For our database knowledge base. Whoop whoop. Knowledge. Yes. I'm starting your session. Yes. How did you end up with me on here? Oh, we are so appreciative of your being here and excited about the opportunity to learn from the wonderful, amazing Mark King. Oh, stop it. Thank you. You're very kind. Yes. Thank you. They're all loading in. They're gonna all tell you where they're from. Because that's what our awesome agents do. In Augustine, Florida. I was just in Florida. Oh, you were? Yeah. I've been everywhere, man. I'm like Johnny Cash right now. Just going everywhere. Okay. Well, I'm gonna leave you to the controls because you're the host, sir. Again, we're so appreciative of your valuable time. Have a really nice time. I love it. Well, are we ready to jump in? We should just that. We're still loading we're still loading agents in. They're still showing up. So maybe some small talk here for a minute. I love small talk. So, yes, I was in LA yesterday, and last week was Honolulu, Hawaii, and the week before that was Florida. So I've been been everywhere, man. Just like Billy Johnny Cash, always wearing black. Good to see everybody. I'm glad you're here. Hello. Hello. My name is Mark King, and, I'm excited to talk to you a little bit about the economy today, a little bit about what's going on with the tax extensions and a lot of things that we just don't pay attention to as real estate professionals like we might should. And so, as we kick this off today, I'm gonna share a small small portion of my presentation with you. There's about two days of content that we're gonna try and get through here in about forty minutes. But I want you to go ahead. If you if you have questions along the way hi from Austin. I'm in Austin. Want you to, just go ahead and put some things in the chat for us. Would love for you to I have a general rule of thumb when I start this conversation because my favorite book on personal finance or even wealth building is by Morgan Housel. It's called the Psychology of Money. It's on my list of recommended books. And he has a chapter in there that's called no one is crazy. And so I remind myself of that daily that I'm I'm probably not crazy, you're probably not crazy, and yet we can have very different viewpoints. And so what I'm gonna share with you today is all data driven, and this comes from this concept. I'll I'll keep bringing this up. I have worked with some amazing human beings in this industry. You know, from a from a Keller Williams perspective where I've spent my ninety nine percent of my career, I've worked with the likes of Gary Keller on a daily basis and and all the CEOs and all the all the ex presidents was was the president of Keller Williams. And so Gary Keller used to teach the agents and still does that the agent's job description is to be a local economist of choice. And so I took that to heart as an agent. I built a what someone would call a successful real estate business. And if you know me personally, you know I couldn't have done that without systems and models and understanding how to attract great people. And so I took it to heart that I should be a local economist of choice, and my goal was to be the smartest person in my real estate market. And tongue in cheek, I found it wasn't that hard to get there. And the reason I say that is I studied every single day. I studied every tax code. I studied every, school district, every county line. I understood what was going on in my market. I'm from Kansas City. It's the home of the Chiefs. After this last Super Bowl, please don't comment. But at the end of the day, what I learned was the smarter I was around my market, the more real estate I would sell. And so when I became president of Keller Williams, I learned that my job was to be the macroeconomist of choice. So that's what we're gonna walk you through today. If you'll give me a second, thanks for being here. I'm so glad you're here. I'm gonna go ahead and share my screen. I'm gonna make it all pretty for you, which, again, is not my skill set, but here we go. So hopefully, y'all can see this, and, we will just get started. This is called wealth strategy. It's a, again, a two day, presentation that we're gonna do about forty minutes from. But I wanna give you a little bit of insights of what your consumers are thinking. And, again, I don't know what market you're in, and I don't know what what state you're in, what the state laws are necessarily. There's gonna be differences around the country, but we're just gonna get started. Very first thing I'm gonna share with you is I wrote this with the amazing Moe Anderson over twenty years ago. This is my mission statement in life. I I see my job as the challenge, the limited mindset of a predetermined destiny. You know, it sounds like a lot of words, and yet what it means to me I haven't changed a word of this since I wrote it. What it means to me personally, is that I grew up in abject poverty. In fact, my family lived in a car for for a short while, almost a full school year, in the eighth grade. And if you have eighth grade boys, you know how how that must have been. And yet, at the end of the day, what I realized is anything we put our mind to, we can achieve. I had a great mother, worked three jobs, told me I could be anything I wanted to be as long as I was willing to do the work. And so I took that to heart. So that's my that's my hope for you today is if you have any mindset challenges or more importantly, if your sphere of influence, if your client base has has some some mindset challenges about the real estate market right now, I wanna arm you with some ways to challenge that mindset. This is the disclaimer. We're gonna talk about some personal finance things. We're gonna talk about some wealth building things. And at the end of the day, go seek out your own advice from your, professional financial planners, etcetera. So here we go. In other words, there's too many lawsuits going on in this industry. There should be no more. Alright. Why do our consumers feel the way that they do? Well, let's just look at what the headlines are. I pulled some headlines for you. And when we talk about wealth building, especially around our clients, I want you to keep in mind, there's a couple of things that that I believe in fully that also, show up in our real estate business. And so at the end of the day, our clients don't know this necessarily, but they will build the most amount of their wealth in their lifetime through real estate. I think we are in the noblest of professions, and I think we are on the front lines of the best deals on the planet, and we can truly help our clients and our communities grow their wealth through real estate. And yet the challenge we must overcome is that our clients are being bombarded with this idea that you just can't get ahead anymore. You just can't become wealthy anymore. The man's keeping us down or the government's keeping us down or whatever we buy into, whatever narrative we hear. And I have a lot of grace. Remember, no one is crazy. I have a lot of grace for our clients because they are bombarded every single day. Keep this in mind. There are seventeen negative news stories for every positive news story that our clients are watching or that you're watching. Right? And so from that perspective, it's easy to see why some people might be a little frustrated with where the market's at. So I just pulled some data. I'm a data guy. I love data. Forty two percent of US adults say that money negatively impacts their mental health. This is, I believe, a growing, epidemic right now, and and I wanna say it this way. There are two distinct situations in our country right now around money. Two separate experiences happening right now, and I'll show you the data behind that. The next slide will tell us if twenty eight percent of US adults worry about our finances daily, this is our client base currently. More than eighty percent of Americans aged eighteen to forty three said that money is a significant source of stress. This is where we start to see some patterns emerge. So our younger generation feels very stressed out over money, over eighty percent. And I don't know who the twenty percent are that feel great about it right now. But when you compare that to half of the the country of all ages, that is a big challenge for us, and it's one that we're gonna have to solve. This is the one slide that I think wakes us up a little bit that we've had two very different experiences. And I go back to Morgan Housel's psychology of money. Right? The no one is crazy. Your experiences will shape how you feel. So here's my argument, and here's what the data suggests. If you're in this group, this this generation between eighteen and forty three, you've lived in the longest economic expansion in US history. We should have had several recessions by now, and we haven't. We're almost fifteen years into this economic expansion, and you can make all the arguments as to why and the government printed four trillion dollars and all the things. But the reality is the result of that is that we're still in the longest economic expansion in US history. So why is it that our younger population feels so stressed out about money? By the way, why is there a disconnect about about people, you know, how they feel about affordability? There's a group of us that feel like affordability is right where it should be, and there's a group of us who feel like it's wildly unaffordable. And the answer is it depends. It depends on who you are and the lens you're looking through. So I'm gonna keep coming back to that that that generation. Seventy six percent of us, all ages, are somewhat to very worried about money right now. We're worried about higher prices. We're worried about inflation. Right? It's a it's a big challenge. When we ask what are the money issues impacting mental health, this is a a a survey done by Acorns. And so, insufficient savings is a big one. I just don't have any extra money. Unable to afford everyday expenses, again, ties in being in debt. So for the almost seventy percent of us that have any debt, forty eight percent of all people say that being in debt is a source of mental health challenges. Said differently, three out of four people who have debt think debt is causing some challenges. And then you see the rest of them all have to do with being able to afford things. So there is a very real crisis happening. I don't know if you know this, but as a macroeconomist, I like to Google the most, financial financial topics that are Googled on Google by state. I know it's a mouthful, but you can Google the most Googled financial topics on Google. And so this is a map, and it shows you what's being Googled about financial topics. Now this changes from time to time, but I just want you to to hone in and focus on wherever your state is and understand the collective intellect of your client base. Because I have been all around this country, and I have taught this to over eight thousand agents. And from that perspective, it's shocking how much of us are are googling negative related financial terms. I was in, Stamford, Connecticut. I love my my Connecticut family. And I was in Connecticut. I was so proud of them because they were four zero one k. And then you dig deeper, and it's how to borrow against your four zero one k. And so, we got we got some challenges, team. That's what I'm telling you. We got some challenges. So what are we gonna do to fix this? That's the ultimate question. And what's ironic about this is when we ask how do we address this, how do we fight the challenge that we're feeling, the answers are cut back on dining out. We're gonna cut back on driving. We're gonna cancel a monthly subscription. It's that Hulu that's keeping us down. Right? Or we're gonna switch from a brand name product. It's the Lulu that's keeping us down. Or we're gonna cancel a trip or vacation. Now if you look at this, I want you to just think for a second. This slide to me screams too similar. All these things have two things in common, and I want you to think about this. I want you to think about this. Cutting back. Everything's about cutting back. Everything's about scarcity mindset. Everything's about, you know, I'm gonna I'm gonna deprive myself. If you've ever struggled with weight like I have throughout my life and you grow up as poor as I did, and you go to a buffet, you can't stop eating because there might not be food tomorrow. And so from that perspective, cutting back has never worked with any kind of, goal accomplishment. Right? So at the end of the day, we're gonna find a reason to justify why we need to go back to eating out. You know, I haven't eaten out in almost four days. It's time we gotta get back. We'll justify it. So what we know is depriving ourselves doesn't work. So that's that's kind of a nonstarter. The second thing that jumps off this page for me is these don't make a dent in the challenges that we're facing. Right? And so understand this is this is how your consumers are feeling. Yes. Very much a a scarcity mindset over one of abundance. So here's a quick here's a quick study for you. This was as of February of twenty twenty five. So this is very recent data, as as recent as I could get it for you. And at the end of the day, our housing market is too expensive. What percentage of our clients this is nationwide. This is a national survey. What percentage of our clients believe the housing market is too expensive? And I'll let you put some guesses in here. There's a little delay for you. Seventy five. Good guess. Oh my gosh. You guys are what a smart group. Holy cow. The answer is eighty percent. All of them. Yeah. Lorie. It feels like all of them at certain times. Right? Great guess. Next question. Interest rates are too high. What percentage of your consumers believe interest rates are too high? I'll just keep letting them roll in a hundred percent. Yep. Seventy four. All of them. Ninety. Ninety. Yeah. This is gonna be the one that might surprise you, and this is where we start to connect some dots on what really is going on here. So the answer is sixty five percent. Now what's fascinating about this is why do you think eighty percent feel like the market's too expensive, but only sixty five feel like interest rates are too high? Interest rates. Why? Why? Interesting. The answer, I'll give it to you, is because of demograph that's right. Demographics. It's because there's old people like me in this survey. I'm fifty one years old. The last time I borrowed money to buy a personal property was two thousand thousand twelve. My interest rate was seven percent, and so I have never seen interest rates below, you know, seven percent personally. And I'll give you some more data. I I'm not a fan of debt, so I got out of debt as fast as I could. I don't have debt. That's why I didn't borrow it at smaller smaller, interest rates. Housing supply is too low. What percentage of your consumers believe the housing supply is too low? Now what we're painting here is a pretty dark pretty dark oh, forty percent. Oh, good. It's eighty percent again. Isn't this fascinating? Now here's the here's the thing. We tend to look at things as as black and white, and they never are. So are these true? Are these people's perceptions reality? It depends on the lens you're looking through. Let me make the argument and then show you the data. So if you're under the age of forty three, I want you to think about, again, longest economic expansion in US history, but you have lived in a time where three percent mortgage rates were somewhat normal. And that and even to this day, almost eighty percent of houses that have mortgages on them and mortgage rates under four percent four percent are under. And so something that surprises people is forty percent of all the houses in America have no mortgages at all. Right? And so when you when you put this into context and perspective, if you are a first time home buyer wait. Let me back up because this is really key. There are seven million projected to be seven million home buyers sitting on the sidelines right now. They want to buy a house, and they feel like they cannot because of what you're seeing in front of you. Right? And this is where we start to learn. Our job as a local economist of choice and hopefully with some macro added to it, we can convince people that the smart strategy is buy buy a home and wait instead of wait to buy a home. Right? And at the end of the day, if you are under forty three and you you think three percent is normal for a mortgage rate, you think that house prices are too high because all you've ever known is what I'm gonna call a suppressed, meaning below the four percent appreciation line. All you've ever seen is houses that were lower in price, and you saw, you know, markets where inventory was just crazy low, and there's multiple offers all the time. So that's been your experience if you're under the age of of forty, forty three. Of those seven million buyers, almost five and a half million of them are projected to be under the age of forty. So what we have here is a massive disconnect between a supply and demand marketplace. And when you boil it down and, again, I'm not the smartest person in the world, don't claim to be, but I have studied the macro on real estate for longer than I should admit. And at the end of the day, it's always been a supply and demand business. The challenge is when there is a mismatch. When and we saw this during COVID. Right? There was not enough supply for the demand. And so you saw lots of multiple offers. Right? When I started in real estate, we one of the first trainings I went to was all about owner carryback financing, wrap around mortgages, assumable loans, all those things. Ask yourself the question, how many how many trainings have you been to lately or ever in your career on financing in terms of, you know, owner carrybacks and some some creative financing courses? We just got away from teaching them because we haven't needed them. Right? I joke with my, you know, the people in in my world, and I'll and I'll say, hey. We're gonna have to actually learn some dialogues on how to talk to people about price reductions. I know it's crazy. Right? Have you have you heard of an expired listing? I know it sounds crazy to you, but but back in my day, we had expired. It was crazy. So that's the market that we're in. We have a big chunk of buyers who are looking for that first time, you know, home. They're looking for a two hundred thousand dollar house with two thousand square feet, and it's gotta be four minutes from their job. And that just doesn't necessarily exist today. So if you are under the age of forty, I'm gonna argue they're right. In fact, I'm gonna argue these these stats are low. If you are over the age of forty, there might be some myths going on here. So some some more that we can learn from. Why do our clients feel this way? I just pulled for you, and this is this is fun for me. But I just pulled for you some of the misinformation that's out there. I don't know. There's a lot of people from Florida, and I don't know if you know this or not, but Florida is screwed. I I learned this on YouTube. And so Florida's screwed. I was just in Florida for a for a week, and I was looking for this fifty percent off real estate. And if any of you have some, I'm looking to buy. So if you have half price real estate, please please, you know, call me. So Florida screwed. This is what our consumers see every day. Now I shouldn't pick on this guy. He's got this channel. He's one of the the loudest voices on YouTube about housing crashes. And the challenge is he he he kinda twist the data a little bit. And so what happens is he is well, for years, I'm gonna show you examples. For years, he has said, there's a giant crash coming. It's happening. It's now. It's all the things. So I don't know if you know this or not, but we have a a nationwide price cut of a hundred and twenty thousand hundred and twenty one thousand dollars. That was from last year. There's a forty percent crash happening right now in Austin and Dallas. I live in Austin, and I don't know if you know this or not, but there there isn't really one. Same guy, different glasses, but it's worse than two thousand eight. Did you know this? It is worse than two thousand eight. This is what your consumers are being bombarded with. So then he has an existential crisis, and he says, I'm leaving YouTube. I'm getting too much feedback on my stuff. And so forty eight hours later, he posts this. Now I just want you to ask yourself, if you told your clients in twenty twenty two it's a terrible time to buy, you should rent and set instead, I think you did them a huge disservice. And so, by the way, if you have a seventeen year old like I do, you recognize the face on the left. Just kidding, honey. Anyway, so Dallas, I don't know if you noticed, in twenty twenty two, it was gonna crash thirty percent. All it did was go up almost twenty percent. At the end of the day oh, yeah. You can buy leads from me. You can buy all kinds of fun stuff from me. It's great. In twenty twenty one, it was a time to boycott real estate. It's a bad time to buy inventory surge. And I'm I'm telling you, I would literally put this in my listing presentation right now to show my clients. And then we go all the way back to two thousand seventeen, and I could give you a thousand examples of this, but the US real estate crash is already underway. So when you when you see this and and we kind of shrug it off because we're real estate professionals, we know that this is not true. Understand your clients are being bombarded with this. So, you know, right, wrong, or indifferent, it is our job to combat what our clients are hearing. Here's the actual data. This is the median sales price. And, by the way, you can go to the the the Fed website. Go to fred dot saint louis fed dot org. They have amazing data. And so at the end of the day, what you could do is you can go find if you live in Orlando, you can go find Orlando stats on this website. You can you can find stuff your local market. But I would literally go pull this data, find it anywhere you can. In today's world, you can find it quickly. Build this into your your listing presentation. It's fred dot saint louis fed dot org. It's on the bottom of the screen right here. And so when you look at this data, this is the median sales price. And I just wanna I I just wanna point out a couple of things on this slide. Real estate has always, in the history of of us tracking real estate pricing, has always appreciated right around four percent. Now like any averages, it's never exactly four percent every single year, so we have ups, we have downs. The challenge is, if you go back and look at from two thousand six to almost two thousand fifteen, that ten year period, we kinda called it the lost decade. And that in that decade, we saw no price appreciation. I'm gonna show you a graph here in a second that'll show you, something I would be telling my clients is there's only been one five year period going back to nineteen sixty where real estate has not gone up in value, and it was during the great financial crisis, and it went down one percent over five years. So the reality is we should be buying real estate and waiting, not waiting to buy real estate. Last year, you may have heard this. I think it was over eighty percent or just at eighty percent of all homebuyers bought because they had to because of life changes. And you've all heard it because of diamonds and diapers and, you know, deployment and all all the reasons we actually moved. That was over eighty percent last year when typically that might be fifty, sixty percent. And as we learn in COVID, sometimes we just buy because we want to. And so last year, what what what we're in is a market where the people who are moving are people that have to. So if I'm lead generating for clients right now, I'm going to the people that need to move in the next thirty days, and I'm staying there until I fill up my pipeline full of business. K? Now so we we missed this ten year period, but, again, go back. Think about these think about the forty year old. Right? The forty year old was born in nineteen eighty five. What a great year eighty five was. Don't go YouTube eighty five. You'll you'll come up with a whole best era ever for music in my opinion. But, anyway, nineteen eighty five. You're born in nineteen eighty five, and by the time you're out of college, right, it's two thousand six, two thousand seven, two thousand eight, and you are getting your first jobs during the worst financial times in most of our lives, then you go to look at a house and look what the price is worth. They're really low. And in your adult life, if you're under the age of forty or if you're forty or younger, you you saw nothing but real estate shoot way up to the right. Now if you are a macro economist, you knew this was coming, and I'm gonna walk you through how we knew this was coming. In fact, you can go pull, videos of of me or other people saying, you know, right now, it looks like real estate is poised to shoot up in value. And I know we were made fun of at the time, and that's okay. It doesn't matter. You know, people can be wrong. And I will say never underestimate the government's ability to wreck all of our plans. I love the government. They're great. And policies can affect this. Right? So that's what we have for median home prices. So I'm gonna argue only if I back up there. Here's the other thing I wanna point out. Right now, today, we are hovering right at the four percent line. We are almost exactly where we should be. And people don't wanna hear this, so don't turn off your computer, but we are exactly at that four percent line. K. Now thirty year fixed rates. Here's a here's a question. Out of two hundred and fifty years our country's been around, I know we didn't always have mortgage rates, But how many years have we ever had thirty year fixed mortgage rates five percent or below? How many years total out of our two hundred and fifty year history have mortgage rates been five percent? Yeah. It's ten, Greg. It's and they were all right there when our forty our forties and youngers were thinking about buying their first house. So you can see on the screen here that five percent line, you can you can see where these mortgage rates were. Right? It's crazy. I think there were a total of eleven years where they averaged they stayed on average five percent or below. So a norm would be closer to that seven percent. So nobody wants to hear this argument either, but at the end of the day, mortgage rates are kind of where they should be. Now don't throw anything at your at your screen. If you're under forty, it doesn't feel that way. If you're over forty, like I told you, my lowest interest rate I've ever had is seven percent. So for me, six point seven five percent or whatever they are today doesn't feel crazy. K? So what else could be going on? What else could be going on? Well, housing inventory. Okay. So is housing is is housing inventory a challenge? This chart is gonna tell us it's becoming more of a challenge. As as we get into selling season for most of the country, inventory is still below where we need it to be. We wanna see that inventory between a million, a million two based on our population. And, again, let me back up. Be really careful when you're pulling data because you have Redfin data out there, and they're looking at all property types, and they'll tell you there's one point six million properties on the market right now. I'm looking at at our housing inventory. Okay? So what we want is somewhere around a million, million two wouldn't be too terrible. That's where we want inventory to we noticed we were we were edging up right where we wanted to be at the end of twenty twenty four, and suddenly, we've dropped again. Now we're edging up a little bit. So does all this matter to you if you live in Poughkeepsie? It it matters a little bit, but what matters more is Poughkeepsie. So go study what's happening in your market area and see how that's affecting your clients. But I could argue that listing inventory is not too crazy low, but there is definitely a mismatch. So the inventory that's out there is a hundred thousand, hundred fifty thousand higher than the buyer price point that's out there. So there's a mismatch in supply and demand. And if if you wanna know how we know knew this was gonna happen, it is a hundred percent because the twenty eighteen tax cuts. If you think it's two thousand eight again, then this is the delinquency rate on our mortgages. So when you hear there's some misinformation out there right now by someone I actually respect, but they just got it wrong and and then a bunch of us jumped on and helped them understand it was wrong. But this is people behind on their mortgage rates mortgage, payments. And so, you know, we're still kinda below the historical average. So if you're waiting for the market to crash because everybody's about to get foreclosed on, then there's no data today that says that we have a giant crash coming. But, again, look how fast it can happen. Go look at two thousand five, right above two thousand five. Follow that over to about two thousand seven, and what you'll see is a pickup in delinquencies. And it was first, you know, kind of a small uptick, and then it turned into what you see in the middle of your screen there. We are starting to see some signs that delinquencies could be on the rise, but there is a very specific order that you have to pay attention to in your local market to understand if there's any kind of crash coming to help your sellers list at the right price, all of those things. Right? So from that perspective, I'll give you that data next, and then I'll share with you how I look at this. Alright. This is delinquency rate on all consumer loans, right, from all commercial banks. And this takes into account our credit card, student loans, auto payments, etcetera. And, again, we have an uptick, but we're below the historical average. So how how do we look at this? And and I'm tracking this daily, but I just wanna walk you through this quick exercise. And that is we have we typically the average American household will have one of the four or all four of the major debts. They are student loans. They are credit cards. They are auto, and they are mortgage. If you wanna know how to track this in your area and you can find this data, there's companies out there that sell this data for your local market. Steve Delabiaaga is an example of somebody who has the revenue firm, and he sells consumer delinquency data. And you can get your hands on this. And there's lots of firms that do that. And with AI, it's gonna get, you know, crazier soon. But at the end of the day, if you are I want you to think about it this way. This is how I I I teach it. If if you have been unfortunate like I have to be in a position where you couldn't make all your payments in any given month, And you have these four debts. You got student loans, credit cards, car payments, and and house payments. What's the first thing you're gonna stop making payments on out of those four? Student loans, credit cards, auto, or mortgage. What's the first thing you're gonna stop making payments on? So the very first thing and fifty three percent of Americans did not make their student loan payment last month. Now part of that, you gotta understand, part of that is that we had a government say that we were gonna forgive our student loans. So there's still a lot of that washing through. But here's the challenge. We are still at historical averages for credit cards. We're still at historical averages for auto. We're still at historical averages for mortgage delinquency. So now if the next month goes along and you didn't make your student loan payment, things are really tight again and you can't make one of these three, are you gonna not make your credit card payment or you're gonna not gonna make your car payment or your house payment? It's credit cards. Right? So credit cards. So this this is in order of what we don't pay. So when you study delinquency to see if there's a crash coming, the last thing that happens is we stop making payments on our mortgage. That's why I'll go back to this. That's why this screen looks like this for mortgage delinquencies. And it's why you see a bit of an uptick on our other consumer delinquencies. When this consumer delinquency reaches above the historical average, then I'll be the first person shouting from the rooftops, you better get ready. Back on this slide real quick, I wanna tell you a quick story. We knew I knew personally. I was one of the top agents in my in my region at the time, and I knew in September of two thousand eight that we were in some serious trouble. And I could tell you exactly the day was September seventeenth two thousand and eight because I was in a meeting with my bank where they called all my loans for my rental properties. I didn't know what calling loans meant, and I said they probably won't answer you, because I'm a little bit of a smart ankle. Right? But, and they said, well, you know, we have it we have it in the contract. We can call the loans at any time. And I jokingly said because again again, these are my bankers. I had sold their personal houses. They said, it's in the contract, and I jokingly said, well, I'm a realtor. I don't read contracts. But in the contract, they had the right to call my loans anytime. They gave me thirty days to come up with three point six million dollars. I did not have three point six million dollars. I ended up getting to ninety days and staving off bankruptcy, and it's a whole another story for a different time. But the point here is I knew on September seventeenth two thousand eight that we were in trouble. The biggest reason I I remember that date is in the lobby, Lehman Brothers was falling that day on the TV. But here's why I point that out. Find about September two thousand eight on this chart. It's it's it's right around the start of the recession. It's when we go full hockey stick up. And that's so we knew I knew at the bottom of that hockey stick, we were in trouble. Now follow all the way to the right to almost twenty twenty, And really, actually, it's it's twenty twenty three before our delinquencies get back to where they were in two thousand five. So when you look at this from this perspective, this kinda changes, you you know, how you think about it's two thousand eight again. But just understand, it can happen very quickly. But when it happens, we had, whatever that is, almost a twenty year cycle where this had to wash out to get back to normal. That's how big the financial crisis was. But even if you wait till there starts to be a decline in delinquencies, we had seven years to understand what was happening. My point here is you're not gonna wake up tomorrow and there be a dramatic housing crash and everything's half price. Even when something we could not have predicted, a black swan event like COVID happened, we didn't say on March thirteenth twenty twenty, oh my gosh, all real estate is half price. Right? And so right now, it's the end of the line. Yes. This is the most recent data that we can pull, so this is as updated as it gets. But and, again, they're they're usually depending on the report, they're thirty to sixty to ninety days behind, so you have to go other places. I haven't found any contrary evidence that this data is is outdated. So, anyway, that's I I just wanna bring your attention to, one other point. In terms of wealth building, I want you to to to remember this, and I know you've heard it. What's what's Warren Buffett's, you know, kinda golden rule? When everyone else is greedy, be fearful. When everyone else is fearful, be greedy. The best time to buy real estate was at the height of these delinquencies from a investment perspective, from an ROI perspective. The best the the best time was at the height of delinquencies. The worst time was at the the low of delinquencies. But there is something about the psychology and human nature, and one of my favorite studies here is is eighty percent of us sell all of our stocks at the bottom, and we buy all of our stocks at the top. Fastest growing addiction in America right now is day trading. And, again, there's reasons why. If you study the macro, you can you can kinda predict some of these things are gonna happen. So let's let's keep going on that. Hopefully, you guys are enjoying this, and you're you're seeing some cool stuff. So what I did, the kids call us bring the receipts, and so I like to be a very transparent human. And what I wanna do is I want to take your take you back to nineteen sixty, and just don't skip ahead on me. But go back to nineteen sixty. How the median home price is eleven thousand nine hundred dollars. How many of y'all wanna go back to nineteen sixty and buy a whole bunch of real estate? Yeah. Me too. Now keep in mind that the median income at the time might have been four thousand dollars a year, but wages have not kept up with inflation recently. So there is a fear that everything is getting more expensive and we don't make enough money. But on that side note, real quick, this is this is a good time to interject this. The inflation incurred from twenty twenty two, twenty twenty three, twenty twenty four combined was twenty five percent. So the cost of living for us grew by twenty five percent, twenty twenty two, twenty twenty three, twenty twenty four. In that three year period, it is now twenty five percent more expensive to pay our bills than it was before. So this hits hard. Right? And what you're gonna hear by most media is wages have not kept up. And the truth is wages have not kept up. But when I pull people and ask them, what have wages done in the exact same time period, twenty twenty two, twenty twenty three, twenty twenty four, what have wages done? What do you think their answers are? How much have wages gone up in the same three year period where inflation grew by twenty five percent? What would your guess be? Five percent. Good guess. That is the most common answer that I get, Greg, five percent. The answer that shocks everybody is twenty three percent. It's crazy. Now in real estate, ironically, because we're commission only salespeople, we tend to not see it the same way everyone else does. When I was the president of Keller Williams and I I watched my expenses, remember the great resignation? I I saw lots of people get raises and lots of and and hiring got way more expensive, etcetera. And a lot of people moved jobs for a ten thousand dollar a year increase, but wages have not kept up with inflation, but it's nowhere near what we're told and what we're told to believe. I'll give you more data on that later. So let's go back to our housing market. I broke this down into five year chunks so you can kinda play along with me. But notice there has not ever been a five year period on here where real estate appreciated at four percent. In fact, the average for these five year periods is five point five eight percent. So what gives, Mark? You just said it's four percent. There's more. We gotta we gotta add some some other some other pieces to this puzzle. And the first piece I'm gonna give you is look at the average square footage of a house in nineteen sixty. Then I broke it down four percent appreciation based on square foot, and you get a whole different picture. So if any of you live in a house or have ever lived in a house that was built in nineteen sixty that the average square foot was twelve hundred eighty nine, we got nearly double that before we went back down in recent years in average square footage. When you take that into consideration, we are right on the four percent line. Then I'm gonna make another argument that's super controversial and and you're not going to hear, but as real estate professionals, we need to be talking to our clients about this. I want you to think about how the Wi Fi was in your house in nineteen sixty. I want you to think about your electronics. Did you have refrigerators that told you your cottage cheese was spoiled? I know that's the latest thing. Right? But our electronics, our appliances, everything in our houses are so much more techy. We have air conditioning as standard today. We have more bathrooms. We have pools. What Wi Fi exactly? There wasn't any. Right? Land goes up in value. You think about the tile, the built in cabinets, the bathrooms, all the things that you you see in a median price house today did not exist in nineteen sixty. So from that perspective, we kinda do this math and what you get is we are we should be somewhere around four hundred and twenty thousand. We are just under that depending on the data you look at. If you go to the Fed, they say we're at four hundred sixteen thousand eight hundred right now. So we're right we're right where we should be with prices. But at the end of the day, no one wants to hear that, especially if you're under the age of forty. Alright. Here's another thing that shocks people. What's the median family income? Half above, half below in America? Half of the families in America make more than a hundred thousand dollars a year. Half the families in America make less than a hundred thousand a year, but it just went over a hundred thousand dollars a year, and that shocks people. What you hear in the media often is sixty, seventy thousand dollars per household. That's just not true. And but wait. There's more. This combines single earning households with dual earning households, and this is where you get a hundred thousand bucks. If you take just the dual incomes, you get closer to a hundred and forty thousand dollars at the median. So if you wanna know where here's my analogy. I I I hang out with a bunch of people that like to fish. I'm not one of them, but I hang out with with people who fish. So my analogy is if you are out fishing for fish and you wanna know where the most fish are, in real estate, the most fish, the most of our clients are gonna be ten percent above or ten percent below the median in a normal market. So if your median price point is four hundred thousand dollars, you would look from three sixty to four forty. That's where the most amount of clients are gonna be. Right? And if I'm lead generating right now, if I'm behind on my business and I really wanna fill my pipeline, I'm gonna live in that area. But there's another challenge with that area. Number one, it's too expensive for first time homebuyers because of interest rates, because of their income, etcetera. Right? It's not that's not an unreal expectation. But number two, if you study the twenty eighteen tax reform, twenty eighteen was most sweeping tax reform, I'm gonna argue, in our country's history, and almost nobody knows about it. And, it's it's it's shocking to me how little we know about twenty eighteen. Before twenty eighteen, you have to go back to nineteen eighty six to to get anywhere near the tax reform we had in two thousand eighteen. Before that, you had to go to nineteen sixty nine, and we were still on the gold standard. So when you when you think about this, we have a mismatch between median income, median house price, and we have a mismatch with who the buyers are and what interest rates they can afford. Now another shocking thing is this is real disposable income. And short of the four trillion dollar I wanna put this in perspective. Our gross domestic product think of the United States as a business. Our top line revenue, our GDP, all the services and products we make and sell in the United States totals thirty trillion dollars. Alright? So that's our GDP. It's an important number to know, not that any of us can actually conceptualize what a trillion is because it's almost impossible for the human brain to do so. But when you think about that and you realize we printed four trillion dollars and we gave it out to the economy. And we did that in eighteen months. We did three trillion of that in twelve months. So when you add ten percent to your top line revenue in any business, I want you to think about how crazy that business looks, especially a business the size of the United States. There is no business in the United States the size of the business in the United States. But if you took if if Microsoft woke up in the next year and grew their top line revenue by ten percent, their stock would go through the roof. Right? And so after the after the the four trillion dollar printing, here's what I wanna here's what I wanna focus on. We have the most disposable income that we've ever had, and it doesn't feel like it. Right? Why doesn't it feel like it? Here's why. Because our personal consumption, we are really good at spending every dollar that we make. And, again, I have grace for our younger generation. When I grew up, there wasn't five dollar coffee to tempt me. In fact excuse me. In fact, I have my Folgers right here, and, my Folgers is about twenty cents a cup. That's the key to wealth building right now. Don't go to Starbucks. Just kidding. But I also we also didn't have subscriptions. The average American spends each each of us spend two hundred nineteen dollars a month on the Hulu's and the and the Primes and all of our Netflix, all of our subscriptions. Our beer of the month club, I don't know if y'all have that. I used to have that. It's pretty good. But we spend two hundred nineteen dollars a month just on our subscriptions. How much did if you're my age, how much did you spend in your twenties on subscriptions? I didn't have any. And it's funny because I watched this, and I'm I'm now it's in my reticular activator system, system, so I'm always paying attention to this. I was in, Honolulu last week, and someone gave me a really cool golf hat, and I was so appreciative. I love gifts. Love golf hats. And on the on the tag inside the the hat was a QR code in that Columbia House. I stayed away from that. I did, I I probably did send in some some Columbia House and not pay for it. That's probably true. But, yeah, that's a good good point. But there's a QR code inside of my hat where I can go click on it, and I can buy a warranty for my hat if I want to. Anything that happens to my hat for five dollars seventy nine cents, I get a I get a free hat sent to me. Beyond that, you can sign up for their hat of the month club. And so if you pay them, I figure it was, you know, nineteen dollars a month, they will send you a new cool golf hat every single month. And I thought, hey. This is cool. Except that I don't need a hat every month. And so my point here is in my day, when I went and bought something, I bought this this marker, and I paid money for it, and I I got the marker, and I own the marker. It's mine. Right? Today, you buy a marker, you get a QR code for a warranty, and then you have to have a subscription for nine dollars a month to use it. I know that's a, exaggeration, but that's what it feels like. Everything comes with a subscription. And so if you're not careful and and tell me if this has not happened to you because it'll be a smaller number. But tell me that it hasn't happened to you, that you've you've got a credit card statement or a debit card statement, and then you found the subscription that you had forgot about from last year, and now you have a seventy nine dollar bill that you weren't expecting. In my case, it was Blinkist. I forgot I had signed up for Blinkist. That was it was kinda my cheat code to to read a bunch of books, and, books were flying at me. And so at the end of the day, I forgot that I'd signed up for Blinkist, and a year later, I get the bill. Right? And that just happened. So that's part of the fallout rate of subscriptions, and and companies know that you're gonna not pay attention to it. But we spend a ton of money on that. Our personal consumption's off the charts. It also did not cost me two hundred dollars for my jeans. Alright. I'm gonna spend some time on this real quickly. It's about all the time we're gonna have, but this is meant again, this is just an example. Talk to your professional, but I wanna give you a couple key insights to what happened in twenty eighteen that may affect the way you look at your taxes. The first thing I'm gonna tell you is about thirty percent of us in this business do our own taxes. I'm gonna ask you to stop it, and I'm gonna tell you that in a world where we argue for people not to FISBO their houses, we FISBO our taxes all the time. Right? Thirty percent of us do our own taxes. And the reason why is you shouldn't be able to keep up with the one million new lines of tax code since twenty eighteen. You need a professional tax strategist. And here's another caveat. The average accountant does about four hundred fifty tax filings a year. Three of those people are real estate agents. If you study the twenty eighteen tax cuts, what you understand is that was a tax cut specifically for real estate. The short version of this is I believe the government saw the the stock market inflated, and they said we need to move people's money into real estate. So let's cut let's give them tax incentives to buy it. Enter institutional investors. Huge tax breaks, enter BlackRock. Right? These institutional investors have bought twenty four percent of all rental properties in the United States since twenty twenty. That is the very property that our first time homebuyers are looking for. Our first time homebuyers don't get tax incentives because our first time homebuyers are paying little to no taxes income wise. And so if BlackRock buys that rental property, they can overpay for it, still get a better deal because of the tax break. K? So when you understand what happened in twenty eighteen, we could predict that there would be more money flowing into real estate, supply, and demand, and therefore, prices would go up. But I show you this example because I had a a fine young man come up to me at one of my presentations and say, you're gonna be so proud of me. I I only paid my tax bracket last year was sixteen percent. And I go, well, I guess that sounds good, but it's gonna depend on everything else. So how much money did you make? And he said, I made two hundred fifty thousand dollars. And I went, hey. That's sixty percent total. That's that's not terrible. But I had this weird feeling, and I said, why don't you let my tax strategist look at this for you and see if there's anything we do? He paid thirty seven thousand in taxes. You can see after this example, our tax strategist is able to get him around seven thousand bucks. So the short version of this is on this is one agent. He he has an LLC, and this is the this is what we would recommend. There's there's, like, four states you can't do this in, so study your own state. But you have your own LLC. You have to elect how you wanna be taxed. By default, you're a sole proprietor. If you have a partner, you're a partnership, but we want you to elect to be taxed as an s corporation. That unlocks a lot of the tax incentives for you to run your real estate business. So, his total top line commissions after paying his brokerage fees were two hundred and fifty thousand dollars. That wasn't his profit. And so that was the first big red flag that we found. We took his officer compensation, and we raised it. He was paying himself thirty six thousand dollars a year. The IRS, definition, which they never give you perfect language, but they say you must pay yourself the w two if you like to be taxed in s corp, and you must pay yourself reasonable compensation. So what is reasonable compensation? I would argue for someone who brings in two fifty a year, it's not reasonable to replace them with someone for thirty six thousand a year. So from that perspective, that part didn't matter as much as what we can do is we can we can put up to twenty five percent of our officer compensation into retirement tax deferred. So if you're from the old school like me, we were taught pay yourself as little as possible, take the rest in profits, and that's the best tax strategy. Not not so true anymore. Next one is employing his teenage kids to work in his business and doing it correctly. He was claiming it, but didn't have any documentation behind it. All of this is gonna require that you document, document, document. But I thought I'd just give you some examples. Payroll tax expense, we reduced that. Company contribution, that's his retirement funds. Accountable plan. Most people I find don't know what accountable plan is. They know what the home office deduction is, and there's one big huge problem with the home office deduction is when you sell that house, you have to pay what's called recapture tax. So any tax strategy where you have to pay it back someday, I'm not a fan of. Okay? So what's the accountable plan? It's very similar. Talk to your accountant. Talk to your tax strategist. But you can write off use of your personal residence for your business without the recapture tax. So go look into the accountable plan. Ask your accountant about it. Side note. If you ask your accountant about all these things and they tell you things like, this is a red flag red flag. It takes a lot more work on their part to do this for you. And so what I found is a lot of accountants just just saying, can't do this. I'm gonna tell you that I haven't found that to be true, that none of these things are more or less of a red flag. How you document them creates the red flag. You probably have seen or heard about the Augusta rule. This is the most commonly taught, financial advice on TikTok right now. And so if you're getting your financial advice from a nineteen year old in her mom's basement, probably not the best place to get it. Not everybody should use the Augusta rule, but I'm gonna argue most of us should. If you're not familiar, this this comes from Augusta National Golf Club members who also were congresspeople. And what they would do is people in Augusta, Georgia would rent out their house for the Masters golf tournament for a couple weeks. Then they realized they had to pay taxes on that income. And so I jokingly say, because everybody at at Augusta is a congressperson, they voted themselves a tax break. But what's good for the goose is good for the gander. So all this means is you can go write off up to fourteen days of your personal residence for business use. Now it doesn't stop there. That's where you're gonna hear the advice end on, you know, the YouTube channel. What you have to actually do is you have to go get comps. You have to get written bids. Go find a like sized square footage, meeting space, event center, hotel, whatever it is, and get a written bid for what it would cost you to rent out your two thousand square foot for a day. In Austin, Texas, we did this. We have three bids for around two thousand dollars. My wife and I can now hold events at our house up to fourteen days a year, and we can write off two thousand dollars per day, plus whatever we spend on food and and other things, which is really a pass through. But that's a twenty eight thousand dollar tax deduction for my wife and I. And in our tax bracket, it's about twelve thousand dollars of savings. So, the Augusta rule for this guy, call him Frank, because his name is Frank, is about twelve thousand dollar tax deduction. Then his normal real estate agent tax deductions. What you get on the left side of the screen, his business related expenses yielded a profit. The fancy word for business profit is your k one. So his k one profit from the business, Frank Inc, was forty thousand three hundred dollars. Now come over to his personal return where he did a pass through, his business expenses, everything to his personal return. His w two wages after putting money in retirement and paying, you know, payroll tax expense, etcetera, are now sixty nine five. His profit from his business is forty thousand three hundred. So his adjusted gross income, what he should be paying taxes on is closer to a hundred and nine thousand eight hundred. But wait, there's more. How many of you have heard of QBI? Out of eight thousand agents I've talked this to, I think we're at fifteen who could tell me what QBI was. And so if you're in that group, congratulations. QBI stands for qualified business income. And all that means is twenty percent of your profit is tax deductible. And almost no one in our business knows about this QBI. When my tax strategy does about six hundred real estate agents tax returns a year, when they, the number one thing they're finding right now is people are did not take QBI, and you can go back and amend for that for three years, talk to your tax strategist, etcetera. Then we take the standard deduction versus itemized. Now his taxable income is seventy two thousand dollars, so his tax should be about eleven thousand bucks. But wait, there's more. He gets a child tax credit on his two children, two thousand apiece, and that the tax credit's different than a write off. Right? A credit is actually money from the government. A write off means you don't pay taxes on that amount. So his his total tax is ended up being around seven thousand dollars. Now I have to tell you the funny conclusion of the story. I was so excited to have this conversation with Frank, and I thought he'd be through the roof and super excited to hang out with me. And his literal comment to me when I said, if you want a simplified version of this, because he didn't understand it. He did his own taxes. And I said, if you want a simplified version, all we did was take the taxes that you paid to the government, and we moved them over to your retirement. That's really the net effect of what you see on the screen. And his comment to me was, so you're telling me I don't get to spend the money either way. And I said, yeah, Frank. You can either give it to the government or you can send it to your retirement. It's completely your choice, but, yes, you don't get to spend it. And that was the first twenty five thousand dollars Frank had ever put into retirement, and he's in his early forties. So I'm gonna conclude there with my presentation. Hopefully, you all got some value out of this. I hope you're doing amazing. And, we have there's there's lots lots more. If I happen to be coming to your area, come see me. I have a business now called Welcome to the Cause where my whole goal in life is to help real estate agents retire. And by that, teach them how to retire and then teach their clients how to build wealth through real estate. So we have a bunch of different products and services, everything from free. You shouldn't pay for it yet. I've got a free Facebook group with about twenty thousand people in it. It's called wealth building two point o. Welcome to the cause. And we are about to launch our complete financial reset. It's about a six month program. It's go at your own pace with live q and a and a bunch of stuff. So we have a we have an awesome, group platform that we're launching next week. And if you're interested in that, please reach out to me. Go to our our website, welcome to the cause dot com. Go to realtor retirement for realtors dot com. Join our Facebook group. It was such a pleasure to be with you today. I hope you got amazing value, and, have an amazing year. We'll talk to you soon. Bye, everybody.