2024 WORST YEAR FOR HOUSING MARKET EVER?

The housing market in 2024 is predicted to be another challenging year following the slowest sales in 2023. Despite some markets experiencing bidding wars, the overall trend is down with a significant decline in home sales in March 2024 compared to the previous year. Median home prices are misleadingly high, with actual prices down from their peak in June 2022. Inventory is increasing, which is good news for potential buyers. However, mortgage rates are expected to rise, which may further impact affordability. The Northeast is currently an exception with increased sales, but the western U.S. is seeing a significant drop. Home builder stocks are falling due to decreased housing starts, indicating a cooling market. The situation is causing financial strain for many homeowners, and the video suggests that having a paid-off home may not guarantee a comfortable retirement due to high property taxes and insurance costs.

Takeaways

• 📉 In 2023, the U.S. housing market experienced one of its slowest years with only about 4 million homes sold on an annualized basis.
• 🔍 The trend is expected to continue into 2024 with no significant improvements, indicating another year of low home sales.
• 🏠 Despite some markets still experiencing bidding wars and quick sales, the overall national trend does not reflect this, with a significant decline in home sales in March 2024.
• 📈 The median home price has risen year-over-year by 4.8% to $393,000, but this is considered misleading as home prices are down from their peak in June 2022.
• 📚 The National Association of Realtors reported a 4.3% decline in home sales in March 2024 compared to the previous year, with an annualized sales prediction of 4.19 million homes for the year.
• 🎉 Good news for potential home buyers as inventory is increasing, with a 14.4% rise from the previous year to 1.11 million units.
• 💰 The Northeast is the only region where home sales increased by 4.2% in March, defying the national trend.
• 📉 The Western half of the U.S. is experiencing the largest decline in home sales, down by 88.2% compared to the previous year.
• 📈 Mortgage rates are expected to rise, not fall, contrary to popular predictions, which will likely impact the housing market's affordability.
• 🏡 Homebuilder stocks are falling due to a 14.7% decline in housing starts, indicating a cooling market and potential future inventory challenges.
• 👴 The importance of having a paid-off home in retirement is emphasized, but it's noted that even without a mortgage, the costs of property taxes and insurance can be substantial.

Q & A

What was the annualized rate of home sales in 2023?

The annualized rate of home sales in 2023 was barely 4 million sales.

According to the National Association of Realtors, what was the trend in home sales in March 2024 compared to March 2023?

Home sales in March 2024 experienced a decline of 4.3% on an annualized basis from the previous March.

What was the annualized sales prediction for homes in 2024 based on March sales?

The annualized sales prediction for homes in 2024 was 4.19 million.

Why is the median home price considered a misleading measure of the overall housing market?

The median home price is considered misleading because it does not account for the changes in the types of homes being sold, which can skew the perceived value of the housing market.

How did the housing market in the Northeast differ from the rest of the country in March 2024?

The housing market in the Northeast was the only region where home sales actually went up by 4.2% in March 2024, as opposed to the rest of the country where sales declined.

What was the decline in home builder starts as of March numbers?

The decline in home builder starts as of March numbers was 14.7% year-over-year.

What is the current trend in mortgage rates?

Mortgage rates are starting to tick back up, contrary to predictions of lower rates by the end of the year.

What is the current situation with housing inventory?

As of March numbers, inventory is up 14.4% from the previous year, with 1.11 million units available.

What is the potential impact of higher mortgage rates on the housing market?

Higher mortgage rates can reduce the affordability of homes, potentially leading to a further slowdown in the housing market and increased inventory.

What is the significance of the decline in home builder starts?

The decline in home builder starts indicates a cooling housing market and suggests that builders are scaling back construction due to slower sales.

Why might a person with a 70% down payment still find monthly payments too high?

Even with a large down payment, monthly payments can remain high due to factors such as property taxes, insurance, HOA fees, and the principal and interest on the loan.

Outlines

00:00

📉 Housing Market Stagnation in 2023 and 2024

The video discusses the sluggish performance of the real estate market in 2023, with annualized home sales at a historic low of around 4 million. The trend is expected to continue into 2024, with no signs of improvement. Despite some markets experiencing bidding wars and quick sales, the overall national trend is downward. According to the National Association of Realtors, March 2024 saw the largest decline in home sales in over a year. The annualized sales prediction for 2024 is 4.19 million, slightly higher than Wall Street's prediction of 4.17 million, which they view as positive news. However, the median home price is still increasing, which the speaker suggests is misleading and will be the subject of a future video. The video also notes that housing inventory is increasing, which is good news for potential buyers, and highlights regional differences in the housing market, with the Northeast experiencing an increase in home sales while the Western U.S. sees a significant decline.

05:02

🔍 The Impact of Mortgage Rates on Housing Affordability

The speaker talks about the relationship between the treasury market and mortgage rates, explaining that an increase in demand for government bonds is causing mortgage rates to rise. This is affecting housing affordability. The video predicts that the only significant improvement in affordability will come when housing inventory increases. It mentions Florida as a region where affordability might improve as inventory is already rising. The speaker also discusses a case of a mortgage modification gone wrong, where a person ended up with a 52-year mortgage term and no reduction in monthly payments, suggesting potential fraud or mismanagement. The video emphasizes the importance of understanding the terms of loan modifications and not blindly signing agreements.

10:02

🏠 The Realities of Homeownership and Market Trends

The video addresses the high costs associated with homeownership, including property taxes, insurance, and mortgage payments, which can be overwhelming for many. It dispels the myth that people will not give up low mortgage rates, providing an example of a homeowner with a 2.37% rate who is selling their house. The speaker also shares a story from a viewer in Houston, who despite being able to afford a 70% down payment, finds the monthly costs of homeownership still too high. The video touches on the challenges of buying an averagely priced home and the financial prudence of putting down large sums when the reduction in monthly payments may not be significant.

15:03

👴 Retirement and the Burden of Housing Costs

The video discusses the importance of being mortgage-free in retirement, using a story from a retired viewer who managed to live comfortably because they had no mortgage or rent payments. However, it also highlights that even without a mortgage, the costs of property taxes, insurance, and maintenance can be substantial. It cautions that while being mortgage-free can improve the chances of a successful retirement, it is not a guarantee, especially considering the increasing costs of homeownership. The video also mentions the struggles of current homeowners facing high property taxes and the potential for future inventory increases due to financial strain on homeowners.

20:04

🚧 Homebuilder Stocks and Market Cooling Signs

The video concludes with a discussion on homebuilder stocks falling due to a 14.7% decline in housing starts, indicating a cooling market. Despite ongoing construction projects, homebuilders are reportedly offering incentives and price cuts to entice buyers, struggling with high inventory. The speaker suggests that the slowdown in new construction projects by homebuilders is a sign of the current market conditions, as they are adapting to the reduced demand for new homes.

Keywords

💡Housing Market

The housing market refers to the sector of the economy that is involved in the sale, purchase, and rental of residential properties. In the video, it is discussed that the housing market in 2024 is experiencing a downturn with low sales and high inventory, indicating a buyer's market.

💡Annualized Rate

The annualized rate is a statistical tool that helps to compare the performance of various investments over different time periods by expressing them on an annual basis. In the context of the video, it is used to describe the projected number of home sales over the course of a year.

💡Bidding Wars

Bidding wars occur in a seller's market when multiple potential buyers compete for the same property, often driving up the price. The video mentions that despite a slow market, there are still some areas experiencing bidding wars due to low inventory and high demand.

💡Median Home Price

The median home price is the middle value in a list of home prices, which is often used as a measure of the typical home price in a given area. The video discusses that while the median home price is still rising, it is not a reliable indicator of the overall housing market's health at the moment.

💡Inventory

Inventory in the context of the housing market refers to the number of homes available for sale. The video highlights that the inventory of homes has increased, which is good news for potential buyers as it suggests more options and potentially lower prices.

💡Mortgage Rates

Mortgage rates are the interest rates on loans used to purchase a home. The video script indicates that mortgage rates are starting to rise, which can affect the affordability of homes and potentially slow down the housing market further.

💡Loan Modification

A loan modification is a change made to the terms of a mortgage to help the borrower, such as extending the loan term or reducing the monthly payment. The video discusses a case where a loan was modified to a 52-year term, which is unusual and potentially problematic.

💡Property Taxes

Property taxes are taxes imposed on real estate by government authorities. The video mentions that property taxes, along with insurance and mortgage payments, can make homeownership expensive, even without a mortgage.

💡Home Affordability

Home affordability refers to the financial feasibility of purchasing a home based on the buyer's income, savings, and the cost of the home. The video suggests that affordability is expected to improve as the housing market cools and inventory increases.

💡Homebuilder Stocks

Homebuilder stocks are shares of companies that are involved in the construction of new homes. The video script notes that these stocks are falling due to a decrease in housing starts, which is a sign of a slowing housing market.

💡Retirement

Retirement is the period after one stops working, typically after many years of employment. The video discusses the importance of having a paid-off home for a comfortable retirement, but also notes that high property taxes and insurance costs can still make homeownership expensive even without a mortgage.

Highlights

2023 was one of the slowest years in real estate history with only 4 million annualized home sales.

The housing market in 2024 is expected to be another abysmal year with no signs of improvement.

Despite a decline in home sales, some markets are still experiencing bidding wars and quick sales due to low inventory and high demand.

March 2024 saw the biggest decline in home sales in over a year, contradicting the typical spring market uptick.

US home sales in March 2024 dropped by 4.3% on an annualized basis from the previous March.

Wall Street viewed the slight increase in home sales above their prediction as positive news.

The median home price is still rising, but this is not a reliable measure of the overall housing market's health.

Home prices have dropped substantially from their peak in June 2022.

Inventory is increasing, up 14.4% from last year to 1.11 million units, signaling a return to a more balanced market.

The Northeast is the only region where home sales increased in March, up by 4.2%.

The Western half of the US is seeing the biggest decline in home sales at 88.2% lower than a year ago.

Mortgage rates are starting to rise, which is likely to further slow the housing market.

Economists forecast only a slight improvement in home sales for 2025, predicting 4.6 million annualized sales.

Many homeowners are struggling with high monthly payments, including property taxes and insurance, even with low mortgage rates.

A loan modification case resulted in a 52-year mortgage term, which is unusual and potentially fraudulent.

Homebuilder stocks are falling due to a 14.7% decline in housing starts, indicating a cooling market.

The high cost of home ownership, even without a mortgage, can impede the ability to retire comfortably.

Home builders are scaling back on new projects due to slow sales and existing inventory.