When The Housing Crash Will Happen

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Why The 2024 Housing Market Is So Expensive:

-A Shortage of Homes For Sale.
Goldman Sachs reported that 99% of homeowners have an interest rate below what’s currently being offered on the market (85% of those rates are well below 5%.and 63% are between 2.5% to 4%.) To put that into perspective, if a homeowner currently has a 3% mortgage - prices would have to drop by 36% for that identical home to have the same monthly payment as today’s current rates of 7%.

-Home Values Hit A Low About A Year Ago.
Home growth almost slowed to a complete standstill at the end of 2022 over the fear of higher rates which is also, in part, why we saw such a dramatic increase over that following year.

-Homes Are Being Built - but not fast enough.
New constructions now make up one-third of the total market inventory, compared to just 13% in the years from 2000 to 2019.

Warren Buffett Sells His Housing Market Stock:
In August of 2023, Warren Buffett announced that he made a substantial investment in three Major US Homebuilders: DR Horton, Lennar, and NVR (Worth ~$800 Million). Since his purchase, DR Horton increased by 35%, Lennar is up by 30%, and NVR is up 20% - all in just 7 months. This means Warren Buffet was able to cash out about $250 million in profit from one investment in less than a year. In terms of why he cashed out, some people argue that homebuilder stocks have rallied WAY faster than expected, so it makes sense that he’s locking in his profits - but other people think that he’s now bearish on the housing market, and that’s a red flag for the future.

Bear Case For Home Prices:
As Ben Carlson points out - if there’s a recession, people are already locked-in to low-rate mortgages, so they’d be unlikely to sell. On top of that, 40% of homeowners don’t even have a mortgage, which means there probably wouldn’t be a bunch of panicked sellers listing their homes at the exact same time.

I think one of the best analyses was posted back in 2023 by Mark Woodworth, who noted that - for housing to fall - there either must be a reduction in demand or a surplus of inventory. In that case, demand would need to fall by 50% for housing to be in-line with historic averages, although he says this is unlikely, given how “transaction volume hasn’t fallen below 2M since the early 1980s.”

The 2024 and 2025 Housing Market Analysis:
Morgan Stanley says their “Bull Case” is that housing prices rise another 5%, saying that "With so many housing statistics at levels we have rarely seen over the past several decades, it isn't hard to envision housing activity and home prices evolving differently from what we have laid out above.” Which, for anyone wondering, is that that they “expect the U.S. economy to avoid a recession next year and the housing market to pick up as incomes rise and mortgage rates continue to fall slightly.”

However, in a more “realistic” forecast, they’re a bit more pessimistic with the belief that overall prices will fall 3% by the end of 2024. In their words, “We expect home prices to fall modestly as housing activity picks up versus 2023, with new home sales outpacing existing sales, but think the strong fundamentals of existing homeowners will prevent sizable corrections.”

In the worst case SCENARIO, they think housing could fall by as much as 8% if everything goes absolutely wrong: “mortgage rates would need to remain elevated, the economy slips into a recession, and demand for housing continues to soften”

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[ZakiSalem-zhgr]

Spoiler alert: no housing crash, just saved you a whole video. See you in the next one 😊

[Hannahbenowitz]

I’ve been diligently working, saving and contributing towards financial freedom and paying off my high interest mortgage, but the economy so far since the pandemic has eaten away most of my portfolio, what I want to know is this: Do I keep contributing to my portfolio in these unstable markets or do I look into alternative sectors.

[NicholasBall]

I've been watching the housing market closely, Prices have been skyrocketing for years. It's going to be tough for first-time buyers to enter the market." how can one diversify $280k reserve .

[ThatGuy-ncwg]

Three years of clickbait and still going strong.

[Fridaynightparty]

This guy has been claiming a crash since I bought my house in 2021

[Mikey]

Who's here from ClearValueTax channel?

[SuperSadel]

There was no housing shortage before COVID. All this appreciation didn't happen organically. Everyone keeps saying interest rates are too high, they're not , home prices are too high.

[ProsperIbeabuchi]

Still waiting for the day the Video Caption reads, "Housing Crash finally happens"...🤣🤣

[janalgos]

what drives a housing collapse is people *needing* to sell not "wanting" to sell. if someone loses their job and needs cash to pay bills, they may get to a point where they'll sell their house and rent or live with family, etc. they're not going to be sitting there thinking about what it would cost to buy another house, or how the new interest rate would compare to their current interest rate. it's mind-boggling that all of these youtubers and analysts fail to realize that simple fact.

[ltesla]

Watch Clear Value Tax instead. Thanks.

[logan]

Clear Value Tax absolutely exposed you. lol

[deriac]

As someone who has worked on homes, ive seen a flip side to this. While demand is high and home builders ramp up new home starts, the quality of the homes seems to be decreasing. Prices are going up while quality is going down. I feel this impact is very hard to see but the lack of conscious consuming is very apparant and seems to be preyed upon by most industries. Isnt this something we should worry about? I feel like every video online is about how to make the most money and theres never anything about investing into quality people and products. But instead im hearing about 300k+ homes where people are falling through floors because everyone wants to cut costs to make money. Theres zero care about anything other than coming out ahead with whats in your wallet.

[FatmaGamze-ycwl]

Got in at AWM79K with $1 but I will keep it until it hits $50. Still low with that number as the market cap is not close to where it should be

[humphrey]

thx for always keeping us informed Mr. Graham!

[taysirlive]

Looks like I’m staying at my parents house

[bersig]

I'm getting deja-vu here. In 2005-2007 builders were building huge new tracts of houses in my area. They were built as fast as possible, often with substandard material. (google chinese drywall.) When the crash came many of those places could not be sold and stood empty for years. They became attractive to squatters (or worse) and / or were gutted by thieves stealing the copper pipes, electrical wiring, plumbing fixtures, etc. Eventually most of those had to be torn down.

[ibrahimFusun]

If AWM79K has the growth as it has atm then no doubts it will dominate the industry

[Emisilknur]

Truth is most of all that we would not even have this current climb if it was not for AWM79K bringing the main change so that even casuals are super interested now. A brand name like that one behind this asset is just the best we could have hoped for

[Nioclas]

Housing prices can't keep rising endlessly, at some point something has to give, people need housing, and the entire supply is being artificially meddled with, something will inevitably happen, either someone / some company will find a way to dramatically increase supply, or China and America will have an economic meltdown.

[YaseminNihal]

It would be great if you had a deep dive on the AWM79K