This has never happened before (Housing Market)
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- More updates on the housing market - epbresearch.com/investor-serv...
Look into the contrasting trends of declining prices in newly constructed homes and rising prices in existing homes, backed by a detailed analysis of the crucial months supply metric.
Twitter - / epbresearch
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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.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad as 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 advice but get buying, cash isn't king at all at this time!
Investors should be cautious about their exposure and be wary of new buys, especially during recession. Such high yields in this recession is only possible under the supervision of a certified financial counselor.
John Desmond Heppolette truly appears to be knowledgeable in this field. After conducting a Google search of his full names, I thoroughly reviewed his web page, including his resume, and qualifications, which were truly impressive. I took the initiative to leave him a note and have booked a call session with him.
I suggest John Desmond whoever get some new prompts for his AI ad bots
Good thing the market doesn’t care what you think.
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
@@WilliamEthan00 That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@WilliamEthan00 I will give this a look, thanks a bunch for sharing.
Learn to Garden, use those OLD ways, from 1940 and Prior, 1 acre of land can Produce more than $250,000 of Produce. Today, likely half a Million. Gain some New Skills, MONEY IS FAKE, always has been. Also, but a Black Laws Dictionary, this Governs Our Lives, though most do not know it. LIFE LONG LEARNING, Survival, never went away, we just got too Comfy on a System that is a DEATH CULT AND PROFIT SYSTEM.
Blame capitalism and the unending greed for profit it fosters, even at the expense of people.
Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy.
I think I could really use more guidance to navigate the market, it is completely overwhelming, I've liquidated most of my assets and I could really use some advice on what best to invest into.
Your best option if you are unfamiliar with the markets is to seek advice or help from a consultant or investing coach. I know it sounds simple or generic, but talking to a consultant helped me stay afloat in the market and increase my portfolio to roughly 65% since January. For me, it's the best method to enter the market right now.
please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
Amanda Kathryn Sachs is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
I remember in 2007 when I was working in real estate seeing people buy homes new from builders with the intention of selling before close of escrow to a new buyer for profit. The crash was so brutal and fast that I remember seeing a lot of these units foreclosed on with the builder plastic still on the carpet.
Most people find it difficult to handle a fall since they are used to bull markets, but if you know where to look and how to maneuver, you can make a size-able profit. Depending on how you intend to enter and exit, yes.
The enduring US stock market bull run evokes a mix of fear and excitement, presenting opportunities with insight, resulting in $780k gains in the past ten months, utilizing a portfolio advisor for a well-defined strategy.
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?
This is useful information; I copied her full name and pasted it into my browser; her website popped up immediately and her qualifications are excellent; thanks for sharing.
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.
Investing in both real estate and stocks can be a great idea, especially if you have a solid trading strategy to guide you during prosperous times. It's all about diversifying your investments and maximizing potential returns!
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.
Recently, I've been considering the possibility of speaking with consultants. I need guidance because I'm an adult, but I'm not sure if their services would be all that helpful.
Actually, I'm not sure if I'm allowed to mention this, but I'd recommend looking up Vivian Carol Gioia because she was a big deal in 2020. She manages my portfolio and serves as both my coach and my manager.
Vivian profile appears to be fairly knowledgeable, therefore I must say that I value the advice. After locating her online, I thoroughly read through her resume, educational background, and qualifications, and I must say that they were quite impressive. We have set up a meeting after she replied to my message.
I can't imagine buying a house 8x my income. How do people do that and sleep at night?!? Last year my wife and I were qualified for a $1.2M house. We bought our house in 2019 for $280k and are staying put until existing homes fall in line with long run averages. The average US consumer is not doing well right now, then to think they're in a home 8x income! This feels like a house of cards waiting for only the slightest headwinds to topple it down.
Seems like a gamble. Housing prices are artificially kept high by having low supply.
1.2Million? How big is that house?
1000 sq ft bungalow in Orange County Ca if you're lucky. @@genez2157
drugs
The alternative is pissing the money away anyway by renting. At high enough interest rates, that becomes a more desireable alternative, which is part of why house turnover is slowing down. The gamble is basically on whether or not the government will allow the market to collapse.
It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.
I recently sold my home in the Boca Grande area and am considering investing a lump sum into the stock market before the anticipated rebound, couple of folks have been discussing a potential rally, speculating on which stocks may experience substantial growth during the festive season. Do you have any insight into which stocks these might be?
If you are new to the market, I recommend seeking professional assistance. The most effective approach to creating a well-organized portfolio is to begin with a professional who is knowledgeable about the turbulent yet profitable market.
Over the past three years, I have been working with an investment coach who has provided daily guidance on my investment decisions. With their expert analysis, I have realized gains of over 850k. Their insights have helped me avoid losses and capitalize on market breakthroughs, particularly during downtrends.
*@elsiechamberlain7773* I’m intrigued by your experience. Could you possibly recommend a trustworthy advisor you've consulted with?
"Camille Alicia Garcia" serves as my advisor, bringing extensive qualifications and experience in the financial market. Her deep understanding of portfolio diversity positions her as an industry expert. I suggest delving into her credentials for further insight. With her considerable experience, she offers valuable guidance to anyone seeking to navigate the complexities of the financial market.
Leave it to Eric to squash anecdotal narratives with actual data. Thanks! (Hope you're feeling better, Eric. We miss your analysis.)
I'm feeling great!
Feels good to be back.
Hasn't been right about any of the big calls I've seen. The presentation and the data is convincing, but the results (look back at predictions) don't match. There is underlying data that explains a large portion of the decrease in the cost of new home builds. You'll apparently be shocked to find out that it doesn't indicate a crash is coming.
@@vygencrash already happened in new builds in many cities.
Average list price in a city down 5% looks small.
Then realize that the average list price of a new build is down 15%.
Then realize that since people went from paying above to paying below list price, average sale price of new homes is down more like 20%.
Then realize that this doesn’t include build concessions such as interest rate buy downs.
As EPB mentions at the end, the reason we're not seeing new home prices affect existing home prices is due to location. Most new homes being built are not in the heart of cities, they're built in the exurbs or distant suburbs. If there is anything built in a desirable area, it's placed into multi-family rentals.
Counter argument: This has always been true. Even 10 years ago. What is different now? Clear indication of a bubble since this argument has always been true!
I think that's a very important distinction. If someone is looking at this video for macroeconomic trends in the market there is one message. However, if someone is watching because they want to buy a home then local trends are pretty much all that matter since most people buy within their current region. I live in Charlotte NC and the amount of housing being built and prices have been very high in and out of the city, but for quite a while the area has grown by about 100 people a day for several years (I think we currently rank 5th in numeric growth nationally).
This has always been the case though
The difference is the size and sprawl of the exurbs, plus the economic incentives around urban living. There aren't infinite exurbs within commuting distance of the urban core. Over the last century we have effectively build out almost all of the proximal areas.
So even though it is true that new houses have historically mostly been located in the exurbs, it is not true that those houses should continue to have the same value compared to existing houses since the size of the suburbs has only grown.
After the pandemic perhaps people have less appetite for a long commute?
A perfect storm is brewing in the United States. Housing prices, Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, diesel fuel and heating oil shortages, baby formula shortages, available automobile shortages and prices, the price of living place. It's all coming together and it could lead to a real disaster towards this year (or sooner). With inflation currently at about 6%, my primary concern is how to maximize my savings/retirement fund which has been sitting duck since forever with zero to no gains.
There are lot of ways to make a killing right now, but such high-volume near impeccable trades can only be carried out by real-time experts with ISDA Agreement. An agreement that lets investors sit at the “big boy table” and make high level trades not available to amateurs. Trying to be a high stakes trader without an ISDA is like trying to win the Indy 500 riding a llama.
I'm sure the idea of an invstment-Adviser might sound controversial to a few, but a new study by Motley-fool found out that demand for Financial-Advisers sky-rocketed by over 42% since the pandemic and based on firsthand encounter I can say for certain their skillsets are topnotch. I've accrued north of 580k within 16-months from an initially stagnant Portfolio.
Impressive can you share more info?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’AILEEN GERTRUDE TIPPY” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; thank you for sharing.
Excellent data and content. Personally, I'm 46 and like houses that have existed for at least 30 years. Nostalgic. Takes me back to when I was younger. The new houses are usually too close to one another and all look nearly identical. I don't like that.
I'm under pressure to grow my reserve that currently holds about $500k. I'm down by 20% already following the crash and I fear I could lose more.
It's all hype! best to ignore the trend at the moment whether bullish or bearish, and stick to a proper trading plan
It is very easy to buy in on trending stocks but the problem is knowing when to sell or hold, which is why a coach is important. I've been in touch with one for about a year now and although I was initially skeptical about it, I will say l've made more progress within a year generating 6figure profit.
That's truly remarkable. I hope you don't mind pointing me towards their direction.
Out of curiosity I looked up Olivia on the web and I have to say her Credentials are really Amazing.
Ever since someone pointed out these ad bots in TH-cam comments, I see them everywhere now.
A factor that affected new construction prices just a few years ago was the cost of materials, and the shortage in supply of those materials. Builders started factoring in expected price increases in materials to avoid selling at a loss.
The cost and supply have stabilized more, and with that builders don’t have to mark up as much to have that extra cushion against unpredictable material cost increases.
Still have good margins, room for further price drops
One would be insane to enter the housing market today. Yes houses have declined a whole 17%, but this is only 1/4 of the frenzied parabolic upward move of 2020-22. We are essentially back to 2022 prices. Lots of downward room to run, especially when the speculators who drove the prices up get squeezed out. Let’s revisit when prices get back down to 2017 levels.
it needs to decline 80%.
Where I live, it's still a sellers market. Leaning closer to a neutral market with rates coming down to 7% and more supply available. I don't think prices are coming down anytime soon unless the fed really jacks the rates up. I'm always on the lookout for deals. Check your county website for sheriff sales. There are always opportunities.
I don't know if we'll see 2017 prices, but 2021 prices would be plenty to normalize the market I think. That's still a 20-30% decline (more in some local markets)
Yeah, even just looking at the graphs presented here, you can see a couple years back the prices being much lower still.
@@zaymitchell what you have to be on the lookout for is not your everyday joe selling, it's the private REITs (like Blackstone) resorting to forced liquidations to manage short term liquidity needs and triggering a mass selloff.
You have a gift: taking complex topics and explaining them in layman's terms. Keep it up!
Do note: older homes can be more valuable because they exist in more desirable areas.
Plus investors and contractors are trying to unload inventory.
Yeah I was going to say the same thing.
That is a good point because I have seen some new home construction, including townhouses, in the middle of freaking nowhere.. their neighbors are cows and soy beans.
Another consideration: I heard that the average newly build home is smaller than before. Thats the reason for these falling home prices (according to my sources).
Update: He says that later in the video ;)
@@njerseydavid explain?
Good to hear from you again, appreciate your logic and historical perspective.
Also always worth noting that the new home sales data does not include the incentives that many builders are offering. Since they usually come from their in-house lender, they don't have to disclose them, so their comps stay artificially high. Probably safe to knock another 10k off of the new construction prices, AND those incentives usually get you a lower interest rate.
Sadly, new construction quality has also went down the crapper post-pandemic, so it's a dice roll for sure.
Pay to have it inspected, insist on paperwork including a provision that makes the builder repair for free anything that breaks in the first 12 months, and enjoy living in new construction
Good information to know. By keeping track of different parts of the economy, both sectors & locations, one can see emerging trends and plan accordingly. For instance, now would be a good time to negotiate the cost of having a home built in one of the over-supplied areas. A better cost and in a desired area equals a win-win.
One thing not factored in on price declines for new construction, in areas where builders typically built homes with basements in the past, they are now cutting basements out and building on slabs to bring prices down. This in many cases is a savings of $50-60k
Housing, tourism, airbnb's, and most of all, globalization, all had it's peak and are already starting to fall. I believe we're heading for the polar opposite. Too much supply of cheap houses and no buyers, no tourists, no airbnbs, countries with their own circular economies, low imports, low exports.
What are you talking about?
@@bfelb Market cycles, market bubbles bursting, personal carbon credits, less imports and more production of goods locally, climate lockdowns, 15 minute cities. It's all going to be a reality in a few years. Courtesy of UN and WEF.
Another factor, although I don't know how you'd get the data, is: Are new homes built to the same standard as they were 3 or 5 years ago? If they're downgrading fit and finish now that drop may not be looking so good
new homes are plywood trash.
@@timothyandrewnielsen100%, I’ve walked into several homes built within the last 5 years and all of them have had cheap finishes, creaky floors, mistakes galore and these were not cheap starter homes.
@@kyletennant4730 Agreed, there is no care or pride put into these new homes. The workers are all underpaid and just want to pump out as many homes as they can for maximum profits.
@@timothyandrewnielsen not no one, just the whip driving boss
One dynamic that's hard to get from aggregate data is the location of new homes vs existing homes. I live in Denver and can tell you that there's a lot of new homes being built on the outskirts of the metro. They are really nice homes but on balance unless you both work from home and very much want a quiet suburban life, these homes are not being built in desirable areas. One fundamental aspect of real estate that is not well know, particularly single family real estate, is that your home is a depreciating assets. Like literally the building itself is depreciating, but the land appreciates, usually more than building depreciates. It's a location based network effect, the closer you are to great stuff, the more your location is worth.
While I'm no expert it seems with Denver the poorer areas are playing catch up to the wealthier ones in the sense that wealthy neighborhoods are saturated, but there is more demand such that the less than stellar neighborhoods are getting facelifts, development, gentrification, whatever you want to call it. There probably is opportunity for buying and holding in one of these neighborhoods if you have patience
Probably depending on the population growth or decline of the area
Well-built homes are not a depreciating asset, especially in the current inflationary period. I'm not sure where you got that idea, but simply looking at the cost of construction for new homes, especially custom homes, thoroughly debunks that assertion. The value of the land, in select market segments, can obfuscate the actual value of the home, but outside of those markets there are endless examples illustrating the fallacy of your claim.
@jasonbroom7147 I think people are expecting a market crash similar to what happened in 08 in which case a lot of people got burned by their newly acquired property. To be fair the conditions have similarities, including outrageous pricing and astronomical high mortgages.
Hard to say though as to what will bring the market down. In 08 it was variable interest rates... but I don't think that will be the case this time. Even if this video is right, and people start building the market will probably just settle.... not crash
One thing you failed to mention was falling costs. Homebuilders were forced to raise prices due to supply chain issues and it’s actually cheaper to build the same home today than it was in 2021.
Thank you! Now I can show my parents, over dinner, why I haven't moved out yet!
my first good laugh of the day. thx
@@tonysteinke7234it’s an honor!
… and never will
Oh damn! I sure hope not!@@sethtenrec
I will pay 15% higher than 2020 prices, that is my hard ceiling. I will wait until 2025 if need be. This situation is an unaffordability crisis.
same. back to 30 year mean. none of this other garbage
Keep ‘em coming Eric….you’re truly appreciated..!!
In my opinion, a reason for the low inventory of existing homes is due to fixed term mortgages. If you have a mortgage in say Canada with a 5 year fixed which you locked in a 2.7% two years ago and want to move, unless you are downsizing, you will need to borrow more to enter the next home after paying selling commissions and legal fees now financed at 7%. This would double your mortgage payment, which in an uncertain economic environment and job market after having suffered 30-40% decline in purchasing power, makes a move unlikely.
Many people would like to move but are stuck.
Housing prices quadrupling in less than four years?!!! Seriously WTF? Wages certainly aren't raising like that. Who can afford these new homes? Something is wrong. It's like a massive bubble or something. You can have a huge demand for houses, but if they're priced way out of reach for most people, then so what? People need homes, if they don't have the money to buy, and can't buy, then they're either renting or living on the street; and people can barely afford the rents nowadays.
I’m 45 and I have about $250k liquid in savings which I plan to put towards becoming a homeowner but based on the current high prices on real estate, do you suggest I hold from buying or do stocks for now?
for many years, bonds and other fixed-income assets have produced yields needed to provide solid income for financial needs, the importance of mitigating risks could be why investors are turning towards advisors for guidance
You must consider what the typical single income is in your area then multiply it by 2. Then multiply that dual income by 4. That is the price which the typical dual income buyer will buy. If you can afford it with your down payment on a single income then you are on par with the dual income folks that you are competing with.
So great to see you adjust your call to the reality on the ground. In my market, existing home inventory is almost non existent, the comp prices are firm, and they sell fast. Home prices “higher for longer”
Are new homes just being built smaller and therefore cost less? Is this price per square foot or price for the whole house? Are we comparing apples to oranges?
I always wonder about older homes in regard to specific materials used for the build and how much those materials would cost today. My thoughts on why older homes are going for more money then their newer counterparts. Example: A modest single family brick home was common in the 70's but we rarely see new brick homes now. Also the spacing of plots of land for new builds are a lot smaller than some of the older neighborhoods.
If has more to do with location. In a lot of mature markets like fave bay area there’s no space. So new homes are built in weird locations. All of the good location is going to be existing homes.
Okay, but if you know how people take care of homes you are going to know that tens of thousands of work shall be required on top of the same price or higher than a new home.
great analysis and refreshing to see, especially in a place like TH-cam, filled with content creators who don't understand how to read economic data.
These are always interesting videos. This seems like a bad time to buy because both interest rates and home prices are high. It’s interesting that the new home prices aren’t that high. I know they’ve been buying down mortgages, so perhaps that would make it a possibility, but I’m really expecting a recession, with both lower home prices and mortgages on the way.
The most interesting part to me was in regards to how overvalued existing home prices are in areas with no new home construction, as these are precisely the areas where the housing market has been stronger.
EPB you’ve gotta keep pumping out videos. Your content is so straightforward and understandable, it makes these dynamic times much less stressful when I can watch a current EPB video to make it all make sense.
Fortnite bot username you are indeed a bot
I think what struck me the most is how the Home price to income median is at a whopping 8X! That means a household where 2 partners make the median income of roughly $60K a year each so $120K total would be buying a house worth $960K... That is completely insane! My income to house price ratio is only 4X and I find that I am maxed out for my personal budget goals...
Yes, but the price to median income is based on single income not dual income. Now you know why home prices can stay fairly strong since most homebuyers are dual income. That 8x price to income ratio becomes a 4x price to income.
excellent quality and analysis, as usual. Thanks.
I had builders give me bids in central illinois for a 2bd/1bth a house at 200k and 180k, that seemed crazy, whereas i paid 50k for a building shell, 10k elec, 15k plumb septic, 10k appliaces, 10k ac/heat, 10k drywall /insulation, 10k floors/paint/landscape, im still only at 110k-120k, i think the "builders" are out of their minds on charging "200k" for a 120k brand new house, its unsustainable greed
That was a lot of information very quickly, but I somehow followed most of it yet I’m not an economist. Great work!
Hi, awesome presentation and insights! But I was impresed by charts You are showing. What tool do You use?
Thanks for keeping us up-to-date
You can include Portland in your reasoning for SEA and San Fran. Same ideological effects on the health of the area.
New homes in new areas, maybe not established as desirable yet. Old homes in established desirable areas and less inventory. I haven’t seen this breakdown before and it’s really helpful.
I live near an area in which a lot of new development is happening and the word is that the homes are built poorly.
Very well articulated. I always enjoy his content.
Great video as always. I hope you are doing better and stay positive for the road ahead, you got this.
I'm not sure I buy the new vs. existing homes market distinction. Most buyers cross-shop both types of houses for a given locale, and rarely care whether they are brand new construction or something "used", so long as a house meets their requirements. It's unusual for a buyer to only shop new homes, or only existing homes.
As you mention, location is key. Many fewer new homes in Greater Boston (for example) and usually they sell for a premium. I think that its hard to compare regions with this national-average approach. Also, you keep predicting a softening of the labor market. Of course that will happen, as everything comes in waves. But we see a strengthening labor market not a weakening one at present.
Eric, great analysis as always. Do you have any thoughts on recent rental rate declines and rising vacancy rates, and how that would impact home values? Multifamily supply is coming online at unprecedented rates in many areas of the country and anecdotally, people who want to move are becoming “forced landlords”, adding to even more rental supply.
Always great videos backed by data. It's very much appreciated
welcome back! finally a new video :)
This video is fantastic. Thank you for all your skillful research and evaluations and all the hard work to put it together simply and gracefully for the masses!
I built my house in 2000 for 4X my income. I can’t imagine paying 8X or more. That is just insane. I thought 4X was bad and I was able to pay off my house in about 15 years rather than the full mortgage term.
Glad to have this content back.
Excellent research, well done.
Buying a house in small town Missouri in the next couple weeks. Even if the prices are inflated, they're still loads better than here in Utah.
Another huge factor to consider is the quality new constructions vs existing homes. In South Texas for example, the quality of new constructions has been extremely poor for several years now. While a freshly completed house may look amazing, it is usually not long before serious problems begin to occur, often involving foundations. This is because home builders are choosing speed over quality time and time again, shortcuts in the building process are often taken.
Great video and thanks for not lumping all home data across the nation in the same bucket like most people do.
moved to North Bay In 2020. I see very few for sale signs, but always SOLD signs...
That was a really interesting bit about how new housing is only really coming in specific places. How do you expect a place like Boston to be impacted by this when new construction is so uncommon? Are other cities declining in prices going to create downward pressure still? Or could Boston prices just keep rising?
How about the cost of single wide manufactured homes?
Thx for the video!
I'd like to see you attribute the blame to location as well-- dense urban cores are often well-built-out whereas say Phoenix, AZ still has plenty of land close to the city to build suburbs. I saw you cover this a little bit but I think it makes sense to cover in more depth.
Land values are the key missing component here. Existing homes sit on more valuable land than new homes. Check land prices. It literally never goes down.
How do you differentiate between a new home still on the market for 6+ months and an “existing” home?
I'm only just starting the video, but my best guess would be that the reason for this is that typical new construction homes and typical existing homes are not in the same markets. Many high demand markets are saturated. You couldn't find an empty lot to build a home on if you tried. And these are also the markets that have seen the biggest increase in demand.
How is this guy not the most followed person in the RE subject. He is just bringing facts without the hype
I loved this video so much. Sounds like the voice of reason. Subscribed!
This doesn't really make sense to me. How could new constructions are good value but existing homes not? If new homes value are so great then it will bleed into existing home lowering it's price.
It is misleading. If you were to look at a region, you would likely see new and existing housing (all other things equal) rise and fall together. Nationally things get weird because of how averages work. Eg. If Las Vegas has 75% new housing and 25% existing housing for sale and Boston has 75% existing housing and 25% new housing for sale, when you look at an average, the new housing data is heavily skewed to the Las Vegas market and the existing housing data is heavily skewed toward Boston.
New housing is frequently on smaller plots. The other metric is pure construction costs. Costs have been falling, which is good. it needs to fall a lot further.
The interesting thing about this is that it doesn't even mention the ratio between construction cost and sale price. This shows that housing is no longer working as a market for supplying homes but primarily as an investment market. This is the fundamental reason there is a homeless crisis and a cost of living crisis. While the free market is a good way of supplying optional goods it is lousy at pricing essentials like food shelter and healthcare. If you have to buy something the free market rapidly becomes an extortion racket.
Im new to this please let me know if I’d be wrong for a certain reason. A simple google search can tell you that the 300 sq feet less of a home definitely would lower the value by 15% or more. I googled how much does a 10x10 bedroom (100 sq feet) add to a house and most sources say between 10% and 15%. I feel it is very safe to say that the new housing market is dipping because of the smaller houses.
Good analysis thanks for the video
🎯 Key Takeaways for quick navigation:
00:00 🏡 *Overview of Home Price Changes*
- Average sales price of new homes significantly dropped, prompting questions about the right time to buy.
01:09 📉 *New vs. Existing Home Prices*
- Distinct contrast between falling prices for new homes and rising prices for existing ones.
- Emphasis on differentiating markets due to historical pricing variations.
02:20 📊 *Month Supply Metric*
- Introduction and explanation of the month supply metric in the housing market.
- Analysis of month supply for new homes (7.8) versus existing homes (consistently below six).
05:06 📈 *Historical Trends in New Home Market*
- Tracking historical periods with month supply below six, indicating upward price pressure.
- Visualizing booms and busts in the new home market based on month supply streaks.
06:14 🏠 *Factors in New Home Price Decline*
- Extended elevated month supply impacting new home price decline.
- Insight into labor market and mortgage rates affecting affordability.
07:46 🌐 *Influence of New Construction*
- Explanation of how declining new home prices affect existing home prices.
- Illustration of cities where existing home prices are influenced by new construction.
09:39 💰 *Valuation of New vs. Existing Homes*
- Comparison of average price-to-income ratio for new construction and existing homes.
- New home market approaching average valuations, while existing homes are currently overvalued.
- Consideration of whether it's a good time to buy based on the market type.
Made with HARPA AI
great video thanks
It’s not just the rates. It’s squarely housing prices. Too many cash investors are in the market that drove up this price
Are there any metrics that track build quality or lot size? Not everything can be boiled down to house square footage. I would be interested to see how those correlate to new and existing house sales.
Excellent point ….also add in undesirable locations compared to existing homes
We need legally limit the amount of corporate ownership of conventional housing. Giant corporations should not be able to buy up large amounts of homes for the sole purpose of renting them. The majority of people below the age of 30 already don't think it will ever be feasible to ever own a home, and that sentiment will only get worse unless drastic action is taken to fix it.
An estimated 27% of single family homes are owned by investors. Legislation was just introduced - today - to make that illegal. Be interesting to see what happens. 27% of homes just instantly going on the market would be quite the crash.
This is a bandaid. The solution is to incentivize the construction of more houses. When supply goes up, price goes down.
Only way to shake this out is a severe crash.
Right now, everyone sees REIT's as a sure thing for x20 returns.
No it's not, more likely anything else would be closer to a band aid@@TheBswan
@@yestube6689 It just got introduced. Idk if it's even out of committee, much less floor vote
Great upload.
Supply of *credit* has dropped everywhere thanks to rising rates.
Goodnight Canada.
Repetitious at the start but …I live in south Florida, where buying an older home introduces problems with meeting current codes and hurricane insurance requirements. Insurance premiums have been skyrocketing as have demands for roof and windows replacement. Condos are a large market and expensive inspections and reinforcing are now required.
At any rate, buildings age, deteriorate and therefore depreciate - on functional attributes as well, like low ceilings or antiquated floor plans. I wish I had bought a few years ago when mortgage rates were low.
well we saw a gigantic spike in house prices after 2020, so this also seems like a price correction
Great content, keep it up 👍
Return of the king, sending prayers and so glad to see a new vid
Hope you are well Eric!
Loved this video! This was very education. I especially like that there's facts backed up with actual data and not just speculation like other housing videos out there.
How much is impacted by the location of new homes vs existing? I wonder quietly to myself.
Existing houses are NOT rising. They are largely stagnant if not falling in some areas.
Excellent, ty
Your video never disappoints
Amazing video!
Glad 2 see u back
Your income to home value data seems off. If you look at ratio of case schiller price to median household income, we are at all time highs (even higher than the peak of the housing bubble in Apr 2006 when it was 6.79). We are currently at 7.5x median income for a house. The long-term average for this ratio since 1990 (to be comparable to your graph) has been about 5x. Why such a difference? Your graph seems to indicate that we are below the peak ratio???
Case shiller looks at the same or equivalent homes and tracks their asset prices. Case Shiller naturally adjusts with inflation.
Good video. Good insight.
You have to consider 🤔 where MOST new homes are constructed - Suburbs and Urban areas especially if you consider condos. The inventory in urban areas is very high because of the recent urban flight and the ability for many people to 'work from home'. Builders tend to build their developments close to cities. Urban flighters have gone to more rural areas where there really aren't a whole lot of new construction to pick from.
Most people don't want to wait for their new construction to be built. They're looking for NEW NOW.
Can you do a video like this for Canada?
Another factor bringing down price of new homes, is that most new homes are town homes. Townhomes are less desirable as they are glorified apartments that you own. They often come with little room for vehicles (so no parties), small garages (no storage), your neighbors are often connected or at least no more that 12ft from your house (fire hazard, noisy, and lack of privacy), on top of all that pretty every new home now has a HOA. All these things together will drive down the price of a home.
My goal was to buy next October, hopefully I get a nice home, prices in my area are starting to go down, not to pre-pandemic levels yet.
Wouldn't it be true that new homes typically are in an apartment building and/or have high HOA fees? I would think that would be a gatekeeper for most homebuyers.
Any chance you could do a similar video on the Canadian market?
How about price per square foot? Newer homes tend to be smaller on subdivided lots or townhomes / condos.