Hey! What's up? Kris Krohn here. And today i'm going to share with you the top 5
ways that Covid-19 is affecting the real estate market for investors and
consumers. I can't even begin to tell you how many people are hitting me up and
they're wondering. "Kris, are you going out of business? What's happening to the
thousands of homes that you're buying? What's going on for you, man?"
Right now, we are literally in the fog of war. People are having a hard time seeing
what's real, what's fake, what's true. And the reality is we have never faced a
pandemic like this before. Today, I'm going to dive in. I'm going to share with you
the facts, the data, the best information out there. And I'm also going to share with
you my opinion on what's going to happen in the next 6 months. Understand that
coronavirus is creating crazy uncertainty in the market. Everyone's
freaking out because we saw the stock market tanked and they're assuming that
the same thing will happen to real estate.
Now, first off, you realize that this isn't any normal, typical
recession, depression. This is government mandated. This is
people's rights all over the world being stepped on right now. And as we talked
about a government-mandated recession, it means that right now we have businesses
shutting down because of the government. We have our economy being stepped on
because of the government. And as a result this is not like other recessions
we've seen in the past. This data is going to surprise you as I go over the top
5 things that are happening in the world today that are impacting the real
estate market because of the coronavirus. And at the end, I'm also going to share with
you some super exciting pivots. Things that I think are mind-blowing and
cutting edge in the world that we live in for real estate today. So, point number
one on how real estate is being affected by Covid-19 for consumers and investors.
Number 1, corona virus is creating uncertainty in the market. But you need
to understand that that uncertainty is very different when it comes to the
stock market as well as real estate. For example, the stock market functions on
certainty. When certainty is low, the market tanks. When certainty is low in
real estate, the real estate market can't tank. Why?
Because it's illiquid. It's not like, "Oh, I don't like the news I see today. Everyone,
hurry and sell your homes." Remember the stock market is an idea.
Real estate is a hard tangible asset based on human beings, supply and demand
saying, "Excuse me. I need a roof over my head. And even if we have a
recession, I still need to live somewhere." Ultimately you need to understand that
real estate isn't purely an investment. It's actually motivated by people simply
wanting a place to hang their hats. So, let's dive in and understand this: We
definitely are in economic winter. We're experiencing a stock market recession.
Does that mean that the real estate market will go down? Everyone's freaking
out because we saw the stock market tanked and they're assuming that the
same thing will happen to real estate because that's what correlated in 2008.
Adam data solutions however recently came out an article in this graphic
evaluating the last 4 drops in stock market real estate. And check this out.
Backing all the way up to 1980 when we had GDP dropped by 2.2%,
guess what happened to home prices? They were up 4.5%.
They actually didn't correlate. Similarly just the very next
year, 18 months later, GDP - was down 2.7 percent. Home prices were still
up 1.9%. But look at what actually happened in
1990 to 1991. We do see a correlation. GDP dropped 1.4%. And the home pricing
market went down 0.9%. They correlated. So, the time before in the 80's,
they didn't in the 90's, they did. Now go with me to March 2001. During this year,
home prices were up 4.8% when GDP was down 0.3% after the dot-com
bubble burst. Bottom line, they didn't correlate. Home prices were up even
though GDP was actually down. But check this out: Right now, 2008, this is what's
on everyone's mind because 12 years ago, everyone remembers that the home prices
actually dropped 13.9%. One of the biggest drops we have
seen since the Great Depression because we had this huge subprime bubble.
Something we definitely don't have today. And GDP also dropped a whopping 5.1%.
So, this is what we actually referred to as the Great Recession. The
question right now with this government-forced recession is this a natural
recession? And doesn't mean that real estate has to correlate? Well, we know
from looking at this right now that the only correlate 3 out of 5 times.
The question right now is do they correlate now? For you to understand that
answer, we're going to move on to point number 2 of how corona virus is
affecting the real estate market. Which is that the corona virus, Covid-19
actually doesn't change our shortage in real estate right now. Freddie Mac came
out and said that we are short 3.3 million homes. In other words,
we have a caught up from the shortage of the subprime crisis of 2008. After all of
these years of building, guess what? We don't have a ball yet. The stock market
might function on confidence. But real estate functions on basic supply and
demand of baby making. Right? I'm talking about population, immigration. Look at
this for the United States. This is showing from 1950 and projected by the
United Nations out to the year 2102. Look at this
relation growth curve. Do you know what this means? This means that real estate
prices have to keep going up. And when there's a shortage, we have to build more.
So, while we have this government mandated recession, you need to
understand that real estate might be on pause in some areas. Real estate could
even slow in some areas. But ultimately, what happens once we get in control of
the corona virus? Before corona virus hit, Fannie Mae it came out and said in 2020,
we have an a significant increase in forecast. How much? After increasing just
over 1% annually this year, growth in same family housing starts with
accelerates up to 10% during 2020. Going from 1 to 10 percent... I mean, this is
astronomical huge growth. And the reason why they're predicting this is because
they know that we're missing 3.3 million homes in America. You can't have a bubble
burst if there's no bubble. In fact, it's the opposite. We actually need to build
more. By the way, if you're really liking the information that you're getting
right now, do yourself a favor and actually subscribe to this channel. Every
day, I come out with brand new videos designed to help awaken your financial
genius and make the best financial moves for your financial future.
Point number 3, pandemics pause real estate. But does it snap right back? The
reality is we got to look back at history and see what we can learn.
Recently, Zillow came out with an article and they looked at what happened to Hong
Kong in 2003 when SARS hit it really really bad. Essentially, what they're
showing here is the correlation between what happened with SARS and the volume
of real estate transactions versus the pricing of real estate. And you know what
they found, they found that immediately, the yellow line right here in the middle
once it hit, volume transaction dropped initially. Why? Because people were doing
their version of social distancing back then. However, after a short period of
time, look what happens. Real Estate's snapped right back.
Volume kicked right back up and people were back to
real estate investing. At the same time, if you look at the blue line, you can
actually see that real estate in Hong Kong was already trending down. And it
stayed true to that. Does that actually correlate? No. Actually the volume bounced
right back up and prices did what they were doing in Hong Kong anyway. This is
what we call the V trend versus the U trend. In a U trend, the market drops and
then it drops for a while and then eventually swings back up. But a V trend
says actually there was an incident where everything dropped. Let's call it a
government-forced recession and then the moment we got on top of the virus, guess
what happened? Boom! Everything snapped right back up. Last week Forbes came out
with an article. And what they did is they interviewed the top 5 producing
real estate agents. And here's what they had to say about real estate and the
pandemic. Few economists believe that we're in for the brutal elongated U that
American experienced through the Great Recession. Most predict a more rapid
Corona V especially for manufacturing and retail pointing to the speed with
which business and factories have reopened in China and in South Korea
already. Many of you know that when the Great Recession hit, all of my real
estate competition, investors, everyone went out of business because
foreclosures were through the roof. For me, that actually represented one of the
very best times to be investing in real estate because with so much product back
to the bank, it's not the government's job to clean it up. That's what investors
do. So, I went into the hardest-hit markets like Phoenix and Vegas and we
literally bought thousands of homes. Homes that were brand-new and had been
selling for a quarter-million, $300,000. I was buying him up for 80 thousand, 90 thousand, 199
hundred thousand, 120 thousand dollars. And when we talk about
that U, it took about 5 or 6 years for the market to catch up. We built up a
huge supply and demand problem. And then guess what? The price has shot back up.
And inside those first 5 years, my investors made over 100 million
dollars. So, what happens when the government actually lifts its
restrictions? I think we're going to experience a snapback. Is it on pause
right now? 100%. Am I still buying real estate during the
pause? I'm going to share that at the end of this video. By the way, my boys love to
create stores even though they really don't have
customers. And here with corona virus, this is their most recent store taking toilet
paper that they did not buy. I'm not sure with the prices. But they're selling it.
If you want to know how to manipulate the real estate market either as an
investor or is it consumer and make the very best choices for the next 6 months, you
need to understand point number 4. Is corona virus producing foreclosures?
Currently, it's not. -In the current mortgage crisis in my opinion is going
to be rather short term. -I like Ram. I think he's got a good head on his
shoulders. He goes on to actually say "In his opinion", that the government will
likely continue bailing us out until we actually get through this pandemic. At
this point realistically, the Fed just seems like they're on track to bail out
anyone who potentially even needs it. By the way, please beware of a lot of the
media that is out there trying to instruct you on how to do forbearances.
The government is not allowing foreclosures to actually take place. But
a lot of people don't know that they're destroying their credit by calling up
their banks and saving a few bucks by saying, "Hey, please do a forbearance." If
you have to do it please be aware that in 2008 when forbearance has occurred,
after the crisis, banks and people viewed your credit as bankrupt. And many times
it took up to 7 years before your credit was fully usable again. So, please
beware of that by the way, banks have been playing super nice with people who
have been really negatively affected by corona virus. But please, beware
we even have YouTubers like Meet Kevin. They're out there actually instructing
people how to get forbearances. He's super young and hasn't lived through the
cycle to actually know what will happen when a forbearance is actually viewed on
your credit like a bankruptcy. Now, by the way, whether foreclosures stay on pause
or not really has to do with how long the corona virus is going to last and
government's position on it, I think personally that the government believes
that since they're mandating what we can and can't do and who can work and who
can leave their house, that right now they're doing everything they can to
avoid what will become otherwise mega class-action lawsuits after this is all
passed. People going back to the government saying, "Your choices
personally financially hurt me and you need to rectify that." So, I think that
we're going to see that. There might be some sectors like vacation homes or Airbnb
where homes might get foreclosed on or go back because guess what?
People are staying in their homes, they're not necessarily going out and
vacationing. Just like people are pivoting their everyday lives to adapt
to what the corona virus is doing, businesses are doing the same and that
goes for real estate as well. Number 5, brokers, realtors and lenders are
pivoting the way that they do real estate. Social distancing means that real
estates on pause, right? Not necessarily. New technology like matter port cameras
are being used to create virtual walkthroughs. Literally you can go
through this house right here. Zoom in anywhere you want to go and literally
check out this entire house, site and seeing without actually going in and checking
out the house. This kind of innovation, it lights me up because with our technology
today, we're always going to find a way. This is great news. Governor Cuomo of New
York actually issued an executive order allowing for virtual notarization. And
look at how it's being used. "Crisis teaches us to be resilient...", says Forbes.
"...creative and gritty. Where there is a will, there is a way to get any deal done.
Closings are still happening. Banks have learned to support and accept desktop
appraisals. Co-op boards are facilitating interviews through zoom and Skype. And we
had one deal closed recently..." Check this out:
"...where there were 4 cars in the POC parking lot representing the bank's
attorney, the sellers attorney, the buyers attorney and the title companies masked
and gloved running back and forth getting signatures. That brings me hope
that we can get through this." While, most economists believe that we're
going to see a V and a major snapback. The reality is this type of thinking and
then technology produces change where things will never be the same again.
Real estate only becomes more virtual and it also only becomes easier. So, am i
out there buying real estate the way I was before corona virus? Yes. I'm
actually getting my hands on as much real estate as I possibly can. Not only
did we crush it during 2008. But I know that when crisis is at a peak, so is
opportunity. In fact, I'm still finding deals that have 25 to 30 percent ROI.
However I want to be really clear that we have been pivoting hard the last 5-
6 weeks. We've been adding more value for our clients. We've been
getting more value away. We've been helping more people in their experience
of building wealth. We've been releasing business products so that people that
lost their jobs can make money. And we've been out there in the real estate game
doing as much as we can. Many members of my team, dude, we know what
it's like to put in 8-hour days, 10- hour days, 12-hour days. Some of us 17-
hour days to keep on top. Now fortunately, we're actually in growth mode and we're
hiring. I know that's not true of a lot of companies out there. But that is
because we're doing everything we can to pivot. And this economy right now with
this government forced recession is mandating that if you don't pivot, you
might die or your business, metaphorically. What's going to happen with
real estate in the next 6 months? I'm going to tell you that I'm going to keep
buying as much real estate as I can. If this pause lasts too long,
you will likely see a lowering of price in a million dollar home. Maybe even a
5 thousand-dollar home. But if you actually stick to homes price under
the median, that's where you're going tO have your greatest safety. I recently
looked at the last 4,000 homes that I've done. Not a billion dollars worth of real
estate. And we didn't aggregate look back on all of our real estate. And one of the
ways that we've been protected especially in recessions is that we're
buying so far below the median that we're still serving the major
single-family housing market that is on the rise right now where we don't have
enough assets. And by the way, if you've ever wanted to get in the game as a real
estate investor, there are certain markets you absolutely want to be in
right now. And if you want to know if those are, you should click the link
below where you can connect directly with me. For the first time ever, I'm
actually giving myself one out. So, if you actually want to connect with me
personally, ask other questions about real estate, disagree with me or connect
in any manner, go ahead and click the link below. You're going to get all the
details of getting my phone number. Text me and let's make sure that you're as
informed as you possibly can be on how to crush it in real estate during this
environment. Because make no mistake during economic winter, when people are
thriving, they are the leaders for spring/summer and coming fall. By the way,
I'm sitting a whole bunch of books that are going out the door. All of these
books are free. They're based on my first book that I wrote, The Straight Path To
Real Estate Wealth. People also request this publication for free. In this
economy, you need to become more knowledgable.
Knowledge is power especially if you act on it. So, if you want to get any
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Kris Krohn here leaving you with the most important information to make sure
you can control, command your own financial future, take it back and live
the most amazing life that you can.