What's up? Grandma It's guys here. So 2023 is already off to an interesting start. Movie fans can now Sue over a misleading trailer California is cracking down on fake parking tickets and uh, we've just seen the worst housing decline on record coming in at a whopping 35 drop. All right.

I Know we've talked Non-Stop about the housing market throughout the last year, but come on, the latest housing date is becoming more and more like an episode of Westworld where the longer it continues, the worse it gets. Okay I know that was a bad joke, but seriously, season three of Westworld is almost as bad as home. Price is now dropping for the fourth straight month in a row, especially when there's a so-called real estate Reckoning that's right around the corner. That's why I Think it's crucial that we break down the latest numbers, go for the most recent 2023 forecasts for where housing prices could decline the most, and discuss the best ways that you could take advantage of a housing market downturn.

Whether you currently own a home or thinking about buying a home, are curious if you'll be able to afford a home, or you just like watching the world burn from behind behind a computer screen. All of that and more on today's episode of don't Mistake a Tasmanian Devil for a plush toy although before we start. as usual, if you appreciate all the unbiased research that goes into making a video like this, it would help out tremendously if you hit the like button or subscribe if you haven't done that already. Interestingly enough, just so much as mentioning it at the beginning of a video does help increase engagement by more than 50 percent, which helps with the channel, so if you wouldn't mind, would mean the world to me.

Thank you so much! And now, with that said, let's begin. Alright, so first of all, when it comes to housing prices, 2023 is likely to be a challenging year for four reasons: Starting with Number one interest rates. as you can see, interest rates have risen at their fastest Pace in history, and we're currently hovering around the same numbers that we saw back in the early to mid 2000s. Except unlike 20 years ago, median home prices are no longer 187 thousand dollars.

Oh no, Instead, they're 454 000 and you bet that median incomes have not gone up enough to keep up. Then second, we got consumer spending. or basically in layman's terms, people don't have as much money. The Wall Street Journal Recently reported that Shoppers pull back sharply on holiday related purchases home project and cars is demand for goods decreased in factories cup production.

Pretty much think of it this way: if you would normally have two thousand dollars left over every single month after expenses, higher prices might mean that you only have fifteen hundred dollars left over meaning there's less disposable income and less money that could be spent towards housing, then third, we have Rising layoffs. The fact is unemployment is typically a lacking indicator and generally occurs towards the end of a recession. After all, as inflation increases, people have less disposable income, companies have weaker earnings, and as a result they begin to scale back. usually with employees.

We've already seen many tech companies reduce their Workforce and with more job Cuts coming, that means less upward pressure for housing. And finally, fourth, we have more inventory. Redfin Found that the number of homes listed for sale increased by 15 year over year, which is the largest increase. peace on record.

Not to mention the median sale price is only up one and a half percent from a year ago. All of that combined is likely to lead to housing prices continuing to fall over the next year, although in terms of how much I recommend you take a seat. And yes, this is a Turkey baster that I've been using this entire time. Let's start with the National Association of Realtors outlook for 2023, which admittedly is one of the worst on the list in terms of overall prices.

They believe that home values are going to remain relatively unchanged from where they are today, meaning half the country could experience small price gains, while the other half could see some declines. They also believe that mortgage rates will begin to fall and likely settle around 5.7 percent by the end of the year, leading of course to a more normal housing market. Now, Realtor.com however, takes that to an extreme, believing that home prices will actually increase by 5.4 percent throughout these next 12 months driven by low inventory. Although they haven't always been the most accurate with last year's forecast being off by more than seven percent.

but Zillow takes a slightly different approach by aggregating their own numbers and Gathering data, they're able to get a general consensus of the latest market conditions, and for 2023, they believe price declines will be moderate across the country. Vacation destinations will likely take the biggest hit, and most experts believe that 2023 will be the year where conditions begin to favor the buyer. Now, of course, that doesn't mean that all areas are going to go down, and as their chart explains, some of the country in blue might continue to get more expensive. Although in terms of the final consensus, the analytics company Core Logic forecasts that housing prices will continue Rising by another 4.1 percent through October of 2023.

Although In fairness, they often adjust and correct their numbers in an almost monthly basis, so I would take that one with a grain of salt. Anyway, in terms of the overall housing values, the general consensus seems to be that appreciation is local, and even though Coastal markets are likely to see a five to fifteen percent drop, other parts of the country could stay the same or even get more expensive. Though I Have to say the one aspect of this that I personally find the most interesting is none other than rent. See: Generally, rental prices are extremely stable and they tend to be a lagging indicator when times get bad.

For example, rents actually increased throughout the 2008 financial crisis and didn't actually begin to drop until a year after the recession ended in 2010.. Why? Well, when prices began to fall and people were losing their homes, a lot of them chose to rent and that drove up the price. From that point on, though, prices only started to fall once those tenants began buying properties of their own. Several years later because the cost of owning was cheaper than that of renting and all of a sudden, the rental prices began to drop.

Although today, something different is happening. Realpage found that National asking rents dropped 0.59 in November And the largest cause isn't so much that those renters are turning to buyers, but instead it's a lack of new household formation. Which basically means that people are either moving back in with their parents or living with roommates instead of striking it out on their own. Markets like Phoenix and Las Vegas are also the first to see year-over-year declines in rent with the rest of the country beginning to follow.

This is also a trend that doesn't look like it's going to be stopping anytime soon because as Realpage points out, apartment construction has reached 40-year highs, with more than 917 000 units underway estimated to be completed in the second half of 2023.. that means there's a lot more inventory about to come on the market and not enough demand to rent at all. Even though the data says the rents are falling, not all locations are equal, especially if you live in Oklahoma City because they've just seen the fastest 24 rent growth in the country. But thankfully for all of the other renters, though year over year areas like New York are already down 10 percent with others like Milwaukee and Minneapolis seeing some of the largest declines in the country.

On top of that, it was also found to still be cheaper to rent than buy throughout most of the United States with 38 to the largest 50 metros being less expensive than owning. However, here's where we get to the really interesting part. and no, it's not the that you could get a free stock worth all the way up to a thousand dollars when you sign up down below in the description with the code Graham with Responsorepublic.com and make a deposit even though it's a pretty enticing offer. But instead it's the fact that across the United States less than 50 percent of landlords raised rent by more than three percent, with the other half raising rents by less or even nothing as the economy begins to slow down.

In fact, when you dive into the data, one analysis explains that most of the headline rent increases are reported from tenant turnover, not increases on existing tenants, and most of the rent increases we do see are simply from landlords who want to bring their rents back up to the current market value. Now, that doesn't mean that prices are not going to be increasing at all because 75 percent of landlords said that they intend to raise rent at least something. but they also point out that smaller landlords are less likely to raise rents during the renewal period since a vacancy would have a larger Financial impact than an institution where rent is spread throughout hundreds or thousands of units. So even though 2023 could be more expensive if you're currently paying under Market values, the good news is that if you're looking for a new place to rent, it's likely going to be a lot cheaper than it was a year ago with prices continuing to fall.

And finally, let's address the title of the video: Home sales slumped by 35 percent, which was the biggest decline on record. Now to break this down, it's important to understand that home sales do not necessarily correlate with lower prices, because simply put, home sales is just the number of homes sold in any given period. And throughout Covid, home sales were abnormally low, only because so few people were selling. This time, home sales are again abnormally low, but not because people aren't listing, but instead because people aren't buying red bid bound that not only were there 18 more homes on the market today than a year ago, but those same homes are lingering on the market longer as buyers take their time.

Purchase applications are also down 36 percent from a year earlier, signaling that buyers are waiting for conditions to improve, which could likely take another 6 to 24 months Personally though, as a real estate in investor and landlord myself, I see 2023 as a year where we're finally going to see the delayed effects of a slowing economy in terms of rents. I Believe that higher interest rates, weaker consumer spending, and continued layoffs are going to put a lot of pressure on landlords to hang on to their existing tenants or second guess their planned rent increases because there's probably going to be a lot more inventory beginning to hit the market like anecdotally. I've seen quite a few home sellers decide to rent their home because they can't get the price they want and they don't want to give up their low interest rate mortgage, so renting becomes the next best option. I Think as more people do this, that's going to give tenants the upper hand to pick and choose where they want to live and landlords will begin to compete with one another for a limited pool of tenants as far as home values are concerned.

I've said this before, but home prices take a long time to adjust. It's not like the stock market or one comment from Jerome Powell Could send the market into a free fall instead. The housing market is a lot like the temperature in a pool where if you turn it up it's gonna take a while to heat and that's what's Happening Here The thing is, when payments increase, only new home buyers are affected. Everyone else who's locked in their loan probably is not going to sell unless they absolutely have to.

and because of that, it's probably going to take about 12 to 18 months for those new prices to really reflect. That's why I Personally believe that a mile drop is probably the most likely scenario. Some of the harder hit areas declining by 10 to 15 percent, but as all of the day the date suggests by predicting anything is really a shot in the dark. That's why it's always best to only buy what you could afford with the fixed rate mortgage that you intend on keeping for at least seven to ten years and then after that you could subscribe if you haven't done that already.

So with that said, you guys thank you so much for watching As always, feel free to add me on! Instagram And don't forget that you can get a free stock with all the way up to a thousand dollars with their sponsor Public.com Down Below in the description with the code grand When you make a deposit, let me know what stock you get. Thank you so much and until next time.