It's OVER for these Home Buyers | The Housing Crash.

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What This Video Is About

The video discusses the potential impact of the upcoming adjustable rate mortgage (ARM) reset in 2028 on the housing market. Many home buyers who took on ARMs in 2021 may face a significant increase in rates, leading to payment shocks and affecting affordability.

Major Ideas Discussed

  • The ARM reset in 2028 could lead to a payment shock, especially with higher energy costs, inflation, and interest rates, affecting 70% of the ARM reset from the 7-year ARM and semi-annual ARM reset period.
  • The US has a unique 30-year fixed rate mortgage, with adjustable rate mortgages currently making up about 11.3% of all originations, and 10% of new mortgage applications.
  • Canada's experience with adjustable rate mortgages has contributed to pain in the Canadian real estate market, with as much as 50% of their loan origination volume as adjustable rate mortgages.
  • Regional differences in mortgage lock-in rates exist, with the western United States having a substantially higher mortgage lock-in rate below 4% compared to the south.
  • The speaker advises getting a fixed rate mortgage to avoid potential payment shocks and being careful when buying in markets with overbuilding or elevated vacation home purchases.
  • The speaker concludes that while some people may get hurt by the ARM reset, it's unlikely to lead to a 2008-style bubble, and emphasizes the importance of location in real estate.

What to Watch Next

The speaker recommends monitoring the labor market, interest rates, and the potential impact of the ARM reset on the housing market, as well as being cautious when buying in certain markets, such as Texas or Florida.