Confusing Data at the Turning Point! 2017 Pricing for Affordable Homes!

Added: 2026-05-09

[00:00:01]Well, are you confused?

[00:00:05]There's always confusion when the markets and economy are going to turn.

[00:00:12]And I think we are at the turning point right now. My models say that, my real estate models say that.

[00:00:19]And I think the economy is saying that.

[00:00:21]Now, the government is going to tell you everything is rosy.

[00:00:25]Always. They're always going to say things are getting better. And I think Donald Trump has got awfully good intentions. And I think he has a lot of business coming in, good plants. And we have lots of manufacturing that's reshoring. But it takes a couple years to build these plants, to get the infrastructure put together.

[00:00:45]And between now and that couple years, I think we have a problem.

[00:00:51]But the stock market's going like crazy.

[00:00:55]Lots of places around the country for in my real estate business are doing incredibly well. Scottsdale, Arizona doing very, very well. That's part of the K.

[00:01:05]So the people who are buying in Scottsdale, a lot of them are paying cash. You know, they don't have to worry about mortgage rates. And they're making a lot of money. Their stock portfolios have just you know, they're records. They haven't had such great returns ever.

[00:01:20]What a great deal is this? This is even higher than 1929 and the dot com bubble.

[00:01:24]They're doing really, really well.

[00:01:28]And of course, that's part of the K. So that's the upper K. I'm not concerned about that. Now, our portfolio Remember, we're in the we're in the affordable home space with a you know, small three bedroom, two baths, two car garage. You know, 1400 square feet about 1800 square feet, single levels.

[00:01:46]These are These are properties that we intend for families.

[00:01:51]You get a family that rents one of our properties in the affordable home space, they stay there 5, 10, 15 years. So this is really good business for us, good for them.

[00:02:00]But, in that price range it's an affordability problem.

[00:02:05]So, here in Maricopa County, the median um uh household income, the median in Maricopa County is $90,000.

[00:02:18]In order to afford the median house in Maricopa County you need to be making $135 to $140,000 to afford the median uh house.

[00:02:31]There's a big disconnect. And that's where the problem lies. So, that's at an extreme.

[00:02:36]Now, we're going to talk about other extremes. We're going to talk about a little bit about the market and the economy. My models are showing me that we are at the turning point.

[00:02:45]You know, they've been slowly coming down. I think they're about to accelerate and to get worse because, you know, uh it's like going bankrupt.

[00:02:53]Remember that famous saying?

[00:02:56]How'd you go bankrupt? Very slowly, then all at once. So, it looks like we've got at turning point in the real estate business nationally um coming up here in the next uh 60 to 90 days. Um I uh my uh timing models are uh are uh completing.

[00:03:12]So, our very first um buy point is coming in uh later this year. We're waiting for a couple signals beforehand. They're they're a little bit distorted with the war and with all the uh with all the liquidity that's coming in.

[00:03:25]Cuz just in the in the S&P uh and the uh and the Dow, uh this year we've had $1.9 trillion in the last year, last 12 months, $1.9 trillion of foreign capital come into the equities market. And of course, that uh that really distorts the market. We're not even talking about uh PEs anymore, price price to earnings. We're talking about price to sales, price to revenues cuz lots of companies are you know, the PE ratio is just gone crazy.

[00:03:55]That is an indication and confusion at turning points.

[00:03:59]And that's where we're at. We are at a turning point. And uh this is great jeopardy for those that are uh you know, overextended. So, you need to make uh a little be a little careful here. Uh let me go to my next slide my and let's just talk about what's going on and we'll see. Now, here at this junction when you start talking about assumptions that turn out to be wrong, these are killers. So, if you make an assumption that turns out to be wrong when you're at extremes, um this can really, really impact your uh business. It can impact your future.

[00:04:35]And you know, decisions that you make at this time can really impact you for the next 10 years. So, you really need to take a look at these assumptions and do what if what if I am wrong on my assumption.

[00:04:48]And you know, when you get these when you get these um great bull markets that we're in, it's actually I I think it's crazy. I think we are in the most extreme valuations for the equity market that in history. This even beats the tulip bubble and the 1929 bubble. Is that and I think that uh we're higher than the dot-com bubble by five or six multiples.

[00:05:13]So, pretty extreme. When you're in this extreme, it's very difficult to uh let go of the risk. You know, when you start seeing things go up at extremes, you don't want to do uh you don't want to let go. So, um if you ignore that risk, this again is going to impact you for the next five or 10 years. So, we need to take a look at that. What are you going to do with that? And um maybe this is a good time to lock in some profits.

[00:05:42]Right? May- maybe this is just something that you should do. So, these are the things I jotted down that I thought maybe you should really take a look at.

[00:05:48]Talk to your financial advisor and see what your exposure is to the markets.

[00:05:53]Remember, I'm a real estate guy. I am not an equities guy, but I pay attention. So, I pay attention to the marketplace. I pay attention to business.

[00:06:01]And businesses to me looks like it's deteriorating. Restaurants are struggling. Entertainment struggling.

[00:06:08]You're seeing warnings from Walmart, from Target, from Home Depot, McDonald's, Shake Shack. So, let me go to my next slide. Let's just talk about what we see and um Now, here again, this is coming off the S&P and we are at extremes. Look up here. This is at This has never been in the history of the S&P this high. So, and not only that, but our PEs are expanding for this. This is like we've got great earnings that's going on. This is an expansion of the PE ratio.

[00:06:44]And it's going up. Now, I think when you get up to these extremes, you need to really pay attention to this. And look at this Look at the volumes down here. This is your momentum. And again, it's it's overlying. Whenever you get to this type of an extreme, typically you have some kind of reaction. So, it's in both indices. So, I'm not a technical guy. I just know that when you see these things, it's time to be careful. Now, here's the culprit. Is that we're seeing global equities are inflowing. The best they've ever had in the last 6 months ever. Like historic. Never been like this before. Flows have chased performance and a record 1.9 trillion so far this year. Can you imagine that? 1.9 trillion dollars. Now, this is liquidity that comes into the marketplace. You know, it never gets destroyed. So, if it comes into the market and you own the shares and they come in and buy your shares, well, where does your money go?

[00:07:43]It goes out somewhere. So, someone is buying into the into the equity markets and that money goes somewhere. So, it's it's exploding into some of our our marketplaces and we're we're going to talk about that.

[00:07:55]Now, look at you can see this. Now, this is just in the M2. This is in the private money.

[00:08:01]This is where that money goes. This is Fred Federal Reserve economic data M2.

[00:08:07]Here it is bottom. You remember in 2022 the Federal Reserve started doing quantitative tightening starting taking money out.

[00:08:15]So, this is the this is the Federal Reserve taking money out of circulation.

[00:08:19]But, you get here we bottom in April of 2023 and now it's up $2 trillion just in the M2. Now, this is pervasive throughout the economy.

[00:08:30]Now, here's what we see. We're seeing manufacturers is confusing. We're seeing manufacturer accelerating is in AI and Middle East war. So, we we're getting defense spending and AI. But, rest of the stuff is not. We just had Spirit Airlines go bad. You know, if the economy was doing really really well these these companies would be able to survive and and and prosper. Now, look at here's what we're seeing. Ford Motor came out and said they had a decline in April of 14.4% 14.4. This does not sound like an economy that is doing really really well. Even though the stock market is at an absolute historic high.

[00:09:11]Now, look at this. Here's the headline new home sales trend higher in May.

[00:09:16]However, prices the prices continue to come down.

[00:09:21]Right? We've talked about that in prior videos. In fact, what look at Lennar.

[00:09:25]Lennar peaked June of 2022 right when our models peaked and they're down to 2017 pricing right now. So, we're seeing that prices continue but the home sales in uh May, which was April, trended higher. But last month, the March existing home sales fell largest decline since November of 2022. So, look it. Here we are. Headline says home new home sales going up. This one says worst decline since November '22. So, this is a little bit of confusion to this.

[00:09:58]We're also seeing now We've talked about this. We're going to do another video on this shortly. But we're starting to see inflation's uh raise its head. A lot has to do with the fact that oil is up. Now, if oil comes down, that's going to go away. But remember, we we have three inflation comes in three uh waves, and we are looking at uh the third wave coming pretty soon. And that's typically the worst one. We're also seeing that uh our our models are saying that interest rates are going to be going considerably higher.

[00:10:28]Now, look it.

[00:10:30]Again, this is confusion. They They say the stock market's at all-time highs, historic highs, and yet we are seeing uh we're seeing this is coming from uh Danielle DiMartino Booth. We're seeing that uh bankruptcies are accelerating.

[00:10:44]Chapter 11 filings are are accelerating.

[00:10:47]So, the continuing claims are continuing. So, not good.

[00:10:52]And we're getting warnings from McDonald's and and uh the Shake Shack.

[00:10:56]They're saying that there's faltering consumer demand. And of course, we're talking about $20 for for lunch. A lot of people can't afford $20 for lunch, and that that's a reflection on these fast food restaurants. And also, we're seeing Walmart and and uh Target are are and Home Depot are coming out and and warning about their guidance. A lot of these places are closing down. So, uh Walmart's closing four properties in uh Chicago. They're They're leaving some of the markets cuz of the problems that they're having.

[00:11:28]Now, look it. This is Estee Lauder. Look at all of the uh brands that they have.

[00:11:32]DKNY, you know, uh Smashbox, Clinique, all these are great, great Tommy Hilfiger.

[00:11:40]These are great, great brands.

[00:11:43]And the market has just dropped like a rock.

[00:11:46]And they're firing 9 to 10,000 employees. So, this does not run with the fact that we're having a great economy and the stock market is at historic highs. I think that we're at historic highs because of the cash flows coming in from overseas.

[00:12:03]Now, again, just got this this morning.

[00:12:06]So, they're saying employment added 115,000 jobs in April. But, look at we're seeing hirings down to next to nothing by the Challenger and Gray.

[00:12:17]Again, this is coming from DiMartino Booth.

[00:12:20]Hirings are down to almost next to nothing.

[00:12:23]And then I get this from Zerohedge this morning.

[00:12:26]They're adding 391,000 jobs. The model, the birth-death model. This is what they're saying this should have happened in April. We should have added. These aren't confirmed jobs. This is what the model is saying that we added 391,000 or 391,000 jobs for April.

[00:12:46]But, when you talk to a household survey reports a loss of 226,000 jobs in April.

[00:12:53]Not adding 391,000.

[00:12:56]When actually call and and call the households cuz they're physically calling asking who's working, what type of job they have, how many hours are you getting?

[00:13:05]We're finding out that we've lost 226,000 jobs in April.

[00:13:11]And we lost so much in January. They were averaging a loss, a job loss, of 343,000 jobs every month since first of the year.

[00:13:22]Now, here's the other thing that causes me to say I think we we need to be cautious here, and I think we are at a turning point in the economy and in all the markets. Again, I think we're switching from financials into real assets, which is going to be great for the real estate market. You know, it's going to be really good for gold and silver, precious metals, oil, forestry products, farm goods, but it's going to be hard on companies that are in financials because look at what's happening here in April. Yes, we added we lost jobs.

[00:13:56]424,000 [snorts] full-time jobs were lost.

[00:14:00]But, a lot of these went into part-time jobs.

[00:14:05]So, they added 123,000 part-time jobs, lost 424,000 jobs in April.

[00:14:12]And uh full-time jobs, and then we added in 123,000 part-time. Now, you know the difference between a full-time, you can feed a family of four, but a part-time job can't. So, this is this is a problem in the economy. So, we're switching from full-time jobs to this gig economy, and that's not good news for us.

[00:14:30]So, this is where I think we are. I I cannot help but think that this is where we are.

[00:14:37]Now, right here, I think is the waterfall.

[00:14:41]Now, it's going to be depending on where you are and what kind of market that you're at. If you're in really good luxury, uh beautiful properties, waterfront, Malibu things, you know, you're on waterfront where you're looking at gorgeous views, you have uh panoramas, you got gorgeous properties, really high-end stuff. I think a lot of the foreign money coming in here in order to maintain their and try and do safe haven, they're buying those properties. Now, here in Scottsdale, we're certainly seeing the fact that home prices are not falling.

[00:15:12]They're doing reasonably well. When you get out to our portfolio in Surprise, Arizona, I will tell you that it peaked in June of 2022 where the median home price was $497,000.

[00:15:26]And last month the median home price in Surprise, the same market, is now uh 404. So, it's down $93,000 over 20% since June of 2022.

[00:15:39]And this is showing us where we are going to be uh on this uh on this I think we're going to be looking right here. And I think we're coming down. If you watch my other videos, and if you like my videos, give me a thumbs up and subscribe. Uh but we've looked at this where Lennar is back to 2017 prices.

[00:16:01]That would be pretty devastating if we went got that far. Now, some of these markets, maybe we will. I don't think we're going to do that here in Phoenix, Arizona. I don't think we're immune from it. But um I think we're going to have some problems.

[00:16:15]So, let me go to my my slide here and let's just finish this up. So, this is where I'm at.

[00:16:20]I give you my very best to you if I can help you in any way. If you'd like the consultation, give me a call at my company. It's a six and a half billion-dollar firm. Here's the phone number. I'll be more than happy to talk with you and uh see what we can do for you and if we're a good fit for each other. My very best to you guys. Bye-bye now.