WTF is Happening With The Housing Market?

We have a ton of new information to go over today regarding the housing market. So let's just jump right into it. I am walking on Karen Way here in Tiburon, California. And first, we're going to talk about the foreclosure data, because this is something that has been a growing concern. We continue to see more and more people go into default and enter the foreclosure process as time goes on, which is something that I predicted a couple of years ago would happen. You can't have a situation where an economy is essentially frozen and people aren't making enough money and all the layoffs and expect everybody to be able to keep up with the mortgage payments. You also add in the fact that a lot of people bought way too much of an expensive home that they could actually afford, or they thought they could afford the home at the time of purchase a few years back, only to come to find out that the expenses for owning that home shot up dramatically over the following years. Now, according to Adam's foreclosure data, the places where we're seeing the foreclosures go up the most right now are places where unemployment rates are above 5%. Out of the 50 counties that were flagged at the highest risk, 12 are in Florida, nine are in California, and then you have Illinois, New Jersey that also had five. And the counties that are at the highest risk right now are Charlotte County, Florida, Butte County, California, Charles County, Maryland. Those are the worst ones. And all of these places are spots where unemployment is climbing over 5% right now. Now, during the first quarter of Adam's data, it shows us that we had a little over 118,000 properties with at least one foreclosure filing. And that is up 26% from one year ago, the same three-month period in 2025. That's a 26% jump, guys. Now, once again, are we at 2008 levels of foreclosure? Not even close. But the trend is the worrying part. The fact that it continues to go up. That's what we got to look out for. And just in one quarter, it's a 6% increase from the prior quarter. New foreclosure starts also climbed 20% on a year-over-year basis to over 82,000 properties. And bank repossessions actually is the part of this that went up the most at a 45% increase year-over-year with a little over 14,000 homes that have been reclaimed by lenders. Which if you look at it, guys, that's not very many compared to the amount of foreclosure filings that are taking place. Not every filing leads to somebody actually going through the full foreclosure process. Things can happen before that. Sometimes people can do a short sale. Sometimes people have enough equity to actually sell the house and get out of it. Or an investor might come in and lowball them and get them out of it. There's things that do happen before people reach that final stage where the bank takes repossession. But it also shows you how much room for growth there still is for bank repossessions to continue happening. With only 14,000 bank repossessions compared to 118,000 filings, it's not even 10%. What are the reasons cited for these increases in foreclosures? All the things I've been warning people about. This is not me saying this, guys. According to Housing Wire, the top reasons for these foreclosures are higher mortgage rates, which means a higher payment as well, especially if you had a higher purchase price, higher insurance costs, higher property taxes, and general household expenses that are leading to these defaults. This is what I've been saying was going to happen. You could see this coming a mile away if you have any sort of experience in the real estate business. So we talked about the foreclosure data. Here's something else that surprised a lot of people recently. The May home sales saw their biggest rise this year, and we haven't seen a jump like this in quite some time. Existing sales of homes went up 3.2% in May over the previous month, which led us to a seasonally adjusted annual rate of 4.17 million homes that could potentially be sold this year. Now, don't get too excited about that number because that really doesn't mean anything, and you'll see why with some of the charts I'm going to show you here in a minute. But economists are naturally celebrating this because it blew past their expectations of only a 0.7% increase, but they're chalking this up to the fact that more homes came on the market in May, which gives buyers more choice with more inventory, which definitely does help. And then we had mortgage rates decline in April, and some people might have locked in their rates back then, and that could have been another reason that more people purchased. While some of those things might be contributors to it, I just chalk it up to the seasonality, guys. This is the time of year when home sales are always the highest, even in a really bad economy. Go back to the 2008 data. I've shown you guys this before. 2008, 2009, 2010, 2011, even in those really down years of the housing market, we still saw home sales rebound in the late spring and early summer months. It happens every year like a clock. So I wouldn't get too excited about this, especially once you start seeing these charts here. First of all, let's take a look at this. Historical existing home sales going all the way back to 1981. Right now we're at 4.17 million, like they said. But if you just draw a line straight through there, we're pretty much at the same amount of home sales that we had back in the early 90s, which has been the case for quite some time. And also the same amount of home sales that we had back around 2008 when the market crashed. So to report this and say that this is good news and try to make it sound like the housing market is rebounding is a lie. Okay? So I don't want anybody to believe that lie. And you got to remember that in the early 90s and even the late 1980s, the size of the US population was than it is now. In 1990, there was barely 250 million Americans. Now there's well over 330 million Americans. But this is not even the most important chart, guys. This is actually the most important chart to look at that shows you the percent change in sales from one year ago and the regions and the price ranges. And when you look at this, it reveals what's been going on in the housing market for years now. And this same chart also explains why the median home price continues to climb even though home sales have been falling. Okay? In every single region of the country, except for the West, the home sales under 250K have been falling substantially, sometimes in the order of magnitude of 20% or more. Okay? And then you have the mid-tier sales of 250K to 500K, kind of flat. The largest one was in the South at a 4.6% increase from one year ago. But what do you notice at the higher end of this scale? This is where all of the home sales are actually taking place, guys, in the $750,000 category or higher. Okay? The Midwest saw a 14.8% jump in that. The South saw a 9.2% jump. In the $1 million plus category, it's even more substantial. The Midwest saw a 20.6% increase in those sales and a 16.7% increase in the South, 8.3% in the West. And when you just look at the overall US figures down below, you can see that the most substantial increase in sales is in the $1 million plus end of the market. So if you're seeing a lot more sales happen over $1 million right now than one year ago, naturally that's going to bring the median home price up. Does that mean everyone's house is naturally worth more? No, but that's what the National Association of Realtors and everybody who wants to sell you a home wants you to think. And a quick little catch up on how math works, the median home price is the middle. That's what median means. So you grab the most middle number from the lowest end of the sales to the highest end, and that brings you to median sale price, right? But if more sales are happening on the higher end, in fact, 11.2% compared to negative 9.1% on the lowest end, well, naturally that middle marking point is going to move closer to the higher end. So what do you get? A higher median sale price, which is why the median sale price, especially nationally, is essentially a useless data point. And it's a lie that people use to get you to have FOMO and to get you to think that home prices are going nowhere but up. And we're going to talk about that more later on in this video. The amount of our personal information that is out on the internet for sale without our permission is at an all-time high. And that's why today's video is sponsored by Delete.me. 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Guys, you can see when it was still going negative back then until about 2012 when things finally started picking back up again. But what do you notice? Things kind of stabilized for a while there and saw modest gains moving forward. And then we saw crazy gains during the pandemic. But what you see now is those gains going very close to zero and almost falling negative, even with so many more homes that are selling in these higher price ranges, which means that there's no reason to have FOMO about buying right now. They like to tell you that home prices are continuing to go higher on a national basis because the inventory of homes for sale remains below pre-pandemic levels. And that's pretty much not true almost anywhere. There are some places where inventory levels are still lower than they were before the pandemic, but that's not the norm, guys. And about 80% of markets have actually recovered and are seeing the same amounts of inventory as pre-pandemic, if not more. The real reason that home prices continue to go up is because just like the inflation numbers, the way that it's calculated, it skews the data to make it look better than it really is. And listen, it's better to use the median in this case than the average, because if they were to use average home prices, it would actually look even better. So they're giving us the worst looking number, at least. But with so many sales taking place on the higher end, it's inevitable that prices are going to go up. But some people have already learned the hard way that that's not true. There was one couple they talked to in this story that bought a house in Mesa, Arizona back in 2022, and they recently had to sell the house. They had to have the house on the market for eight months, multiple price cuts later, they finally sold the home for 15% less than they bought it for. And they took money out of their retirement accounts to cover their selling costs and pay off what they owed on the mortgage. So it sounds like they actually had to bring money to the closing table. These sellers did not make money, they lost money on the sale of this home. They're now renting, and they don't plan on buying a home anytime in the near future. But this shows you that just one example that people have to learn this the hard way. And look, if that's what it takes for people to learn their lesson, fine, I'm good with that. Not everybody's going to have to experience that, depends on the market you live in, depends on the purchase price, depends on how long you decide to keep the property for, are all going to be major factors in how much you come in ahead or not. But believe me, they are trying to make you feel the FOMO with these numbers, not only based on this bullish May sales report and median home prices continuing to go up, but Lawrence Young, he just came out with an announcement. He is the chief economist at National Association of Realtors, okay? And he just said that by the time 2050 rolls around, the median single family home price could be $1 million in the United States. Now, the reason why I would sort of agree with that just on the surface is because of inflation, not because homes are going to get so much more valuable between now and then. But the National Association of Realtors is forecasting a steady annual home price increase of 3% to 4% per year indefinitely between now and 2050. And he says, look at this, if you go back to the year 1990, the median home price was barely $100,000. And at that time, nobody would have thought that median home prices would be $400,000 today. And yeah, there is some truth to that statement, guys. But what have we seen happen between 1990 and now? Well, inflation has blown through the flipping roof and some markets get skewed more than others. Like San Francisco, right across the bay here in 1990, the median home price was $250,000. And today, it's already about a million. But why? San Francisco is literally the tech hub of American. All of these tech companies have been headquartered there for decades now. And these people are basically the richest people in the country, guys. So naturally, they can afford to more than the average Joe. Also, let's not forget that in the United States, there's basically no restrictions on who can buy real estate in this country, including a ton of foreigners that have cash who see the United States as the safest place to park their money. In Miami, where I live, we are surrounded by empty multimillion dollar condos. Guys, you can walk down the Miami Beach boardwalk at nighttime. I should do this when I get back and show you guys. Peak winter season, and you'll see barely half the lights on in any given building, especially a luxury one. But why would that be? Well, it's because nobody's there. People buy these places, and they have multiple homes across the world. And it's just somewhere to park their money, where they feel like they are not going to lose their shirt like they might in their home country. This helps prices go up even more here in the US. But the point of this story is that the National Association of Realtors wants people to hear this and say, this is why you should buy a house now. Because if you buy a house now, in 25 years from now, you're going to be thanking yourself because you might pay 400 grand for the house today, and it's going to be worth a million in 25 years. And if you just use that argument alone, I would agree. But the part of the story that they never tell you is how much it's going to cost you to own that home over those 25 years. Are you going to see some substantial gains over that timeframe? No doubt. Who knows how much it's really going to be. Guys, nobody can see that far into the future, but you are going to make gains. That's going to But the average person should be asking themselves, should I be worried about this? If I'm somebody who's contemplating whether or not I want to be a buyer or a renter right now, should I be worried that prices are going to be that high in the distant future? I would say no, at least not in the near term. And here's why. Because in many parts of the country, prices are actually still coming down. And even if the price gains are modest, the median home price is only going up like 1.5% year over year right now. So median home price is not even keeping up with the official inflation numbers at 4.2%, guys. So unless you are seeing home prices in your area go up more than, let's say, 5% or 6% year over year right now, I would not be worried about this. And the other thing is, with how much this economy has been deteriorating, especially recently, you're going to see a lot of buying opportunities continue to come up for the foreseeable future. There is no rush to get into a house right now. The opportunities are going to be there, guys, for quite some time. Real estate's a very slow moving thing. And one thing that's for sure in this economy is that nothing is getting cheaper right now. And nothing is getting better in terms of the job market. Nothing's getting better in terms of inflation or wage growth. And until any of those things improve, more people are going to be defaulting. More people are going to be forced to sell a home, which puts somebody who is in a better position in the position to be able to buy that home at a discount. So do you need to be worried about this in the near term, within the next, say, three to five years? I would say no. Should you be worried about it in the next 10 or 15 years? Yes, you should be. But don't buy just because that house is going to be worth maybe double what you pay for it now in 25 years from now. Because you could still make a much better return on investment with other things, guys, just like investing into the stock market, or even buying gold and silver for that matter, or starting your own business. Those are all going to be more profitable things that you can do with your money. But at the same time, everybody needs a place to live. And a lot of people like to build a little wealth in the background, owning a home. And that's perfectly understandable, too. I'm not saying that this isn't anything somebody should do. I'm just saying, don't do it only because your house could be worth double in 25 years. That's always been the case, guys. This is like a FOMO article that they come out with, right? Telling people, oh, it's going to be a million dollars in 25 years from now. Well, yeah, especially with how much inflation has been going up. I wouldn't be surprised if it's more than that. Because real estate has been outpacing inflation by quite a wide clip. I think I did a video a year or two ago talking about how much home prices should be if it kept up with the official inflation numbers. Home prices should probably only be around $275,000 or $300,000 if it only went up with inflation, guys. But because of all these other factors, like I said, foreign investment, extremely wealthy people that skew the figures, that makes the price go up even more. But also another thing to think about is that these are nominal figures, okay? And inflation eats away at way more than what meets the eye. So what a million dollars is going to be in 25 years from now is going to be peanuts, guys. Already today, you could argue that. I'm not saying a million dollars is nothing. A lot of people would love to have that kind of money, but a million dollars is not today what it was 20 or 30 years ago when you could just sail off into the sunset if you had a million dollars and never think about work again. Some people could still do that, but not in expensive areas of the United States. Those days are over. But then they want to go out there and tell us that, well, it's still the high mortgage rates that's going to keep the housing market muted for now. This is why we're not seeing a lot of sales happen. It all just comes down to mortgage rates as if that's going to fix everything. And Lawrence Young, he goes on record and says that if mortgage rates were closer to 6%, this would increase sales activity. Well, we already saw that happen, guys. Mortgage rates were 6% last year. Rates came down pretty substantially. Some people even got into the fives. Did that move the needle? No, it didn't. We still saw very low home sales. It didn't help anything. In fact, things are a little bit better now than they were then. And I will also tell you if it's mortgage rates that you are worried about and you're waiting for lower mortgage rates to don't. Because mortgage rates are predicted to be over 6% at least through 2028 now. So we're talking at least another two and a half more years minimum before we ever see interest rates go back below 6%. And I predict with the amount of inflation that we're seeing and some of the crazy things that could happen between now and then, that we might never see mortgage rates go back below 6%. Guys, those 3% rates that people got during the pandemic was probably once in a lifetime. No one's ever going to get that again, which is why so many people who have them are hanging onto those rates for dear life. Even if they hate their house or they wish they would have made a better decision or whatever, they're hanging onto that because that mortgage rate is beating inflation. We have so much inflation right now that the inflation is wiping out that mortgage debt for people. Even my personal rate, my best rate I could get at the time when I bought was 4.125%. And even that now is being beat by the latest CPI reading. But at least they do acknowledge eventually in this story, the average home purchase price is about $460,000 right now. People are paying nearly $3,000 a month for their house. And that's about 50% of the median after-tax pay of the average American. And the reason why that's a significant figure is because when you qualify for a mortgage, they look at your gross income. They do take into consideration your debt-to-income ratio, but they look at your gross income to qualify you. But yet 50% of after-tax, which is net income, is what's actually being spent right now, which is But all of this to me, if you ask me, if you've been patient, is good news. There's nothing that I said in this video that's bad news if you have been patiently waiting to buy. Because the buying opportunities are still out there and are actually getting better and better. And I expect that to continue to be the case for at least the next two to three years, guys. There is nothing that I am in any of this economic data or the real estate reports that says otherwise. I mean, if you have a counter argument to that, put it in the comments below. Hopefully I see it. And at least if I don't, somebody might see it and bring it to my attention because I think I just covered everything. I'm acknowledging that inflation is going to make home prices a lot higher in 20 years from now. That's a no-brainer. But it shouldn't be the reason why you jump in and buy a house. Because you can still come out far ahead financially being a renter and making the appropriate investments along the way. The thing is, you have to do that. If you don't, and you're not good with money, not good at saving or investing, maybe buying the house is the way to go for you. You have to figure that out for yourself. So if you enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here. And I'll see you in the next one.