The Housing Market CRASH Is Coming (Don't Buy A Home Yet)

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!

[WhiteBoardFinance]

Use code "HOUSING20" to get 20% OFF FOREVER!

[Johnny-sehk]

I'm wondering if folks who went through the '08 financial crisis had a tougher time than I am having today, my plan was to work, save money and retire at 55, but high price for everything is now an obstacle *Sigh, I look towards the stock market to fuel my goal at this point.

[RaymondKeen.]

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.

[Karenlisa]

Building steady income is quite difficult for newbies... <<thanks to John Desmond Heppolette for improving my portfolio.

[RicoRaynn]

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.

[Jay-]

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.

[giffordnewbury]

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.

[gabrielaaron]

They've been calling for a crash for years. A broken clock is right twice a day

[e.tune]

Thank you. Easy to understand and straight to the point. No need to go into crazy details and "what ifs"

[WhiteBoardFinance]

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.

[Evelyn]

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

[brentmordenofficial]

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.

[rccalhoun]

then add in higher property taxes, higher insurance premiums and higher maintenance costs and there are no buyers left.

[BryanHinderer]

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.

[billschlafly]

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.

[alanmt]

And now GDP was 4.5%! We're holding up the whole world...

[oo-jjxv]

Prices have come down in my area, i will continue to wait

[ram_bam]

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.

[EachAdventure]

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. 😔

[toddsellars]

I agree with your grandfather Marko - he's right. Facts 💯