Home Buyers VANISH AS PENDING HOME SALES CRASH TO ALL TIME LOW

There are so many big stories this week to cover when it comes to the housing market and the economy that honestly it has been a struggle to try to even figure out what I think is the most important things to discuss because I really can't talk about all of it. But today we have a lot of things to unpack with this real estate video because pending home sales they just dropped to the lowest level that's ever been recorded guys We've already seen some troubling statistics come out recently surrounding the housing market and this is just going to be the latest version of it. Pending home sales are an indicator of how much movement we're seeing happen within the housing market. Okay when a home goes under contract that is now considered a pending home sale. But pending home sales just dropped 4.6 percent from December to the lowest level on record since the National Association of Realtors has been keeping track since 2001 guys. 24 year low. Sales are also down 5.2 percent from January of 2024. So we are not off to a great start when it comes to the housing market in 2025 this is just looking to be yet again another worst year ever. And it's funny that they even mention this but they say weather may have been a factor but sales actually rose month to month in the northeast and fell in the west which have seen the smallest impact of the cold temperatures. So obviously it's not the weather guys it's just the market itself. Mortgage rates remained well above seven percent for the entire month of January so that's yet another thing that slowed down sales. And even with this huge uptick in inventory in January we're seeing the amount of inventory up 14 percent year over year. You're seeing the amount of price reductions up year over year and yet you're seeing the pending home sales fall to an all-time low. I think we can finally call the game so to speak. We can already say things have turned and we're not going to see a turnaround for quite some time. You know whether interest rates come down a little bit or home prices come down a little bit I don't think it's going to get buyers back into this market. People have already given up on this housing market and the smart ones that haven't given up are just choosing to wait it out for better conditions that are going to come in the future. And this is really great news for everybody who's been waiting to buy a house guys because greater inventory combined with lower sales volume means that we're going to see more price cuts in the coming months for the listings that are going unsold. We're also going to see a big uptick in inventory in the spring and summer months like we do every single year. That's a yearly pattern in the housing market which those people if they want to have any chance at selling they're going to have to come to market with a competitively priced listing and if they don't it's just going to lead to more and more homes just continuing to linger on the market. This is becoming so apparent that the housing market is in trouble that even Zillow updated their forecast of where the housing market is going in 2025 because they used to have a pretty rosy picture of how 2025 was going to turn out as they usually do. Zillow's previous home price forecast for 2025 is that prices would go up 2.9 percent on a national basis this year. Well now they've revised that down to 0.9 percent and we're not even out of February yet. So imagine where that revision might go if these conditions remain. If we continue to see home sales not happening. If we continue to see inventory pick up. This number could actually turn negative. Their forecast may turn negative before the year's over. We'll see. And they say that the number one reason why their prediction changed is because new listings were higher than expected out of the gate this year so the inventory expectations have made the revision put downward pressure for home prices. According to Zillow existing home sales are now forecasted to reach 4.11 million in 2025 which hasn't really changed much. So far they're saying home sale trends are expected to closely mirror 2023 and 2024 which is just barely around the 4 million homes sold for the year guys. And keep in mind a typical year when the housing market is humming along it's usually anywhere between five and a half to six million homes sold per year. So that is a massive decrease in the amount of listings that are transacting. Don't be fooled because in the coming months what we're gonna see for sure it always happens and it would be a miracle if we don't see this but every year what happens is when the spring housing market rolls around we see a ton of listings hit the market and you see home sales picked up mortgage applications picked up and then they use that as like a way to claim that there's some sort of recovery happening in the housing market but that's not a recovery. We saw that same behavior happen even when the housing market was in an all-out crash back between 2008 and 2012. The spring and summer home buying months still saw an uptick in transactions and the amount of people buying homes even during those times. So be sure that you're going to see it again even in these times but I guarantee you mark my words that in a couple of months from now when we start seeing that behavior happen the news is going to come out and say the housing market's in full recovery mode nothing to worry about here everything was just looking kind of bad for a little while but now we're back on track. No that's a seasonal trend that happens no matter what. And what we're seeing happen is since buyer demand is so low we are seeing renters remain renters for longer. Zillow is forecasting a 3.7 percent increase in the price of single family rentals for 2025 and multi-family rents are projected to rise by 3.1 percent this year. However just keep in mind that's on a national basis okay and there are places across the country right now that have seen a tremendous uptick in inventory for apartments guys and even if rents did go up by three or three and a half percent this year it's still likely going to be far cheaper than what it costs to buy in a similar market and to give you an idea of what I mean one of my viewers Alan he wrote me an email recently because he rents an apartment in Atlanta which is another great example of a place that saw a tremendous uptick in the amount of available listings okay he says that his apartment complex has offered referral payments ranging between 250 dollars and 500 dollars in the past like if you were to refer a tenant to live there they'll give you 250 or 500 bucks right now the referral fee that they're offering has doubled to a thousand dollars and the maintenance people at the building are saying that there are a ton of empty units everybody who's getting renewal notices right now at his building are not seeing any increase in rents okay and he said prior to this every year whenever they got their renewal notice there was always an increase in rent this year no increase guys he says on top of all that they've been having homeless people trying to break into the building and sleep in the hallway or the storage units he also knows people in the area that are starting to move in together in order to try to save money which is something else we've talked about on this channel but the reason I wanted to bring this up because it's a fantastic first-hand account of what's happening in the real rental market right now you see these rental listings start to pile up and the incentives start to pile up to rent them you'll start seeing one month two months free rent different things like that as well any landlord under these circumstances that tries to raise your rent is a fool because they're going to lose their tenant because there's so many other available options out there and most people are just going to pack up and leave so right now is a really good time to be a renter the ball is in your court and you kind of hold all the cards you're able to call the shots now that there are so many available units so if you do live in a place that tries to raise your rent this year I highly recommend you try to negotiate that to at least no increase maybe even a decrease if there's a lot of other units popping up in your area where you could actually move for less because of course you know moving is a pain in the ass and there are expenses involved with it so if you can avoid it a lot of people would probably choose to do that but if there's units that are comparable to yours that are popping up that are three four hundred dollars a month cheaper than what you're paying now it might be worth the move and it's definitely worth negotiating with your landlord the next thing is new home sales in January also fell brand new single family home sales in January fell ten and a half percent from December so it's down ten and a percent from the prior month and it's down one point one percent from just a year ago and it's funny just the excuses they give another thing they say here economists are saying that the frigid temperatures in January across the country played a role in the decline like yeah I guess every winter you could say that's the case you know every winter you have less people out there searching for a house because it's cold but that is not the reason why people aren't buying these houses in general they're not buying them because they're too expensive and no one can afford them but you know that's what it's coming down to where the economists have no excuses and they refuse to admit the truth of what's actually happening in the real economy so they just come up with lame excuses like oh it was too cold so that's why a lot of these brand new houses didn't sell well news flash guys a lot of these brand new houses are right here in the sunbelt where it doesn't get that cold okay a lot of them are right here in Florida where we have endless summer okay we just have mild winters we don't get snow and for the most part I guess we did this year but you know what I mean you know the weather is not really a great excuse to say why these houses are not selling it's just beating around the bush and refusing to tell the real story which I try to do here every single day on this channel and one thing that me and a lot of other people here on YouTube have been saying about the housing market in general is that it has been artificially propped up by government stimulus by lending programs like FHA, VA and zero percent down mortgages from Zillow Mortgages and United Wholesale Mortgages these companies that are doing this now there was some new information that was sent to me about FHA fraud and how the government is using FHA to prop up the housing market even further okay take a look at this in 2007 35 percent of FHA borrowers had a debt-to-income ratio above 43 percent which is already a lot by 2020 54 percent of borrowers had a debt-to-income ratio above 43 percent and in case you don't know what the debt-to-income ratio is that is how much money you are allowed to borrow based on your monthly expenses so basically with a 43 percent debt-to-income ratio your lender will lend you about 43 percent of your income each month and allow you to pay that for your house payment for FHA which is far above what conventional lenders will give you so what this means is that the FHA loan portfolio is now far riskier than it was back in 2008 when we had the last housing crash about 7.05 percent of FHA mortgages went seriously delinquent which is 90 days or more past due within 12 months just last year within one year of getting the mortgage you had over seven percent of folks already be 90 days past due or more guys which is more than we saw during the peak of the housing bubble when it was 7.02 percent basically the federal government has been paying off the lenders and the mortgage servicers in order to not foreclose on these FHA borrowers because in 2024 we had 52,531 FHA loans go seriously delinquent only nine of them were foreclosed on how is that possible well it's possible because the FHA instituted a program that pays mortgage servicers to make borrowers missed payments for them you have the missed payments are added to the loans principle with no interest the FHA also pays the servicers to cut monthly payments for delinquent borrowers by 25 percent for three years with the payment reductions also added to the principle without interest so last year the FHA made 556,841 incentive payments to servicers in order to prevent foreclosures which is just about as many as new mortgages it insured last year so in other words government-backed mortgage relief has become a cash cow for servicers basically these lenders are being paid not to foreclose on these delinquent borrowers guys so the federal government is paying the mortgage of all these people that haven't been paying specifically when we're talking about FHA borrowers i'm sure a lot of people out there didn't know this because i certainly didn't know this until now that should have been over an additional 56,000 new listings that should have hit the housing market last year just in the form of foreclosure okay and they were not foreclosed on they didn't hit the market in foreclosure and how many other ones should have been in the position where they were forced to sell their property because they could no longer afford it but instead were getting their mortgages paid by the government guys i mean this level of fraud and corruption if you ask me is just unforgivable so there's just no consequences for a lot of these people that just bid off way more than they can chew their debt to income ratio was too high they never should have qualified to been able to even get that mortgage to begin with and now that they have it and they can't afford it the government's paying their bills and even with that going on keep in mind we're still seeing a pretty sharp decline in the housing market activity in general we're not seeing people jump in and buy houses right now you are seeing a lot of people list houses for sale that want to get out from underneath it which tells me that there is nothing that can stop this next housing crash we are already in the midst of it now and regardless of what happens i don't think anything can stop it short of you know a huge round of money printing that gets injected back into the economy to kind of prop things up that way short of that happening i don't see a way out of this besides just having to go through the correction people are going to have to experience the hardships from it now there was also some more data released from redfin this week talking about the home buyers typical down payment now is 16 actually 16.3 percent of the purchase price in december which is up from the 15 percent that it was just a year earlier and the reason why this matters is because it's not that home buyers are richer or people have more money it's because the prices of homes are higher and therefore the down payment amount has gone up that makes sense but here's also some important notes from this redfin story that also gives us some clues on what's happening in the market we are seeing now fewer home buyers pay in cash about 30 of homes were bought in cash in december that's down from 33.8 a year ago so you're seeing just less people with the money to actually go out and buy in cash but here's the most important thing from this story as far as i'm concerned back to the fha story about 15 percent of mortgaged home sales used an fha loan in december which is down only slightly from 15.9 just one year ago so imagine guys one in seven people who's buying a house right now aren't even really qualified to buy that house because with the way that fha works and the debt to income ratio that they allow their borrowers to have and then possibly even make their mortgage payments for them if they can't pay is huge can you imagine how much that contributes to the bubble that we are in right now with this housing market also you have the share of mortgage home sales using a va loan went up to 6.7 a slight increase from a year ago that's a zero percent down loan program you have more home buyers who are using fha loans now than they did in 2021 and 2022 when the interest rates were a lot lower which means that people are turning to fha because they cannot afford a conventional loan also which means you probably shouldn't be buying a house but yet they're getting the green light every single day to go out and buy one they're saying well it's because home prices are higher so more people don't have the higher down payment to put down therefore they're turning to an fha loan well yeah i mean if you don't have the money guys we've already been over this a thousand times in the past but just a quick refresher if you don't have money for the down payment and you don't have money after you close on the house for any real expenses with the house how do you intend to afford that house that's why we are seeing so many delinquencies in the fha lending okay with over seven percent of people last year falling delinquent and going more than 90 days late that is huge here's the thing even though i don't agree that now is a good time to buy one thing i will tell you is that it is a good time to buy compared to the last two years you know it's a better time to buy than it was two years ago in general and that's because according to redfin also the average home listing sold for 1.8 percent less than its asking price in january which is the largest discount in about two years so things are moving in the right direction like we've been talking about here also the homes are sitting on the market longer taking 56 days to go under contract also works in your favor as the buyer but that doesn't happen everywhere typically the the listings that sit on the market longer are either mispriced or they are in less desirable areas or they're homes that need a lot of work because according to most of the redfin real estate agents they're saying that you know if you have a relatively affordable move-in ready home that's close to highly rated schools they're still selling quickly and sometimes even with multiple offers which makes sense you know everything is relative in real estate even in the same general city or neighborhood you can see drastic differences in how hard or easy it is to sell a home but this is good news because it means that the scales are tipping in your favor as a buyer and going into the high season for real estate in the spring that's going to be giving you an advantage if you're somebody that does want to buy this doesn't mean that homes are all of a sudden cheap it just means that things are starting to work in your favor in fact right here in miami and in fort lauderdale the typical home is now selling for five percent below the asking price which is the biggest markdown among all of the 50 most populous regions that redfin tracks but does that mean it's a good time to buy in miami absolutely not you guys see the prices that i show you on these videos and they're absolutely ridiculous so yeah it's five percent off of a ridiculous number which isn't very helpful in the end this house right here's a great example of what i was just saying okay this house was listed back in june of 2024 for 4.45 million and fast forward to today they have lowered the price about two hundred and twenty five thousand dollars but still not really enough to get it sold so this listing is already about eight months old and it's not selling and so yeah even if it's sold for five percent off of the current list price does that make it a good deal no it doesn't does it give you an opportunity as a buyer to make a serious and sort of low ball offer and try to get the home yes and i encourage everybody out there to be doing that right now if you are looking to buy a house but the point is it's a step in the right direction and the point is also that all of the metros are selling at a larger discount than they were in january 2024 but if you're somebody out there who's thinking about buying a home this spring make sure you use my link down in the description below guys i can set you up with a real estate agent it's 100 free it helps you and it helps support the channel it also works if you need a realtor to sell your home as well so if you use that i appreciate it and 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