There are 96% Less Homes For Sale Today in Metro Denver Than in 2008

 Check out this graph. In 2008 there were over 26,000 homes for sale in the Denver metro area. In 2019 there were 9,600 homes for sale. Today there are right around 1,000. That is 96% less than 2008, and 89% less than 2019! 

This is the smallest amount of inventory in metro-Denver history (well, perhaps after the year 1800). We are not in a bubble crisis, we are in an inventory crisis... 

During Inflation, Savers Lose and Borrowers Win

 

Inflation, inflation, inflation. Why does it seem like everyone is talking about inflation? Well, for one thing, inflation is currently at a 40-year high. Yikes. And for another, inflation directly affects YOUR hard-earned money. It's important to try to understand how inflation does this, but with all the fear-mongering of the media, what may not be as discussed is how you can actually benefit from inflation. The long and short of it is this: that during times of inflation, savers and lenders are losers, and debtors and investors are winners. Sound crazy? Read on.  What is inflation, and why does it matter to YOU? In simple terms, inflation is the decline of purchasing power of a given currency over time. The value of the dollar has been debased--we've printed too many dollars, and as the US Debt Clock shows, we are almost at $29,000,000,000,000 (trillion) in national debt, and counting. Another way to look at it is when the amount of spending and income grows faster than the production of goods, prices rise, this is inflation. Inflation is now at 6.2%, a 31-year high! During inflation your money sitting in the bank goes down in value, right now at 7.5% per year (at least)! That means you must invest your money at a 7% annual return just to break even. If you don't, you are losing 7.5% per year! What does that mean? If you have $100,000 sitting in the bank, you are losing $7,000 per year, so next year your hard-earned money will be $92,500! And if you invest it and make 7.5% returns, it will only remain at the original $100,000. Crazy!  So how can real estate not only protect your money but maximize your profits during inflation? So glad you asked! There are 3 ways that real estate can maximize your wealth during inflation. 1. This first concept blew my mind when I learned it. Just as your $100,000 sitting in the bank loses $7,500 per year, so does your real estate debt. If you borrow $100,000 from the bank today (instead of giving them your hard-earned $100,000 which represents thousands of hours of work!), your debt also loses the same inflation percentage per year, right now 7.5%! The best part is, the bank doesn't make you pay in inflationary-adjusted terms (tomorrow dollars), but only your original amount(yesterday's dollars). So next year I would only owe the bank $92,500, minus any payments I made. WOW. You can see how this hurts lenders, but very much helps debtors! You make money in your sleep! 2. If you use that loan to buy real estate, real estate follows inflation, meaning if cost of goods and services go up, which they do during inflation, the cost of real estate prices also goes up. Your home or investment property will appreciate as well! You make money in your sleep! 3. Just as real estate prices go up, historically rents go up as well. Rents have skyrocketed lately because of supply and demand issues, but historically rise during inflation as well.  You, once again, make money in your sleep! And none of this includes the tax benefits of real estate! So, when you buy cash-flowing real estate with long-term fixed interest rate debt, the Inflation Triple Crown that you win is: Price Inflation, Debt Debasement, and Cash Flow Enhancement (click for great video explanations). Learning about these concepts epitomizes financial education. You get to utilize a concept that impoverishes most people... and ethically turn it into your financial advantage.

TAKE AWAY HACK: *Don't watch your money ERODE in your bank account! Invest it in cash-flowing real estate using debt which will be debased during inflation! Do the opposite of what most consumers do.

Real Estate, meet Crypto.

The truth is, real estate and crypto have already met, and have become fast friends. Consumers can now buy homes with crypto, get a mortgage in crypto, and even save for a downpayment in crypto. Furthermore, real estate is becoming tokenized to offer secured fractionalization and liquidity. The title industry is exploring blockchain technology for solving old-world title problems. NFT mortgages are happening in the Metaverse. On and on it goes. I know, this sounds like I'm writing this from the year 3,000, but it's happening now. The current crypto market cap is over $2 trillion, with a 24-hour trading volume of $107 billion. And there is over $212 billion locked in the decentralized financial world (dApps, a different world from Bitcoin).    Despite the volatility of cryptocurrencies, they continue to be gain adaption and momentum, especially in real estate. “Holders of cryptocurrency can buy any property on or off the MLS, Equator.com or Hubzu.com by selecting PremiumTitle as their title and escrow company and sending their Bitcoin, Litecoin, Dash, Ethereum or Bitcoin Cash to a ForumPay wallet for conversion.” Furthermore, a recent Redfin report shows that 12% of first-time homebuyers used crypto to help save for their down payment. This is up from 5% in 2019. It's not far-fetched to say that Real Estate and Mortgage Lending helped give birth to crypto. It all starts in the crash of 2008. After much irresponsible lending and borrowing, a huge oversupply of housing (32,000 homes for sale in metro Denver alone in 2007, vs. a mere 1,087 houses right now😩. To think 77% of consumers believe we're in a housing bubble🤦), the greed of banks and Wall Street via false mortgage security ratings by rating companies (watch The Big Short), stocks and real estate prices crashing, then the government bailing out said banks and insurance companies using taxes paid by its citizens....well, you may lose any last trust you had in the system after this point. As one author put it: "There are millions of people in the world whose entire jobs are to simply do this: verify trustworthiness. Insurance companies, banks, legal firms, universities, regulatory agencies, and government programs have massive office buildings full of nothing but people doing this trustworthy verification thing, all day every day. And they do this because we have no other better way to do it. And because these groups of thousands of people are required to do this, the process is corruptible because it is human." Enter Satoshi Nakamoto, inventor of Bitcoin. In his (or their) fascinating Whitepaper, Satoshi addresses the inherent problem of 2008 as a problem of a "trust economy," that a whole economy dependent on 3rd party institutions (which at the end of the day put their financial and personal interests before their customers') is an economy which is always vulnerable and inefficient. He proposes,  "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." (Satoshi Nakamoto, Bitcoin: A Peer-to Peer Electronic Cash System) Thus the revolutionary invention of Bitcoin, and not long after, several other cryptocurrencies and blockchains with different purposes and goals. As you know I absolutely love real estate, however, it continues to be one of the most archaic industries in the world, right there with digging for dinosaur bones and collecting baseball cards (both still extremely valuable)! The inefficiencies of real estate along with so many other industries still using paper(😵) and "trust" which are wholly vulnerable to error, hacking and fraud (healthcare, insurance, legal, voting, charity, cyber-security, and of course, the financial industry), can and will benefit tremendously from blockchain and smart-contract technology. Real estate and Bitcoin have a lot more in common than meets the eye, first and foremost they are not the US Dollar, which is being printed like it's a Monopoly game. The US Dollar has significantly deflated in value especially over the last 2 years, but real estate and cryptocurrency are assets and have significantly increased. Inflation is hitting 40-year records, and people are looking for safer alternatives than holding depleting cash. Even JP Morgan, who just last year called Bitcoin worthless and a fraud--an understandable and loud critic of Bitcoin--recently came out with an analysis saying Bitcoin could very well go to $150,000 in the long term(😯). And entire major countries are now changing their stance--recently India, and now Russia, are legalizing Bitcoin. El Salvador, which has a 70% population which don't have bank accounts, became the first country to recognize Bitcoin as legal tender. And many analysts are predicting several other 2nd and 3rd world countries will follow suit.    So, what does this all mean for me, Jonathan? Well, I'm not a financial advisor, who would just tell you to invest in your 401k and the stocks he/she gets a commission on anyway LOL!), but I would say with absolute conviction to educate yourself and pay attention to these trends (read or watch a video on the book The Bitcoin Standard). As far as becoming involved, once again, do your own research, but it is becoming almost common strategy even by big hedge funds and investors to keep at least 1%-3% (some say up to 5 and 10%) of your portfolio into cryptocurrency, especially Bitcoin and Ethereum, and the other top 20 coins. DeFi protocols are also a whole other rabbit hole one can travel down. I'm not saying buy $100,000 NFT's or virtual real estate (yet), but educate yourself (WSJ has great short videos all about blockchain, NFT's, Metaverse, etc). This is internet in the late 90's. You will thank me later. Oh, and don't foget to watch what everyone is renaming as the Crypto Bowl this Sunday! And, of course, buy real estate. I don't care where you buy it, just buy it. You will thank me later.