Oh, hey everyone. I thought i was done filming for today, and you know i may have just had a shower and gotten totally blindsided by this report from zillow, and you know things might still be a little unhinged around here, but holy crap bloomberg just had the following of from Zillow and uh in a headline piece here we got to talk about it a little bit. Oh boy. Here we go all right here.

It is dang quote the market is softening the housing market. That is see zillow does homes full stop, says the ceo of zillow. In an interview he says quote, i think the toughest macro lens is that inventories continue to plummet. Flat transactions would be good this year and i don't know if we will get there.

Okay, this is challenging. So we got ta talk about this and we get a little bit more color from this excerpt. By going to the earnings, call not the interview, the earnings call so let's jump on over there and try to understand what zillow's, seeing because it's a good heads up for the housing market. Remember zillow is a company that has a lot of data on us as as individual searchers from for homes and obviously one of the first things to get hit uh.

You would expect, at least if the housing market was beginning to slow down, would be individuals, willingness or interest in searching for homes. So, let's jump over to the uh earnings, call and see kind of what they've got compared to expectations now. First, it's worth noting that our expectations are that when interest rates shoot up four percent, that we would have potentially a 40 drag down in purchasing power. But of course, if you have excess demand in the amount of 40, you might not actually see home prices go down at all, so that's sort of like the backdrop of what our expectations are going in that maybe zillow would tell us they're starting to see some Forms of uh cracks i mean, obviously when they already say the market is stopping full s or softening full stop.

That's already a problem and they're talking about tough macro right. So, let's jump into the earnings call here and let's just snoop around a little bit in the earnings call, so they talk about how inventory is still in march was down 23 year over year and remember the last year is: uh is essentially a year that gave Us 20 plus percent across the entire united states in increased prices, which is incredible. However, even though inventory levels - and this is one of the big things that people keep talking about - they keep saying: oh well, housing prices can't go down because inventory levels are down. That's true year over year you know if this right here is march of 21, then you know maybe over here.

I should actually draw it kind of like this. Maybe over here is march of 2022.. Now now, why did i actually draw it with that? Little inflection point up. Ah, that's because take a look at this new for sale listings were less strained in march up 36 from feb levels, but still down nine percent year over year.

So, actually, we're probably doing a little bit more like that trying to get back uh, just nine percent down essentially here from those march of 2021 levels. Okay, interesting so kind of seeing a little bit of an inflection point where maybe inventories are starting to move up. But then again that could be seasonal right i mean who lists their home in february. That's lame! You sell in march right it could be entirely seasonal.

So what else can we see here? Transaction value, growth trends are meaningfully softening and even the most respected prognosticators have - and this is a i think, just typo here, i think, distinct or dis. You know maybe different views in terms of what will happen next. In other words, you've got people like me who think prices will probably come down 10 to 20 percent, and you got a lot of people saying well, there's just still not enough inventory. So we'll probably just have a soft landing which is kind of exactly what we were told in 2006.

When then fed chair ben bernanke says well, we've never had home prices come down across the board, so i probably won't have that happen now. Oops! Oh wait! Oh, damn didn't see that one coming okay anyway, then zillow talks a little bit about how they're getting out of obviously the i buyer business, which is where they buy homes and flip them. They only have 100 homes left to go they've almost completely gotten out and if the market kind of tanks after this they got out at the perfect time and they got a lot of hate for what they did. The last you know a couple earnings reports ago, but honestly it could end up having been a pretty uh smart, uh, smart move.

They talk about how more people save homes on zillow when they have 3d tours. This, in my opinion, is kind of obvious, though, because you're more likely to go back to the listing more often when there's a 3d tour duh, then they talk about right here. They still have high occupancy rates in rentals, and that makes it harder for them to make money from landlords who want to re-rent properties because they offer a rental service and credit screening services. But here they talk about affordability, challenges with higher mortgage rates and we're starting to see early signs, not only what we heard earlier of inventories going up, but also earlier signs of low rental vacancy issues subsiding.

That would mean we're starting to get more properties potentially opening up and that could potentially for one reason or another, helps stabilize those rents from continuing to just skyrocket, and they also talk about this deceleration in the real estate industry's growth. So they they kind of stop short of saying, like hey, we're heading towards a crash here, but they do say that we anticipate market headwinds and then they say hey. You know if, if there's some terrible storm and the market grinds to a halt for a long long time, you know we could change our views, but hey um. Let's just talk about 2025.

okay. So what do we? What do we glean from this? Well? In my opinion, what we glean from this is really what they didn't tell us in relation to what they did. Tell us hey we're starting to see some softening and rentals, which, when you see softening and rentals, that means you generally get less landlords who want to get into the rental business because it gets tougher right. Then, potentially you get landlords who want to get out of the rental business, which could mean more for sale, inventory people who want to take advantage of a top we're already seeing housing inventory trend up.

We don't know if that's seasonal, yet so we'll have to wait for a little confirmation on that, but we're still down compared to last year. So it's still time and then when they're basically asked hey like. Are we gon na? Have a market crash you're like well? You know if there's a terrible storm uh we're focused on 2025 uh, but yeah yeah yeah things are softening, but uh hey, don't worry! Folks, i think it's obvious. You should be a little bit concerned about the real estate market going forward.

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