What's up, guys? It's Graham here. And if you thought the housing market was completely backwards a month ago, just wait, because today, things are about to get a whole lot more confusing with the entire housing market now predicted to climb another seven percent in 2024.. at the same time, it's also important to consider that we're in the middle of a U.S credit downgrade, a giant wealth transfer, and fake employees being used to collect extra wages all will. Warren Buffett sits on one of his largest cash piles of all time.

So here's your update on precisely why the housing market is about to experience yet another unprecedented move: Which markets are expected to see the largest increases and decreases over these next 12 months, Whether or not there's actually going to be a housing crash according to experts and what you could do about this to potentially make money on today's episode of it Really helps to hit the like button and subscribe if you haven't done that already. Although before we start as usual, I do my best to read and respond to as many of your comments as possible, so feel free to let me know your thoughts down below. And also a big thank you to Blackrock for sponsoring to it. Just kidding.

Let's begin all right now: I Probably don't need to tell you this, but so far the Market has been incredibly resilient in 2023. Like as I mentioned just over a year ago, in July of 2022, the housing market was presenting itself in such a way that a big crash was unlikely to happen. And if you don't believe me, here's what I said: So Based on all the information I could possibly find, there is nothing that points to a severe or imminent real estate crash. With the information that we currently have available, this was in response to a somewhat controversial video posted by Dave Ramsey who proudly explains that there would not be a housing market crash.

And even though prices are very much higher today than they were a few years ago, most people don't know the full extent of it. For example, in 2017, home prices increased by 7.1 percent in 2018, five and a half percent in 2019, 6.2 percent In 2020, home prices skyrocketed 29 before going up an additional 18 in 2021, and then another 10.2 percent in 2022.. in fact, 2023 is the only year where prices are relatively flat down only half a percent from May of 2022 through May of 2023.. with, of course the caveat, the prices are once again beginning to move back up.

How much you might ask? Well, new data shows that were 3.2 percent higher today than a year ago now. Obviously, these types of past increases are in no way sustainable each and every year. but it is worth noting that historically, real estate prices do tend to move upwards by an average of 3.8 percent a year, Meaning, over the long term, it generally matches the pace of inflation plus an extra one to two percent. However, the real issue that we're facing today is that new constructions have slowed down dramatically from the peak of 2.1 million units during the housing bubble of 2007 to now just under one and a half million units, which is still lower than the amount of new construction that we saw back in the 1990s.

So what does this realistically mean for the market? Well, according to Zillow, they're so sure that the US Housing Market is Bond that it just issued bullish calls throughout 48 housing markets See well. Everyone else was predicting a housing market decline just over a year ago. Zillow took the stance that home prices were only going higher, and today, their expectations have largely proven to be correct. From their perspective, a lack of new development combined with higher interest rates has severely limited the amount of new inventory coming on the market, resulting in a huge decline of availability for buyers to choose from and a sales volume that has not been this low since 2009.

Because of that, they're quite bullish on the direction of future prices, and they think it's only up from here. For instance, even though Zillow economists expect National home prices to rise 6.3 percent over the coming year, their forecast model predicts that 48 of the nation's 200 largest housing markets will see an increase of seven percent or greater over the next 12 months. The reasoning for this is simple: The locations that they believe will be doing the best all have the lowest inventory and have seen less of a coveted Bull Run when compared to other areas like Boise and Austin. Of course, if you're curious which locations they expect to see the biggest increases, here's the chart, with places like Baton Rouge, Anchorage San Luis Obispo and Atlanta all coming in at the top positions now I Do have to say that I also found it remarkable that Zillow is not the only company who's predicting that the U.S housing market is bottomed.

In fact, CoreLogic also believes this to be the case, and they're also quite bullish. For example, in their most recent August housing report, they anticipate home prices to increase another 4.3 percent year over year, and even though this encompasses a national average, only 10 states posted an annual home price decline, with most of those recorded in the Northwest. On top of that, almost 4 in 10 sales are all cash transactions and most baby boomer homeowners have substantial equity, which could be putting pressure on prices and markets where that generation is currently migrating. or I guess more simply puts people have money and when they sell their home at all-time highs, they could then afford to buy another home at all-time highs keeping prices.

High The AEI Housing Center, which is really difficult to say say that five times, also predicts the exact same thing when with their belief that 2023 will see a six percent increase followed by a seven percent surge in 2024. all because the economy is still relatively strong. As they explain, low unemployment is giving consumers confidence that they'd be able to spend money in a home remote work is allowing buyers to expand their search. and the biggest reason from all of this is the fact that rate locked homeowners are more than twice as likely not to sell.

Look, we've all seen mortgage rates Surge from an all-time low of 2020 to now the highest they've been in 23 years. But today, a new report founds that the most realistic outcome from all of this is simply that nobody wants to sell. It's recently found that 47 percent of homeowners paying a mortgage rate above five percent already have their house listed for sale, compared to 20 percent of those with rates below. After all, if you bought a home with a fixed 30-year mortgage of three percent, your new payment would immediately be 40 percent higher, even if you bought the same home at the same price point just because you got a new mortgage at today's interest rates.

Because of that, a further analysis found the true inflection point that would cause homeowners to consider selling would have to be a mortgage rate that falls between four and five percent. This implies that if interest rates begin going back down, people might once again consider moving. But until then, low inventory and high demand is likely going to keep prices higher for longer. Although before we go into the most realistic outcomes from all of this, there is one piece of good news that's worth talking about, and that would be rent.

On the surface. According to Zillow, average asking price has increased ten dollars a month from June to July, which works out to a 3.6 increase from a year ago. However, when you start digging deeper, you'll begin to realize that it's actually quite positive. As Zillow explains, pre-pandemic rents were growing at an average of 3.9 percent a year, and this means that rents are now growing at a slower Pace than what we've historically seen.

On top of that, rents are also expected to decline even further, with a record 976 seven thousand multi-family units currently under construction as of June. In fact, Co-star even noted that there are more new apartments under construction today than at any other time in the past 50 years, which should begin to suppress overall prices even further. But as with all good news, unfortunately, there's also a bit of a downside. because of rising construction costs.

These new units are likely not going to be affordable for the lowest income bracket, but rather for those in a luxury price range, which is only going to benefit people who already had the income to pay it. Vice Even noted that, well, rent growth is slowing down even on the lowest end of the spectrum, the cheapest units are still disappearing faster than they could be replaced, and building high-end housing isn't riveting that. So yes, rents are coming down towards the higher end of the market, but on the lower end, it's still just as competitive and expensive. Although in terms of what this means for you, the housing market and the future, here's what I think First of all, I know there's probably a lot of information to swallow, but that's why I'm I'm washing it down with Ag1.

And for those that don't know, Ag1 is a daily foundational nutrition supplement that helps support whole body. Health Like even though they've sponsored a past video of mine, no joke. I've just been drinking it all the time since. This stuff is delicious and it's not too sweet.

It's just oddly refreshing and if you're interested in picking some up for yourself, I've got a link Down Below in the description and if you use it, you get a few bonus extras alongside with it. So enjoy! Anyway, besides that, I do want to make it clear that not everybody believes the housing market is going to go higher. In fact, one poll of 29 analysts forecasted the average home price is based on the case. Schiller Index will fall by four and a half percent in 2023, followed by no increase in 2024..

they also believe that average home prices are expected to fall 10 from Peak to trough. But as far as what I think in order to understand what's going to happen, you have to understand the difference between real and nominal returns. And if that sounds confusing, then you'll really gotta understand exactly how this works because it's really going to make a huge difference in terms of what we're going to see over these next few years. On the surface, most people only pay attention to nominal home prices, which is simply how much does something cost today relative to what it cost a year ago? But what everybody forgets is that if you want to have an accurate understanding of how much something actually goes up, you also have to account for inflation.

For example, by taking a home's price growth and then subtracting inflation, you'll be left with a much more realistic number that tells you exactly how much your money is growing or not growing. Depending on how you look at it like, here's something to consider: Would you say that making a 400 return between the years of 1970 and 2020 is good? Would you be happy with those returns? Well, if you said yes to this, you would be wrong because you would actually be losing net purchasing power when adjusted for inflation. And once you take this into consideration for home values, you'll begin to see that we've only ever had one decline in 15 years, with that being in 2010.. Even more confusing is that up until 19, 70 home prices were essentially flat and were only driven Higher by the need for larger homes, loosened policy changes, lower interest rates, and the one you've all been waiting for a lot of money Printing as Bill McBride points out from the calculated Risk blog, today's housing market is almost exactly following the same trends of 1978.

this is a time when the United States experienced runaway inflation, interest rates spiked as high as 20 percent Gas and energy prices were soaring and all prices were caught in the crossfire. Which sounds a lot like today, right? Well, thankfully, because of the Internet, we could look back in time to see exactly what happened and see if the same thing applies today. And here's what you need to know: From 1978 through 1982, nominal prices continued going higher, but real prices when accounting for inflation fell by 11 over three years, Meaning, home prices went up in terms of dollars. But when accounting for inflation, values actually declined even though people's net worths on paper were going up, if that makes sense.

Anyway, if that sounds confusing, just consider this hypothetically if home prices increased by five percent, but inflation was six percent, that kind of means she has still lost one percent. Plus, if we begin to look at the actual data, it's quite interesting because home prices were previously up 10.9 year over year during a time where inflation was 9.1 percent. This meant that home prices only increased 1.8 percent above inflation, which is pretty much right in line with historical averages. All of that is to say that this is why inflation needs to be considered when you talk about home prices, and this is why it's been my opinion for the last few years that nominal prices may still go up even though real returns are slowing down.

This is why the market is largely resisted to sell-off and why it's still possible for home prices to go even higher, even though it kind of makes no sense. Of course, there is also the caveat that real estate is very much location dependent and every single Market is going to be different. That's why I Believe that if you're going to be buying a home, my personal take is to only buy something that you intend on keeping for at least seven to ten years without maxing out your budget with something that you could afford. If you could stick within that, I Think you should be okay, especially if you 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 Snapchat and Instagram And don't forget that you can get some free stocks worth all the way up to a few thousand dollars with a paid affiliate link. Down Below in the description. When you make a deposit, you may as well do that because it's like five to ten minutes of work and you could get a decent amount back.

So enjoy! Thank you so much And until next time.