Housing Headlines Are Lying To You - Here's What's Actually Happening

You're being bombarded with completely different housing headlines right now. One person is screaming housing crash. Another person is bragging about all time record highs. They're both kind of right and they're both kind of wrong. Because the US housing market has officially split in two. On one side, you've got many markets where home prices are down tens of thousands of dollars from the peak. On the other side, you've got many areas where home prices are quietly hitting all time record highs. Today, I'm going to prove to you using actual zip code level data, which side of the split you're on. Let's start with four cities that demonstrate what I'm talking about. In Dallas, home prices are down nearly $50,000 from the peak in 2023. And in Atlanta, Georgia, down nearly $40,000. If you bought near the top in certain neighborhoods in Dallas and Atlanta, you're not even breaking even right now. But at the exact same time, Columbus, Ohio is sitting at an all time high home price for this time of year. And the same thing in Chicago, Illinois, Columbus and Chicago haven't crashed at all. So when someone says the housing market has crashed and someone else says prices are still going up, they're both cherry picking certain cities. Now, I definitely see the comments. Some of you get frustrated, really frustrated when I show national housing market charts because rightly so. You say real estate is local housing nerd. What you're showing on the screen isn't happening in my market. And look, while many times I do show national data because it gives us a picture of what's happening overall in the housing market. In today's video, I'm going to drop all that national hype and drill down into local zip codes. And by the way, if you want me to look at your specific zip code, join us on our next live stream and I'll break it down live. So drop your zip code and your city in the comments below and I'll pull the best ones. Before we look at prices, let's take a peek at inventory because that's really what's happening behind the split in the market. Nationally, active homes for sale is barely up. According to Redfin, active homes for sale is only up about 1.85% year over year. So there's barely more homes for sale right now than there was this time last year. And other data providers say that we have 10, maybe 15% more homes for sale. So on paper, it sounds like, okay, cool, things are starting to loosen up. But here's the catch. National is average. In a lot of Western and Sunbelt markets, the number of homes for sale has absolutely exploded. Buyers suddenly have more choices and that's putting real pressure on prices. But in big chunks of the Midwest and the Northeast, it's the opposite story. Inventory is still starved. There's almost nothing to buy. And that scarcity is exactly why prices are grinding higher. So when you hear inventory is up just a little bit, prices are flat nationally. What you're actually hearing is two completely different markets being mashed into one statistic. And that's why we're not going to stop at national data today. We're going local. But before we look at that local data, I need to fix one big problem that you guys are absolutely right about in the comments. A lot of you say, hey, housing nerd, you continue to use medium price and medium price is fake. And I agree with you. Most of the headlines you see on YouTube or on cable news are driven by median sale price. But here's the problem. If a bunch of luxury mansions hit the market all in one month and a few of them sell, the medium price jumps up and the headlines say home prices surge. If next month lower priced homes sell, but luxury homes don't sell, the headline could scream prices crash. Did the actual value of a typical house in that area actually change that much? Probably not, because median can be noisy. So today I'm not using median price. Let me say that again, because I know it matters to you. What you're going to see today with home prices is not median. Instead, I'm using Zillow's middle tier price. And here's what that means in plain English. We completely strip out the very top of the market, all the luxury mansions and custom builds. We also strip out the very bottom of the market, the houses that are completely dilapidated and need bulldozed. And then we just look at the middle, the 35th to 65th percentile of all the houses that sell. That's the area that most people care about and the area that most families are buying in. So when I say a particular zip code is up 10 percent or 11 percent, I'm not talking about one mansion that didn't sell. I'm talking about the typical middle of the road house. That's the only way the split on the map I'm going to show you today makes sense. All right. With that out of the way, let's zoom in and look at some local data. We're going to start with the crash side of the split, the places on the YouTube thumbnails that are painted red. And let's start with Dallas. Everyone online loves to say that Texas is crashing and Dallas usually ends up as one of the top crash cities. Remember earlier I said that Dallas is down about $50,000, but that's using just broad level city data. Now let's get granular. Zip code 75216, which is just south of downtown Dallas, using Zillow's middle tier pricing, not median, just the middle tier. The typical home in 75216 is down about 14 percent since 2022, 14 percent. If you bought near the top and tried to sell today, there's a very real possibility that you're walking away with less than you put in after you factor in cost to actually sell your property. But why is this happening? Inventory, folks, inventory. Currently, this zip code in Dallas, this localized data, not national, not state, not metro, but zip code level data says that there's 146 active homes on the market in 75216. And look, during the pandemic, they only had 35 homes on the market in December of 2020. And before the pandemic, there were only 80 homes on the market. So now you've got a ton of inventory compared to pre-pandemic and certainly during the pandemic. You've got builders finishing starts and investors offloading some inventory. So buyers in this zip code have more choices than they've had in the last several years, and demand hasn't kept up with the rise in supply. And when that happens, you have price decline. Dallas is clearly on the crash side of the split, at least in this zip code. Next up, Atlanta, Georgia, same story in the headlines. Atlanta is cooling off. Atlanta investors are trapped. But let's look at a real zip code and find out what's happening. Zip code 30318, again, using the middle tier, the 35th to 65th percentile, not the median, not counting luxury homes. The typical home is down about 6% since 2022. Now, 6% doesn't sound like the end of the world. But if you think about a buyer who stretched themselves to their absolute max with probably a minimal down payment, they didn't buy a spreadsheet. They bought a story that Atlanta home prices always go up. Now, four years later, their home is worth 6% less. And look at inventory. They've got 378 homes right now on the market back during COVID, only 157 more homes on the market, fewer panic buyers, less FOMO. So prices in 30318 have given up some of the pandemic froth. But watch what happens when we cross the fracture line and head to the Midwest. Let's slide up to Chicago. If you only watch national doom channels, you would see things like Chicago is done for. Inventory is exploding. People are fleeing. The demographics are taking over and the housing market is crashing. But let's look at that middle tier pricing in a specific zip code and see what we can find. Zip code 60629 home prices. The middle tier price, not the median, is up 8% since 2022, 8% up. Same country, same rate environment, completely different outcome. Why? Inventory. In that zip code, there are 76 homes for sale right now. If I go back to 2016, there were 159 homes on the market. So a place like 60629 in Chicago, that localized market, you can see it's plain as day that they have not really gained any inventory at all. And it's kind of just remained woefully low. You've got a base of local buyers and very little supply. Even with higher interest rates, that dynamic pushes prices up. And that's exactly what we've seen in markets like this. Now let's head out to Columbus, Ohio. Zip code 43017. Again, not median pricing, but the middle tier, the 35th to 65th percentile, the typical house. Those prices are up 15% since 2022. 15% two digit appreciation in a boring Midwest market during a time when everyone's screaming housing market crash. And if you look at the inventory overlay, it's plain as day what's going on. Back in 2018, this zip code in Columbus had 118 houses on the market. And you can see at one point during COVID only 21 homes on the market and now. 64 homes. So while they've gained some inventory, there are still nowhere close to pre-pandemic levels. Remember folks, supply is very inelastic. You can't build houses in a day, in a week, in a month. It takes a long time to build a house, to ramp up inventory. On the other side, demand is very elastic, meaning demand can ramp up overnight. If you don't believe me, remember COVID? I'm sure you saw house prices skyrocket where you live. It almost was a light switch that was flipped overnight. And that's what happens when some of these markets like Dublin 43017 doesn't have the supply it needs to keep up with the overnight demand increase. Let's go back to the pandemic darlings of the West coast and mountain states. Everyone had Boise, Idaho as their poster child for a pandemic housing boom. Californians moving in, investors flooding with new money using that same middle tier price. The typical home in 83646 in Boise is now down 10% since 2022, 10%. That's what happens when you take a relatively small market and flood it with new money and then slam the brakes with higher interest rates and a lot more inventory. I mean, look at this back during COVID. They only had 52 houses on the market in this zip code, but now they've got 220. And in 2022, they had nearly 400 homes on the market. And the same thing in Denver zip code 80134 prices are down 8% since 2022. Again, behind that number is inventory right now about 234 homes, but during the pandemic 63 homes and before the pandemic 230 homes. So this zip code is back to pre pandemic levels of inventory, more supply, less froth prices are dropping. And now let's head out to New York zip code 14519, which is Rochester is pretty incredible. And you may have heard stories from other housing analysts saying that Rochester and New York is suffering and they have a lot of inventory and prices are crashing. Let's find out using zip code level data, 14519 home prices. Are you ready for this? Sit down. They're up 24% since 2022, 24%. Why inventory? I mean, this chart says it all back in 2016, this little zip code in Rochester, New York had 65 homes on the market, and now they've got 14 homes on the market. During COVID they had 11 homes, so they barely gained any inventory at all. Inventory is not exploding there. And obviously prices are not crashing. And that brings me to maybe the best example of housing and real estate is local. Let's talk about Houston, Texas. If I look at the city of Houston overall, they say that prices, the middle tier price, not median is down 3% for the whole city. And if you hang out in the crash corners of the internet, you're going to hear that Houston is doomed all the time. And the whole city has a housing market that's crashing. So if I wanted an easy thumbnail or title, I can easily say Houston home prices are crashing because if I look at the Metro level, they're down 3% since 2022. Is that a crash? I'm not sure, but they're at least down since 2022 on a Metro level. But like you've all pointed out, we're going to go local. We're going to look at zip code 7 7 0 9 4, which is Katie. And it's one of the more popular areas of Houston prices. There are not down 3% like they are for the city of Houston Metro wide. They're actually up up 7%, 7% same Metro, same broader economy, Houston overall down Katie, Texas up. Why? Because even in the same Metro area, you're going to have zip codes that vary a lot. This is exactly why I pull zip code level information on many of my videos and lives number one, so you can see I'm not cherry picking one scary chart and number two, so you understand local matters. So the next time you see a YouTube thumbnail screaming housing crash or new all time high, I want you to remember this map. National data is average national price. It's Dallas plus Dublin, plus Boise, plus Denver, plus Chicago, all rolled into one statistic. If you're a buyer or seller, you don't live in national data. You live in local data with specific inventory and specific demand and a specific price trend. My job on this channel is not to cheerlead hand. It's not to sell you a crash call. It's to pull the data, expose the risk and pressure test the national headlines all the way down to a zip code level. Remember, drop your zip codes right now in the comments. I'll be pulling the most interesting ones for the next live stream, and we can review them together. I'm the housing nerd, and I'll see you on the next one.