part of what this graph shows is that we are now in an even bigger bubble than we were in in 2008 yeah except this is the graph out of the book right this is the one out of the book and you can see that we're about at a level of about 210 210 and then we've since updated it with another annual data point and from 210 we're now over 220 almost 225 wow the biggest real estate bubble in history this is it hi everyone and welcome to this video I've got Alan Hib with me once again Alan how are you doing I'm great Mike


thanks how are you good you know recently I was at this real estate uh uh conference called the collective uh a mastermind group very very uh probably the best uh conference that I've spoken at so far I mean it was a very high caliber group of people and uh just uh something very special uh but anyway they were Real Estate Investors and one of the things that I did was I showed them a couple of charts on the real estate being in the biggest bubble we are currently in the biggest real estate


bubble in world history right now uh pretty much a it's it's almost across the globe in the United States and China is deflating big time so uh you've you've prepared some of the charts to show us once again the difference between the charts in the book when it was published and updating them to today so yeah exactly so there's a very basic chart that we can look at when we think about home prices and of course we know that the price of every asset tends to go up over over time but that's


really because we're creating more currency so if we simply divide the asset prices nominal asset prices by the amount of currency growth inflation we should get the real value of something over time and that's what I have here the real home price index of real EST yeah uh Dr Robert Schiller has recreated the CPI though right going all the way back to 1880 I believe yes exactly so he's recreated he he's come up with a basket of of home prices and he has a whole methodology a whole methodology


for doing that using 10 cities 20 cities and so forth yeah so so people can look that up if they're interested but it's basically a proxy for home values across the United States yeah this is the 20 City index I believe that you're presenting it is so yeah it's index to 100 um so going back at the beginning of the time series we we we know that the real home price index is 100 and over time we would expect that home prices adjusted for inflation should be about a 100 a little bit above


or below forever I mean it really it really shouldn't deviate too widely from that metric over time or else something is out of whack and as you can see here this this giant runup to the 2008 financial crisis which started with real estate uh is super super autow whack right you know I want to um say that I first started presenting this graph it's in my very first video uh which was when I was speaking at the Silver Summit in 2004 and so it was on that runup to the you know this that first bump there


peaks in 2007 and uh so 2004 is uh on the way up and I was warning people then in this video that and speaking to an audience that we were entering a massive real estate bubble and that this was not going to end well yep exactly and it didn't end well no it didn't Global financial crisis is what it caused exactly and you could argue that it still hasn't ended there there may have been a temporary reprieve and and certain certain metrics may have returned to quote unquote normal but other metrics have been out of whack the


entire time and part of what this graph shows is that we are now in an even bigger bubble than we were in in 2008 yeah except this is the graph out of the book right this is the one out of the book and you can see that we're about at a level of about 210 210 and then we've since updated it with another annual data point and from 210 we're now over 220 almost 225 w well yeah annual data the biggest real estate bubble in history this is it and so people think that 2008 was bad uh we have uh in 2008 the stock market was not


o that overvalued uh so now we have the end of the bond bubble we've got the the uh stock markets are tremendously overvalued right now uh and you know the stock markets back in 2000 in the year 2000 they were just horrifically overvalued and they crashed and then came back down close to fair value and went started going up into 2008 but they weren't anywhere where they are today so we've got the greatest Bond bubble already starting to deflate the 30- year bond is down 53% the greatest real estate bubble in


history and uh the I I believe according it depends on how you measure it uh if you're measuring uh PE ratios or uh the buffet indicator uh where either the biggest stock market bubble or the second biggest stock market bubble uh in history and so with all of these bubbles the next Crisis is going to be much worse probably than 28 so uh yeah so keep on going uh so basically you know one of the things I just want to let everybody know um maybe that 100 line uh maybe Dr Robert Schiller should have


indexed that to the average throughout the uh 50s and 60s and 70s that area right in there I don't know maybe it's a little bit low but if we are up at 225% that means real estate is overvalued by 125% and when a correction happens it that means that it could lose more than half real estate could lose more than half of its value during the next correction and that is going to be devastating and you'll see the FED overreact you know we'll have zero interest rates again we'll have uh


massive currency printing but each time it it gets harder for you know they're slapping Band-Aids on cancer and uh uh and each time uh it they have to either create more currency or come up with more little gimmicks to try to uh plaster over the cracks in the foundation of the economy yep exactly and to your point even if real estate did lose half of its value over some period of time if it starts at let's call it 220 losing half of its value is still 110 so it still would be above average yeah so so maybe maybe you could


argue that there's a slight upward Trend here if you know you imagine that people do Home Improvements and the cost of those improvements isn't really captured right the expenses are kind of outside of the data set and that they just would show up as asset appreciation maybe you could make that argument real estates a little tricky to measure like that but it certainly isn't going up exponentially like we know that even if there is a slight upward Trend here we're still above it by more than we


ever have been and once again we we need to remind everybody this is inflation adjusted data it's inflation right right yeah far ahead of all the inflation that we've had it's just amazing and once again scary yeah it is so there is one more chart I want to show you this was not in the book but it still pertains to um the real estate bubble hey guys just want to let you know that we'll be running a Black Friday deal at goldsilver.com if you want to turn some of your currency into a real money you'll get fantastic


deals like 20% 30% or even 55% % off premiums on the products you already love so go to goldsilver.com now it still pertains to um the real estate bubble this is this is home price this is a ratio of home price to median household income so home price to median household income so it basically measures affordability in a certain kind of way uh and you can see that right it looks like people used to pay around four years of their income to buy a house and now they're paying uh s and a3d years of their income so the housing


bubble there the the that triggered the 2008 financial crisis that looks like it's at about 6.8 times their income right now we're yeah we're up at seven and a third now this is uh absolutely crazy and it's just more supporting evidence to suggest that do Dr Robert Schiller's data is correct the previous charts that you just showed uh this is another way of measuring it and this is the greatest real estate bubble in history it's bigger than 2008 uh we have a different uh you know


different circumstances when it comes to the foundation uh we don't have the same derivatives that we had back then but we've got things like uh commercial real estate being 50% a lot of it is 50% empty and on Commercial Real Estate estate uh the the bank values and a lot of the commercial real estate has shorter term loans than 30-year mortgages uh and it rolls over and you have to refinance but the bank values the property based on the occupancy the cash flow that's coming in it's not


based off of the structure and the location it's largely like there was a building uh that was on Twitter recently that in 20 uh9 had sold for 64 million and just sold last month for 16 million um yeah 16 million right and um and that was because of the occupancy and then the owners not being able to refinance because you've either got to cough up a ton of cash or uh you've got to you know the bank if if the riskier it gets the higher the interest rate is going to be so the higher the monthly


payment are going to be so if you don't have uh High occupancy so my point is that uh we've got a real estate bubble a stock market bubble and a bond bubble all simultaneously and with real estate it's not just residential this time it's residential and Commercial and that isn't the way it was in 2008 commercial didn't implode it was residential only and so now we've got both of these so this is It's Mass and everybody needs to pay attention to this because you can see the future I


think 2024 is going to be a bad year for most people maybe it's 2025 I don't know they seem to be really good at kicking the can down the road but each time they kick that can the more it's delayed the more energy builds up and the greater the implosion exactly and to your point that's what we've been seeing with housing demand at all uh you know when you lower interest rates and you reduce the uh qualifications for a mortgage you pull a bunch of demand from the future and you get a whole bunch of people


buying houses in the present who otherwise would have waited and eventually that has to revert as you talk about the energy has to go back to equilibrium and just like a ton of people you know basically made a lot of sacrifices to get into homes uh they're going to eventually be making a lot of sacrifices to get out of their homes right because they're going to have so much debt so much liabilities on their personal balance sheets people are going to say get me out of this house I can't


afford the payments I can't afford the interest I can't afford the utilities just get me out of here and they'll pay a massive cost to get out of those homes um just to revert that balance of energy and it's going to be really really sad to see that but it is inevitable it seems yes okay so yeah yes so so there is something else I kind of wanted to shift gears but stay on the same topic and talk about the 30-year fixed rate mortgage really paint a picture with some specific numbers of just how


um housing affordability has changed in the last couple years so this year is the 30-year fixed rate mortgage average in the United States and this is Federal Reserve data and you can see just a couple years ago we had those historic low mortgage rates people were getting mortgages at 2.7% 2.8 2.9 plenty of people for plenty of months were below 3% right and now with the recent uh record record high rate of interest rate hikes we're all the way up to seven and a half% on mortgages average in the United


States um as of November 9th so uh we went from below 3% to up to 7 and a half percent and so I want to show you using a mortgage calculator how that affects the monthly mortgage payment and some of the other numbers around Equity uh by pulling up two examples so remember these numbers 3% and 7 and a half perc let's let's see what a mortgage calculator would look like so I have here a a supposing a million doll home now maybe some people aren't going to afford a million dollar home but it it makes for round numbers


so that's why I chose that interest rate of 3% over 30 years starting in January and I I zeroed everything out because this is this is going to depend uh wildly on you know what part of the country you're in and your personal circumstances and that kind of thing yeah so this is just the actual loan on the house not property taxes and uh home insurance and stuff like that exactly and I also assumed no down payment because that also varies widely from zero to 20% I mean people have all different circumstances so this yeah you


wanted to know what the million dollar give me a I'm sorry create a million bucks that didn't exist the second before my signature hit the loan document create a million bucks for me how much is it going to cost me over two over 30 years yeah exactly yeah promise me a million dollars of future economic growth um and you can have it today anyways so the mortgage payment is $4,200 $4,200 that's kind of our Baseline as if we it had a 3% rate and as if we bought a house just a couple years ago let's say the middle of


2021 okay go back to the mortgage okay one thing I want to point out the in total interest that you're going to pay on the house for the million dooll loan is uh just over $500,000 so you're paying about 50% uh over the amount that you're borrowing so okay yep and now compare and and $4,200 per month and you pay for the house one and a half times okay yeah oh and then go to the amortization chart above and I I I want to show people where is the area where you actually own 50% of your home where you own 50% okay


so that's when your outstanding balance would drop below $500,000 so um that's out here okay looks like it's right here between 2041 and 2042 you would own half the home okay so that's about 17 years yeah okay so hang on so now let's compare because we have a lot of numbers so let's compare them so at let's go back to let's go back to the rate I don't want people to get confused remember we wanted to compare what would have happened at a 3% rate of a couple years ago to a 7 and a half% rate today


all right so at 7 and a half% with no other numbers changing still a million dollars the monthly payment is just shy of 7,000 7,000 compared to 4200 so $785 cents shy of 7,000 right $785 shot yeah that's right so it's basically 7,000 compared to 4200 that is a massive increase in monthly payment if you decided to wait two years to buy a house um and total interest this is 1.5 million in interest compared to half a million in interest so you're paying triple in interest instead pay 150%


instead of uh 50% yeah instead of paying for the house one and a half times you're gonna pay for it two and a half times you're gonna pay an extra million dollars you're going to pay an extra million dollars uhhuh wow that's crazy right oh you know another thing uh look at how with the higher interest payment you know mortgage uh is to engage in debt until you die morgage mortality and so it's mortgage to engage in debt until death and uh so take a look at the what you're paying on for


the first five years and how little of it goes to uh actually buying the house it's all going to the bank's profit it is all interest and uh and then it ramps up once you get you know the trajectory sort of changes at about the halfway point and you're paying more and more on the house now most people buy a home and then five years later or six years or seven years sell it and buy another one and so they're always on this treadmill of paying just the interest now go back to the 3% loan for a


second and look at how much is actually being paid toward the house instead of the bank's profit yeah this is sizable so let's let's actually quote some numbers here so imagine you you buy a house and then you live in it for between five and seven years so let me go to 2029 and imagine selling it in 2029 and the question is how much Equity do you have at that point if you only lived in the house about six years so here you would have uh bottle 136,000 in equity 136,000 in equity that's at at the low interest rate


136 so that's about 133% uh yeah 13.6% Equity these are million dollar loans yeah yep yep and here you have 68,000 so that's like that's half that's less than half that's six 6.8% Equity so compared 13% compared to 6.8% um you have half the equity so that's insane that's that's insane just just waiting two years to buy a house at a much higher interest rate your Equity is going to get cut in half if you sell it when most people do about five to seven years after now I do want


to say for everybody that's a real estate investor out there if you've got cash flow none of this stuff matters if you've got cash flow and you're pretty certain that your rents are not going to fall in a real estate crisis or occupancy rates go up uh none of this matters as long as you are making more income than your payments to the bank that's all that matters so uh okay so uh go ahead and take us through this a little bit more yeah um well I have one other hypothetical example here I have a


third tab of the mortgage calculator and basically the the question here is suppose suppose that as as an individual you have a fixed salary you have a job and you can only afford the same monthly payment that you could have afforded to years ago so two years ago at the lower rates 3% rates we said that for a million doll home the monthly payment is about $4,200 so suppose that's all you can afford today and you want to buy a house today at the higher interest rate it's s and a half percent today but you can


only afford 4200 a month now the question is how much house can you buy can you afford that million dollar house of course not after a little bit of guess and check it turns out if you want to stay under $4,200 you can only afford a home that's about 600,000 62,000 62,000 yeah wow yeah so that's a 40% decrease right that yeah it's about 40% exactly so what that means effectively is that you know take take away the Real Estate Investors just looking at people who buy a single family home and they live in it


themselves and they have to they have to earn income from a job in order to pay for their housing right instead of being able to afford a million doll home two years ago you can only afford 600,000 today so your home affordability has dropped 40% in two years 40% in two years and this is this change that is happening right now is in the face of the greatest real estate bubble in history and with the overvaluations just at insane levels and so anybody that doesn't think and and along with that


the uh the commercial real estate occupancy crisis that is a crisis and so these two things rolling over at the same time should cause another crisis and then the stock market's in a bubble what happens when there's a crisis in the economy the stock market crashes what what is the fed's response print print and type lots of zeros like and it's funny and all this printing when you think about the app the basics what does it mean to just print money and you know inject it here and


C I've been so good about that yeah currency when you just create currency and send it here and there and you have all these different programs and what what does it really mean it's creating promises that the the private sector will bail themselves out of it later that's what it is it's like I'm promising that eventually you'll get yourself out of this but I'm just gonna push things around until you figure a way to get yourself out that's what it is because they're buying assets that


are all cash flow from future taxation or future mortgage payments and so it's BAS basically you bailing yourself out today uh by promising to make the payments for the currency the Federal Federal Reserve is borrowing into existence today you're going to make those payments in the future it's it's a totally insane system yes it is and so whenever they say like oh we have you know these banks are too big to fail oh we have to bail out the financial sector like I'm thinking no we don't we do not


need to keep bailing this out and perpetuating the system like the longer it goes on the worse it's going to be like we kind of want a new system you know what I mean right and and they say you know they being the government the Federal Reserve whoever uh the powers that be that oh we need to do this and we need to do that we need to do this but they never tell you that you're the one footing the bill oh we'll fix it we know what to do we're experts exactly well all we can do is uh all we can do is try to get


ourselves out of debt and uh do our best every day I don't know okay uh awesome uh charts thank you very much for putting all of this together and I want to thank everybody for watching this video and please like subscribe uh smash that uh notification Bell and we'll see you next time thanks Alan thanks Mike hey guys just want to let you know that we'll be running a Black Friday deal at goldsilver.com if you want to turn some of your currency into real money you'll get fantastic


deals like 20% 30% or even 55% off premiums on the products you already love so go to goldsilver.com now