The Biggest Housing Crash Of Our Generation Is Coming

Let's talk about declining home sales, and what this means for the 2022 Housing Market - Enjoy! Trade Bitcoin, Doge, and other crypto with low fees on FTX. Use my referral code GRAHAM and get up to $100 FOR FREE: https://ftx.us/partners/graham - Add me on Instagram: GPStephan

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Every month, the National Association Of Realtors publishes their data on the latest market updates, home pricing, and mortgage trends, to give their insights as to the direction of our economy:

Most recently, mortgage Demand Plummets 22%, new applications for a mortgage fell 19% lower than the same week in 2021, and refinance saw an 80% drop year over year…but, the most surprising is that: Home Prices are now 13.4% HIGHER than they were, one year ago.

Even though more inventory IS being listed, the record low pace of “days on the market” implies that, homes priced RIGHT are selling quickly - and, homes priced TOO HIGH are simply deterring prospective buyers.

The blog, CalculatedRisk, points out that - in terms of what could happen in the future, look no further than 1978: We’ve seen a similar uptick in year-over-year mortgage increases…with rates rising by more than 50% - and, even though mortgage rates are lower today than in the past…there are some striking similarities.

As Bill points out, from 1978 to 1982…NOMINAL HOME PRICES CONTINUED GOING HIGHER…but, REAL RETURNS - when accounting for inflation - FELL by 11% over three years…meaning, home prices went UP in terms of DOLLARS…but, because of inflation…the NET VALUE declined…even though people’s net worths were going up.
https://fred.stlouisfed.org/series/MSPUS

The thing is, since homeowners are able to lock low interest, fixed rate loans…home values tend to remain STICKY, in the sense that, people who aren’t FORCED to sell - won’t sell. That’s why, we could very well have prices continuing to go UP…even though, REAL VALUES might decline.

So, OVERALL…these reports are telling us that - higher prices ARE discouraging buyers from making an offer…BUT, there’s still enough demand to keep the market relatively stable.

In my own, very unprofessional opinion…I would NOT be surprised if NOMINAL VALUES GO UP…while REAL VALUES stay flat, or even see a slight drop…so, that means: if you're in the market for a home…simply buy what you can comfortably afford and plan to keep for the next 7-10 years…but, what do I know…I’m just a talking head on YouTube.

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