7 Non Obvious Statistics Part One

Apr 16, 2021

Welcome Back to Powerful Homes Housing Literacy- the Mindset and Tactics to empower your dreams through Real Estate. We are going to spend the next 2 sessions going over the numbers…since we are exactly what the scoreboard says we are on a very basic level. So often, people may put off decisions since they don’t have a context for the reality of the numbers. Today, we are going to review the 7 non-obvious numbers that may give you context about the market and key indicators. In Part 2 of this topic, we will go over numbers that affect YOU personally. The significance of SEVEN is that it represents wholeness and completeness. The idea of Powerful Homes is to provide every person with the mindset and tactics (information) so they can use real estate to empower their biggest dreams. In this video are some of the key statistics that may help understand the market and current context to making a decision to become an owner. As always, give Matt a text if you have any questions at 303-885-1644.

Episode Transcript:

Welcome to the housing literacy podcast with host Matt Guarino, founder of Powerful Homes. Matt's mission is to empower dreams through home ownership. We're here to help. We're going to do this together and now Matt Guarino.

Hey guys, my name is Matt Guarino and I'm the founder of Powerful Homes. And the vision of powerful homes is to empower dreams through real estate. And our mission is specifically to help 10,000 people in the next 10 years purchase their first home or their first investment property. And we believe that we want to do that because we think that everyone, everyone should have the opportunity to purchase their very first home, regardless of their age, regardless of their education level, regardless of their race. It shouldn't matter and everybody should have access to that. And how do we do that? We do that through something. We call housing literacy, which is basically the mindset and the tactics, the mindset, and the tactics. There's a lot of books out there. Great books out there that give you the tactics. There are some books out there that talk to you about the mindset, growth mindset generally.

I've spent the last 25 years buying and selling homes all over the country, doing multifamily. I've done ground up new construction. I've done land development, all kinds of things in the HUD space, as well as for-profit market rate. I have through that period of time, I've created a system that you need, both the mindset and the tactics. So what we do here is we're here for you. We're not looking to sell you anything necessarily. We'd love to be your guides in this process at Housing Literacy, but we're not pushing an agenda, political, religious, anything like that. We're also not saying I have it all figured out or any of us have it all figured out. We have an amazing team.

We think we have a process that's we believe going to be a disrupter to the industry in a very positive way. We hope this is around the Powerful Homes Foundation, as well as the Powerful Homes Brokerage for a hundred years from now. We're actually talking like that because we think it's that different and real. So we're excited to bring it to you. I'm so glad if this is your first time, welcome. If you're returning welcome back and we're thrilled to have you I'm. So, so especially pumped, I'm usually pumped up. I'm extra pumped today to talk about this topic. It's a two-part deal today. We're going to go over part one today. We're going to go over part two next time, but we're talking about seven non-obvious, but amazing statistics related to real estate. And remember, we're talking about housing literacy. So what we're doing here is not just for the first time home buyer, but for even a seasoned investor or somebody that owns a house or a couple of house. We believe that these statistics will create the power within the knowledge, within the context and the confidence for you to take action.

We are all coming out of a really crazy time the last year, year and a half. And we're looking for solutions we've reflected on our lives, and we're trying to maybe launch the biggest, best version of our lives to even make meaning of all that we've gone through the pain we've gone through all the challenges. I believe that real estate is one of those things that can make a difference. It's changed completely transformed my life. I came from nothing. I got a paper out when I was a kid led to college, led to some learnings led to the whole process, but real estate has been the thing that's been constant in my life and changed everything. So I'm passionate about bringing this to you. And today's thing that we're talking about is numbers, right? I'm a recovering CPA, I always say. I did it, but it wasn't great at it. Didn't really enjoy it, but I'm glad I did because I see the world through statistics and numbers.

So today we're going to go through the numbers that will hopefully give you the confidence to understand the moment that we're in to understand why would you consider buying a home or an investment property? What do the numbers say? So we always have a governing quote that goes through all of it. And today's is that numbers don't lie. Check the scoreboard, right? You are what the scoreboard says you are. So we're going to give you the seven numbers. We really like the idea of seven. It's goes back. It's like a biblical thing. Even it goes back into ancient times. Seven is kind of a reflection throughout the Bible and throughout all corporate America of completeness and wholeness. So we liked the idea of that.

We're talking about impairment. We want this information. We want these tactics to make you more complete and whole. So that's how we come up with the number seven. So today is about the market. Next time it's going to be about you, seven non-obvious, but amazing statistics for you to know and learn and process. The whole idea is that we hope you go, huh? After this and say, wow, I never really thought about that number, but it really is rocking me back and making me think about taking action and doing something about it. So let's get into it.

So the first, first number is 8 billion. You may or may not know that there's 8 billion people on the planet today, give or take, and I'll give one more qualifier. I've looked at dozens of studies and I will put all of these in the show notes, but I haven't, cross-referenced every single one. So all of these things today can be approximations, approximately billion, that's an example. So but we'll give you all the, all the studies and the information in the show notes. So you can kind of cross reference yourself, but please don't fact check me on exactly. You know, give me the standard of deviation. I'm rounding to make the point. The idea is not to get the numbers exactly right, but to give you an approximation to make you think.

So there's 8 billion people on the planet, the population grows around 1% a year, which is around 80 people worldwide. In the United States, that's around a half a percent of the population in the US so that's about a million and a half a year, more new net people in the United States. If you add in immigration, net immigration into our country which is influx, there's a lot of changes with that going on right now. But overall there's around two, two and a half to 3 million new people in the United States. Our construction rates are such that we can only build units to accommodate half of those. Lots of other reasons why this number 8 billion is significant, but the general ideas our population is growing. The world population is projected to be 10 billion by the year 20, 50, 10 to 11 billion. And worldwide we can't build the units fast enough. That's the big message, right? So supply and demand, the supply is lower than the demand is going to be because everyone needs to live in a home. So first number checking the scoreboard, numbers don't lie is 8 billion.

So the next one is 300,000. I want to see here that in your mind, 300,000, and we asked 10 people on the streets and said, what's the average price of a home in the United States 300,000 would be the answer. I don't know how many people would know that. Give some context, so Hawaii is the highest at 650. In the continental US it's California is the highest state. It's 600 and West Virginia is the lowest set around a hundred thousand, give or take. Just to give you some context again, 300,000 is the number in the United States. The average home China has the average home price at around 1.2 million. So about double of what we have. Why is that? Going back to the first number 8 billion scoreboard doesn't lie.

There's three times amount of people in China. The country is much smaller, demand is high. Everyone has to live somewhere. That's why that drives prices. A way to understand that if you, just basic economics, if you had a hundred degree day, 50 snow cones on the beach and you had 200 people on the beach, and you said, snow cones for sale. You could probably say just about any price. You could say $10, $12 people would pay it. The demand is higher than the supply. So the 8 billion people on the planet, the United States home values are around $300,000 contexts. The highest in the world is 1.2 million in China. So is the first two numbers.

Third number of seven on the path to helping you become more whole and complete and perfect, is 128 million. What's 128 million. Well, that's the number of homes that are owned in the United States. There's about 43 million homes that are rented or units that are rented in the US, so think about that. Our economies, $20 trillion. We're number one in the history of the world, richest nation in the world; a third of Americans don't own. It's hard to even comprehend for me. So the idea of that is that, you know, how is it that with a $20 trillion economy, a third of the people don't own. It's just hard to even comprehend. It's been hovering on that, that number worldwide we're 40th in home ownership rates in the mid 60%. There are countries in the 95% home, right at the top. So we're 40th out of 195 countries and only 128 million own, 43 million don't.

The next number of the seven numbers that are going to help us become more complete and whole is $1,200. So what's $1,200? $1,200 is the average mortgage payment in the United States today, just the average payment. Ironically, the average rental payment is about the same $1,200 today, give or take. You also have real estate taxes and insurance, which are combined around $3,000, $3,500. But if you own your own home and you're making mortgage payment, you get to save around 25% on taxes, give or take. Again, give or take. So the net net number after paying insurance, paying taxes, getting the CIT tax savings is about the same exact net number, renting or buying. Crazy, and I don't know how many people know that and I really want that one to sear into your mind.

So many people will put off, we've talked about turning away and 10 years clips by and not doing anything about it. I have urgency right now about helping people to think about buying a home, buying their first home, or buying an investment property. Every American can own 10 properties. That's another little known fact, but people stop because they say, oh, I think ultimately it's way more money to buy a house. The reality is with today's market, it isn't. And we haven't talked about repairs and maintenance and things like that, but it isn't. It's not true. $1,200 is the number I want to sear in there. That's the fourth number?

So the fifth number is 3%. I do talk about these being non-obvious and 3% you might know is the interest rate today. So, it might be obvious, but what's not obvious about that. 3% is the context. Remember, I'm trying to empower people to have more confidence and know that this is a good decision for so many reasons. They're not just relying on one of the 2 million real estate brokers in the country to do it for them. This is empowerment. We want people to do it for themselves and feel confident that they're doing the right thing. So here's some context why 3% matters. In the seventies, the last 50 years I watched my dad. I was the last of seven kids rates were in the mid sevens, right in the seventies, which is okay rate, that whole decade. But in the eighties, I watched my dad with rates that started in the beginning of the decade we're up to 16%. lots of reasons for that, but we won't go into, but 16%. And the decade of the eighties ended around 10%. So we'll keep going with the decades.

The next decade in the nineties rates were at 10 and they went to seven. The rates in the two thousands were at eight and ended at five give or take. And now today they're at all-time lows of three. So the last 50 years, and they've been up to 16 and now they're down to three. Well, why does that matter? Why is 3% a number that I really want to sear into your mind and give it a lot of thought for every one point? And we talked about the average house is 300,000 for every 0.1%, it's around $250 a month. So if rates go up, which we don't know they could go up. They'd never been this low before for this long. If they go up 3%, that's $750 more a month. So that's part of the reason, it dramatically changes your monthly payment, dramatically changes what you can afford. So having it at historically low rates at 3% is a number that I want you to remember. And I want it to haunt you, that you want to take advantage of that.

So the sixth number is $30 trillion. What's $30 trillion. It's a lot of money, 30 trillion. That's the value of the homes owned in the US. Of the 128 million there's $30 trillion of that. And the mortgages, the loans on these around 20 trillion. So there's about $10 trillion of equity for the homeowners. And the average is around a hundred to 150,000. Again, these are numbers that I want you to remember. 30 trillion of value, 20 trillion of debt, 10 trillion of equity. Each American has a hundred to 150. And when they're in their sixties which is 60% of their net worth. Sixty percent of the net worth is in their equity in their home.

So let's just even make it even bigger. Again, giving you context, the world has around a $280 trillion of real estate in it, commercial and residential. China and the US have about the same; residential and commercial about 42 trillion, 30 trillion of that is in homes. So 30% of the world's real estate are in two countries, the United States and China. It's one of the greatest assets in the history of the world, ever, in the history of the world, the safest assets. People own the homes that they live in that because they have to, they have to have a place to live. So if you can rent or own, why not be a part of one of the safest, greatest, most reliable assets in the history of the world? One of the things I didn't say in the beginning is that there are other ways to do this. You can own stock, bonds, companies, private companies, public but real estate in the history of the world, worldwide id a very stable asset to own in the long run.

So the final number, and this was the one I want to land the plane with. And I want you to be really thinking about this is $100,000. $100,000 is the average net worth of a person at the end of their life. So now, if we kind of think of all these statistics, I just talked to you about demand is higher than the supply of homes. The average home is $300,000. Usually people get a 30 year mortgage, you can get a 15, you can get a 40, but thirty is the average home mortgage. If a person bought a home, did one thing, buy one home and just paid it off over 30 years, they would have $300,000. Given the first value, not even giving any appreciation. Homes in 1950s were trading around 150,000, now they're double that. So assumed it doubled, which is a fair thing to say. It would more than double but let's just assume it did that. If you did one thing and bought a home and paid the loan off over 30 years and it doubled, it'd be 600,000. The average person in America has a hundred thousand of equity at the end of their life.

Those numbers, I want to really, really get under your skin. The 3%, the $1,200 loan payment, a mortgage payment, and the rental payment are the same. There's 40 million people in the US that don't own homes that could in one of the richest nations in the world. So you see how all of these numbers, these seven numbers, if you really understand them, could create more wholeness, could create more resources for your life to live your biggest life. And it's one decision; buying a home and owning it.

So glad you're here and we're so excited to talk about this. We'd love to be your guides. We'd love to help share more information, check out the show notes. My cell phone number is (303) 885-1644. You can go on Powerfulhomes.org, which is our foundation that'll connect you to our real estate company, if you're interested in learning more about this. But we'd love for you to, if you want to subscribe, if this is of value to you, love to hear any comments, any things that's on your mind, let us know. I'd love to know some statistics that you think are haunting, and then we'd love to kind of throw out there to our listeners. So glad you're here. See you next time.

Thank you for listening to another episode of the Housing Literacy Podcast. Don't forget to like comment and hit that subscribe button and stay connected with Matt Guarino by visiting www.powerfulhomes.org.