remember we've got an expiring coupon code for the courses on building your wealth link down below check them out before the price goes up i hate to say it but the real estate bubble that the federal reserve warned about right here folks is beginning to burst take a look at this report from the end of march from the federal reserve the dallas federal reserve research division quote we argue that the underlying causes of the run-up differ from those of the last housing boom which preceded the 2007-2009 global financial crisis however there is growing concern that u.s house prices are again becoming unhinged for fundamentals this under the title real-time market moving monitoring find signs of brewing housing bubble and it's no surprise that when mortgage rates skyrocket three to four percent and buyer purchasing power plummets to the tune of 30 to 40 percent that we might begin to see some signs of the bubble popping or at least air getting left out let's talk about those signs in this video first we need to understand some fundamentals and that is that real housing prices are now above the upper bound 95 level which is just a fancy line that the federal reserve draws that shows when are housing prices deemed exuberant or too hot the last time we crossed over this line was right here in a period of time that actually lasted quite a bit from about the beginning of 2000 to the 2008 market crash being above that line though is a dangerous sign of a potential housing market bubble and folks look at where we sit right here and this chart only goes through the end of 2021 and home prices have only accelerated in the first three months of the year that's because those closing on homes in the first three months of the year we're still able to lock in substantially lower rates than buyers today if we hop on over to view the price to rent ratio we also see a substantial decoupling of prices to rents and so what we have is anytime the right here this blue line and the green line again go above this fancy red dotted line that the fed has drawn we get exuberance again based on how far prices have disconnected from rents you can understand that clearly via the lines on the bottom and you could see that here as they show you how rents are moving versus how home prices are moving okay so bottom just says if we're above the red bad here you go we are above the red and you can see the difference here between rents and home prices blue being home prices that deviation right and the same thing we're seeing at housing prices to incomes but not quite over that red line yet but that might be because this is based on incomes that have been inflated by stimulus so where does that leave us now well folks and now it leaves us with housing inventory that is the percent change of housing inventory finally skyrocketing the annual change of active listings is finally blowing up and people say oh well home prices can't go down because there's no inventory well folks look at this chart the only time you've actually seen since 2016 inventory levels move uh even in the positive direction compared to the prior year was briefly here in 2019 now we're seeing a positive move in available properties on the market this jump in inventory is unsurprisingly leading to a substantial amount of price reductions in areas throughout the country whether it's austin texas price drops in all metro areas whether it's price drops in seattle washington or los angeles the black line representing an increase in the amount of active listings with price drops and we're seeing this explode everywhere especially in markets like boise where we're starting to see 10 to 20 percent of homes with active price reductions so folks who say oh there's a shortage of homes just wait the more we see price reductions the more houses can potentially hopefully sell but can potentially also stagnate on the market at the same time as we're seeing active listings increase now the stock market sees the writing on the wall this is the msci world real estate index and you can see it's not yet fallen below its 10-year average but we've come down a substantial amount about 30 percent on real estate stocks because that's the belief of the stock market that real estate is going to suffer impairments evaluations which would lower the balance sheet at real estate companies like reits basically price gonna go down of houses so we may as well pre-price the stock lower that's the thesis and again it makes sense when you see interest rates skyrocket the way they have now fortunately and this is good news for the housing market here briefly recently is we've seen the 10-year treasury yield come down off of its highs of about three and a half percent to about three percent this helps keep housing interest rates for mortgages somewhere around five and a half percent when we get to that three and a half percent ten year we start seeing rates closer to six and a quarter to six and a half percent and that's substantially more painful another 10 to 20 percent of purchasing power for buyers evaporating at this higher rate and so it's no surprise that when we look at a home builder report the second largest home builder in the country lennar we see that orders and traffic sales incentives and cancellations have all worsened in the month of june with lennar again the nation's second largest home builder they have three categories of markets experiencing suffering category one markets on screen here have found purchasing power flattening in the pace of sales flattening areas like san diego orange county phoenix san antonio houston florida category two markets are seeing more aggressive price reductions like salt lake and reno in the bay area and category three markets are seeing a more significant market softening and correction and folks we have seen this deterioration get worse just since the beginning of june but folks are we actually starting to see home prices start declining well that's what we're going to talk about right after i mention this message from our sponsor and of course the expiring coupon code link down below for the courses on building your wealth with real estate investing check them out link below sponsor today's video is tendy's and come on everybody wants attendees i've been talking a lot about the volatility in the market right now institutional money is lining up to put cash to work and folks there are companies who are charging you an arm and a leg like stockx charging 40 to 350 per month for access to filtered options flow but folks attendees link down below shows you whale purchases volatility signals in real time for free take a look on screen and how easy this is folks i talked about revlon yesterday so let's see what's going on in the app you get c charts you can drop right in options flow data and even what people are saying about the stock all across reddit we get memes we get trades we get charts we get order flow all in one ah now look okay you gotta be careful okay and this is why you want as much leading data as you can because revlon was another move movement but we're seeing meme movements last shorter and shorter gme movement was very very long lasting amc the ape movement very long lasting but what's happening now is we're getting these meme movements on things like revlon that'll last maybe a week sometimes even shorter and so you need the data at your fingertips to make sure you're not getting ripped off plus attendees integrates with your brokerage platform as well so you can monitor performance now make sure you click the link in the description to download the attendees app it's a great app that is giving away options flow data for free check it out download attendees use the link down below free options flow algorithm so what makes us think that the housing bubble has actually started to burst well take a look at this this is a report that indicates the average momentum of home price appreciation has not just flattened it's actually the red line it has started to decline this is starting to show that in markets throughout the united states and 37 of markets in the united states we're actually starting to see home price decreases and this is a leading indicator in fact and this particular data from housingalerts.com which is a blog who collects this quarter over quarter data to try to give us some leading indicators which are so hard it's so hard to get leading data for real estate they list the following counties and cities as showing declines you can see the declines on the right there and you can pause the video at any point here but we can start seeing quarter over quarter declines of two tenths of a percent of a percent three tenths of a percent and if you go through this list you can see it continue point six percent point seven percent point eight percent one percent one point four percent going up to two percent three percent declines in charleston west virginia and uh you've gone iowa city here 3.1 percent declines and these are in quarters if you multiply the quarter by four to annualize these declines if this pace of decline continues a decline of 3.1 percent and a quarter could represent a decline of 12.4 percent in iowa city just as an example and this assumes that we're not going to see an acceleration of price declines so we're already starting to see quarter over quarter price declines and this makes sense because we saw housing inventory go up we saw the price drops on active listings we have more listings stagnating and fewer pending sales and what comes after that price drops now let's go away from a blog's leading indicators and look at what morgan stanley and barclays tell us or credit suisse affordability fallen and this dampens housing starts you can see housing affordability plummeting and the start of an inflection point in housing starts right over here take a look at the next one we have new and pending home sales both have substantially slowed gray or pending home sales and the black line are new home sales both of these can be useful as leading indicators as it takes us until closing to know the price of these but we know that the volume of them is starting to decline and so that's why we have to really pay attention to when these houses actually start closing what kind of declines are we going to see and then of course this is a another chart from morgan stanley on existing homes available for sale in gray and new homes available for sale in black and you see an inflection point up that's a little more still traditional on existing but a substantial explosion in new homes for sale and it'll just be a matter of time until we see that same movement on existing home sales as price drops and a lack of sales lead to stagnating inventory and more people listing homes for sale now there's also the risk that institutional buyers potentially slow their purchasing of properties taking less inventory off of the market this so far has been corporate buyers as a percentage of the purchasing market somewhere around two to two and a half percent for either institutional or eye buyers and if this flattens or inflicts to the downside we'll have less institutional investors what about non-corporate buyers well the individual investor is still buying but what happens when this inflects down and we start getting new data from individual investors no longer buying because they're waiting for potentially better rates after all jerome powell told us if you're a home buyer right now it might make sense to wait for a reset when rates come back down and things become more affordable folks the data is speaking volumes the real estate market is slowing down and it's time to get ready to be a buyer increase your income increase your side hustles increase your savings and reduce your spending get your debt to income down if you have debt and start talking to a lender today about what you could do to make sure you can qualify for a rental property by the end of the year or a home for you to move into maybe it's a duplex maybe you want a house hack it and if you're unfamiliar with real estate and you really want to make sure that you're an expert when it comes time to buy check out the programs on building your wealth link down below that walk you through these step by step and use the coupon code in the description thanks so much and good luck.