do you believe we can have a soft Landing no it’s impossible people have to realize the enormity of this bubble there is not a comparable bubble in real estate this is going to be worse than the than the crash before and it’s going to be way worse than the real estate crash in the Great Depression this is going to show why the Federal Reserve and central banks shouldn’t be manipulating the economy these people are dictating economies playing with the money supply and it’s dangerous because of these giant lags this is a first in the world economists don’t understand this because they think it’s all politics I don’t study you know how much time I spend studying politics none I don’t care who gets elected president they don’t drive this ship and all I can tell you since there’s no precedent for a bubble this big in This Global it’s not going to end [Music] well Economist and bestselling author Harry D says home prices will crash by at least 50% and we’ll never see them as high as they have been over the last several of years at least In Our Lifetime now if this is true in order for this to happen we would have to have a massive financial disaster headed our way but before you turn your nose to Harry’s predictions listen to what Harry is saying and then ask yourself despite his timing being off so far as Harry or nobody for that matter can control the last ditch attempts from the government to kick this can down the road you have to ask is there truth to what Harry is saying and I will say this if we don’t have a massive recession this would be the first time in history that no economic downturn comes after an economic boom now many economists believe including Harry Dent that will see the largest economic bust in history way bigger than the 20 8 Global financial crisis and maybe bigger than the Great Depression and some of these economists are saying it’s already begun I
hope you enjoy the [Music] show Harry welcome back to the sax realy podcast so great to see you yeah yeah down in Puerto Rico where the weather’s almost damn near perfect it’s unbelievable yeah all the way the good thing about having m Mountain unlike Florida is the mountains get all the rain so we get all the Sun and they get all the rain so we have plenty of water and plenty of sunshine both did you guys see anything from that last hurricane that uh no that went good I mean we got one dad bad day like a bad rain day and when but it went well below us yeah we we are in the strike zone so one out of two serious hurricanes we are gonna get so we got lucky on that one yeah well today we’re going to talk about the US economy especially the housing market and you’ve said recently that the stock market will crash the housing market will crash and the debt bubble will explode and it’s it’s kind of all happening now as the government’s ability to prop up this economy I think has been exhausted so yeah yeah this yeah we’re at the end of the greatest debt ball and and and we’ve never seen two bubbles in a row that’s another unique thing two real estate Bubbles and two stock Bubbles and this time the stock and real estate bubbles for kind of curring together so that’s a trip well we’ve never seen a housing bubble like this I don’t I I don’t believe I mean I’ve been serving the housing market for about 35 years and uh since 2020 home prices have absolutely exploded um in your opinion has this uh housing market crash finally started well you know I I I think it’s just cresting now I think it’s about to start I I tell people you know in real estate look at the stock market because the stock market tends to be the more leading indicator for the economy and then housing tends to follow and difference if you look back at the last downturn where stocks peaked in late 2007 real estate started peaking before but real estate didn’t bottom until mid 20102 when stocks bottom in early 2009 so so when you see the stock market start to fall that’s when you start to say okay I don’t have long to sell my house uh if I’m looking at selling uh because because this this real estate bubble is the second in a row never happened before by the way even the Roaring 20s there really wasn’t much of a real estate bubble because loans were hard to get back then in the Roaring 20s a mortgage loan was was 50% down in fiveyear terms you have to pay off the whole loan in five years so the stocks got speculated in and got bit up real estate just had a normal kind of boom and bust it only went down 26% in the Great Depression you know stocks went down 89% in the Great Depression so this that’s what’s different this time real estate really is even more so the heart of this bubble and financing you know since the kind of the 80s forward and particularly the mid90s forward financing has been so easy and interest rates keep getting pushed down by the fed and and falling inflation um and and that was all because of the baby boom so so this this really has been the most Global and the biggest real estate bubble in all of history in fact I’m telling people I don’t think we’ll ever see one this big again and we haven’t seen one this big uh previous even going back to the 1800s or something so this this is a big deal and and you know normally people say hey it’s my house you know I’m gonna be in it forever okay well yeah yeah if if you’re thinking of trading up don’t do it now you know stay in your smaller home and wait if you’re thinking of selling and maybe retiring and and and downsizing a few years from now because you’re an aging baby boomer well well sell your big house now and wait a few years for the to see if this crash sets in which I think is very very very likely um to buy so so real estate’s the biggest purchase we make and again never before a bubble like this because of such EAS such such easy financing for for housing mortgages and and I’m telling you the people who I feel most sorry for in the world are the Chinese Chinese have incomes like more like 12 to 15,000 in US dollar equivalents and the typical Chinese household is buying one little house and then buying one or two more and leaving it empty not even renting it out because they think real estate is the road to wealth so so as bad as our bubble may be the biggest we’ve ever had in the US and bigger than the one uh that peaked in in um 2006 and crashed 34% on average in the US this bubble will be bigger here but the Chinese are going to see the real estate bubble burst of all times and and that is going to take that economy down in a way nobody expects and and China will never fully come back because they’re the only emerging country that is has has seen a peak in demographics that in other words their population is aging like the developed countries even though they’re emerging country with lower incomes and they have some urbanization left but but I I’m telling you the real estate bust in China is going to go down and hit history and going to make us feel good about mate oh a home price is going down 50 to 60% here now real quick I mean I was I you know I was previously Wonder Hey the last one was 34% on average that means upscale homes were going down 50% or so and again nobody ever thought I I was told all growing up real estate’s the one thing that never goes down they’re ain’t making more of it and stuff well that proved that wrong but this bubble has gone much longer much higher and and now just I’m looking at just getting back to the 2000 mid 20102 lows not that far ago and that is about a 60% drop for the average house and of course that could mean 70 80% or more for high-end homes and condos and and one of the funniest things I get every time I give a presentation usually some some you know older lady will come up to me and say Harry you know let me tell you about my house in La Hoya it’s on The Cliff it’s the it’s the greatest house that’s got this and that certainly Harry my house isn’t going to go down and I’m like Martha I’m sorry the bigger the bubble the bigger the birst the best houses are going to Bubble the most in a in a market like this and go down the most and they’ll still be the best houses and that’s exactly what I want to buy on the other side a few years from now the best houses in other words somebody may be looking at a you know 3,000 square foot house today to trade up into and then we come out of this you may be able to buy a 4 to 5,000 foot house for less than the 3,000 foot is today and so this is going to be what I call the last great buy opportunity in real estate we did get one in in in 2012 and and and and shortly after that and otherwise you know you’d have to buy back in the early 80s in the deepest recession back then so so this is a huge threat to what is the biggest asset for most households more most people own more real estate than they do stocks only the richest people have a li amount of stock the the biggest threat to your net worth but also the greatest buy opportunity just a few years from now if if you’ll be patient and if you’ll sell any unnecessary re real estate let’s say let’s say you have a nice home you’re living in and you got a vacation home and maybe you’re you’re considering retiring in that vacational okay uh okay it’d be best if you could sell the most valuable house and the one with the most equity in it now and raises much cash so then you can have the most to buy real estate at the at the buy opportunity of a lifetime years from now so and then the other good thing about real estate just before you know you ask more questions is it real estate does take longer than bottom so so there’s going to be a longer opportune buying opportunity here last time it was like 2009 to 2012 where you could have still bought them near or near the bottom so I think this one will be you’ll be able to start buying houses maybe in 2006 at great bargains and that may extend out to 2008 or longer so this is so so people should really be looking at real estate vacation uh investment um main homes everything retirement and say what do I really want and then be waiting to pounce knowing this is going to happen and and build up all the capital uh you can now and and some people will come to me in my presentation say oh how hey I got this house with a big mortgage on it my second house doesn’t have much oh I should sell the one with the mortgage I’m like no keep the one with the mortgage the banks may have to write that down for you if it goes down enough you may get a freebie there sell the one with the most almost everybody gets that one wrong they think they should keep the one with the most equity and sell the one with the most debt no keep the one with the most debt because the bank you’re very likely to be able to if things get as bad as I say a 50% or more drop in real estate banks are going to have to renegotiate loans with people and you may get that high mortgage house written down so you sell the house create a big the the the house you own the most of get a big pile of cash and then maybe get your mortgage written down a few years from now with the government helping to subsidize Banks do that and I think they’ll have to do that and you just you just win across the board interesting will you uh I want to unpack a couple things that you said um because I really never uh thought about him the way that you mentioned it first is well first let me say that uh here in Maryland back in the GFC we were probably one of the states that was hit the hardest and the slowest to come back and people don’t really realize it they they’re they’re so shortsighted they only think about what’s happened since 2020 and you’re exactly right I have a client that I sold her house last year they paid 1.3 million for it in the peak of the market in 2006 and you know they couldn’t get out of the house in the plus until 2022 and I mean it took that long for the prices to come back and yeah and but the what I want to say here is you maybe think about something that um you know one of the look I’ve been saying since 2022 and I know timing’s off you’ve been saying the same thing but we agree that this housing bubble is not sustainable and I’ve been saying it since 2022 that we’re having a a crashes is about to happen but none of us could predict the government stimulus in the way that they’ve propped it up and kicked the can down the road and I want to dive into that a little bit but you said something very interesting that now we’re in the second largest asset bubble ever with housing but you mentioned back in the 20s even the Roaring 20s we didn’t have the real estate bubble that we had because of you know interest only mortgages five and sixe mortgages and yeah they needed 50% down to get those and you know but what you said people want to say this will never happen again because loans are tighter than they’ve ever been or what that’s not true yeah but it’s but what you just said is the truth back in the 20s look it’s still easier today historically easier today to buy a home than it was ever before well yeah that that’s been a big change since then um and and and people don’t appreciate that it was hard to get a mortgage back then you almost had to be in the upper crust just to buy a decent home back then and and and that’s not the case now and and and and and now real estate again because of government pushing real interest rates real interest rates lower and and and these zero rates which even now Powell said Rec you know we may never see these zero rates again you know I think they’re going to be low longterm but you’re right zero rates because they push them to low this is this is the number one thing to create a housing bubble and the reason why we had what I call a second artificial housing bubble to follow the natural one into 2006 that was the greatest boomman history which I alone started forecasting in the early mid 80s I said people this is not a recovery from the long 70s recession this is the greatest boom in history with the largest generation ever and we’re going to see a boom in 2007 that’s going to last longer and go higher in stocks and real estate and anybody think and people thought I was crazier back then than they think I am now when I’m bearish okay and people call me now a Perma bear this is one of the few times I’ve been bearish in my whole forecasting life but that you know that that’s what people do but but yes it’s just there’s never been a time where it was so easy to fin real estate and again for Chinese on S and the Chinese on such low income there compared to here imagine buying two or three small homes and you make $15,000 US dollar a year that’s what the ja typical Chinese person is and a lot of those people have a second or third home and S and one or two of those are out of two or three are sitting empty not even renting out so it’s just this is a once in history sort of event stocks since they were created in the late 7 and irons have always bubbled and burst and the rich have always driven them much more than anything else but almost every you know 60 70% of households buy real estate 60 70% of people don’t have anything significant in stocks and other financial asset but they buy real estate and so when the FED what they did particularly as you said it was it was covid that really blew the top off because Co hit and and and there’s been and I I calculated I’m the only guy talking about it since the 2009 down 20089 downturn when they really started stimulating $27 trillion do in stimulus 19 of it government deficits that go straight in the economy and the other nine million of it eight million of it went straight into the financial markets they buy bonds and push all fin that’s more money chasing all Financial assets and it always ends up in the best ones real estate and stocks it doesn’t sit in in government bonds which people buy so so they this this overreaction to co I I was saying what’s wrong with governments covid is a natural disaster it’s just like the influenza that happened 1918 to 20 it hit for two years everybody got it then it went away they out of the 27 trillion I’ve talked about in stimulus in the last 15 years 11 of it came in the two years after covid so it was this over reaction to co took inflation that right with my indicators longterm going down towards 1 to 2% never to be high again and shot it up to %. and then that forced the FED to to raise interest rates 525 basis points and right now I’m looking at this and saying we haven’t really felt that much yet usually that’s a year and a half lag my theory is since we had such a giant magnitude of stimulus especially after covid and such a giant tightening that it may be taking more like two years for these to filter in and and so we’re not going to know how much this tightening which already done they already went to 520 even if they started loosening in September which is the earliest anybody thinks and that’ll probably just be 50 B bases points not much out of the 525 this thing’s going to keep this tightening keeps hitting for a year and a half to two year after this so so so this is this is going to go down as a huge this is going to show why the Federal Reserve and central banks around the world including Mario B BR drogy and all the ECB people over in Europe shouldn’t be manipulating the economy what’s free market capitalism the markets are a bottomup system that work way better than top- down bureaucracies and dictatorships and everything else that’s been tried in history that was the greatest innovation in history democracy broad participation of people and free markets which really rewards Innovation people think democracy and and and capitalism or or brothers and sisters no they’re opposites One Rewards Innovation strongly the other one includes everybody even if you don’t contribute much and that that allows people to you know identify with the system and support it it’s the best con it’s the best marriage like male and female in history so so what we’re doing now since 2008 I mean democracy been weakening for a long time a lot way you know special interest and all
this stuff stuff and lobbying but but free market capitalism got attacked 100% by central banks starting in early 2009 and and I call that the greatest crime in history this is what has made us rich and and and now academic people do you know anybody in any Central Bank any head of any Central Bank in the world that’s ever had sex or run a business or looks like they ever had sex or actually run a business and and the answer is probably know these people are dictating economies playing with the money supply and it’s dangerous because of these giant lags and everybody saying oh the yeah they this the tightening didn’t matter that much we wait another six or 12 months we won’t know until early to mid 2025 how much it hits and I think by then even with a little easing it’s going to be worse than people think why the greatest debt bubble in history I can not compare this bubble period to the Roaring 20s or the 1820s and 30s which is the other great bubble period of the 1800s or the one from 18 Civil War into the 1870s which came the long depression over 20 years okay I can’t compare it to those because this bubble has been longer and bigger and again the first bubble was natural just 25 to 29 bubble inide it was natural the economy was so good good inflation was falling for natural reasons and people just get Giddy and they and and things end up in a bubble okay no this is the second bubble and and two bubbles which started in in 95 and and and are peing here looks like in 2024 this is the longest greatest and only double bubble period in all of modern history and all I can tell you since there’s no precedent for a bubble this big in This Global it’s not GNA end well no and everybody says a soft Landing there hasn’t been one bubble short even the tulet bubble it was two years up and one years down but the the landing was down 98 99% that was the first modern bubble in the steepest and fastest only driven by the rich only richest people were speculating in these tulip bulbs and stupid stuff driving up a $2 Tula bulb to a thousand bucks that’s kind of what kind of happened in reality that Bubble Burst 98% in one year so this can only end badly and it is and this is not a Us bubble it it’s a bubble in everything and the Japanese that hit them first and their real EST their stocks peaked in late 89 and only went to New highs 35 years later recently and that’s about to crash bigger than they’ve ever seen and their housing peaked in 91 and have never seen and will never see new highs again so real estate goes down longer and comes back slower because the real estate is is is demographic and it’s local stocks are Global I don’t care how bad we get hit in this crash even if the US is slower to come back particularly because of the real estate markets and stuff stocks are Global and they’ll come back with the world and the world will come back especially emerging markets and and in some of the places that have stronger demographics than us and of course Japan has continued to lose no matter what happens because Japan was the first developed country peak in their demographic Trends longterm and everybody else is following China is now the first and already is peaked in their demographic Trends emerging country and all emerging countries will follow but it’ll take decades for many I mean India won’t Peak until 20055 demographically in Southeast Asia 2045 so there’s there’s tons of growth in the merging world and and and and all of that but but for for all the developed countries us is plateauing between 2007 and 37 and and again I am saying that when Real Estate crashes this time more than last time only back to 2012 lows which doesn’t sound that much but it is 60% now for the average house 70 80% for the typical upscale house we will never see real estate prices to those highs in any of our lifetimes and probably not even our kids wow stocks in some places will I don’t think our stock market will will ever see these highs either I don’t think the Dow will ever see 40,000 in any of our lifetimes again and real estate definitely W yeah let’s dive into some of the reasons but first I want to talk about and you know you mentioned Japan doesn’t Japan have like a hundred-year mortgage or something crazy yeah yeah they go out to 40 to 60 and I think they do have some 100 y more and and that’s what people do to stretch it and all but again Japan people say Well when house prices go down no Japan uh will never ever be the same because unlike the unit we have the option we have high immigration and we have the option since we’re the most attractive country still in the world to up it if we really wanted to ask for it okay Japan has aging demographics and no immigration they’ve never allowed much immigration and their culture doesn’t want immigration I don’t blame them that they have a great culture but they are a dying Japan is the example to the rest of the developed world of how the entire developed world is plateauing or dying in only a few countries like Australia New Zealand and and Norway Sweden and Finland five small developed countries in the world have demographics that go higher in the future all the rest of them are flat to down forever as far as you can see this is a first in the world economists don’t understand this because they think it’s all politics all they study is politics and politics and politicians and what they’re doing and this bill and that I don’t study you know how much I I spend studying politic none I don’t care who gets elected president they don’t drive this ship they don’t make that many decisions and they take too long to impact even if they do doesn’t matter to me if Joe Biden’s reelected or Trump gets in okay maybe for certain bills or certain things but for the overall economy I don’t base any on that okay the baby boom generation caused the greatest boom in history when it failed governments overstimulated everywhere and now the millennial boom that when the US will Peak around 2037 has already been pre-bed you know it’s already been mostly played out with all the stimulus people have bought homes bigger than the