Housing Market Crash Fears Rise (Homes Are NOT Selling)
These notes were generated by AI and may contain inaccuracies.
Are housing prices finally going to start dropping in 2026? If told in early 2022 that mortgage rates would go from sub 3% to 8%, then stay above 6% for three straight years, expectation was they would come down. Prices kept getting higher. According to Schiller's data, up 6% in 2023, up 4% in 2024, up nearly 2% so far in 2025.
Red Fin reports sellers outnumber buyers by 36.8% in October. Home builders can't move inventory even offering 4% mortgages. Wall Street Journal: number of completed but unsold new homes at levels not seen since summer of 2009. Builders geared up for big 2025 rebound, but demand didn't show; inventory climbing fast. Nearly 60% of houses sold in 2025 had at least one price cut, according to N.
November 19th article: home sellers outnumbered buyers by record 36.8% in October. Buyers dropped 1.7% to lowest level on record aside from start of pandemic. Strongest buyers markets in Texas and Florida; strongest sellers markets in tri-state area. Chart shows 36.8% figure climbing since December 2021; above black line means more sellers than buyers; positive since October 2023.
Blue line sellers, red line buyers: estimated number of US home buyers and sellers actively in market. Equilibrium in early 2023, then February 2024 more sellers than buyers, diverging.
Worst: Jacksonville, Florida at -4%. Best: Cleveland, Ohio up 11.6%, Newark, New Jersey, Detroit, Michigan. Milwaukees, Chicago up (Chicago due to big outflow of population).
Home prices almost never fall nationally. Historically over 76 years, nominal home prices fell only seven times, all clustered around major financial crises. Chart of completed unsold new homes since 2000: 2021-2022 lowest levels, now back to 2009 levels.
Early '90s S&L crisis, 2008 Great Financial Crisis, 1990 recession dip just over 2%. 11 recessions in period; home prices shrugged through most.
Waiting for 20-30% nationwide crash might take a long time. Upcoming video on unemployment and planned layoffs next year. Real estate is local; some markets correcting. Past videos called corrections in major cities that occurred.
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Austin down 26%, Cape Coral -18%, New Orleans -14%. Common: insane runups 2020-2022 (Austin, Cape Coral up ~70% in two years). Not collapse, just gravity returning sanity to overheated markets.
Decade full of curveballs; forecasting 12 months difficult, especially with planned layoffs, AI (takes 5 jobs for every created over 10-25 years). Base case: home prices stagnate, flat to slightly down so incomes can catch up. If mortgage rates stay above 6%, small correction wouldn't shock.
Shocking: Detroits, Clevelands, Milwaukees with solid job markets but declining populations (Detroit, Cleveland declining decades). Columbus, Ohio: population increase, now buyers market. Cleveland, Cuyahoga County: declining population 20-30 years, now sellers market.
Unclear if heading into recession; upcoming video on planned job cuts and unemployment rate. If rates fall due to slowing economy, doesn't help demand.
Highly unlikely: loan-to-value ratios significantly lower than 2007-2009. 2008 was systemic with commercial mortgage-backed securities, collateralized debt obligations, investment banks betting against clients on bad products.
Largest population group in prime home buying years: 32-36 in 2024 (speaker turning 38). People want homes, marriages, babies despite rates. Boomers (late 50s, early 60s) holding homes: doesn't make sense to sell low-rate mortgage for higher rates into inferior properties.
House prices don't fall often or easily; requires major financial crisis or huge layoffs. 2026 maybe stagnation or correction, not collapse. Loan-to-value lower than 2007-2008. Data doesn't support 30% cheaper housing next year.
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