2025 Housing Market Crisis: What To Expect And How To Prepare

Hey folks, Dan Ferrio here with the closing bell for October 18th, 2024. So it's kind of an eerie quietness right now. So other than AI and some other stocks, stock market's kind of trickling up and it's hitting record highs every day, but the housing market, that's what we're concerned about. So there is a housing crash. Okay, basically the housing crash has occurred and it was right under your nose. It's housing sales. Do you realize it's the worst year ever in history for housing sales? The lowest amount ever in history. So I wanna show you an interview with Housing Wire, an economist at Housing Wire to basically paint a whole picture of where we're going with housing. And it's not, I won't say it's bad, but I won't say it's good. If you're out there, you were waiting for a crash or a pullback in prices, you're not getting it. And this interview doesn't help in that case. And he's also saying mortgage rates are gonna be stagnant here at this level for some time. And one of the big culprits to this is the federal government debt that we have. So let's listen to this interview, but he works at Housing Wire, check out their website. It's fantastic. It's got a ton of data here. So if you're watching my videos, you wanna understand the housing market. And to understand it, you need as much data as you can possibly get. Don't listen to just me and don't listen to some of the other people. Do your own research, compile all this data. That's why I try on a daily basis is to teach you this stuff. I don't wanna just say, here's what's happening. I'm gonna say, okay, here's like, for example, they use Altos Research. And I tell you guys about this all the time. If you go in here and see, there's Altos Reports. So many financial companies, especially when they're dealing with real estate, they use this data because it is pure data. You can go into your zip code and figure out what's going on. So check out Altos Research. But let's get over to the interview with this so you can hear his take on it. And like I said, it's not, it doesn't paint a fantastic picture, but it doesn't actually paint a gloomy picture as well. So let's let him take it away. Housing starts lower month over month, but beating expectations this morning. That said, the rate on a 30-year fixed remains right around 6.7%. Here to break it all down and what it means for prices, housing wire analyst, Logan Motashami. Logan, there was so much hope that the Fed was finally gonna start cutting rates and mortgage rates would continue to come down. And yet, they've gone up along with the 10-year post. It's been very confusing for the consumer because they see progress being made on inflation, the labor data getting softer, and they naturally assume that mortgage rates will go sub 6%, which would be beneficial for housing. But we just don't have that kind of policy out there. I've tried my best to try to temper expectations, but unless the Fed comes out and tells people we're not in kind of the pro-growth housing stage of monetary policy, things will get a little bit clearer. But the economic data had been firming up, bond yields shot right back up, mortgage rates shot right back up. So this is what it is. So what does that mean for activity? What are your expectations for where we go in the next few months? We had a good 18 weeks of purchase application data. Rates shot up, it's gonna go negative. This is what it's been like for the last two years. We're trending at the lowest levels of sales ever in history for the third calendar year. If mortgage rates could just get to 6% and stay there, we can grow sales from these depressed levels. But the purchase application data has been very clear. We're at record low levels. Any growth we get here is minuscule to the big housing picture that we've had over the last 20 years. So it's truly, it's dismal when it comes to purchasing. And it cycles just like he says. When rates hit right about 6%, the floodgates open up. We have more applications than we can even deal with. And then as soon as rates hit like 6.5, 6.6, everything stops. So I get it. Housing prices are way up there. Are they gonna come down? Well, that's what he's gonna talk about, housing supply. And that's what they started talking about initially is building permits are down. So is that gonna hurt or help housing? So let's get back to the interview. Logan, help viewers remember some of the issues we might face. We got starts today and what we might get in multifamily next year in the way of pipeline. Most likely, we're not gonna get any housing construction boom whatsoever. Multifamily permits are at recession lows. The units are being completed right now. Once that is done, those people aren't gonna be working on anything new. So it's a positive that we're getting some construction built now, but permits are at recession lows. If rates go higher, single-family permits will fall again. That's the problem. We just don't have that kind of monetary policy yet to be kind of pro-housing until the labor market gets weaker. So you're not optimistic we're gonna get more supply. You're not optimistic we're gonna get more demand. So does that mean you expect prices to stay stubbornly high? Inventory has been able to grow this year. 40% of the inventory growth in America is really Texas and Florida, but price growth is cooling. That's a positive. So it is a positive story that active inventory is growing this year. The price growth is cooling, but we need rates to stay at 6% and stay there. Whenever rates shoot right back up, it doesn't work for the housing market. It's just as simple as that. Do we need more federal policy, the likes of which some of the presidential candidates are talking about when it comes to intervening on supply and incentive, both on the buy side and on supply and demand side? Sympathetic to the view that housing sales are so low that you need to do something. I am not a big fan of any kind of demand stimulus. Literally all we would need is mortgage rates to get to 6% and stay, and then maybe single family permits can grow. The fed funds rate probably has to go a little bit lower to get more multifamily construction and land purchases going. There's just not much going on here because policy is still restrictive for housing. For the economy, it's still expanding, but for the housing market, it's still very restrictive. He hit it right on the button, and I can validate that information. It's so cyclical on rates alone. So that's that take on it right through here. And again, while you have the economy this strong, and I've been bringing this up every day, here's what the Federal Reserve looks at. They're like, okay, what's the economy looking like? So we take my head out of the equation. Right through here, here's what you're seeing. Inflation, getting down to 2% where they wanted it. Unemployment is below, it's right about 4, 4.1. It's been ticking down from 4.3 to 4.2 to 4.1. We have robust GDP. And here's where he was talking about the federal funds rate being, it's going to come down. So it's at 4.75 right now. What's the thoughts of it coming down? Well, here's the CME FedWatch tool telling us with the next cut, there's still a 90, over a 90% chance that they're going to cut a quarter percent because the federal funds rate right now is 4.75 to 5.5, which you can see right through this section right through here. So the equity markets are kind of even stagnant today. Look at the Dow Jones. The Dow Jones is up 17 ticks. When's the last time you saw that? You saw the Russell 2000s up or down one. We have the VIX coming down. It's coming into a nice range. We need it down to 15. Let's see what's going on with cryptocurrencies. How's that doing? We focus in on these every day. It's almost at 69,000. That's doing fantastic. And is oil still on the pullback? Yes, it is. Oil's below $70. So this is going to tremendously help on the inflation front. So that's the news basically we have for this week. I will be out with a special video this weekend. I'm actually doing all my research right now to introduce you guys to investment opportunities. Now, I'm not telling you what to invest in. I'm just going to give you some guidelines and say, okay, here's some tools and here's things, and we're going to educate you on this. What to look for when you're trying to put your money to work somewhere. Because a lot of people are missing out on a lot of things, especially the stock exchanges, which are hitting high levels every day. The AI trades people are doing. Even cryptocurrencies on fire right now. We just added to our portfolio not too long ago. Remember, it's 64,000, and that was about a month ago. Now it's at 68,000. So not a bad return that we're seeing there. So that's what we're seeing, and that's what I'm going to be working on over the weekend, and I will be posting that on Sunday. So if you're wanting to know what I am, who I am, what do I do, I'm actually a loan officer. And the good news is I'm a loan officer and licensed in every state. So it doesn't matter where you live. You can be in California, you can be in Maine, or you can be in Texas or Idaho. I can help you. So I'm licensed in all 50 states as well as Puerto Rico. So if you're looking to buy that first house, love to help you. If you're looking to refinance, would love to help you. What's the first and most biggest piece of advice I can give you if you're buying that first house? Well, try to get some stimulus package money or some down payment assistance money because it's virtually free, the ones we've handpicked. So if you want to check those out, check them out right through here, the grant finders. There's one for the Illinois grant finders because we're located in Illinois. So it's called the Chicagoland one. There's one for the national grants. We handpicked these specifically for you guys because they're fantastic and they don't have a lot of the ramifications a lot of other down payment assistance programs have for you. So check that out. And if you're looking to refinance, we're allowing you to pick your rate. Yes, I said, pick your rate. How do you do that? Well, go to the rateupdate.com, get my head out of the way. And I'm going to show you a new feature we just added in here. You scroll down and you're going to see some fantastic information there, but then right there, you're going to see it. Get the rate watch tool. So basically you're going to tell us if rates hit this number, that specific interest rate you want alerted by us to see what the numbers look like, go over your costs and see if it does make while, make it worth your while to go ahead and refinance. But if you want to reach out to us directly, you can hit the apply now button right at the top of your screen, or go to the bottom of my website right through here. And you're going to find our phone number as well as my email address. And it's 844-775-5626. Or you can reach me personally at danatherateupdate.com. Thanks so much for watching, guys. We're this close to 32,000 people, so if you wouldn't mind subscribing, I'd greatly appreciate it. How do you do that? Well, you do it right over there in the corner. Thanks so much, guys. God bless. Have a safe and fantastic weekend. I'll see you back here on Monday morning. Bye-bye.