America is DONE. "A Storm is Brewing" in the Real Estate Market

US housing affordability has definitely reached crisis levels check this out guys well it's been a slow building disaster so I don't think it feels more apocalyptic now than it did four months ago the housing market is just taking a beating because affordability is at a four decade low and so at some point we just need to catch a break from the Federal Reserve and that doesn't seem likely to happen in 2023 is it having the desired effect on prices on given it's also coming up against this backdrop of super low inventories that is the problem so it is certainly depressed employment in the real estate sector but it hasn't hurt prices prices keep going up usually in a downturn like 2008 people don't want to sell but they have to sell because foreclosure is imminent in this case we have had a soft Landing the rest of the economy is doing well people are not in dire economic Straits and with a 3% mortgage there's no way they're going to put that house on the market so we've had a downturn in sales volume but an upturn in prices and that means that the sales volume cramp is just going to last a long long time you heard that guys a long long time and the way that he said it it sound like somebody with an evil plot to keep regular people from owning homes you know what I'm saying or is that really the plan so here's why America's housing crisis has hit a new inflection point on one side you got millions of Millennials who are at the point in life where they're starting family am and they're desperately in need of a place to call home they're the immovable Force now on the other side you got the Federal Reserve dead set on taming inflation and their weapon of choice is of course interest rates they're the Unstoppable object The Showdown is leading to a major problem with housing affordability so home builders they're now they're caught right in the middle of it all they're faced with a tough choice should they go ahead and build houses that potential buyers might struggle to afford especially with mortgage rates sitting at over 7% or should they just just go ahead and hold off which of course would worsen the long-term housing supply issues that we're already facing so in a nutshell it's a real housing market conundrum and it's causing quite a bit of concern new data out shows housing starts in August fell 11.3% from July that was disproportionately driven by a drop in multif family units like apartments and condos but starts of single family homes fell by 4.3% too Builders started work on new single family homes at 941,618 which is 16% below the average pace of construction from mid 2020 to Mid 2022 and the same thing with the survey from the National Association of home builders showing a big huge steep decline in Builders confidence like the experts are saying High mortgage rates they're clearly taking on a toll on Builder confidence and consumer demand and a growing number of buyers are considering to defer home purchases until longer term rates move lower so here's what's going on mortgage rates they shot up early in 2022 and for a moment it seemed like that might cool down the red hot housing market but that relief was shortlived come June the S&P Cas Schiller National home price index did a u-turn bouncing right back up to its record high from the previous year what's driving this well it's a mix of strong demand in certain areas and limited housing Supply so let's go ahead and talk demographics for a second right remember Taylor Swift's iconic year 1989 well that's the same year that the super siiz millennial generation was born and guess what guys they're turning 34 years old this year which is typically the age when people start getting married having kids and needing more space so it's no wonder that there's such a huge demand for housing square footage all in all it adds to an affordability crisis so imagine a house that cost like $500,000 2 years ago and a family taken out a mortgage for 80% of the purchase price now at the then national average of 30-year fixed rate mortgage rates of 2.86% the monthly mortgage payment would have been about $1,656 a 13.5% run up in home prices since then would push the home's price to $568,000 a surge in rates to 7.18% last week thus results in a monthly payment of $3,077 for the exact same house so what do you think guys almost double the payment for just interest like would you go for that I guess this is what's happening to our broken housing market and you can really see the downside of relying so heavily on interest rate policy in order to guide the economy really the only solution is more Supply but I don't think that that's happening anytime soon with home builders still skittish about rates and affordability and yeah there is a lack of housing inventory that's propping up home prices but really affordability when the average family doesn't have enough income to buy the median price home some would say that the American dream is now dead I think no one should be rooting for that condoning it or even supporting it but what do you guys think make sure you guys do not miss out on the news and the headlines that impact you and your wallet be sure to subscribe to the channel and tap H that notification Bell icon and if you guys appreciate the content and the work that goes into every one of these videos you can show your support by dropping a quick like for the video really does help I really appreciate that now the question is when will the home prices be affordable again I mean am I right so the national average 30-year fix rate mortgage rate it blasted right through 7% in mid August reaching a 2023 high of 7.23% now as of September 21st the average 30-year fix rate mortgage rate stands at 7 .9% according to Freddy Mack so meanwhile year-over-year existing monthly home sales sagged in July for the second consecutive month slipping by 2.2% for a 6-month low with all four major US regions posting year-over-year sales declines and still people are lining up to buy homes despite the ultra high mortgage rates and Skyhigh mortgage home prices not to mention ongoing inventory Crunch and homeowners who locked in low interest rates they're staying put so really it is an affordability crisis at this point how housing affordability isn't the first thing out of any incumbent or want to be elected official at any and all levels is totally Beyond me we definitely first need to be able to see an improvement in housing inventory not to mention a cooling off of interest rates this additional inventory would ease the upward pressure on home prices leveling them off or perhaps even helping them to settle back toward something that was uh you know a little bit from the peak or maybe near Peak levels and what we don't want though are interest rates cooling down too quickly that will probably just create a surge in demand that wipes out any kind of inventory gains causing home prices to rebound again slow and steady is probably my guess and so that means waiting a while before getting back those not as low as before but definitely better than now interest rates housing Supply remains at near historic levels especially entry level Supply this scarcity of available homes is driving up demand and it's keeping home prices High there are are new single family homes entering the market catching the eye of eager buyers who are frustrated with the limited number of existing home sales now what's interesting is that the price gap between the average price of existing homes and new homes it's been narrowing recently which is attracting even more home buyers now on the existing home front there's a tiny bit of good news it seems like some potential buyers are either leaving the market or turning to new construction as a result the inventory of unsold existing homes actually went up by 3.7% between June and July well hold on tight guys don't get too excited this small increase only pushed up the existing Home Supply from a measly 3.1 months to 3.3 months at the current pace of sales and just so you guys know housing experts generally consider a balanced Market to have about four to 6 months of inventory so yeah we're still quite a ways away and it's still more of a sellers Market than it is a buyer Market meanwhile when it comes to new houses things are slightly better as a result as of July there were around 437 ,000 new homes available for sale which translates to about 7.3 months of Supply at the current sales rate and so this is down from 10.9 months of Supply a year ago now the big takeaway here is that we're still a long way away from the historical average of housing inventory dating all the way back to 1999 experts think that it's highly unlikely that this inventory shortage will magically disappear in 2023 so we're in for a real challenging ride in the housing market for a little bit longer if now doesn't feel like the right time to buy a home you're not alone in fact you're among 82% of consumers who reported putting home buying plans on hold even as they're saying that they feel that their job and their income are fairly stable or even better than a year ago so thanks to escalating mortgage rates and still high home prices home Seekers on $3,000 monthly budgets they could have purchased a $500,000 home a year ago but they can only afford $429,000 home today and firsttime home buyers hoping to land a home at a lower price point they generally have it even worse starter homes are becoming increasingly more expensive making it even tougher for folks who already struggle with low savings or you know for down payments and incomes that just can't keep up with the higher mortgage costs so for example in witch Kansas it used to be an affordable neighborhood in 2019 but if we go and fast forward to today the monthly mortgage payments there have skyrocketed by a whopping 271 per. and guess what guys it's not just Witchita many places across the country that used to be known for their affordability like Florida for example example they're seeing similar Trends according to the National Association of Realtors firsttime home buyers affordability index in the second quarter the index dropped to 61.4% which is actually down from 67.4 in the first quarter to put it very simply guys a score of 100 means a family with the median income can comfortably afford a typical home but right now most firsttime home buyers are nowhere close to having the income needed in order to make home ownership a reality firsttime home buyers hoping to buy a starter home will need to earn about $64,500 a year that's 133% more than a year ago and that's after a typical starter home hit an all-time high of $243,000 in June so those earning $75,000 a year can afford a $256,000 home yet Homes at this price or less accounted for only 23% of the existing home listings in April buying a house in any Market it's really a personal decision because homes represent the largest single purchase that most people will probably make in their lifetime so you got to really be in a solid financial position before diving in use a mortgage calculator to estimate your monthly housing cost based on your down payment but if you're really trying to predict what might happen next year experts say that this is probably not the best home buying strategy for them the best time for prospective buyers is when they find a home that they like that meets their family's current and foreseeable needs and that they can afford it's also important important to be flexible if you badly want a house and you can work remotely or switch jobs moving to a lower PRC housing market may actually be a good idea to consider millions of Americans have done just that already also get all your ducks in a row in advance review your financial situation gather require documents shop multiple lenders and strengthen your credit score that way when you do find your dream home you'll be in a better position to act fast in a tight market and if you're on the other end though selling I mean experts advis taking steps sooner rather than later to get your houses ready to sell the top regret for sellers year after year is that they wish that they started prepping their home for sale sooner and don't neglect that online curb appeal guys you can look up how to include a 3D virtual home tour or even an interactive floor map in your listing definitely some cool stuff more in the next update