It Happened In 2008 And It's Happening Again...

Hinzugefügt: 2026-05-25

[00:00:00]Most people assume that when mortgage rates fall, home prices should automatically rise. And that's why I've got this chart behind me. We're going to talk about this. And during normal times, that's often true, right? Makes sense because mortgage rates come down.

[00:00:14]A lot of people can afford homes. They go and buy it, right? It makes the monthly payments cheaper, right? Which allows more people to afford homes. More buyers enter the market, demand rises, and prices often move higher. But you see between 2006 and 2012, something very unusual happened. This right here, now you can see the green line is the K Schiller Price Home Index. Um, this is actually a very delayed uh number that comes out. It always tells you too late that the prices are dropping. All right, the prices actually are already dropping. Um, the red line is the average 30-year mortgage rate and the affected funds rate, effective funds rate is the blue line. Okay. Um something very unusual happened here but it's actually not unusual. It just happens every you know 7 to 10 years and this one got expanded because of COVID.

[00:01:04]So what was happening right here?

[00:01:07]Mortgage rates were falling right at the exact same time home prices were collapsing. You could see that right here. Red line, green line, blue line going down all at the same time. To understand why, imagine the housing market is like a giant huge massive auction. Normally lower rates in mortgage rates give buyers more purchasing power. If rates fall from 7% to 4% buyers can afford a larger mortgage payment for the same monthly cost. So they bid up real estate or they go and buy a bigger house, right? And that normally supports prices. But during the housing crash, fear became stronger than cheap money. And that's coming back again. And while I'm on this topic, um I only do this twice a year.

[00:01:55]I've reopened the MOR the real estate master group, which is all of my past real estate courses and it includes all of the future courses all included in one price, but also group coaching calls until uh the end of this year each month. Huge value. Go take a look at it.

[00:02:12]If you're looking to buy a house, uh real estate, take advantage of what we're talking about here. Links down below for that. It's only open for a couple days. So, you see, back in the early 2000s, housing prices exploded upward right here. Let's right right there. Right. Rates were coming down, down, down, down, down, down. The Fed funds rate, the blue line was coming down. And you can see the green line going up. I'm learning this stuff. Okay, so that was the early 2000s. I was investing in real estate back then, and I was making money handover fist, right?

[00:02:43]Banks were lending aggressively.

[00:02:45]Millions of people bought homes that they could barely afford and speculative buying became common. I was part of it, but I wasn't part of this crash. You see, I started selling in mid 2005, which is right here. Um, right right, right there, right as rates were coming up a little bit more.

[00:03:03]People believed that home prices could never fall nationally, including Ben Bernaki, the the FUD chair. But then reality hit, adjustable rate mortgages reset higher. borrowing or borrowers started missing payments and foreclosure surge. Surge sound familiar?

[00:03:20]Foreclosures are starting to surge right now. Banks tightened their lending standards which is starting to happen right now and suddenly the market became flooded with homes that nobody wanted to buy. That is also starting right now.

[00:03:34]This is where the relationship between mortgage rates and home prices changed completely and you got this everything going down at once which is about to start again. The now just so you know you don't see it on this chart because this chart here right up here. Oh man, I'm bad at that. This is a delayed uh uh case is a delayed number. Your better numbers are going to come from the St. Louis Fred, which are going to actively show that home prices, the sale price of homes on average throughout the entire country have all already fallen over 10%. Okay? It's not being told to you in the um I'll do another video on that, showing you that chart. It's not being reported in the mainstream media. Okay?

[00:04:13]The Federal Reserve back then when this crisis was happening, responded by cutting interest rates aggressively. You can see this blue line and how fast it was coming down, right?

[00:04:24]in order, they did this in order to stimulate the economy and make borrowing cheaper. Mortgages, uh, they fell the rates dramatically because they're based off the 10-year bond rate, right, and the Fed funds rate. But even though homes became cheaper to finance, buyers were still afraid, right? This is where they're about to become more and more afraid as homes sit long longer on the market right now. So, back then, why did this happen? Because people no longer believe that prices had stopped falling.

[00:04:52]And that changes human behavior instantly on a dime. And you're going to see it. And the triggering event just like back here was high fuel prices. By this point right here on the chart right there, it was being reported in uh end of 2007 that uh fuel prices had gotten so high semi-truck stopped uh you know delivering things. Uh everybody was reeling from home high fuel prices and that's starting again. So, back then, imagine you bought a $400,000 house. Uh or or let's say no, you did it today.

[00:05:27]Imagine you bought one today. If you believe that it could be worth uh $300,000 next year, uh would you buy it?

[00:05:35]No. You're only going to buy that $400,000 house if you believe that it's going to go up in the the near-term and the midterm and the long term, which most people actually believe. But home prices do these resets every so so many years and it's already beginning in this market, right? So back then and currently if people felt that way they'd wait. And that is exactly what happened during the 2008 crash.

[00:06:02]Cheaper rates could not overcome collapsing confidence. At the same time, banks became much more strict about their lending because they were afraid that they were going to collapse. During the boom, almost anyone could qualify for a mortgage. After the crash began, lenders suddenly uh started demanding stronger credit, larger down payments, verified income, and lower debt levels.

[00:06:25]We've actually seen this in the mortgage market in the last couple of years. So, even though rates were lower, far fewer people could actually qualify for those homes as well. And that again is happening right now because up here uh right here people are at record high uh credit card debt, auto debt, um student loan debt, and mortgage debt. And a lot of them are starting to default. And the government's trying to hide these numbers from you because they uh are afraid that if you learn the truth, you're going to stop spending money. But consumer confidence just hit some massive low just recently. So that is why we are back to this point right here. And that is why you want to be in a position to absolutely crush it. And there is going to be a point in the near term, I believe in the next 6 months, you're going to see interest rates start to fall at the same price uh time it's being uh advertised that home prices are falling finally out in the public eye.

[00:07:24]And at the same time, you're going to start seeing banks get really strict with their lending. So, you're going to want to have stellar credit. Work to get your credit score up over 800 points.

[00:07:35]You are going to be so happy you did because when this happens, if you don't have enough money to pay cash for a house, you're going to be able to walk into a mortgage company and you're going to be their saving grace, their answer, because they're going to want your high credit score to be able to tell other banks, "Hey, look, look at all the high credit worthy people we're attracting and you know, we want better deals and more money and all that stuff." All right. Hey, if you want to be part of the real estate master group, this is a huge opportunity. It only comes around twice a year. Um, this is only good for a couple days. All of my real estate courses and all of the future courses of real estate included in one place, one price, and six group monthly coaching calls through the end of this year. I can't wait to see you. I'm so excited to invite you to this. We've had so much success over the last three years with this. And yeah, we only open up twice.

[00:08:21]It's a small group of people. All right, with that being said, the economic ninja is out.