Home Sellers Refuse to Accept the New Market Reality

Today, I'm actually walking in the Seacliff neighborhood here in San Francisco. I wasn't going to make any San Francisco videos this year, but I thought, well, this is right across the Golden Gate Bridge, not too far from me, and it seems pretty safe. And it's a great place to talk about real estate because we're walking among some of the most prestigious real estate in all of San Francisco here in this neighborhood. And here's the thing about real estate right now. There's a couple of big corporations out there. Most notably, Berkshire Hathaway and Zillow are talking about how mortgage rates cannot fall enough right now for Americans to afford a home. A couple of months ago, I talked about a story on how Zillow came out and said that even if interest rates were at 0%, people still wouldn't be able to afford homes in America's most expensive cities. This is one of them right here. Now, in typical parts of the country, Zillow says that mortgage rates would need to drop to 4.43% to make the typical home affordable to the average buyer. However, even at 0%, it still wouldn't be affordable in New York, Los Angeles, Miami, San Francisco, San Diego, or San Jose. And of course, if you're a homeowner right now that has a low mortgage rate, well, then you're not going to want to put your house on the market unless you can get something even more affordable. Most people don't want to spend more if they're going to sell their house and move. They want to pay less. Unless you are moving up in the world and you're making more money and you have an expanding family, then that's the one exception. But a lot of people are looking for a cheaper place to live right now, not more expensive. And the problem is, even though a lot of homeowners received a lot of equity over the last few years, that's not enough for them to actually pay more for another house at these interest rates today. Even if interest rates were to fall to that less than 4.5% mark, a lot of people who have a good rate now still wouldn't be able to afford to buy a new home. That's what Berkshire Hathaway says. And that's why the housing market is going to remain pretty stuck for a pretty long time because even existing homeowners are having a hard time affording to buy a house right now, let alone people trying to break into the housing market for the very first time. And before this hesitation to put homes on the market was causing an inventory shortage throughout the country. However, now there's no more inventory shortage. We are back to pre-pandemic levels of listing inventory throughout pretty much all of the country right now. There is a handful of markets out there where inventory remains well below what it was before the pandemic, but those markets are now the minority, not the majority. You know my channel? I know your channel. Oh, cool, man. What's your name? Jim. Jim? Yeah, how you doing? Nice to meet you. Hey, first time doing a video over here. Good to see you here. I know. I live in Marin, and I remember when you did a videos in, uh, what is it, Tiburon? Uh-huh. Tiburon, Belvedere, uh, around that area. Yeah, yeah. I remember that. Yeah. It's very good. Cool. Cool. I appreciate you being a fan of the channel, man. Sure, I sure am. I, I appreciate you also. Yeah, absolutely. Well, I'll keep them coming. Good to see you out here again. Thanks for saying hello. Okay, you're welcome. All right, take care. Okay, take care. I always love when people stop and say hello, guys. So if you ever see me out walking around, feel free to say hi, just like Jim did. Now, when you look at what's happening with home builders, home builders have the most amount of unsold inventory than they've had in 16 years, guys. Well, what happened 16 years ago? Oh yeah, that's right. We were in a massive housing crash back then. And by the way, speaking of real estate, this is another one of Robin Williams' former houses over here by Seacliff Drive. It even shows on Google Maps. You guys can check it out. Looks like the new owner's undergoing a full renovation. But when we look at what's happening on the brand new housing market, it's not looking too good. And that is a sign of what's to come for the existing market. And it's already starting to bleed over into the existing market. According to Parcel Labs, the number of active listings on the market this summer rose to over 3.06 million, which is a 4.9% increase from the same time last year. And at the same time, you have a record amount of sellers delisting their properties. That's still not enough to actually make up for the massive increase in housing supply that we're seeing right now. So that whole narrative that we have a shortage is completely busted right now. And yet still so many people are talking about how we still have a shortage. Homes are also sitting on the market three weeks longer than they were a year ago, guys. That's almost a month for anybody counting. And that's a huge sign that sellers are still kind of anchored in the past. Sellers don't want to face reality of what's happening today. And it's funny because the way that they talk about this housing shortage is like this. This doesn't mean that there's an influx of housing in the US. We're still short millions of units. It just means there aren't enough people who can actually afford to buy a home. So they're telling us that the reason why there's so many homes for sale is because people can't afford to buy them. But if we built more than they would be able to afford it. Now, the only measure of truth in that statement is the law of supply and demand. When you have far more supply than demand, prices do come down. However, we already have more supply than demand. Right now, there's about a half a million more sellers on the US housing market than there are buyers. And a lot of these homes aren't selling. So we've already met the criteria of homes to become more affordable, but sellers are just refusing to lower their prices. At least the most stubborn ones are. But how can you sit there and say that there's a housing shortage and we need to build millions of more homes when there's already right now in October of 2025, more homes for sale than people are willing to buy? How can you say that there's a shortage? If there was a shortage, then all of the homes would be sold. We would be back down to just a couple of months supply of inventory. Things would be extremely tight and homes would be selling for over asking price because people just can't get enough of them. But we're not seeing that. As of October of 2025, according to realtor.com, the typical home is now spending 62 days on the market. And that's as of back data going back to July. It's probably even more than that right now. And this lines up roughly with how many days on the market it took to sell a home before the pandemic. So it's pretty much safe to say that the housing market has returned to pre-pandemic norms besides the prices. But the But they do admit here like, listen, wages have not grown at the same pace as home price appreciation, making buying a house feel even more unaffordable. And if nothing changes like mortgage rates, inventory or wage growth, it's likely the housing affordability crisis will persist in the U.S. Well, we know wages aren't going to magically go up. Interest rates are going to be pretty stuck where they're at right now. And inventory is already higher than what it even needs to be to meet buyer demand. So there's only one other thing left to move, and that is home prices.