A Grim Warning to Home Buyers (It's Getting Worse)
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- เผยแพร่เมื่อ 28 ก.ย. 2024
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Ken and Danille McElroy discuss the current economic landscape related to the skyrocketing US home prices and the worsening supply and demand crisis. Learn why the housing market is becoming increasingly challenging for buyers.
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Crashing in Nashville. Inventory is skyrocketing at record rates, price cuts are skyrocketing, sales volume has plummeted, and delisting are skyrocketing. Finally, according to the MLS in Davidson count (I’m a realtor) price per square foot sold has dropped about 10% from 2022 highs.
Looks like we’re maybe 1/3 to 1/4 into this 2-3 season crash before we trough at I’m guessing 20-30% lower than we are now.
It will be a great opportunity for buyers as I’m sure interest rates will have lowered to 4.5-5.5% by then. Not sure if we’ll have a full blown recession, but I imagine at least one weak year after the election either way it goes.
I’ve got a lot of money saved and actually could’ve bought a house for over a year now but I wouldn’t touch the market with a 6 foot pole. The bubbles just beginning to pop and I’d rather not economically ruin my life by buying such an inflated asset right now.
Sounds like another form of 2008.
Crashing in Texas too. Don’t listen to these false numbers. When the only homes selling are 1+ million dollars the average is going to rise. I’m seeing price drops every single day and Fort Worth is back to highest inventory in 10 years.
@@KennyCronin-wq8xq The economy will trend in the direction of its favor, regardless of who is elected. Moreover, this genie is already out of the bottle.
It’s correcting at most , it’s definitely not crashing. This is not 2008 by any means.
No guarantee that rates come down that low. We could be entering a new era of higher inflation expectations. 10 yr could easily climb from here and keep us in the 7-8 range for next couple of years. Not the base case, but could happen.
In our area, it’s really high interest rates, home prices, and consumer concerns on the economy. , not supply of housing. There are so many homes that are in the market for months and have to reduce their price now to at least garner attention
Thanks for the update and keep doing what you do. My journey in the current market has taught me a lot of lessons, at the top of that list is that it never pays to live above one's means. I have managed to grow a nest egg of around $600k to a decent 7 figures in the space of a few months. Sad to say but a lot of us have poor money management skills. My 2 cents -get an advisor to keep you accountable and aid you make better decisions, Linda Wilburn has been helping me a lot, all through my journey. I find it better to pay a little bit more for peace of mind than worry about money or market trends and still get >burned.
She's often interacts on Telegrams, using the user-name.
@Lindawilburn
Trading with an expert is the best strategy for beginners and busy investor s who have little or no time to monitor their trades.
The key to financial stability is having the right investment suggestions for a diverse portfolio. Many investment failures and losses happen when you invest without proper guidance.
It was quite challenging to understand the different trends on my own until i found out about Wilburn. Trading made easy.
With inventory rising, this has got to be the peak of pricing, unless rates drop suddenly. Seems like this bubble will never end.
So many areas are at or below replacement cost - it's not a housing bubble, it's a fiat money bubble. Values measured in terms of fiat money are likely pretty solid.
@firstjohn26 that's a good point, but doesn't it look like the powers that be will prevent USD from being devalued further? IE not printing trillions more and zirp any time soon. the fiat devaluation was basically done in 21-22
@@besnkinic I mean devaluation in real terms. Against other fiat currencies, I believe the USD will remain strong. We are living through a great devaluation of all fiat currencies. So much bloat, inefficiency, and red tape are becoming entrenched in all developed economies, and globally we are just printing money to obscure that. The amount of labor and effort connected to actual production of anything useful is falling, and the total global amount of labor and effort available per capita is falling.
I will be forever grateful to you, you changed my entire life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Charlotte Miller.
I'm surprised that you just mentioned and recommended Charlotte Miller, I met her at a conference in 2018 and we have been working together ever since.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states
The very first time we tried, we invested $1000 and after a week, we received $5500. That really helped us a lot to pay up our bills.
I'm new at this, please how can I reach her?
she's mostly on Instagrams, using the user name
When I bought my frist house in 1999 it was 8 1/4 percent but the difference here is that it was on $130.000 mortgage not 400.000 plus mortgage.
@@chrisspear3551 and what was the income difference? The value of the dollar matters.
Hey Ken, I have a lot of respect for you and will thank you in every opportunity. You opened my eyes to building assets so I pulled an equity loan (during what I call the home equity interest loan crash)to build an adu. Rented the front house for 2500. (Peak of rents) and my mortgage payment is at 586, home insurance at 1034 yr, property taxes at about 3000yr. So I build on what I had worked so hard for which was paying off my house (bought it in 2011 crash). After being debt free 10.5 years after, which it felt like a blessing but I no income, found myself as a stay home dad and no assets). Now I have an asset (renting the front house) to keep putting a roof over my family and a warm meal. We made it religious to save 25 percent of my wife’s income to save for the next opportunity to invest on(the next crash) stocks, building another ADU since we have the space and city allows it because buying another house is not creating cash flow opportunity in my area.
In Arizona Maricopa county there were 900+ forclosures. I checked today and there is only 198 somthing funky is going on 🤔
This is all by design. And I won't participate even in speculating. This is all intentional.
Careful, your tin foil hat is slipping.
you are right. Black rock buying up is the clear indicator.
Which market? Which housing sector? There’s like 500+ markets and there not all the same.
Design by who ?
I'm hoping there will be a housing crisis so I can buy cheaply when I sell a few houses in 2025. As a backup plan, I've been thinking about purchasing stocks. What advice do you have for choosing the best buying time? On the one hand, I continue to read and see trading earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
Not in Texas. We have an oversupply issue here. No one is buying. Lots of homes are sitting on the market for 6 months.
Just the opposite here in Massachusetts.
There hasn't been any real housing development in the past 16 years.
Not much land available, to many regulations, not much of a labor force.
I've watched I don't know how many of these videos, I've wondered about the relationship, and now AHAAA, you're married!! Awesome! Great content, we bought our first investment prop coming up on a year ago, a duplex. Had to gut the whole thing, even every single ceiling and floor joist, you walked into a shell. I own a small painting and remodeling company in the KC area, and the end looks to be good. You have so much knowledge Ken, great videos, hearing the stories are just straight up free college. You guys are great, good chemistry on screen. Thanks for the content, really inspiring, informational and as big as you are, approachable. Thank you for not using big words😂😂 Signed- the dumb painter😂😂
I do not believe the Fed is concerned with home prices. They look at inflation from a macro level, not focused on one specific sector such as housing. Honestly, the Fed cant do anything to help housing inflation and they know it, so they choose not to focus on it. If they raise rates, homes are more unaffordable due to mortgage interest, but if they lower rates, that will raise home prices because you will see increased demand with no real change in supply. Even if builders were to increase activity based on a small decrease in rates, it takes time to get product to market once you have made the decision to build more.
WOW! Could you IMAGINE, free floating interest rates in a capitalist society based on price discovery and NOT the FED setting Rates! OH MY!!!
Increasing interest rates wasn’t designed to slow down one market. And to say it isn’t working is somewhat misleading. The growth in housing sales has slowed down like crazy. Are houses still expensive? Yes! But lower rates wouldn’t make these homes any less expensive.
Great video, could you please explain what you mean by "Fannie Mae is coming for your equity"? How so and what does it mean for investors/home owners?
everything you discuss indicates a large wave of unemployment is on the horizon. how are homes going to increase, or even maintain value when so much buyer income will be lost? i understand your incentive for wanting high prices but i don't think you should just be skimming over unemployment. what will you do when your tenants cant afford to pay you anymore because they lost their jobs?
In my area, rentals are $2500 to $4000 for 2 and 3 bedroom apartments, not including monthly fees for pets, parking storage or utilities, homes are additional $500-1000 above rental units. I will probably will have to live out of my car starting august…average home for sale in the county is $950,000.
Inventory is up in Orlando and Tampa
You’re the single most helpful voice on TH-cam about investing and real estate and the economy
We had a buyers market from 2008 up until pretty much now. Wait till the next buying market arrives.
Unemployment is the missing element. But, it's coming.
People are listing their homes at prices they themselves could not afford. Who do they expect will buy it?
In my area, all the northerners and Californians fleeing their high cost of living areas to displace natives in the areas they are moving too, all while incessantly complaining the new places aren’t just like NY or California.
They're just measuring it differently. 2x crappy part time jobs makes stats look better than 1 career level job that pays a mortgage
Big corporations will buy these houses and rent them out
@@anutkaschannel2478 Nope, it would be a bad investment.
By the way, by 2035 15k boomers/day will be dying. And no, immigration won't backfill. Look to Japan to see what will happen to real estate outside of big cities.
Japan doesn’t have nearly as much immigrants as USA, I would rather look at Germany or other EU countries with massive immigration increase
Wait, you guys are married? I had no idea
I thought she is the guys daughter..... money talks.
@@buildingsfunnels5867 Wait I thought so as well..... They had the same last name. Where did you say they are married?
The problem with ADUs is that you can't sell them individually. They are part of one large parcel and sold as such😮
Rent is going down in areas where houses sat on market 500 days. I'm talking brand new construction that can't sell, going for 1700/mo for a 3 BR house brand new. These people are trying to scare you into buying high.
Thank you Ken, Danille, and team for another great video on the housing market. Agree we need more inventory of properties for sale to slow the rate of price growth but interest rates and regulation will slow that progress and people with low interest rate mortgages who don't want to sell. Affordability will remain a challenge and owning real estate of any kind, especially cash flowing real estate, will benefit from the low inventory and high inflation.
Crashing in many markets. Most of Florida. Half of Texas. The new high is driven off of 1+m homes getting sold. But I do agree that higher and higher interest do nothing to inflation. We have seen this before. There’s many charts showing interest rates in comparison to inflation.
Love to listen to these episodes. So much to learn.
Always a pleasure to sit in this audience!
I listened twice!
Recommended to 10 others
The other things with inflation employers can not hire and raise wages just because rents go up or home prices go up. Unaffordable housing is an employer problem more than just for employees.
Danille you should run for office. You would be an excellent candidate and you have a good broad grasp of things.
I think home prices are a bit more complex than just increasing inventory. There has to be an environment where homeowners are willing to take a steep loss to sell their home. Once prices go up and are sustained, you have essentially accumulated a higher amount of homeowners at a new higher price level.
These buyers aren't going to sell at a loss unlessed they are forced to as a last resort. You have to squeeze out some of these investors who bought at an overleveraged price. Increase occupance tax. Force commercial zoning for Airbnb. Design and implement a threshold for the amount of affordable housing each county must meet per capita.
Just sold a small 3 bedroom house . Had 42 bids
If you get 10% in one year and then go back to 2% immediately after.... you are still 8% off forever. You need to get below target to catch up. But it is way out of proportion, ex going down to 1% (never gonna happen), would mean you get back to long term target in 8 years as you get 1 year back every year.
So chances of pricing going anywhere near back to normal with a "soft" landing arr basically nil in any appreciable timeline
I remember a recent stream you talked about how rent should be coming down. What changed your forecast?
It still will bc so much supply hit the market, but after this supply nothing is being built so we will have a sharp increase in 2-3 years
Thank you the shout out guys!!!
Ken the Fed’s mandate is to keep
Inflation at 2% or lower. They don’t have to do anything regarding rates. They could care less about housing and the impact raising rates has on mortgages. If they did they would have lowered rates already. Fed decisions revolve around the inflation number and little else
I don’t trust the data, im in south florida , home appraised 550k 9 months ago, today 522k
All markets are diff
My mom and dad bought a house in 1967 for 25,000 and I took over mortgage in 1993 and I sold it in 2005 for 197,000 ,I built a new house in 2006 and started the new mortgage, the principal at the time was 417,000 it's now almost 18 years old and it's value is appraised at 378,000 ,so what I'm saying is look at how much the value of homes increased in40 years, versus now, by that that same increase my home should technically be valued at 2,000,000 so the actual housing bubble literally did pop in 2009
Psst: the federal reserve has been lowering rates by buying debt and driving yields down. Esteemed colleagues should know this and communicate it to their listeners.
We have more and more for lease and many new multi family finally finished-so where are all the leasors? Oh, I mean, the illegal leasors
And more inventory isn't dropping anything. Places with a lot of new inventory still aren't at pre pandemic prices - not even close. And that's rent too.
Is it actually tho? Or are we just saying it for fun?
I don't think we need more building to see price declines. I've seen significant building in the past 10 years, and a few foreclosures should be enough to tip the market into a decline. My conclusion is that the higher rates will at least not lead to higher prices.
Rates werent hiked enough and taxes on folks owning more than one home, whether for pleasure or business, is too low. Rates are going back to normal. Not higher. No more eb5 programs!
They need to refine their measure. Home prices are increasing because the wealthy and investors are not deterred by interest rates or the price. They need to look at the price points that are selling and use their education to tell them this is pulling the average price upward. Regular everyday people are not buying 350K and up homes. The FED needs some help here with Fiscal Policy. There needs to be regulation of investors in this market. Nothing else will fix it.
We need investors in order to build supply. There isnt enough housing.
@@DanilleAZRealEstate We do not need investors to build house to only to rent them out at outrageous prices. No not what the American public needs.
Love you guys!! great content
What did he mean when he said the government was coming after the equity in real estate?
Possibly the proposed "wealth tax" that will tax anyone with big real estate or stock market assets.
Unrealized gains in real estate property values, will be taxed
The housing market is controlled by the construction company, they are building home by home, usually they build when the home is in contract
Thanks for sharing.
Tariffs will eventually cause inflation, because businesses will raise prices to match tariffs. This is why the Fed has to keep interest rates higher for longer to prevent wage inflation from the tariffs.
Black Rock handles things like retirement funds. Real estate profits feed black rocks retirement fund capacity. The market crashing puts retirements in jeopardy. They can not let it crash
It's hard to increase the supply. I can't find anybody to Work for us
Very helpful Thank you for sharing
Have you watched vdo of Reventure consulting. He always lists homes with price crash
Pure Greed is the cause Always ! Cant drop rates !! Should have never loward them !!! 😢
Headphones for the speakers would be amazing on the ear shock
Food and Energy are just going up slower...haven't gone down
If they lower interest rates will that make the price of the houses go up in value?
Depends on the specific market and inventory. If a market is already short on inventory it will only push the price up. It’s really location drive.
No one is addressing the implications of that. Every expert is totally ignoring this. The cost of living is unattainable for everyone.
Home prices are too high!
ADU= first step to shanty towns of Brazil in the USA.
100000000000000000000000%
Raising rates, raises rent, which raises values.
Restricting supply is exactly what they want. If you don't understand that this is being done on purpose then you haven't been paying attention.
With respect, if ultra wealthy and Wallstreet investors would stick to investing in CRE and multifamily like they have historically then normal working people could still afford single family homes. Buying 30% of the houses decreases inventory (duh). The government's loose monetary/fiscal policies are of course also largely responsible for the dramatic asset inflation pricing out the middle class.
Everywhere
The high property tax received because of the high price housing has saved many local governments, and the twelve million illegal immigrants are keeping home prices from falling by occupying many of the rental properties. This is why the federal government is having a two trillion dollar deficit to keep higher employment, because a recession will reduce employment and millions of these immigrants will leave for home, and empty housing causes prices to fall. The Fed may be forced to have a recession now to reduce inflation in housing.
30or 29.99
If the US Gov would have used the money they wasted on Ukraine and subsidize construction loans, the supply would be a lot higher, and the Fed could have cut rates sooner.
Huge Tax law changes needed. need to Suppress homes being purchased by hedge funds private equity firms.., Don’t tell me free market society. Many rules laws help rich but crush many many others… remember America is a young country we are so do for a revolution (what ever that looks like) That is the only thing that will evoke change… 13:06
FOMO
Price drops up
Inventory up
Months of supply up
Let the housing market cook 🍳
Let the interest rates cook 🍳
We will find this "Housing shortage" were just speculators and landleeches hoarding housing, give it time
Inventory is up 35% yoy based on May data. What are you all talking about?
Up from extreme lows. So not really
Also who’s building right now? Wouldn’t be surprised to see a dip in the next year or two of inventory because no one is building as much as they were
@@themisguidedpodcast What do you mean "not really." It's up 35% YoY, May 2023 to May 2024. This is an objective fact. I did not make a comment about whether this was below or above historical norms, I said that inventory is up year over year. Why can people not allow this fact to be absorbed in their brains? It's almost like they can't absorb factual information just as the market can't absorb new inventory hitting the market.
@@TylerShorti definitely absorbed that comment but it just was a comment without any follow up. Like what ELSE were you trying to say.
@@themisguidedpodcast It's clearly in response to the videos commentary claiming that "nobody is selling." This is factually incorrect, and definitely refuted with data. More people are indeed selling than they are buying. People need to stop parroting talking points and look at data that is free to the Earth's population.
Averages are meaningless, you need to use median numbers.
you know what's not affordable. Limitless!! on sale 1000 bucks normally 1500. smh at 1000 times 2000 seats. guys making 2,000,000 minimum. yes i know there's cost like renting a venue and paying speakers. still pocketing a mil.
Who’s in WA/OR markets ? Let’s connect!
In WA, trying to get out 😂
@@nemodeals2034 yeah run while you still can lol
Everyone in the US should listen to this and really try to understand how the economy works. then they will stop voting for the stupid lies out there.
Home prices will decline as a result of decreased demand. Its underway.
Debt gives you a reason to go to work
All the Crash bros going on year 5 of waiting for the next market correction tho 🤣🤣. How’s those elevated rent prices been??
Great
How i love your example 😂 thats me!
So don't buy the "average home." I know, I know, people don't want what they can afford, they want what they want.
Ken you need to read..The Great Taking..personally id pay your personal mortgage off completely 👍
Ken getting a little spicy on this one. ;)
A home is a fundamental need and want of Americans. These fools don’t understand the simplest things
Rent control makes me as a landlord leave..
You’re a fool if you are buying a house right now..
These people and their BS, I though this guy was smart! Don't understand the mortgage market, eco etc..
Half off in a few years. Just be patient and focus on something else.
Mass unemployment with AI coming for many jobs will hurt housing
Well, Switzerland was founded on slavery 170 yrs ago like the US. Apples and oranges, bud
The smartest families i've seen are the ones that stick together. I'm talking about the Indians, the Philippinos, the Mexicans...4 people in each bedroom and each has 2 jobs making 40k each. 40k a pop and there's 7 to 10 people per house under that single family zoning? Do the math. They all share a few Mercedes and carry cash around. Strength in numbers. But what do "Americans" do? They tell their children to get out the house by 18 and start over...LMFAO.
Normaly hiking rate work very well but our gov is counter balancing the effect with war,immigration,gov jobs... But the middle class if still exist is badly affected by these hike.
All you investors are half issue! Hoarding homes like some sort of addiction. Your not helping.
Is that is wife?
Huge housing market crash coming!! Joyous times ahead
10ani.de.zile.ati.lasat.pe.srada.fara.home.romania.
Kalapsen. Detli. Amerkem. Homles. 😭😭😭😭😭😭😭😭
People will have to accept reality that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. I now look towards the stock market to fuel my millionaire goal. Sure I'm not alone in my chain of thoughts.
U.S. stocks have historically been the best investment. Treat it like real estate, don't panic sell and impulse buy.
I like both. But in my experience, most of the millionaires that I know have gained their wealth through diversified investments and they all had a sort of advisor helping out with informed decisions.
Agreed, advisors are the ideal reps for investing jobs, and straight up! that's how I’ve stayed afloat for 5 years now, accruing nearly $1m in ROI, after 100s of thousands invested. IMO, home prices will need to fall at least 40% before the market normalizes.
@@fromthebirchwood real estate prices exploded, interest rates exploded, but my wage the same, i'm screwed! who is your advisor please, if you dont mind me asking? in dire need of proper asset allocation
She goes by ‘’KAREN LYNNE CHESS’’ I suggest you look her up. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.