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Grant Cardone on what to expect from the housing market post-pandemic

The number of homes for sale hit an all-time low, according to Realtor.com's December housing report. Entrepreneur and Author Grant Cardone joins Yahoo Finance Live to discuss his thoughts on the outlook for housing in 2021.

Video Transcript

ZACK GUZMAN: The number of homes for sale in the US reached an all-time low in December, dipping below 700,000 for the first time as buyers uncharacteristically remained active during the holiday season. That according to a Realtor.com monthly housing-trends report. That coupled with the expectation that interest rates could begin climbing sooner rather than later, albeit still a few years out, makes real estate quite the interesting play these days. And for more on that, I want to bring on our next guest. That would be real-estate entrepreneur and author as well as star of Discovery's "Undercover Billionaire." Grant Cardone joins us now.

And, Grant, thanks for coming back on, man. Let's start with the update I was just talking about there in the Realtor.com report. Obviously a hot market right now, but prices are rising on slim inventory. So what's your outlook for real estate here in the new year?

GRANT CARDONE: Zack, the middle class are going to get priced out permanently. The great divide will get wider, and wealthy people are picking up the second and third homes like most people buy Skittles or the way we were buying toilet paper back in March.


AKIKO FUJITA: Well, that sounds pretty depressing, Grant.

GRANT CARDONE: The average-- the average person's not able to grab a house today. Like after the pandemic, the banks went to 20% down. Now they're going to do double and triple checks on how you did during COVID to see if your future employment is stable. It's going to get more and more difficult for people to buy a home. In the lowest interest-rate environment we've ever had, the middle class will not be able to take advantage of it. And literally this validates this concept I've been telling and push on for years, which is cash is trash, and the wealthy are turning their cash into real assets.

AKIKO FUJITA: Yeah, when you talk about that divide, certainly what we've seen with the broader economic recovery over the last several months. When you talk about the demand for homes right now, certainly low mortgage rates a big driver, but we've also been hearing a lot about these new tools that are in place. More and more people feeling comfortable without even visiting a home or actually seeing it and buying that online. Can you speak a little bit to that and how significant a driver that has been in pushing prices even higher?

GRANT CARDONE: Yeah, so number one, I think that people are-- their trust for cash is so low now, probably, in my lifetime, at epic low levels. Like, I don't want cash. We have printed 21% of all the US dollars in existence today on planet Earth were printed in 2020. Wealthy, intelligent, financially intelligent people know they do not want something that is being destroyed, but they want something real.

When you add to that technology where I don't have to visit, I don't have to look-- I can trust the 3D. I can trust the walk through. Particularly with experienced real-estate investors like myself-- you know, I don't-- I buy $150 million pieces of real estate that has apartments in it. I'm going to look at 2 of the 400 apartments and do the due diligence on the rest later. So sophisticated, intelligent, second-, third-, fourth-time buyers know they don't have to go visit that house. Kitchens are kitchens. Living rooms are living rooms. They're buying locations. They're buying great markets. There's this massive [INAUDIBLE] going on, and technology is assisting the wealthy in turning garbage fiat cash into real assets that will be worth more in the future and benefit from inflation.

ZACK GUZMAN: Yeah, and I'm glad you mentioned inflation too, though, because we're talking about interest rates being low, and obviously we've been talking about the expectations that they'll rise eventually. Goldman Sachs moving their forecasts up higher. But still, we're talking about 2024 up from 2025.

So there's still quite a long time here to go in this real-estate boom we're discussing here. I know you have a lot of properties around the country here. But when you look into maybe room to run in some of the hottest metros, what are you seeing out there? Because it seems like Austin, Texas, still seems to be one of those areas a lot of people are looking at-- New Orleans. What would you say about 2021 and the year to come?

GRANT CARDONE: You go back to last couple of times-- go back to the last couple of times-- Zack, I'm sorry I cut you off there, but go back to the last couple of times I've been on this show. I was telling you the markets-- Arizona, Utah, all the Southeast. You could literally put a big smiley face on the United States of America. If it's in the smiley face, you could go buy it blind and you're going to be fine.

The migration that is happening from the West Coast and from the Northeast is-- it's not a temporary thing. This is going to happen. The Northeast, the Middle West of America, and the West Coast, those property values will come down.

By the way, I'll make a prediction here. Rates are going to pop a little bit. They'll fall apart again within the next three to six months. They will fall apart, possibly reach new lows again because once the wealthy are done buying assets and accumulating their Skittles, what they will do is the middle class will not be able to drive the housing thing that's going on right now.

AKIKO FUJITA: But if we're talking about the lack of availability of housing in general, I mean, how much of those gains you talked about in these markets actually come at the expense of these other cities? We've been pointing to, of course, New York City one, but I can tell you is here in California, you look at the property prices in LA. There has not been a slowdown. I mean, what's going to be the driver if you expect that pullback moving forward if people from New York City, for example, are moving in here or San Francisco are moving here, even if there is still an exit from a place like California to Texas?

GRANT CARDONE: Yeah, so you have compression, right? You have limited availability of product. But LA-- you know, there will be the outlier cities that will not benefit that will get destroyed. You're going to have compression to where jobs are-- Tampa, Miami-- we've got tech and Goldman Sachs coming into Miami like we've never seen before and only wished for. Orlando-- you mentioned New Orleans, Houston, Texas, Austin, San Antonio. Like, this is coming from someplace because they didn't just have a bunch of babies this year.

So I understand LA is a beneficiary right now just because it's such a highly populated market, and you probably have people slipping down from Silicon Valley to LA saying, hey, it's cheaper here. But again, the average home in America is $295,000. That's probably $500,000 in LA. I need $60,000 to $100,000 in cash for a down payment today. There are no 5% loans today after COVID. I need $60,000 down at minimum. I need a great job. I need good credit. Otherwise I'm not going to take advantage of the house or the mortgage, and this is going to drive America into the renters market.

ZACK GUZMAN: Yeah, that's a good point. And when we talk about the renters market, if more people are to be priced out, one of the trends that we saw play out in 2020 was maybe the shift away from cities. What are your expectations around that as maybe we move past this pandemic? Are you expecting more people to come back into cities? How long is it going to take?

GRANT CARDONE: Look, I don't know that. I mean, New York City is not going away. People will go back there, but it has to be affordable, right? So when you don't have credibility in the market, the rents are going to pull down. When the rents pull down, the values in the property pull down.

But Goldman Sachs is not going to move out or these big companies are not going to move from Silicon Valley into Austin and then suddenly move back. So you probably have a problem in New York that's probably 12 years and a couple administrations away from fixing itself, and you have the markets that are going to benefit, particularly in the apartment market. This multifamily market will be-- the boom that we had in housing in the '60s, we will see in apartments for the next 10 to 15 or 20 years.

AKIKO FUJITA: Grant Cardone, it's good to talk to you. And, of course, we should remind our viewers, season two of "Undercover Billionaire" already premiered January 6. A lot of people certainly watching that too. Grant, it's good to talk to you today.

GRANT CARDONE: Thank you so much.