Something BIG is About to Occur in the Real Estate Market

And welcome back. Something huge is about to happen with our housing market that you guys should definitely be aware of. I want to talk about current trends we're seeing right now that should give us an indication of what lies ahead. So in today's video I'm going to talk about home prices, housing inventory, and also more importantly price reductions here because those have been absolutely skyrocketing lately. And of course before we get started if you guys are looking for a real estate agent referral whether you're looking to buy or sell a house in virtually any part of the United States then check out that link below which is homeandmoney.com slash jason to get started today. And with that said let's begin today's video. This is actually based on data provided by realtor.com. They provide a weekly housing market update and this is their update right here which again I haven't even read just like I normally do over the past several months now. Instead because I'm a real estate market data nerd here go to realtor.com slash research slash data. Takes you to this website right here and you click on this link right here which more or less takes you to this data right here. They provide weekly analysis regarding year-over-year changes in the median listing price, in other words asking prices in which home sellers ask for the houses, the year-over-year change there, active listing count which of course is the year-over-year change of housing supply in the U.S., new listings, the number of new listings compared to one year ago, also the meeting days in the market, the time period when a home seller lists their home for sale to when they ultimately accept an offer from home buyer, and last but not least the number of reduced price listings which have been absolutely skyrocketing lately. Let's first talk about meeting asking prices though. So this most recent week is for the week ending October 15th. Hope you guys enjoy this video. I went a lot of to make this video here. So take a look at this. For four consecutive weeks now have been more or less flat, pegged at around 13 percent gains. Obviously this is much more than historical speaking. Home prices tend to increase in range of three to six percent and not 13 percent and that's why we're seeing this giant increase of price reductions and more than that here in just a little bit. But we had four consecutive weeks now where the asking prices have been more or less flat and as I note right here this is likely to slow further in the months ahead given that we're approaching the slow season here for housing market here and of course because mortgage rates are at almost a 22 year high right now. Rates right now are about 7.37 percent at the time of this video which is the 20th of October. And by the way I have a lot more to share regarding this giant increase in mortgage rates here so stay tuned toward the end of this video here as well. I'm also going to provide a summary at the end of this video as well here so hope you guys get some value of today's video here. So active listing count, in other words this is the number of houses being listed for sale at the percent change compared to one year ago. Look at this for one, two, three, four, five consecutive months we've been seeing active listing count actually increase. So the most recent trends we have right now is for this week right here which is October 15th. It gained by 33.5 percent compared to the same time period one year ago. And by the way this 33 percent increase of housing supply compared to one year ago is in line with altosreachers.com. Let me briefly share that with you right now. So according to altos for the week ending October 14th we have approximately 566,000 houses for sale compared that to one year ago we had 423,578. So approximately 424,000 houses for sale now we have approximately 566,000 or a 33 percent increase. And going back to the data from realtor.com here this has been kind of the trend we've been seeing over the past few months. So over the past few months inventory gains compared to one year ago have been the range of 25 to 30 percent. But as you guys can see here for five consecutive weeks now that has actually been increasing now it's at 33.5 percent. And as I note right here this increase of housing supply is more or less due to the result of a fallout in home buying demand here. Because look at this we've been seeing an increase again for five consecutive weeks now of inventory growth on a year-over-year basis here even though we've been seeing fewer new listings for what is this for 15 consecutive weeks now. So in other words for 15 consecutive weeks we've had fewer new listings hitting the market compared to the same time period one year ago. Also for the past three weeks we've been seeing double digit decreases in new listings and despite all that we've been seeing inventory actually increasing. This is eye-opening to me because even though we're seeing this giant decrease in the number of new listings inventory is still increasing which is really telling me that we're seeing this really big pullback in home buying demand here. So take a look at Redfin's website right here this is Redfin's what is it called their data center. So the most recent week they have is for the four weeks ending October 16th. They have four week periods where they provide analysis regarding their housing market here and for the most recent trends we have right now new listings are down by 18.5 percent compared to the same time period in 2021. So during this time frame they had approximately 77,000 houses listed for sale. Compare this to 2019 this time they had approximately 89,000. Back in 2021 about 95,000 and back in 2020 at this time around 101,000. So in other words it's pretty remarkable to see that even though new listings have been falling greatly for the past several months it's pretty remarkable to see that inventory is still gaining ground. And I mention this on the channel all the time but in my personal opinion why we're seeing this decrease of new listings is because people don't want to give up their historically low rates. If you have a rate of three percent why would you sell in order to buy a house at 7.4 percent right now. So we're seeing this dynamics right now where a lot of home sellers are opting to or a lot of home owners are opting to stay put given the fact that rates have increased so much and also our housing market has also slowed down as well. Now again I'm not saying our housing market is without its challenges because there are a lot of challenges that home buyers are facing right now especially due to housing affordability and of course of rising rates here. Let's talk a little about days in the market though. Look at this for 12 consecutive weeks now it's taking home sellers on average longer to sell their house compared to the same time period one year ago. So right now it's taking about seven days longer to sell a house compared to the same time period in 2021. And one thing I want to mention regarding this is that this is the days on the market for houses that have actually closed escrow. In other words this is a lagging indicator of our housing market whereas a lot of these other trends we're seeing right here is really an early indication of home buying demand and therefore it gives us some indication of what lies ahead here. Let's talk about the number of reduced price listings though because this has been absolutely insane to watch this unfold here. So as of October 15th or at least the week ending October 15th the number of reduced price listings has increased by 90.1% compared to the same week one year ago. This is a giant increase and actually over the two weeks we've been seeing this huge increase because for the week ending October 1st the share was only 68% now it's 90%. Also at 90% right now this is very close to the highs we saw in mid June all the way until mid July when the range was approximately 90% to 110%. So we're getting very close to those levels we saw for year-to-date highs during the summer months. So that's an increase in the number of reduced price listings. Let's have a look at the share of reduced price listings because according to Altos the share of reduced price listings for the week ending October 14th is at 42%. Five months ago it was 21%. In other words the share of reduced price listings has doubled over the past five months and right now approximately four every ten houses that are listed for sale right now have all reduced their asking prices. And here's a chart showing the share of reduced price listings across the United States according to altosresearch.com. Again they have a great YouTube channel if you guys want to check them out. They provide weekly housing market updates for the U.S. here. So for the week ending May 13th the share of reduced price listings was 21.19% now it's 42%. The share price drops has been increasing greatly ever since really May of this year. As you can see from May all the way until the middle of April or actually the middle of August I should say the share was absolutely increasing or was increasing greatly each week. But once we hit the middle of April or middle of August I should say again the share of reduced price listings has still been increasing but not increasing at the rates we once saw. Okay that was a ton of info to share in today's video so I actually want to provide a summary to kind of recap what we just talked about here. Number one inventory has been has now risen by 33% over the past week compared to one year ago. The growth is significant though given the fact that there's been a decrease in the number of new listings hitting the market. Now down from last year for 15 consecutive weeks and new listings have been decreasing by double digits for the past three weeks in a row. In contrast this landscape here or their housing market would look entirely different if new listings were absolutely skyrocketing. But so far they're doing just the opposite though because they've been decreasing for 15 consecutive weeks and declining by double digits for three consecutive weeks. That's number one let's have a look at number two here mortgage rates have been at or above six percent since the first of September and this should slow down home buying demand further in the months ahead here causing inventory to rise in the weeks and months ahead. And average rates right now are at more or less a 22 year high for rates which is absolutely insane. So rates have increased by 232 basis points or 2.32 percentage points since August 1st of this year. Also compared to 12 months ago rates have increased by 418 basis points or 4.18 percentage points. That was number two let's have a look at number three here. We have a huge increase in the number of reduced price listings a huge increase over the past two weeks really and last week it rose by 90% compared to the same week one year ago. Also the share price drops has about doubled over the past five months according to altosresearch.com and also is far higher compared to the past few years as well. And if I had to guess this is likely to rise in the months ahead given the fact that rates have been surging greatly. And number four houses are taking longer to sell compared to the same time period in 2021 for 12 consecutive weeks now. Again though this is a lagging indicator based on closed home sales. I also expect this to increase in the weeks and months ahead due to our seasonality of our housing market and also due to the spike in rates. Let's talk about some potential huge changes ahead in our housing market given the fact that rates our mortgage rates have been at or above six percent ever since September 1st of this year. Number one more and more home buyers will get priced out of this housing market given the fact that rates have increased so much. So the general rule of thumb is that for every one percent gain in rates that causes a 10 percent decrease in buyers purchasing power. And because rates have increased about four percentage points over the past 12 months that causes a 40 percent decrease in buyers purchasing power. Therefore because of this a lot of home buyers have been or will get priced out of this housing market. And number two we have a huge housing affordability issue that I've been talking about on this channel virtually all year. So based on the most recent trends we have right now according to the National Association of Realtors based on current rates right now versus one year ago it's going to cost the average home buyer approximately $898 more per month compared to last year to buy a house. That's right almost $900 more per month to buy a medium price home today versus 12 months ago and that's a 73 percent increase from one year ago. And number three because of these reasons right here due to a lack of housing affordability and also home buyers getting priced out due to rising rates we're going to see more declines in home sales for the remainder of the year. Now I will say this would be entirely normal to see a decrease in home sales in the second half of this year but in my personal opinion we're going to see a seasonality of our housing market meaning our housing market's going to slow down due to our seasonality of a housing market happens every year but also due to this fallout in demand due to high rates. And lastly number four to combat inflation the Federal Reserve plans to raise rates or the federal funds rates in November and also in December of this year and this could cause mortgage rates to potentially increase even more. And of course I'll definitely keep you posted with the latest developments so make sure you subscribe to this channel. Also if you guys got any value this video whatsoever then please hit the like button I greatly appreciate that. I hope you guys have an awesome day and look forward to seeing you in the next video.