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US Housing Inventory Crisis: Its Impact on Home Prices
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- Опубликовано: 17 авг 2024
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In this video, we look at the recent hanges in home inventory and its impact on US home prices
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DISCLAIMER: This video does not provide investment or economic advice and is not professional advice (legal, accounting, tax). The owner of this content is not an investment advisor. Any securities, trading, or market discussion is incidental and solely for entertainment. Nothing herein shall constitute a recommendation, investment advice, or an opinion on suitability. The information in this video is provided as of its initial release date. The owner of this video expressly disclaims all representations or warranties of accuracy. The owner of this video claims all intellectual property rights, including copyrights, of and related to this video.
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Consider reallocating from real estate to other reliable investments like stock, crypto or precious metals . Severe recessions offer market buying opportunities with caution, as volatility can yield short-term trading prospects. Not financial advice, but it may be wise to invest, as cash isn't ideal in this period.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Melissa Terri Swayne for the last five years or so, and her returns have been pretty much amazing.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Melissa.
I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
it’s a personal decision, but according to Forbes, housing activities will remain stagnant for the most part of the year, so maybe hold off a little.
well you could put a downpayment on a home and as well diversify as much as you can into Ai and pharm. stocks like Pfizer and JnJ.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
this is all new to me, where do I find a fiduciary, can you recommend any?
“Carol Vivian Constable” is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quiet mediocre neighbourhoods. Then you’ve got Better, average sized homes in nicer neighbourhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Personally, I can connect to that. When I began working with a fiduciary financial counsellor, my advantages were certain. I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2021 this time with guidance, Long story short, its been 2years now and I’ve gained over a million dollars following guidance from my investment adviser.
This is huge! think you can point me towards the direction of your advisor? been looking at advisory management myself.. seeking ways to invest and make more money with the uncertainty in the economy.
‘’Aileen Gertrude Tippy’’ is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Prices are too high. With rates not subsidised in ’24 and mortgage still high , currently seeking alternatives to maximize savings without an RV move or taking a loan. I’m seriously contemplating the latter.
Affording our mortgage is tough as well. I have suggested cashing in, renting or relocating, and investing the rest in the stock market.
If you can afford to relocate, you should manage the mortgage.
if you are looking to invest in the stock market, I suggest you Consider a fiduciary with mortgage-backed securities knowledge for guidance. Prices today may look like dips tomorrow.
You're right, I and a few Neighbors in Bel Air Area work with an advisor who prefers we DCA across other prospective sectors. Instead of a lump sum purchase, Following this, my portfolio grew 40% in the last quarter.
Who is this person guiding you and how can i reach he/she?
I think you have the most straight-forward, well presented approach to market analysis that I have ever seen on RUclips. Thank you.
We're working hard to make these videos as valuable as possible. Glad you like them!
I totally agree with Genesis_JG96, been viewing your presentations/podcasts on RUclips for I think 2yrs maybe a little more, however your solid research, and analysis of the data sources you acquire to present in chart-form for presentation is superb...along with how you explain the charts and conclusions to be drawn are excellent! I consider you on par with a good economics professor...or those who know this subject. Thanks so much for the hard work you share on RUclips!!!
It really is fantastically done
Better than Game of Trades? Or Joe @ Heresy Financial? Maybe so 👍
I agree.
it's a real struggle. With the rising housing prices and stagnant wages, it's becoming increasingly difficult for many to afford homes, let alone save for retirement
It's a vicious cycle. If people can't afford homes, they might delay retirement savings, but if they focus solely on saving for this. Economic instability, inflation, and market fluctuations can further complicate matters and add to people's financial worries
Americans are facing a tough time with their finances, especially concerning housing affordability and retirement savings
I'm getting worried about the rising housing prices. It seems like it's becoming harder to afford a home these days
Inflation can erode the purchasing power of your money over time, especially in today's global economy
Exactly. With prices seemingly going up on everything, I'm not sure how to protect my finances
just sold a property in Portland and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.
Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge
@@EdmundEthan093 Very true, Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately 950k that same year, In reality, all I was doing was getting professional advice
@@roxdietren How can I participate in this? I sincerely aspire to establish a secure financial future and I am eager to participate. Who is the driving force behind your success
@@AlfredStephen127 I'd say a little due diligence " claire robert's durand" truly exceptional
@@roxdietren Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks
If anything, it's likely to get worse. Affordable housing will soon become unaffordable. Therefore, I advise taking action now because today's prices will seem like bargains tomorrow. Until the Fed takes more decisive action, I expect we will see hysteria due to rampant inflation. You can't just halfway rip the band-aid off.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes. If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Do you mind sharing info on the adviser who assisted you?
Melissa Elise Robinson is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Wow, her track record looks really good from what I found online. i just searched her name and messaged her and I also scheduled a call with her
Everything you give us is gold. Thanks for collecting data and explaining everything in a way us common folk can better grasp
This is our mission!
First-time home ownership is OVER. "Starter homes" are over 400k.. Average income is 60k.
Wonder why Millenials and Gen Z are doom spending? Not getting married? Not starting families? Why is civil unrest growing while the wealth gap is larger than it ever has been in history?
This economy priced us out and left us behind before we arrived. This doesn't end well for society at any socioeconomic level..
I also think a big problem we will see for first time buyers is if/when home prices soften you will see banks tighten lending standards... 3% down isn't that risky for the bank when home prices are appreciating 5 or even 10% YoY.... there will always be equity. But what if home prices go down by 2%... now that 3% downpayment isn't enough protection for the bank. So nearly all first time home buyers will be screwed.. after years of high rents they do not have money for a downpayment... most don't have 5% let alone 20%.
The graphs at 2:05 are shocking. People who already have a home are not selling them, but then the next graph says new inventory is super high, so nobody is buying either.
This kind of goes along with something George Gammon said - people with a locked in low rate see the rate itself as the asset. People don't want to sell their home and move because it would mean getting a much higher rate on the house they buy.
This would mean that pretty much all selling of used homes is being done by investors; people who have the freedom of selling a home without needing to buy a replacement home.
Exactly, nobody who has a rate in the 2-4% range is going to sell unless they absolutely have to. And if they do sell, the smart move might actually be to rent in the meantime. So they're not necessarily buying even after they sell.
because most new inventory are “luxury town homes” or mcmansions; how about we build single family homes 1500-2200 sq ft; no upgrades, carpet throughout…no they don’t build that
@@bmdo6870 There doesn't seem to be a market for 1950 style homes that are small but have a big back yard. People don't go outside anymore, kids don't play outside. The people with money want a big house, and the people who don't have money want a townhouse. Going from townhouse to small single family house dramatically increases the land cost because the footprint is twice as large, but it's only marginally nicer, so there isn't demand for that.
@@bmdo6870They dont build anymore the typical 1800sq, 3 bedroom, 2 bathroom single family house because the draconian zoning regulations make it absolutely impossible for developpers to turn a profit. Only at the $700k+ price range they can soak up the sky high tax and regulatory fees to make it profitable. Do you want to see more affordable housing being built? Ease down on the regulation and taxes to incentivize builders!
@@shawn576I think buyers exist for it, but it'd builders would make it so expensive because every house they dont build is money they dont make, so they'll charge more for the land that they didnt build on.
Congratulations Eric on your 100k subscribers. You’ve earned it. 🎉
Well done!! Been in commercial real estate for 35 years and this is one of the most concise and effective housing presentations I've ever seen
We love to hear that!
I think it's safe to say that Builders have learned a trick or two since 2008. There's plenty of "boots on the ground" evidence suggesting that builders are leavng very small portions of some homes unfinished, so as to keep those units in the "under construction/not yet for sale" category indefinitely. The purpose of that trick being to not oversaturate their market, of course. So, I'm personally very skeptical about the 20% figure being reported.
They can only play that game for so long... 1/3 completed homes gets expensive when you start to do that en masse... the foundation contractor, site work company and framers aren't going to wait 6 months to get paid.
@@jonathantaylor6926 I agree, but the big boys made tons of profit recently, so I think they can float their subs for a much longer time this time around.
Regional differences are also extreme. For instance, RE in NH there have been very few or at best, modest price reductions and there are relatively few new homes under construction.
A lot of clear animated data in this video, well done!
Thanks for the video. Regarding the new build inventories, you do need to take that with a grain of salt as many builders have or are transitioning to "build-to-order" where they sell the home prior to the construction start. This is a sale and does take a home off the market but the home was not in the traditional "ready to occupy" inventory state. One question for you, I believe there is a accepted standard % of home builds that are "replacements" for things like homes destroyed due to natural disasters. Does your statistics include or exclude these? Curious to know as this might actually make the inventories lower. I also saw a report from Melody Wright, where she was looking into builder inventories that were not listed in the sales inventories so again the this might increase the builders inventories higher. I'm also seeing the builders itemizing the total home prices (i.e. separating things like lots, pools, etc) so that they can reduce costs but keep the appearance of the home price higher/stable. Lets all hope the interest rates stay high, well historically normal around 5%, so that the affordability comes back into line. So frustrating to hear loud voices scream for lower interest rates. That's like taking an aspirin for a headache caused by a brain tumor.
This is also based on a survey that builders are not required to fill out, honestly, if at all. Remember back in '07 builders were giving alot of incentives and mortgage rate buy downs and ARMs before it went bust. Same is happening today. Also MBS have just been renamed to CLOs 😂
Correctomundo. You can bet every "old" trick is being used, along with a few new ones. No one went to jail.
Ok can you track these dividing houses into 3 groups. Under 100k, 100k-500k and 500k-up. If you did that you would see the 3 markets. They are as seperate and distinct with the pools of these homes and the buyers forces over time have made them into nearly unrelated markets. Low: First time low income families, house flippers, small unit renters, downsized former middle class poor old and elderly ect, Middle: Blue\White Collars and Trades. in small market cities are in the "High class" and the lower are in this group in major cities as the rest are renters. High: major Market Toronto, NY LA London ect.
Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite a while now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
My partner’s been considering going the same route, could you share more info please on the advisor that guides you.
Iynne Marie Stella is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
She appears to be a true authority in her profession with over two decades of experience. I looked her up on the internet and skimmed through her site, very professional. already sent her an inquiry hoping for a response soon.
I lost over $70k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Natalie Strayer....
I'm surprised that you just mentioned Natalie Strayer here also Didn’t know she has been good to so many people too this is wonderful, i'm in my fifth trade with her and it has been super.
The very first time we tried, we invested $2000 and after a week, we received $9500. That really helped us a lot to pay up our bills.
Natalie Strayer has really set the standard for others to follow, we love her here in Canada 🇨🇦 as she has been really helpful and changed lots of life's
I'm new at this, please how can I reach her?
After I raised up to 125k trading with her I bought a new House and a car here in the states also paid for my son's surgery
Glory to God shalom.
I was once a statistics major in college, I follow all of the data, but I still am giving up hope because it seems no matter what the data is, prices on everything just keep going up. We live in such a broken system
I sold my home 2020 and I've been dollar cost averaging all year long and I've almost maxed out my reserve, so I'm basically waiting for stocks to fully recover so I can break even, but on the other hand, I've been coming by articles on people who are puIIing off recurring proflts of over $150K wlthln just weeks of trades, what am i doing wrong?
I sold a couple of homes in the Tampa area for pretty good cash and I'm thinking to just leave it in stocks while waiting for a house crash to happen and as well avoid inflation, but is this really a good time to buy stocks? I hear it's a madhouse right now and I still hear folks are raking in huge 6figure profits by the weeks and I'd love to know how.
look at it this way, while some folks are waiting to make minimal profits when stocks recover, some others folks already know where to look and what to do to make hefty gains in these times, so yea, it all boils down to knowledge to risk mltigation.
True, I was in dilemma myself due to this chaotic mrkt, wasn't sure if to sell or just wait a little longer, 75% of my portfolo was tanking and in the red and the economy isn’t looking promising, but I began gaiinng clarity and have more confidence in my invt through an lnvt-advlser, I know most DlY-lnvestor like me would say advlsors aren't essential, but come to think of it, they're better trained and equipped at this and if I have to give just a little amt in fees for me to be able to net $650K in less than 8months like I did this year, I truly don't mind.
I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is the professional that guides you?
Her name is Annette Christine Conte can't divulge much. Most likely, the internet should have her basic info, you can research if you like
When rates drop we will get volume, then we will know the real situation.
It doesn't matter. Supply significantly under runs demand. It's not like 2008 from a fundamental standpoint. Construction never rebounded after 08. Housing is the new Mercedes. It's a luxury product
People are still broke so it wouldn’t matter much
You can get 5.5 on new build at thats not helping them sell.
@@jonathantaylor6926 those companies are taking from their bottom line and prepaying the mortgage to make the effective rate 5.5% without cutting prices. No one beats the 10 year on a 30 year mortgage
@@jonathantaylor6926 I'm assuming the 5.49% rate you're referring to is after a buydown with builder credit, which can also be used on closing costs instead. If a buyer was just short of a 20% down payment and was planning to rate hack, they could opt to put builder credit toward closing costs to help get them there. Haven't run the numbers on this strategy yet, but this is what I'm leaning towards for my 1st home.
Fantastic video. Love the graphs, charts, and simple explanation of the situation.
One thing missing is that new homes are more likely to be in the exurbs, further from workplaces, stores, etc. existing homes are either in first layer suburbs or in the city.
It's not comparing apples to apples even with equal square feet
Many people say that home values will spike once rates go down. Do you see this happening?
The quality of news home is frighteningly poor in my market. A looser supply of new homes may help this problem.
Great video! For 2024, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You are right! I’ve diversified my $450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
Do you mind sharing info on the adviser who assisted you?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I am grateful for your assistance. My finances have been in disarray, and I have experienced multiple losses in my 401k, IRA, and mutual funds. I hope that Melissa can provide me with the guidance needed to rectify the situation before it reaches a critical point.
Land where I live has shot up so much that builders will only build more expensive houses. There are some duplexes available for $300k and a new subdivision starting at 400k (small ranches), but most push 600-900k 3000 sq ft homes that I have no clue who is buying.
Zoning regulation fees have become so expensive that developpers cannot turn a profit in the 1800sq, $300k price range. That is why they only build in the 3000sq, $600k+ range anymore. We gotta deregularize the industry to incentivize new affordable developments.
It is turning. I bought one of those 600k+ homes in a large community and was one of the last few homes sold.
The next phase of development they fired the current builder and brought on DR Horton to build ranch homes on smaller lots.
I guess they learned from our homes that there arent a lot of buyers for 4,000 sq ft homes going forward.
This has been a pretty incredible video, thank you for the clarity, straight to the point, sourced information.
Thank you for a good explanation unlike the many YTers who've been prophesizing a huge crash for years. Wish there was meaningful new construction in my area, my area continues struggling in 1.5-2.5 months supply range. Last time it was a balanced market here was 2017, last time a buyers market 2011 and only briefly--before that not since the early 90's. Really makes ever owning feel out of reach.
Will you please include multifamily data as well? I think that affects supply and demand too. If there is a huge amount of new multifamily units coming for rent then people who wanted to buy may just rent an apartment
Your data is always great and on point, the problem is that we can't understand the effect on people's behavior. As soon as people start seeing declines to prices they will start to buy and then the second wave will begin. Right now the price declines are hidden with the incentives builders are providing, but when the builders have to actually reduce the prices we will see a different reaction to the real estate market.
Housing inventory confuses people.. you could build 10M new houses and "inventory" won't move in inch if you don't list them for sale.. Its not a matter of a home existing, but rather being on the MLS... so inventory has the ability to spike aggressively.. You don't need to buy a lot, clear trees, hiring masons and framers and plumbers and electricians to add supply.... all you need to do is make a single phone call to a realtor and you just added a house to the "inventory".... and if you are a panicked investor worried about a RE crash maybe you add two homes or 10 or even 1,000 if you are AHFR or some other massive firm that owns 50,000 SFH's... Investors will drop RE like a bad habit if RE enters a clear bear market, especially of bonds remain an attractive alternative investment. And unlike a normal home owner that sells but then adds corresponding demand when they buy a different house, investors could list a million homes for sale, and buy zero.... they can add massive supply but no demand and thats a huge liability for RE if that momentum ever picks up. And investor selling spiking supply and lowering prices will become a negative feedback loop as other investors look to get out and protect equity.
My bet is that a similar type Evergrande situation will happen in the US, which will be the spark that sets off that type of downward price spiral. Lots of small banks have given out risky loans to businesses to invest in real estate. We already saw two bank failures (Silicone Valley Bank) a year ago, and Powel said to expect more in the future.
Whatever happens, businesses that have invested in real estate are a prime candidate to crash the market. If a bank fails which leads to those business failing, or those businesses fail due to bad capital management, that's all it would take to drive the entire market down due to multiple factors. A risky market with failing businesses will slow demand, and failing RE investment firms will throw tens or hundreds of thousands of homes onto the market that need quickly liquidated, which will drive prices down quickly.
This can also happen from the bottom up, hitting the small local investor first. Consider that AirBnB has about as many open rooms as the US has missing homes. Rooms aren't directly comparable to homes, but a crash that affects short term rental properties that are heavily mortgaged will also cause huge inventory surplus.
Bottom line, I agree. There's lots of inventory out there, if people and businesses wake up one day, change their mind, and decide to start selling. There's record low home occupancy right now, and that's an unsustainable situation. Investors got too greedy, and now no one can afford any home. When one large investor cracks and inventory spikes, the entire market turns on a dime.
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
@@LucasBenjamin-hv7sk Impressive can you share more info?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with Annette Marie Holt for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
But if you take take cost of living / house price and basic buying power in 1990, that 10% interest rate wasnt so bad compare to now. 1990, 60k house income 200k house. 2024 100k house income 900k house. You see the difference?
would you ever consider this same analysis for specific markets? perhaps the 10-20 largest MSAs, or maybe just Tampa ;)
So long story short, if I am planning to house shop this fall, is that a bad time before things get better or a good time before things get much worse 🙃
any idea what proportion of housing has been built solely to accommodate tourists and thus isn't included in the supply ?
So in a nutshell, established neighborhoods far from the nearest new construction should be insulated from price drops.
Interesting to consider the effect on wealth inequality. Take Denver for instance. The wealthiest neighborhoods are typically very established and far from the new construction activity in the exurbs.
@@Travis12861 well I guess this just underscores the "real estate is local" theme!
If you started to do home market analytics, which I love. Could you please look directly into New York housing situation and commerical real estate? From my experience new families have no options but to rent globally. Companies are picking up their tails and I don't see it going forward. As of now, there is a balance of liability to over-leveraged commercial real estate market. What I don't understand is how unrealised losses are not becoming real as the time go by. It is stagnant since 2022, yet nobody is picking up the bill. How is that possible?
Doesn't make sense to combine new and existing homes. These are two different markets and people have there sights set on one or the other.
New hones are being built smaller and lower quality than existing homes. Also those seeking space and privacy are likely looking for existing homes.
Investors are trading homes like Pokemon cards and the population at large is suffering renting whatever they demand. Then since the only accepted way to value most single family homes is buy "comps" the prices get ratcheted ever higher and higher. It would be hilarious and comical if it didn't have such awful consequences.
Great information and I'd love to see a follow-up to it within the next 6 months to see where things are going. Even more so if rate cuts begin in that time.
I’m guessing that 61% figure for portion of new home sales with incentives is almost entirely regional.
Probably some markets where almost every one needs an “incentive” (price reduction that doesn’t reduce official sale price) while in other markets almost no new homes are experiencing this
If you are trying to sell a house. You already missed the top. Better sell it as fast as you can !!
amazing video. Told me everything i needed to know
Phenomenal channel. keep up the good work.
US housing demand (**at current prices and interest rates**) crisis, and its coming impact on prices: 2008 2.0
Supply is right, but demand is even tighter. This of just a little supply comes on the market while demand is still ultra tight, what happens to prices?
It's immaterial honestly. We're something like 3 million homes under built and increasing. Any new listings will just get snapped up. Is there an upper limit to house pricing? You betcha. Were at max expenditure...but there's still millions of people that are waiting for an opportunity to buy. When you think of housing like a luxury product, the pricing starts to make more sense. It's going to stay high for a very long time.
2008 cannot be replicated, the restrictions and over corrections implemented after the housing market crash make that situation impossible.
This makes 2008 look like a lemonade stand. Both bubble are driven by out of control speculation. This time the speculation is significantly higher as are the fraudulent values. And no one is taking about the shady, private money, balloon loans and appraisal fraud that’s happening right now.
The shortage is a completely lie
@@Thecelestial1it won’t be a housing crash, itll be commercial real estate lead crash.
@@Thecelestial1 The amount of leverage and speculative investment poured into RE is equal to or worse this time around. Just because the front door of the house got closed (barely) doesn't mean the rats didn't burrow themselves a new entry. It's called "shadow lending".
Great summary and presentation, once again!
Little help - census shows 678,000 new SFH under construction as of May 2024, yet the total inventory in the charts shows 479,725. Must be an issue with how census creates unit under construction?
This is basically telling me that home depot sales and plumber, electrician, and carpenter wages are about to go through the roof. Those people may not be forced to sell their home because of low rates, but they will be forced to start fixing them up once they start falling apart.
I'd bet against that trend. The majority of the trade job market is powered by new construction. You need far fewer electricians or carpenters to fix an issue than you need to build a home from scratch. Plus, those old homes needed fixed anyways. Whoever moves into the old home would have needed to repair their home, so that shouldn't have an upwards effect on the market. A construction crash will drive wages down, for better or worse.
top quality video. Uninmprovable, i would say
This approach seems short sighted. The number of homes which are unoccupied and not for sale is near a record high. Prices are rising so rapidly that owners have no incentive to sell if they can keep gaining equity by waiting. In fact investors are buying homes and not even renting them because they can still sell them for a profit in the future. This situation will collapse once there is even a minor month to month price drop. At this point those timing the market will all sell at once leading to a crash like just happened in China.
Then of coarse there is the boomers. A generation notorious for hoarding multiple vacation homes not available for rent. Eventually these homes will be inherited by generation y and gen z who would simply cash out by selling them. That is going to cause a huge excess of inventory.
that scenario wont happen for another 10-15 years unfortunately
@@fabioj- The bubble really should have popped already except that China crashed first. The Chinese investors all pulled out and started buying in the US instead. That is a problem because the bubble in China was so big that entire cities were built full of unoccupied skyscrapers as an investment tool and it didn't matter that nobody could afford to rent them. That was never the point. Yes it could continue another 10 years until the boomers die off, but if that Is how it plays out we are screwed because popping a bubble that big virtually destroy the entire economy.
Also if we see a deep recession I bet 75% of AirBnB's hit the market.. that system has never been tested during a bear market but hotel stocks always get absolutely crushed during recession.. leisure is literally one of the worst segments of the economy in recession- its the fist thing cut out of a persons budget.
Amazing job on this video
good stuff as always Eric
I like your analysis, however, supply and interest rates aren't the only factors contributing to the shortage.
You didn't discuss the average sales prices or price range across existing and new homes. There is a massive differential in home prices and I have yet to see new construction building "starter" homes that's affordable to most first-time home buyers. It was also unclear if that all new construction included apartments, condos, and special-case construction (i.e. retirement/long-term care communities).
I like how you presented the information, but focusing solely on mortgage rates and stock available, while not even acknowledging other variables that are contributing, could mislead people at worse, and at least, presents an oversimplified view of the market.
If new permits are declining, that means the market will further tighten, resulting in less supply.
So what. A decline in prices by 30% still doesn’t reset the overall increase of 80% over the last few years. Wake me up when prices decline 60-70%.
2024 new builds are shit tho
Feels like as soon as the housing supply situation begins to normalize they’ll cut rates and sidelined buyers will rush in
Sidelined buyers have no shot at a reasonable home price ever again unfortunately.
I disagree. The FED ultimately cares about one thing- the dollar. So long as we have hot inflation the FED can not cut even if the economy is deteriorating. Remember the FED doesn't just "cut rates" by decree.. The FED only has direct control over the "Over Night Rate"... the real way the FED lowers rates is through "Quantitative Easing"... so the FED for example does't just get to say "The 10 year UST is now going to pay 3%".... nope. In order for the FED to manipulate bond rates lower they have to BUY THE DEBT WITH PRINTED MONEY.... but that becomes a big problem because printing money to create demand for bonds and lower yields is practically the definition of "inflation". They absolutely cant QE into hot inflation or they will have way hotter inflation after a few quarters.
@jonathantaylor6926 that's cool, unless the government steps in to push investors out of the housing market, prices will never be reasonable again. And they won't because they are investors.
@@donaldbiden9492 Or the 10 year pays 6% (its historical average) and most RE investors become bond investors overnight. Most RE investors don't even want to own RE.. it's a massive pain in the ass managing rentals.. with bonds you literally do nothing and you incur zero risk.
@@donaldbiden9492 “Push”? Explain please.
its* impact
Thanks!
Thank you for your support. We greatly appreciate it!
@@EPBResearch always appreciate your concise presentation of precise analysis backed by hard data!
Statistics is so useless. The problem with housing is BlackRock, Vanguard, UBS and Fidelity overpaid for residential houses for over a decade after the housing bubble. They are controlling the release of their massive inventories to maintain inflated prices in an attempt to minimize losses. These firms own 80% of everything. That's the problem. They can manipulate anything and residential housing is the easiest one to control because you need a place to live. This bubble, this time, will be everything, not just housing.
Inventory is climbing in every state.
can you collab with ClearValue Tax please !!!!!!!!!!!
Ok, so then why has my house sat with only 1 person viewing and absolutely no other interest? Existing home sales dead unless it's "perfect."
We need to levy a progressive tax onto corporations that own hundreds of thousands of single family homes for the purpose of renting them out. Squeeze them out of the market and then maybe one day I'll be able to own a home
There’s no homes for sale of course sales are low
I think the video is explaining the WHY behind your statement there 😂
New homes are touch and go
The its in your title should not have an apostrophe. It’s means “it is”. “Belonging to it” is spelled “its”.
If things have an equil and opposite reaction....
Good stuff
Hi eric
Eric, while i generally agree with you on most things, the use of Months Supply is a flawed statistic. It makes the assumption that Supply and Demand are at equilibrium. Current estimated place the US housing market as under built by 4 million units, meaning demand is much steonger than months supply would indicate. Additionally we have to account for the drastic change in interest rates that have slowed homes from coming onto the market. No one is going to downgrade their home to pay 30% more than their current home.
I feel its important to put that caveat in the data because it implies that there is an oversupply issue that cant exist.
You're demonstrating a fundamental misunderstanding of the discussion. Months supply is literally a measurement of supply and demand. Claiming that it assumes a equilibrium is a meaningless statement, because that would mean there is a 0 months supply. Months supply doesn't get measured in the negative, it's literally saying how long it would take for an event to occur.
"Crisis", your title says there is an inventory crisis, but it would seem right now we are actually heading towards normal. In your video, you don't say anything that would suggest things will overshoot to the other extreme. I love your style of video and the presentation of data, but your video title is a bit misleading this time.
As for the data itself, the pandemic and historically low interest rates allowed millions to refinance at a level that made selling their home irrational. This clearly has lead to a low supply of existing homes forcing people who need/want a home to buy new construction. Probably the singular more important thing going forward will be Fed rates as they influence leading rates. As lending rates come down it will be more financially feasible for people to sell existing homes financed at ultra-low rates. Also, over time new construction will become existing homes, financed at higher rates, meaning those existing homeowners would feel rate-locked into their homes and free to move about helping normalize the housing market as a whole.
Boom goes the dynamite!
Just buy NVDA calls and you can afford any house in no time 🚀🔥
As expected, 2ndary markets die first.
This does not bode well for young people :(
Question is how much of this is actually new supply and not just fixed up homes or homes from deceased elderly.
🔥
The true inventory numbers mean you have to believe the government
Inventory crisis because people could move in and not pay anything for 2 years
I’ve followed and participated in the SFR market, as a builder, buyer and seller, and owner for SIX (6) decades. While supply lags demand, these factors have little to do with the “affordability crisis” for homes. As a CPA and financial analyst for nearly five plus decades, the problem of affordability is three fold. 1) the USD, as global reserve currency, has lost more value over this period due to profligate Federal spending by Democrat administrations, 2) tax rules for exemption of so-called “gain” on the sale of SFR has NOT been adjusted to account for inflation (this factor is HUGE), and 3) wages have not kept pace with the expectations of younger families due to loss of value in the US currency. The Democrats are not the party of the common person, but rather multi-millionaire elites.
25% of existing homes are investor owned. When home ownership from an investment viewpoint becomes unprofitable you will see inventory spike.
For every dollar that Trump got for workers ……
Trumps inflation ate up all but .5cents
Correction complete
5 waves up 💰
We bought this house 30+ years ago. 🤷♂️
The data shows you're dead wrong. There is no crisis. No decline for the country as a whole. Because the number of people looking to 'buy the dip' in real estate is EPIC. Kinda similar to 2000. Stocks collapse. Funds go into hard assets. U.S. debt is out of control, so Treasuries are no longer "safe." So even more money flowing into hard assets. The people who understand the value of hard assets won't be selling. So supply vs demand means prices can only go UP over the mid & long terms.
Can you compare this to population please. Especially with the increased migration due to refugees.
This is what greed and job exporting look like in DEI USA.
Yet prices keep going up😂
Wool socks to sleep = 20% better quality of life🟧
You may want to contact a physician, you might be having a stroke
Bot comment? Second nearly identical I've seen this week.