hello and welcome mortgage rates are the most powerful and the highest impact indicator
on house pricing today so in this video we'll discuss in detail with some data and facts to
figure out what impact could rising interest rates have on the housing market and why it
should concern you whether you're buying a house you want credit cards you have a line of credit
interest rates affects all of us so if that interests you stick around to find out more
to all my friends all over the world i'm your host ak i'm an investor i'm an entrepreneur i
have a masters of science in computer science i have worked for top three consulting firms
in the world i do development i do buildings i do flips and rehabs i have rental properties and most
importantly i provide affordable housing for the needy and that is my goal folks
this channel is for the outsider outsiders like yourself and outsider like myself
so in this video we're gonna have some fun we're gonna view some tick-tock videos or some fake
gurus who are posing to be a real estate expert but they have no idea what real estate is about
they have no knowledge of real estate yet they're talking about they have all these properties and
values so just for kicks we're gonna do that okay so stick around till the end to watch that
now if you have a 30-year loan i mean you're okay you don't have to worry about interest rates but
if you have a variable rate which is called the 5-1 arm then i think you have to really worry
about it because folks with 5-1 arm your rates can go up and down any time depending on the market
and that can be very detrimental to your savings and your future plans why because a variable rate
could also mean a variable payment that means you don't know exactly how much you're paying
month to month so that can offset your budget and your balance so be very careful about that
also if you have credit cards you have to worry about interest rates because credit cards also
have variable interest rates historically when companies have increased credit card rates it's
due to the rates overall rates increase because they want to squeeze as much juice out of your
credit cards as possible so and they want to take up your savings so when that happens you know
that the rates are rising and your credit card rates will also increase because of that
now if you have a line of credit taking some loan out to buy some furniture or add some value to
your life or pay off some student loans it's very dangerous because when the interest rates rise
those payments those checks that you're writing every month could also change drastically folks
so please understand that the rates have massive ramifications and i don't want to scare you or
anything but if the rates go up in a few percent it doesn't really matter let's say if the rates go
up from 2.9 percent to 3.25 percent on a 200 000 loan well your payments will only change
like 60 bucks a month so it's not the end of the world but if the same rate goes up to 4.5 well
then you have a 160 difference approximately so your monthly payments can get out of your hands
if the rates keep increasing so you have to be very sure and careful that you keep an eye on
rates also as a home buyer you want to make sure you keep looking at the rates because the rates do
affect the market sometimes they don't affect the market because there are other variables such as
inflation and demand and maybe pandemic and so on so forth but that's a separate factor
you still want to watch the rates to see you know when can you jump if the rates are affecting the
house prices so so why are the rates increasing is the question right why are the feds adamant
about increasing interest rates there's a reason for that they want to slow down this
inflation you know they want to make sure that the prices of houses do not keep going so high that
nobody can buy those houses and right now it just seems like it's headed that way folks because the
overall indicators are that the market is strong it's just going to keep going high and high
if that happens then it's going to be out of reach for most people for an average george and you know
when interest rates increase what also happens the stock market gets affected okay and i'll tell
you why stock market actually takes a hit from that because the value of the bond goes lower
if you want to learn about bonds you can google the fact and and how bonds work and so on so but
there are some really nice videos and these bonds are issued as assets to companies and to investors
so it has an adverse effect on the companies they will stop hiring stop firing start fighting people
because their bond are not giving them as much return and usually a market goes through a
correction but interest rates keep rising so i want to bring that to your attention so you're
aware of that how rates are so important beyond just housing beyond heloc beyond your credit cards
beyond your purchasing and beyond your mortgage rate it also affects the whole world including
the stock market okay and the bond market for that matter so let's look at a couple of markets
because people have been asking me dropping questions there have been some trolls worth saying
well nothing is going down well i want to present some facts to you for this is not information that
i just cooked up from my own okay in my previous video where i show you guys there is no crash
i also show you the some of the graphs and charts but here's my message to you folks that there are
a couple of markets okay and there's more than that i'm sure there's more than that one i know
personally okay a couple of markets such as let's look at dallas market dallas has only gone up one
or two percent in the past few years so why is that right why is dallas not exploding like the
entire other u.s well they have a lot more land okay and there are other factors involved so you
have to look at not just the state level you have to look at the city level okay they're leveling
off folks and that's happening in a lot of places including las vegas las vegas also has a similar
trend where the prices just shot up like a rocket and then they level off and and you need
to be aware of those for those of you in asia who think that the market is not slowing down in other
places you're wrong you have to look at the facts city by city state by state and sometimes even by
the county level let me give you a solid example of a recent market here my own sister is selling
a house okay in rockville maryland well guess what happened in rockwell there's a small town called
derwort maryland in durban only 10 houses sold in the last month but guess what the
house prices are less than 20 from last year so you would think that everything in rockwell
and rockville is a great town folks a great uh great city prices are fluctuating differently
and going at a different rate in dallas versus derwood of maryland so please understand that
and if you have any confusion drop me a comment or a question i can clarify that by the way if
you love the content if you love what i'm sharing the knowledge with you and helping you guys out
please drop a comment and a like and show some love for your boy okay thank you so much for that
so what happens if the interest rates keep going up right now they're at 3.11 for 30 a year okay
what if they keep going up well the graph of the house increase house price in peace could
flatten out okay it may just be straight uh for a few months it may start to go down who knows we
don't know we're just speculating not predicting okay and the only factor that's keeping the prices
high in the other markets folks is number one demand obviously a number to inflation if those
two factors were not there i guarantee you this interest rate increase will bring the prices down
again you have to follow these trends and think like an investor folks i want you to think like
an investor you know don't just look at the rates okay look at the median sale price of your region
of your city of your state look at inflation in your city in your town look at number of
foreclosures okay uh look at the number of days a house sits in the market those are
the factors you have to look at to answer these questions so the reason i'm telling you all this
is there's a great opportunity folks if the rates are going down in your city or state or your town
and you know the inflation is under control and you see that household are sitting a little bit
longer in the market that's when you know is an opportunity for you to make a deal because that
that makes the seller nervous right the sellers get nervous when the house sits
for too long in the market and that's when you can jump in and capitalize on the opportunity and
that's why i'm talking about this whole scenario about real estate and interest rates because they
are directly or indirectly connected to each other okay so you might say okay so what about
interest rates and refinancing how does it affect that folks interest rates have a huge effect on
refinancing refinancing has gone down 20 from last year and it continues to go down the number
of people who are refinancing are not refinancing as much because some people already have a good
rate for the past few years right so why would you refinance spend several thousand dollars in
general the market is not as healthy folks and i say that from the affordability perspective right
the prices are out of reach you know a town home in canada is selling for a million dollars right
i mean that's insanity so so i think you know as a subsequent effect of that a lot of parents are
giving gifts and keeping their kids in their own house until they are able to buy a house so they
can save more money and that's a bit of a bummer right because even though you have a good job and
a good savings you can't afford a house because houses that you want are 500 600 a million dollars
when prices go for houses 14 increase right or whatever you have to also factor in inflation when
prices for houses go up let's say 14 let's say in virginia or maryland it doesn't mean it's actually
14 because you have to subtract the inflation rate folks inflation is five or six percent right now
so if you deduct that from the price of the house the house has actually only gone up 10
it may be a bubble in some state in cities but it's like 20 30 but if the house price has gone
up 10 for a single family home that's not out of the norm folks okay that that happens okay there
are other factors here demand and supply as we talked about in the other videos always subtract
the amount of inflation just like you subtract the amount of inflation from your salary if you get a
three percent raise but inflation is six percent did you really get a raise no you didn't no you
didn't be honest with yourself okay you did not get a raise a very important point that nobody's
talking about so how do interest rates affects the banks well the banks can charge you more money
they can make more money they can make their investors happy you know that's why they also
would promote and enjoy interest rates right the bank of nova scotia also said that they will try
they will try to increase interest rates three or four times next year in 2022. so why are they
increasing the rates because they want to have more returns you know they're more buyers in the
market and the house prices are higher the loans are larger so if they increase the interest rate
boom they can make more money so banks are in this folks banks want the rates to go higher and go up
and up and up what is also playing a factor here is that the us dollar is devalued folks why what
used to buy four hundred dollars you know a few years ago it cannot buy the same amount of money
or assets for that hundred dollars anymore and that's what i mean by inflation is that the dollar
is weaker so you have to pay a million dollars for a town home to be able to afford that you know one
thousand eight hundred two thousand square feet of house the same price that we know was being sold
for 500 a few years ago and this is this is all because of quantitative easing which is a concept
that was introduced back in obama's days in 2008 when the crash happened they pumped a lot of money
in the market bailed out these banks who were lending money you know illegally and unethical
ways and manners and that's what happened back then so quantitative easing is happening again
in this market government is printing money money is being pumped in the market the feds are buying
mortgage-backed securities to create a perception that the market is healthy and it should keep
growing so let's look at the graph and chart that i want to show you guys on the screen here if you
look at the arm 5-1 arm which is 2.49 percent uh the third year um fixed is three point one one
percent and this charge you see so the five one arm is actually going down right now uh while the
the blue line is going up now let's zoom out a little bit right let's look at december right
december of last year wow wow look let's look at the see what happened here folks
uh there was a spike in the arm rate right 2.4 percent went to three point five percent
or three point one two percent wow and then what happened to the the thirty year interest rate
third year interest rate also uh got up to two point seven nine percent so what does that tell
you that tells you that the rates go up and they affect each other they kind of play off each other
so when the arm went up third year also went up but guess what happens then if you have a home
equity line of credit that r means your payment just went up a hundred dollars more per month
depending on you you pulled out ten thousand or twenty thousand or a hundred thousand dollars
from your house now let's look at another chart from the past 28 months to see how the rates are
fluctuating in the past 28 months to get a bigger picture of the history of rates right it's one
understand what has been happening all this time right so rates were like 44 sorry four percent
so rates were four percent you know around 2019 right and then and then from 2019 they
started coming down you know because of covet because of other factors because supply chain
um they kept coming down kept them down but now if you see in the past you know six or seven months
they're sort of going up now and that's really interesting right they're sort of going up now
i want to bring another chart to your attention i want to bring the chart chart to your attention
if you look at this chart in front of you 30 year fixed was pretty high 1990s but these gray
lines you're seeing folks in the middle these gray lines are actually the recession times and that's
why a lot of people are saying the market will crash and so on so because we haven't had that
recession since 2008. so let's look at the the last three or four recessions right so around 1998
or 1990s right 1993 i think things to be exact there was a recession the dot-com bubble burst
then again around 2000 or so there was a recession recession 8 factors that occurred then then now
the 2008 recession that also occurred recently quite recently was the last big recession where
fannie mae and freddie mac were audited for lending you know loans unethical practices
and so on so forth so so that's very important folks so you know that last recession happened
already in 2008 so now that's why a lot of people like robert kiyosaki and they're predicting like
oh my god there's going to be another recession because the market is inflated it's been healthy
for so long inflation has been low in the u.s for the most part but inflation in other countries
is pretty high like for example argentina is over 13 inflation so so my point is this
right that look at these precession factors look at these rates you know how they are
going down and down and now they're kind of sort of going up so i won't be surprised and again
speculating that i won't be surprised in the pa in the next three to four to six months you might see
rates as high as four percent okay now if that happens and inflation is under control then do
expect to see the house prices adjust and correct themselves okay when i say correction i don't mean
that oh my god it's going to go 50 down no there will be corrections again city by city state by
state town by town you know somewhere it might be 20 something might be 10 percent some places might
be five percent you know who knows right we're just speculating based on this data and the data
tells the story right look at the story and the graphs going down and then going up and that's
that's beautiful so with that i'll recap folks that rates are a critical factor and i want you to
educate yourself in how rates affect the housing market the bond market the stock market the credit
card the home equity line of credit that you have taken if your house mortgage is an arm is
an unfixed rate it's not a fixed rate it's going to affect those people the most so those people
have to really worry and make sure they don't get shortchanged by this rate increase now let's
look at the fun part the tick tock videos okay see what these clowns are doing so we can have
some fun at their expense right yeah so let's look at this lady she's dancing she's saying when you
realize you can get your real estate license for 300 and start selling million dollar homes right
this is too funny folks you're going to get your real estate license for 300
and start selling million dollar homes who the hell is going to give you a million dollar home to
sell when you just got your real estate license so that's that's a fake guru right there for you guys
okay so this lady seems like at first she thought real estate was a joke but now she's showing um
that she has received uh but bro why wow i got a big check and the check is about i don't know 20
000 or 28 000 or something now this person seems like a wholesaler or a realtor who just
got lucky with the big check and now telling the whole world look i got this check which is a small
check by the way but nonetheless you know another fake guru trying to claim that i have a channel
but here's this funny guy right look at this guy okay a wonderful ten dollar shades and a four
dollar cup of coffee the mask hanging all over the place he looks like uh someone who does airport
cleaning because he's always sitting at some station claims that he owns three self storage as
well how do you do that when you don't even have money to buy a decent watch or a pair of pants
without any of your own money yeah well and this guy never talks he never tells you how
much knowledge he has he just talks about he just posts these you know these texts and images
that talks about how many properties he owns how many warehouses he owns and he has thousands of
followers people are just claiming to be you know king kong when they don't know they don't actively
do real estate but they just read up online and they gather all these things they're trying to
fool these 20 year olds but you know what you're getting here you're getting solid information from
someone who's actively on the ground uh building the properties working with contractors you know
who understands what real estate is in and out and if you guys have any questions on construction
rehabbing per strategy you know fix and flips or rehabs whatever ask me questions i'll be happy to
point you in the right direction if you have any questions around the county how to work with the
county or historical districts where i'm doing two buildings recently in baltimore any questions like
that i'd be happy to help you guys so with that i want to thank you for joining us for another good
video again if you have any questions somebody dropped a comment about portland so i apologize
but i didn't get a chance to look into it i will look into portland oregon and get back to you and
show you the market analysis of that folks the data some of you have asked where i put my data
from i get investor report for zip code for local zip codes okay that's a separate report
but for you guys what i do is i go to zillow i go to realtor.com i go to fred.com i go to redfin.com
and i try to look at all those data and trends and then i come and derive a conclusion and try to
pull whatever the simplest graph in chart that i could find to show you guys what the market would
look like because anybody can look at the data right but investors also have insight because i
have seen markets go up and down i've been through these ups and downs in the market i know exactly
what's happening and what i'm telling you is real you can look it up you can research yourself don't
let's listen to these burning houses images and icons and these people are scaring you recession's
coming this incoming crash is coming they don't know if they knew that they won't be youtubers you
know if you see anybody making three four videos a week they are full-time youtuber folks they're
not investors investors don't have that kind of time to make 10 videos a week we don't i'd be
lucky if i can put out two videos a week you know because it takes time to research and you guys are
asking smart questions so i have to think before i say something because you guys are gonna catch me
right so i have to be very careful with you guys because some of you are very smart cats out there
so no but i i'm kidding i'm kidding i love it i enjoy it i appreciate you guys again this channel
is for the outsider so i appreciate you guys i gotta go feed my dog now i wanna thank you again
uh for joining my channel and i love you all and i'll see you in the next video bye now you