History of Real Estate

Can I just tell you, when it comes to real estate, Gen Z is so screwed compared to the baby boomers. I mean if you think about it, real estate used to be so cheap and so affordable. And with every generation, it just gets worse. At least that's the opinion of a lot of people out there. Right now, the media has painted real estate in such a bad light. And they're basically saying, come on. The real opportunity of real estate has got to be gone. It's not affordable like it used to be. You've got your median price over $400,000. Real estate, the opportunity, it's gone. Is that really true? Well, today we're diving into the facts. We're going to take a look at the last 4 generations. Let's find out ourselves. Come on, Kris. Is it even fair to have a historical debate of real estate through time? Well, I want to take a look at the 4 generations and I want to take a look at how good or how bad they had it. We're going to compare all 4 of them really well against each other. But here's the premise on why we need to start. Building wealth in the game of real estate, if we go all the way back multiple generations to like the Great Depression, we've got the great robber baron and millionaire prototype. Andrew Carnegie himself that once said, 90% of all millionaires become so through owning real estate. Real estate then? I mean that is how we created robber barons in the first place. But does that opportunity still exist today? Let's find out by taking a look at each of the last 4 generations. Alright, so check it out. We're going to go generation by generation. We're going to take a look at baby boomers that are now between 57, 77. We're going to do Gen X that are now between 42 and 56. We're going to take a look at the Millennials that are now 26 to 41. But Gen Z, even though they are the 12 to 25 year olds, we do have 25 year olds buying real estate. And the benefits of real estate for these generations in general has always been relative safe investment, tangible asset that can appreciate over time and a source of passive income. However, the relativity of the safety, the level of appreciation and the level of passive income is not equal. It has changed from one generation to the next. And at the end of this video, we're all going to find out together whether this Gen Z generation is the most screwed or the most blessed. Let's find out. Alright, let's get started with the baby boomers, right? This is the oldest generation that are about to go to bed and retire, right? When it comes to purchasing real estate, they got into the game in the 60s. Back then, the median home price was $11,900. Like, are you freaking kidding me? Where's my time machine? I'll go back in time. I'd like to buy me a whole bunch of $12,000 real estate. Today, that's a down payment. And if you take a look at their median income, it was $5,600. So, there was a price to income ratio of 2.1. That basically meant whatever the cost of the house was, the amount of money they made in a year was about half of that. But now, I want you to fast forward by comparison to 2019, right? Where the median cost then was $270,000. And the estimated median income was only 68,000. That was a price to income ratio of 3.9. And guess what? That trend has continued which means that our incomes are not going up as fast as real estate. Real estate is going up a lot faster than income. So, let's take a look at their economic conditions, right? The baby boomers, they bought homes when prices were definitely more favorable towards their income. The total cost of a year of college by the way back then was $10,600 in 1963. They definitely had better loans. And one might argue, I don't know Kris. The boomers, they really had it going on. If you wanted to be a real estate investor, shouldn't we have wished that we were a part of that generation? I don't know. Now, let's take a look at generation X, right? When it came to purchasing real estate, the median value of a home in the United States in the early 2000s, that was $119,000, right? 10 times more than it was in the 60s. Homes appreciated over 18% from 1990 to 2000. And basically grew by 101,000 to $119,000. These however are the economic conditions. By September 2008, average US housing prices had declined by over 20% from their mid-2006 peak. And by September 2010, 23% of all US homes were worth less than their mortgages. In other words, they were actually underwater. So, I remember when that went down. For most people, they consider this one of the worst economic crises since the Great Depression. Let's talk about what's happened to the Millennials because they've experienced the price skyrocket. Prices have sky rocketed in recent years. And add to this that mortgage rates currently, they're super high. So, it's one thing to be like, oh, the house is worth $100,000 more. But you add a high interest rate on top of that and it's like, oh and by the way, that just boosted your payment another 500 or $800. Nationally, homes sold at a median resale price of 275,000 in 2019. Rising 35% from their 2009 median sales price of $204,000. And you might be thinking, man, the prices can't keep going up. But believe it or not, the next generation, the Gen Zers, they have it actually worse. In the past 20 years, the average home price in the US has grown from about $140,000 to $340,000. That's a $200,000 increase. And as of August 2023, the median national home price has now broken $400,000. You got to be thinking, doesn't the madness have to come to an end? $400,000? Like surely Kris, it's got a drop, right? Like it's got a drop for the next decade and then maybe come back? I got news for you. It is what it is. You got to be wondering what all the noises. And yes, I'm persisting on making a YouTube video no matter what. But I got a little bit of this going on. And my friend right here, it looks like he's getting ready to take the addition, connect it to the house. Looks like he's drilling through all of this which is making for lovely sound issues. And then of course, we have Gen Z. Like what's real estate going to look like for them? Check it out. Gen Z only makes up 4% of the US homebuyers in 2022. And Gen Z homebuyers are actively in markets where prices are still relatively affordable. Because guess what their median purchase price is? $255,000. So, they're staying away from the expensive places because it's a small contingency of really young people that are like, hey, if I can afford anything just coming out of college or with my job, they're kind of targeting the lower price stuff. The median national home price being over $405,000, Gen Z is forced to seek smaller housing. Gen Z homebuyers purchased the smallest homes across buyers. Meaning, they have on average a 1,480 square foot footprint. They're basically getting into the tiny home business. So, here's a theoretical for you. Kris Krohn, if I could choose any one of those generations to be born in, when it comes to real estate gains, which one would you have picked? It would have been nice to be a baby boomer. Where wherever my income was, the cost of real estate was just double my annual salary. I'm thinking like that would have been nice. However, we have something today that's quite extraordinary. Real estate values are going up so much higher than income that it's still affordable. You can still get in the game. But here's one thing you know for sure. Real estate is an investment that is going to perform for you. It's like the robber baron said. 90% of all millionaires made their money in real estate. It's actually easier and faster to make money in real estate today. Which is why I'm buying more real estate than ever before. Because guess what? It's going up and accelerating faster than it ever has before. Let's take a look at real estate through time and why I'm buying more of it today than ever before. Number 1, it appreciates over time. And in the last 65 years across all those generations, on average it goes up 4.65%. That right there cannot be compared to a 5 or 6 percent gain in the 401k or IRA 30-year average market. Because you're only putting down a small percentage of money. Which means you're earning that growth on everything leveraged. Not just the money that you put in. That means in the game of real estate, you can pretty easily earn 25% a year on your money or more. And even at that rate, you're making 27 times more money than a 401k or an IRA. Next, you do have cheap markets. I know where these cheap markets. I invest in these cheap markets. Hang out for the end of the video and I'll tell you where they are. Because the cheap markets equal a higher ROI. Boomers and Gen X were able to get that real estate at prices much lower. So, they're figuring out how to game the system today. And then real estate remains really strong through recessions. Because we're in one right now. Following the 2008 recession, real estate did plummet. However, it's now valued higher than ever before. So, if you play real estate as a long game, you're always, always, always going to win. Listen, it's one thing if you want to buy real estate on your own. It's a different story if you want to become an investor become wealthy like me and so many others have gone on to do. You should make sure you're a subscriber on this channel because I'll show you how to do that. But check it out. I've got something really special for you right now. Did you know that you can work with me and I can help navigate the game of real estate out of 324 markets that make up our US? There are only 5 markets I'm investing in. So, I can take you into those markets where the ROIs are so high that they kick the trash out of your 401k, your IRA and set you up for the kind of retirement that you actually want. If you want that game figured out, click the link below. Fill out the information. Let me and my team be in touch with you and share with you a game plan. How would Kris Krohn get rich if he woke up in your shoes? That's the conversation we're going to have. Okay, Kris Krohn. Where are these markets where you're earning so much money? Do they exist? Yeah, they do. And they're right here. Watch this video, let me show you.