The Housing Market CRASH Is Coming (Don't Buy A Home Yet)
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- Опубликовано: 9 июн 2024
- In this video, we're going to talk about the inevitable housing market crash, and why it doesn't make sense to buy a house right now.
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I've done some extensive research and gathered a ton of statistics from various sources. I've placed a significant emphasis on insights from Redfin.
Now, here's a big takeaway right off the bat: Monthly mortgage costs, compared to the median household income, have hit unprecedented levels.
I'm talking about a scenario where you're looking at a 10% down payment and a 75% mortgage rate - these costs are skyrocketing, reaching heights we haven't seen since 2005.
But why is this happening? Well, one major factor is the scarcity of homes available in the market.
It's a situation where folks who secured those low mortgage rates are thinking twice about selling and buying new homes because of the substantial rate difference. This tight supply and growing demand are pushing prices up, following the good old rules of supply and demand economics.
Here's another fact: Monthly payments for homebuyers have shot up by a whopping 8.5% year-over-year.
Just to give you an example, in 2023, the median monthly mortgage payment has soared to an all-time high of $2,666. That's a jaw-dropping 77% increase compared to the costs in 2020, and it's mainly due to those higher mortgage rates.
Speaking of mortgage rates, they're currently on the rise, and it's not just affecting folks with less-than-stellar credit. Even those with excellent credit scores are seeing rates in the mid to high 7% range.
This rate hike is hitting monthly payments hard. To put things in perspective, let's compare a 2.49% fixed-rate mortgage from a few years ago to an 8.09% rate in 2023. The difference in monthly costs is substantial and can't be ignored.
Adding to the challenge, active listings in the housing market are down by a significant 15.3% year-over-year. This further tightens the supply constraint. But here's the kicker - demand has also decreased by 7% year-over-year, as shown by Redfin's homebuyer demand index.
Pending sales are even worse, with a significant drop of 13.3%, continuing a streak of double-digit declines over the past 15 months.
But wait, there's more! Despite these headwinds, the median asking price for homes has risen by 4.4% year-over-year. This raises questions about whether this trend is sustainable or not.
In conclusion, the housing market is throwing some major curveballs at us right now.
The primary thing keeping it together is low unemployment.
However, any uptick in unemployment could potentially trigger a recession. So, if you're in the market for a home, be prepared for potential corrections. It might not be the best time to buy, and it's crucial to consider factors like low rates combined with low prices, which historically lead to the best deals.
Remember, the future of the housing market is uncertain, and it's essential to make informed decisions based on your unique circumstances.
Thanks for tuning in, and if you found this video helpful, don't forget to check out Whiteboard Finance University. You can snag a 20% discount on membership using the code "HOUSING20."
Have a fantastic day!
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Have you ever done a video on tax lien investing? I’m curious how this could impact that.
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The fact that there is already an excessive amount of demand awaiting its absorption, despite how everyone is frightened and calling the crash, is another reason why it is less likely to occur that way. 2008 saw no one, at least not the broad public, making this forecast, as I'll explain below. The ownership rate was noted to have peaked in 2004 in the other comment. Having previously peaked in the second quarter of 2020, we are currently at the median level. Between 2008 and 2012, it dropped by 3%, and by the second quarter of 2020, it had dropped from 68 to 65.
You're not doing anything wrong; the problem is that you don't have the knowledge needed to succeed in a challenging market. Only highly qualified professionals who had to experience the 2008 financial crisis could hope to earn a high salary in these challenging conditions.
Actually, I'm not sure if I'm allowed to mention this, but I'd recommend looking up " Margaret Johnson Arndt” because she was a big deal in 2020. She manages my portfolio and serves as both my coach and my manager.
I think a housing crash will happen because all those people who bought homes over asking price, although it was at a low interest rate, they are over their heads. They have no equity if the housing prices continue to go down, and if for whatever reason they cannot afford the house anymore and it goes into foreclosure because even if they try to sell, they will not make any money. I think this will happen to a lot of people especially with the massive layoff predicted for the future and the cost of living rising at a high speed.Read more
Forecasting the 2023 housing market proves to be a complex task due to the uncertainty surrounding the Federal Reserve's ability to curtail cost surges and borrowing rates without adversely affecting the demand for diverse assets, such as homes and automobiles.
Indeed, diversifying a $380,000 portfolio across various markets with guidance from an investment coach has proven fruitful. You've managed to generate a net profit of over $790,000 through high dividend yield stocks, ETFs, and bonds. That's an impressive achievement.
My partner is also thinking about taking a similar approach. Could you please provide more details about the advisor who assists you?
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Thank you for this. I'm gonna check her out and try to reach her. I hope she gets back to me before my portfolio is completely gone.
Have a few friends who work in the mortgage game and a few that a realtors.
It’s coming and they all know it. One of them mentioned that you can currently bid 10-20% lower than the asking price and some sellers are taking it.
Panic is starting to set it. Don’t think it will be as bad as the 08-12, but it’s gonna hurt a ton of people who paid half a million dollars for a 300k home.
🤞
They've been calling for a crash for years. A broken clock is right twice a day
And the only reason it hasn’t happened is because the fed had 0 rates and QE.. which resulted in nearly double digit inflation and no inventory. Lol
The crash should have happened in 2017/2018. The issue is the Fed keeps inventing new "economic vehicles" to keep the false market moving forward. Example - after 2008 the Fed started buying mortgage backed securities (MBS) which tanked mortgage rates. Around 2018 the Fed started buying corporate bonds, which kept things afloat. In 2020 the pandemic gave the Fed the ability to bail out banks, people don't know this because they got their stimi checks. Now, the Fed has emergency loans (BTFP) to banks which is coming to an end.
The Fed will find another way to keep this going, but they are running out of options. The only thing they can do is pray for a war...oh wait...isn't America going to start defending Israel? Funny how wars and pandemics pop up exactly when they're needed.
Although the general sentiment you've mentioned is on point, in this context there is more nuance. There are generally 2 camps 1: real estate prices will always go up we won't get a crash, 2: prices will crash. In this case of someone is calling for a crash, it's not a case of oh if you keep saying it, it will eventually happen because group 1 is saying that a crash will never happen. If prices do crash then it means group 1 was wrong and group 2 was right but the timing of group 2 is obviously incorrect. Your statement implies the crash is inevitable, which would put you in group 2 but without putting a date to it. Not sure if I did a good job of explaining lmk.
@@SomeUserNameBlahBlah beyond correct! This is literally a page out of the Feds book. If you haven’t already, I encourage everyone to read “The Creature from Jekyll Island”. It’s a full account and history of the federal reserve.
It has been revised many times to include current events, but it’s foundation remains incredibly accurate. The FED was not created as “lender of last resort”, it was created to keep bankers happy and the govt in its back pocket. Recent events (Covid, inflation, war) all continue to prove that point.
In all of my videos I said a correction of 10-15% will happen. Which, it has. Don't just read the title and actually watch the video. This video is saying how there WON'T be a crash until unemployment ticks up, and how it doesn't make sense to buy a house at these rates.
It’s a very frustrating time especially for first time home buyers. I saved money for years preparing to buy a home once I got married but now the prices are ridiculous.
Buy 0.999 gold bars with your saved money, then later on you can buy a home when home prices will be a fraction of what they are today!
Same :(
Same here,I live in Downey California 😬
In all of my videos, I said a correction of 10-15% will happen. Which, it has. Don't just read the title and actually watch the video. This video is saying how there WON'T be a crash until unemployment ticks up, and how it doesn't make sense to buy a house at these rates.
The other factor is landlords selling which can add huge supply quick. When a landlord sells they add supply (could potential be selling hundreds or thousands of units) but they don't add any demand. That money leaves the RE market entirely. Depends what bonds do.. who knows if bond yields ever get high enough but at some point- X%, real estate investors bail and buy bonds as an alternative.
Must wait, crash imminent. Got it. Thanks. I just wish we heard why you believe unemployment will go up instead of the obvious unaffordability...again
Bc it’s at a record low which precedes every recession
We refinanced in the fall of 2021 with a new rate of 2.9% for 30 yr. I knew things were going to get bad. I'm so glad we did it.
Nice!
I aint no smart person but I think that may have been the best time to refinance over the last few years. I got a 2.35% on a 30 year fixed loan and couldn't be happier. Dropped 1.25% off the initial loan when we built the house 2 years before in 2019. I could possible even afford to think about the house I have if I was trying to get a loan today...
Wish I was as smart and lucky as you. Instead I’m purposely buying into an over priced market and gladly giving lenders a generous payment. I will likely not be able to qualify for refinance when the time comes because by then the value may have had corrected 😂
@@franciscoblanco3764prices will continue to rise over the next 5-7 years
This is why the market won't crash you are sitting on a rate where it makes it so you won't sell which the market is built on supply and demand if people don't sell theres no crash what will it take for everyone with low rates and good equity to sell?
Got my 30 Yr 2.7% fixed.
Thank you. Easy to understand and straight to the point. No need to go into crazy details and "what ifs"
then add in higher property taxes, higher insurance premiums and higher maintenance costs and there are no buyers left.
Prices are still rising though so obviously there are some buyers left. The real question is what happens when (if) rates come down. I'd expect a flood of inventory. But there's also all the pent up demand from buyers waiting for rates to lower. So it's a tough call whether lower rates will cause a housing boom or bust.
You know what happens when people wait for prices to drop to get into the market…….?
They drive prices back up!
Shhhh. Nobody here wants to hear logic
I feel like anyone who didn't by a home in 2020-2021 missed the boat and the next boat won't be here for another 20 years, if ever. I missed the boat and it hurts.
I hear ya. We sold in 2020 and made a killing….then life circumstances changed our plans and we had to buy back in recently. Still ok….but man it hurts.
No 30 year mortgages in Canada. Bubble is popping with 5 year mortgages renewing at these rates
F Canada. Why you bring this up? No 30y anywhere except US.
I really like your visuals and how its explained. Thanks!
I doubt that was really your grandpa on the phone with you 😂😂😂
It's my brother in law lol
Thanks for the valuable insight, Marko. I feel very fortunate to have just purchased a co-op apartment in NYC after saving up diligently for several years. Mostly cash with a small mortgage in the high 6%'s. Cannot imagine doing a small down payment and then dealing with exorbitant mortgage costs. Peers my age (mid-20's) - especially in big cities - are increasingly feeling hopeless about this mixture of circumstances, especially those who want to become property owners. Even many of my friends making low six figures are living paycheck to paycheck given sky high rent, unable to save up. What a time we live in.
Love your content and your in depth explanation
I appreciate that!
Refi'd my owner occupied duplex in Jan 2021 at 2.25%
At 7.75% it would add $1300 to my monthly payment. That's BROKE LIFE.
You will own nothing and be happy.
We re-fied in 2020 into a 15 year 2.875% rate. If all goes to plan my house will be paid off in 15 months - a total of 5 years. Call me crazy for paying it down early, but I'm over 50 and I want the home paid for.
That's not crazy, that smart!
Rates are up, incomes are flat, but home prices go up. Sellers delusion. To your point, it will correct but housing lags and is stubborn! If you can, wait it out.
Fantastic summary.
Thank you kindly!
The market is insane right now. In 2019 we were about to buy, but decided to hold off an extra year to pay off all of our debt and be in a better financial position. We are in that position now, but because of all the craziness since 2020 we can no longer afford anything in our area (or remotely close). So frustrating. 😔
I was going to buy in 2017… but listened to all those crash bros..smh. I ended up paying more. Well, At least it’s on a low interest rate.
It’s ok don’t feel like you missed out. You guys made a decision to better yourselves and the housing market isn’t going anywhere so you’ll always have another opportunity to buy later. 😊
Exact same situation.
Funnily enough being stupid with money and buying before you’re ready in 2019 would have turned out to be the best financial decision you could have made. Same boat here
Buy when you can ! I was going to buy in 2018 I didn’t thank goodness I bought in 2021 . 2.99 interest rate … if I bought in 2018 I could of made 100k see what happens in 3 years from now ..
Prices have come down in my area, i will continue to wait
You're a true visionary! -- "Success is built on diligence.."
I just closed on a house in Florida a couple weeks ago and it went over asking with multiple offers on day 1... The thing is that even though prices and rates are high, it's still cheaper to buy than rent here.
I sold my house on the first day - over asking. It’s true. Even though rates are high, their monthly payment will still be less than rent.
I wish that were true here in La county! Rent around the out skirts of LA (SGV County and further east) are around $1600 for a 1Bd room while a house is around $2500 with a 25% down payment not including utilities, insurance, etc. So I gotta try and save for a 35% Downpayment and Increase my salary to not be house poor😢
Renting will only be about 29% of my take home pay vs a home would be around 52.5% so definitely renting makes more sense for now.
@@Aperez78 Those prices aren't far off from what we are paying here now. My mortgage payment is 2k a month but to rent a house here it starts at 2k a month for the worst examples.
@@jonmccravy OH wow yeah sadly the disparity here in Los Angeles/Orange County is too big to buy/rent a home here. Apt start around $1450 for the safe areas at least vs a house start maybe around $3000 to rent; never looked into renting a home fully just because houses here start around $650K on the low end to $800K on average so I can only imagine how much it would be!
I'm hopeful for the future so I continue to save and live my life frugally and debt free!
Marko, I love your humor.
Thanks Marko!!
Housing market will not crash nationwide. 99 of the top 100 housing markets are still going up in price, and they are projected to rise in cost in 2024. There are simply not enough homes available for those that want them. Homes prices didn’t crash in the 1980s when homes went up fairly fast, due to crazy inflation, and they aren’t going to crash now. What’s going to happen throughout the decade, is wages will increase. Also, we need more homes. After the financial crisis of 2008, our democrat politicians created the Wall Street Reform and Consumer Protection Act of 2010, otherwise known as the Dodd-Frank Act. That stymied building at the pace needed in this country, and caused a shortage. No one seemed to notice the shortage until 2020-2021, and now we are 5m-6m homes short of what is needed to bring prices down. Until the supply is met, demand will remain high, and those that studied business and economics, know exactly what that does to prices.
It doesn't help that we are short construction workers too.
Hit the nail on the head.
@@danstevens64i work construction it sucks and the pay isn't even good enough to buy a home so who want this life style and job I want out
Wait and save. Great video
I’d love a few more videos on this topic of housing. Also, with current world events and inflation?
Safe to say those maybe 35 and under who may only be accustomed to renting, but want to eventually own a home are better off doing everything in their power to increase their income and/or cut expenses dramatically (if it moves the needle enough, not skipping the coffee 😉) over the next few years so that if/when deals present themselves they are ready to go. No way to know what exactly happens market wise, but at least you control what you can control and the time will come when it comes. The curveball is that job market. On paper this sounds like a solid plan for many, but if you lose your job/main income stream how will you save/be prepared for when the deals present themselves?
I said that elsewhere. Reason housing was so cheap between 2009-2012 is because so many people got financially wiped out. Job losses were high. Basically, if people are correct and housing drops it could bring down the whole US economy for a year or two. Housing is, after all, something like 20% of the US economy.
I am so angry at this manipulated housing market. I feel like the government screwed me by driving rates so low at the beginning of the pandemic. I sold a house back then when I retired. That house since resold for $200k more than I sold it for. While I was getting ready to buy a replacement home the bidding wars started. I didn't want to play that game so I sat it out. While I may have the equity from the house I sold I feel like that money is worthless. The buying power is substantially reduced due to higher rates and house values. I further gave up the $200k gain by selling when I did. To top it off my pension is worth less because inflation went up on everything else. The only reason I'm not in a bad way is I have other investments and no debt.
Simple solution - single family homes can be owned by citizens only, and a citizen can own *one* single family home. You'll see inventory jump and prices come back down to normal. Today, we have 12M vacant homes in America. Investors horded the inventory and put us in this situation. Homes should not be investments.
My neighbor sold a rental for 700K and 2.5 years later his old tenant who bought the home got an offer from a builder for 1.1M who wanted to bulldoze the house. So you are not alone.
So what are you bitching about
My neighbors house went up 30k after they sold also. Really cant time the market
2.375 percent 15 year mortgage here. I owe way less than what my place is worth. No friggin' way I'm selling and moving now.
What do you do for a living?
@@Navs126 Factory worker. Assembly. Two income household with no kids so that helps.
Great content as always!
Appreciate it!
Cant wait to sign up for WBFU!!
See you inside the community!
Real estate is a local market , my neighbor sold there house , 45 days closed.. listed 680k , sold 650k .. they overpriced it and then did a 30k price cut 10 days after .. this was in July 2023. Menifee, ca
I really hope so! I am a year out of college and I can barely afford rent let alone a house payment
Home prices went from 2.5x incomes to 7x incomes. You can thank the boomers for that.
@@jonathantaylor6926 Research the amount of foreign capital that flows into this country to fuel real estate investing, then get back to me. This really doesn't have anything to do with boomers. Look more towards D.C.
I sold my home this year and I had a 2.2% rate. I was planing on buying land and building a home cash. But land prices are crazy high right now. I hope they drop so I can continue with the plan
Ouch. You let that interest rate go?!
Bought my house with cash in 2021 and I don't plan on selling it any time soon.
I have to say something strange going on with housing, and the problem not in interest rates it’s more the prices for homes right now ( just to be clear I bought my house 2 years ago 356k currently my house value is 687k ) if you have higher interest rate you can refinance in the future but if you have houses that triple in prices I really don’t know where it would lead us in the future.
Marry the price, date the rate.
Safe investing and, at the same time, educating yourself is important 👌
I agree with your grandfather Marko - he's right. Facts 💯
Hi Marko, could you please do a video explaining the 2019 Repo Crisis and what the bankruptcy of a travel company (Thomas Cook) had to do with it. Thanks!
If you back to that time in my channel I have videos on that!
Great information. Another factor to take into consideration are microeconomics of a specific demographic. I do not think the prices will ever come down in the area I'm from, where demand is still consistent YoY, in some month over months it is increasing, and supply is declining YoY
My thoughts exactly for here around the Austin area
And if you don’t have cash in hand you are gonna get
Outbid as soon as housing prices drop everything is going to get scooped up by cash buyers lots of people waiting on the sidelines.
Buy a home can’t even afford rent apartment’s anymore everywhere is considered luxury single parent it’s nightmare to work for the state and state can’t even pay me enough to live in the state
i cant even pay off my student loans. maybe after i retire at 89 i can buy a house.
Literally just talked to a 24 year old kid that’s just getting into house flipping and tried telling me it’s a buyers market. I couldn’t believe how duped he was.
According to every realtor ever and ever house flipper ever, it's always a good time to buy LOL.
Buyers market? I am an appraiser and am still seeing escalation clauses, paying of seller closing cost, appraisal gap contingencies. That kid needs to get an education before he tanks.
Great info…. 1 M subs coming soon
I appreciate that! Thanks for watching. Please share the video, these take a lot of time and research to put together!
why would they sell? Because the market is going down. Best sell quick before it really drops
Apparently up to 40% of the realtors have moved onto other jobs in Knoxville area. Which was a hot market until the last few months.
I agree with you. Regarding the renters. I have family members in the construction line of work building home and apartments. They were told to stop building homes and built more apartments. So they are make it very difficult for people to buy a home.
Plantation Fl they built lots of apartments. Majority are sitting vacant, unaffordable. 2/2 bedrooms $3,000 per month-minimum.
Building apartments still reduces home prices, albeit less directly. More apartments means cheaper rent, cheaper rent means less demand to purchase housing. Anything that increases housing supply is good for buyers, even if it isn't the type of housing you want to buy.
In NJ where I live luxury apartments are going up all over the place. Partly it's because of a NJ law that requires municipalities to have a certain number of low income housing. Many towns ignored this law for years but now they've been told they must comply. So they build high-end apartments with a certain percentage given out by lottery at well below market rates.
@@jaredhaas4168 not necessarily. They told to build less house because they banks/lender are make it very difficult to buy a home. The interest rate are in 6%. So what they do. Increase house prices and interest. No one wants to buy. But built more apartments so they can rent. Of course they rent a 2 bedroom is going to be cheaper than a mortgage payment. This is smart to keep people renting not buying.
Great video Marko! I think it's important to define what "crash" means, I think the rule of thumb is 20% for it to be considered a crash, but overall, there is not enough inventory to be a large crash like 08, demand is still high in some markets and prices in Chicago specifically have been stable and still going up. 08 crashed because of many reasons (bad ratings, bad loans, MBS market) but because there were so many houses it tipped things over the edge. Of course demand and listings will decrease for many markets because it's typical in the winter season but I REALLY don't think we are going to see 08 again. What are your thoughts?
Marko......The Man .. ....The Myth.......The Legend !!
It makes sense to sell those low interest homes for some. Several folks that I know simply had a house that was too big, their home value grew by 40% over 2 years and knowing that value wouldn't last, they sold.
Most people in high tax states who refi’d to a lower rate to cut their payments down are going to be right back to the same payment pre-refi due to the fact that insurance and property taxes are going up heavily
So if we're in another war and at the end of a rate tighting cycle which ends with rate cuts and with low market inventory and everyone locked in with low rates sitting tons of equity where will you get millions of people to sell there houses at the same time to get a crash? Market will dip 10% but not crash it takes years for a crash
The 10 yr rate, which affects mortgage rates, won't come down even if the FED cuts. Nobody is readily buying those bonds like they once did since they don't trust them anymore. Rates will continue to shoot higher even if they did pivot. It also would help if our Gov stopped spending the way it does now.
Marko, do you see a point in investing into S&P now if you plan on purchasing real estate in the next 3-5 years as you said to wait for? Or better to keep in High Yield Savings in the meantime to avoid any risk in the case you need to be liquid.
Some savings accounts are paying over 4%, thats where I’d put any money you need in the next few years
there's 100 homes for sake in a couple square mile radius where we live in Florida, the market has already crashed, people just don't realize it yet. The listed prices are a fantasy with so much inventory available that's not moving. prices are easily 100K less if you follow normal trend
I’ve read the rule for financial predictions is to give a time or a number but never both. Finance, like particle physics, follows an uncertainty principle. If you set one variable as fixed, you will have 100% uncertainty on the other
Housing in socal is crazy. Prices are still making relative highs as there is very little supply. Renting makes almost no sense as you are pretty much paying 3-4k a month. I understand it night not make sense for those buying at the ask with these rates, but if you can somehow find a deal that can put you in a winning positiin even with these high rates then go for it.
Thre is no crash coming. Just a lot of gloom and doom talk. There is no inventory, because homeowners are not selling. Why would they? Sell their homes and buy a more expensive one at a higher mortgage rate?
Did you even watch the video?
@@WhiteBoardFinance Just read the comment and realize it is a full on troll. Employment goes up combined with a high cost environment will force the liquidation of property on top of any drop in demand for AirBNB rentals will force more of that inventory back to the market. Will it happen...absolutely, when is the only question but I would not buy today.
Marko, you shouldn't compare the same loan amount because house prices today are not the same as in July 2021. I'm sure your property has appreciated by 25% so the comparison of loan amounts should be done according to such appreciation.
Nice video, my only go to for financial news on YT. You should do an update video on the used car market. Also would be cool to hear your thoughts on the CCPA and it’s potential impact.
Good idea!
So many youtubers say the housing market is crashing but I don't see any huge price differences in places I want to buy in like Austin, TX or Nashville, TN. The prices are still over 100K more within the last 3 yrs. During pre covid homes were going in the 200K to 250K range. Is there real data on the real estate market? Seems the data is really lacking behind.
Prices in Austin are down 14% or so but still high. I mentioned this in the video
It will happen much more slowly in meme cities (Austin, Boise, Denver, Phoenix, etc.)
It’s the home flippers that are artificially keeping the home prices unaffordable and real estate prices high.
Price is up because most of the homes selling are new homes with the builders offering 4.5% 30 years until now. As soon as that goes away all hell will break loose
We're renting right now. We've been wanting to buy a home since 2021, but the housing market has been so out-of-whack that even though we can afford a house, there's just too much risk. We don't want to be in a situation where we buy a home for $400K and then a year later we can't sell it for $300K. it's not that we have the intention of selling a home a year after buying it, but:
1) We'd rather buy that home for $300K if we could
2) If we are in a jam and need to sell it, we don't want to wait 10 years just to break even.
We looked at houses in the area we want to move in back in March 2022 when the interest rates were at 2.9%. Good Lord the prices were just out of this world. I remember thinking that we could wait a year at high rates, but much lower pricing. We've seen a drop in the area we're looking at, but still way too high. Just today I saw a listing for a house that sold in 2021 for $210K and they want $420K for it and they've done nothing to it except for add a new roof. And this is in an area where inventory is steadily increasing at a good rate.
I just see the housing market now as a 'frozen' market. It's not a seller's market by any stretch. It's just people who can't sell because it's not feasible for them to sell or anybody to buy. But even the people with low interest rates are struggling as the debt-to-income ratio is at an all time high. It tells me that people are borrowing too much and they can get the money to borrow because they have jobs. But once the unemployment increases significantly, they'll no longer get that money to borrow.
I believe the first step we'll see here is people 'downsizing'...not by selling their home and going to a smaller home...but by selling their home and going to renting. The smaller homes are too expensive to buy and will put them in a worse financial situation. So they need to sell, gain some liquidity and rent in the meantime.
Save up 50K but then the house you wanted went up 100K.. so you save up another 50K and now have 100K... but the house now went up 200K... rinse and repeat. It's like chasing a carrot on a stick.
Don’t touch this Ponzi scheme with a ten foot pole. This fake market is driven complexity by scumbag flippers and investors and they are going to burn.
Dude if you could afford an home. You should bought. Think of putting in the money in your investment instead of paying rent
Now you will end up buying a more expensive house for crazier interest rate
Rent vs buy is tough now. Where I live it is cheaper to rent. I invest the difference in high yield savings, index funds, anything with 4-8% annual return. I’ve done the math and it only makes sense to buy now if you are confident you will have that property for more than 5-10 years. When you account for all of the costs of homeownership, you will generate more wealth as a renter investing in liquid investments. My rent is $2100. The mortgage payment of similar size is $3500. Plus I would have to pay more money to maintain the property. It would’ve made sense in 2021 but not now
@@dhruvshah5813 I rent a 2,100 sq foot home for $1,500/month. Mortgage payments , property tax, insurance & HOA would run me at least $2K per month. At that difference I just take the money I save renting and invest it. I'm actually making out *better* in the end. If my rent wasn't so low and mortgages weren't so high I'd probably be more apt to buy. But as Marko shows, it's not a great time right now and housing prices are likely to drop quite a bit, if not flat-out crash.
Something leads me to believe that is not Marko's grandfather.
I have been hearing about an imminent housing crash for a few years now. The problem is timing! Interest rates have been much higher in the past but there has to be a breaking point.
Thank you!
Low rates wont matter if you lost your job you may have to sell anyway… watch the employment number…. (Watched video, glad to see you nailed it!! 👍)
Exactly as mentioned in the video
First like n First comment! Thanks for the great info!
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Always do
@WhiteBoardFinance if you ever take a vacation down to the florida keys let me know, I'll show you around.
@@saltlife85 I was there a few years ago with a friend. We chartered a boat and caught a bunch of fish that I had no business catching :)
You would have to literally be crazy to think homes priced a hundred to two hundred thousand dollars above what they were just three years ago is sustainable in any economy. I live in the Chicago area where homes in some high crime areas are selling upwards of close to a million. Bad schools and everything!
its wild what they are asking for in Logan Square, Pilson, etc.
Crash is happening in certain locations. Not Nationwide. People that are waiting in certain areas will continue to wait and watch prices go higher 😅
I am curious how this will unfold in the Canadian market where demand continues to be fueled by record immigration...We are already seeing two families buying one home to be able to afford one. With extremely low rental inventory, some people are forced to buy in the worst time.
We have record immigration also
@@Daisy-fairy The US had record immigration in the early 20th century and most recently in the early 90’s. Current immigration is far from its peak. Relative to its population, Canada has ~500% higher influx of new immigrants when compared to the US.
@@smileoftenatseadoes that number take into consideration illegal immigration? Asking because I genuinely don't know. Hey I'm wrong sometimes that's ok
@@Daisy-fairy That’s totally fine, that’s why its good to share information. The numbers I mentioned use legal immigration numbers for both countries. Given the easier and faster immigration process in Canada, I would assume that the US would have a higher number of illegal immigrants relative to it’s population.
I knew my decision to invest in treehouses would pay off! 😅
Sounds like grandpa could do voice over for Elmo 😃
Marco's grandpa sounds like a younger guy pretending to be a grandpa that is so wild
People are always looking for something for nothing. Home ownership involves, taxes, maintenance, repairs. Sometimes renting is the better option. I have many rentals, try replacing a septic system that no longer works. or how about a complete HVAC system. NOTHING IS FREE IN LIFE.
Home prices are finally leveling off a little by me
And now GDP was 4.5%! We're holding up the whole world...
Do you think we'll see sub 3% rates again? Crash economy, then reduce rates to get it going again?
I dont think we will ever see this rate again. It was the result of 0% fed rate from the pandemic stimulation. They were afraid of seeing 2008 style crash
I wonder if all this applies to San Francisco market. Have you looked into that @Marko - whiteboard finance? SF is a weird market
There is going to be an even larger wealth gap once inheritance happens. Houses and other assets will be passed to some but not all.
Literally just drove by some crappy, tiny 2BR condos backing to the highway out of town, south of Denver and looked them up when I got home. $512,000 minimum, $3300/month w/ 20% down. 0 average income earners can afford them. The Fed and the shortage have completely broken the real estate market. Buying anything is off the table for me for a long time and I make a decent living.
Some comments I had heard and read about regarding the low unemployment, is that it could be a bit misleading because it could be that for many, they're working multiple part-time jobs. Thoughts Marko?
That, and they stop counting people in these statistics after they've fallen out of the job search category. Take everything with a grain of salt, same with CPI.
There's currently 7M to 9M working aged men who are refusing to work. They do not get counted as unemployed because they are not looking for a job.
How can there be a crash if there’s way more demand than supply of houses??
Months of inventory is increasing the demand is smaller than the supply even if it’s by a little it’ll cause a pile up
Can anyone suggest a website where I can shop around for mortgages?
The crash has been coming since 2009. 😴
The peak of the 2009 crash was 2013.
You're an !d!ot. Did 2012-2014 pass you by?
BTW - can't believe RUclips made me censor i-d-i-o-t. I don't have this problem on other channels, so I assume Marko set this rule in place.
I have no idea what you're trying to say lol. The best time to buy was 2012-2013 after 07-08.
Marko, what do you think about renting a house as a medium between apartment rent and an expensive mortgage?
I would say as long as it's still affordable then a house is solid if you want the space. Renting is renting at the end of the day. Just make sure you keep it within budget like 30 percent of income or less and think about utilities, etc.
Also read the comment from @richiehunt5097 below which could be a similar situation to yours.
It makes more sense to rent than to buy right now, which fits the motto of "you will own nothing and be happy"
We pay 1.5% for 20 years. Calculating our monthly payment with current rates has a really scary outcome. We're sticking with our current house for a good while with this current interest environment.
yeah you are staying there forever and that is ok. Put the investment money into treasuries longer duration at 4.5% now.
Wth Marko, i have an oct25 closing date. Thanks
Blackrock, State St, and Vanguard are buying up all the houses and making them unaffordable. And they all own each other, so it's really just one monolith.
They need to introduce legislation the bans commercial entities from purchasing residential properties. They also need to tax the absolute hell out of individuals that own more than two residential properties. Neither of these things will happen.
Prices are only going up better to buy now then wait 🎉
This is good news for me! I wasn’t planning on buying until 2027 or 2028 at the earliest based on my debt pay off plan. Looks like the timing of things may be just right for my goals!
Marko's grandpa is adorable