of any Product or Service comes down to the basic fundamental equation of Economics, SUPPLY & DEMAND.
As long as there is a shortage of Housing Supply and steady Demand, the Prices will not DROP. The Prices might drop in one or two location specific Markets, but overall, the Prices will not drop significantly.
Either the Government has to ease regulations and zoning laws, and allow Builders to construct more Housing units and increase the SUPPLY, or the DEMAND has to go down significantly than the current number of Housing Units for sale on the Market.
These are the only two indicators that matter in any Market.
Everything else is a bunch of hogwash.

[TerryCheever]

Insurance and property taxes are the skyrocketing parameters that are pushing escrow higher and higher in a constant climb making my mortgage payments reaching stupid levels lately. I'm shopping for lower cost insurance, and it is ridiculous to discover that mine is already lower than that I can find to replace it, and there appears to be some conspiring going on here.

[jljmlxt]

The problem is, people think they need a 2500 plus square foot home, for two people. I grew up in a little four room house. It originally was a two room. People didn’t go out and buy a bigger house, back then. They just added on to the old house. Sure it’s nice to own a big place. But you have to heat it, cool it and upkeep and pay taxes on it. Let’s scale back people. You just need a place to lay your head. By the way. We had 8 people living in that house.