What's up guys? It's Graham here. So with following home sales, higher mortgage rates, and lottery winners finally being able to afford a home, new information just revealed that these conditions could soon be coming to an end because home prices just posted their largest annual drop in 11 years. That's right. This is the first time since 2012 that median prices have fallen year over year, and even though it's only two percent, some experts are saying that this could just be the very beginning with more than 40 cities poised for a potential downturn over these next 12 months.

So with all of that going on, along with Taco Bell trying to cancel the Taco Tuesday trademark, let's discuss exactly what's happening in the housing markets, which locations are poised to see the biggest decline, what this means for you, and then finally, how you could use this information to make money as soon as you smash the like button for the YouTube algorithm. No, actually, as soon as you hit the like button because I'm doing a test to determine video performance on a video where I talk about the like button versus another video where I don't mention it at all. So if you want to participate, just do me a favor. It helps up tremendously And as a thank you for doing that, here's a picture of a goldfish.

So thank you guys so much and also big thank you to OK it up for sponsoring this video but more on that later. All right! So to start, we first have to hit the thumb sales. This is a metric that indicates how many homes are actively being sold on the market in a given month, and generally it gives us a really good understanding in terms of Market inventory, demand, and a buyer's willingness to close on a home. Now, throughout the pandemic, home sales were obviously an all-time record low, simply because there weren't enough homes in the market to be sold.

Well, everybody was urged to stay indoors, But this time, home sales are declining for another reason, and that would be mortgage rates. Simply put, 62 percent of homeowners currently have a rate below 4 and 82 percent have a rate below five percent. So instead of selling and being forced to take out a mortgage at a much higher rate, they're choosing to stay put And as a result, fewer homes are sold. On top of that, higher mortgage rates means that buyers can afford less and with more people sitting on the sidelines, these numbers continue going lower.

In terms of specifics, though, year over year, home sales are down another 23.2 since April of 2022, marking a nearly consistent decline for over a year. Second, another metric that's worth talking about is What's called the month's supply of inventory. This refers to the number of months it would take for all the current inventory to sell. So for example, if there's a thousand homes listed on the market with 200 homes being sold on a monthly basis, you would have a five month supply.

Now, Generally, when they're six months or more of inventory on the markets, it's considered a buyer's market. and if they're six months or less of inventory on the markets, it's considered a seller's market. And in terms of where we stand today, here's where things get interesting. If you're in the market for a brand new construction, supply is actually declined, going from 8.4 months worth of inventory a year ago to now just 7.6 months suggesting that more inventory is selling and demand is increased for all other sales.

Though, the total inventory in April was up 7.2 percent from March and one percent from a year ago, which even though that sounds good if you're a buyer, it's still well below the historical average. For instance, we currently only have a 2.9 month supply of inventory for sale, and that means we still have a very long ways to go and sellers still have the upper hand. However, don't lose hope just yet because that brings us to third home prices. It's the Wall Street Journal reported that the national median home price fell 1.7 in April to 388 thousand dollars, which was the largest decline since January of 2012.

Although what I personally found the most interesting is that in terms of how far home prices are falling, it really just depends on what side of the country you live on. The West Coast or the East Coast for example is Black Knight Research pointed out the housing market has essentially been cut right in half down the middle, with the West Coast having seen a 10 drop, while the East Coast saw a 10 gain. In terms of specific States, though home prices fell seven and a half percent in Seattle and dropped 10.3 percent in San Francisco. At the same time, home prices surged 12 Miami and jumped 9.3 percent in Orlando.

Why is this happening you might ask? Well, as you can see, the areas that saw the largest declines also just so happen to be the areas with the highest prices. The opposite applies to those which saw home values increase basically higher priced homes had more room to fall or have seen more of a net migration to the locations with more affordable housing. In addition to that, we also generally find that the tech industry is more concentrated on the west coast, meaning higher interest rates could affect those Industries the most and cause housing prices to decline. And finally, in terms of where home prices could soon be headed, we also have something called seasonality.

see. Even though housing prices have generally trended upwards over the last several decades, Once you zoom in, you'll be able to see that there are consistent, predictable Peaks and valleys that go up and down on a regular basis like clockwork. And this is all because in a sense, people are very predictable. Data from the last three decades has shown us that no matter what two things always happen, people are most likely to buy a home and move throughout spring and summer, and sellers are most likely to take their home off the market in the winter.

For example, we could see that with the exception of the housing crash in 2009, more than 60 to 70 percent, the entire Year's sales are transacted in the peak Seasons This means that all of our current data is looking a little bit worse than usual, but it's really nothing out of the ordinary when you consider that we're now just going into the summer. For example, pricing Trends suggests that the busiest, most expensive months occur in May, June July into August and the slowest least expensive months occur in November, December, January and February. The reason for this, you might be wondering. Well, it should be no surprise that most families tend to move around the end of the school year, which is usually between May and August.

On top of that, very few buyers also want to move around the holiday season, which could be impacted by less than ideal weather. So that's why they save their home search for the spring, which is pretty much exactly what's happening right now. However, before we go into which cities are about to see the largest decreases and increases, this all assumes that the United States is able to agree on a new debt ceiling limit in the next few weeks. And if they can't, well, Zillow has some Choice words to say.

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In terms of Zillow's warning, here's what they say will happen to the housing market. If they can't come up with the new debt ceiling limit first, there would be higher interest rates. see: typically mortgage rates are based on the price of a 10-year Treasury And if investors no longer field that the United States is a hundred percent guaranteed to pay back their debt on time is agreed, those rates would have to go up to compensate for the additional risk, and as a result, mortgage rates would go higher second. Speaking of higher, we'd also see higher unemployment as they explain: Federal expenditures accounted for 34 percent of gross domestic product in the first quarter of 2023.

Hitting a debt ceiling would reduce those costs, lower economy, and cause higher unemployment in the process, which would eventually trickle down to the housing market if those people can no longer pay their mortgage. and third, fewer home sales and lower prices. According to their forecast, a default would cause home sales to decline by 23 percent and such a recovery would likely take more than a year to begin to normalize. As a result, home prices are expected to modestly decline by an extra one percent, which might not sound like a lot, but when they're forecasting an otherwise housing boom, any type of decline is considered pretty negative.

Of course, all of this is pure speculation, and realistically, the United States is not going to default. It's all just political negotiation and posturing for various spending agendas, so it's probably not going to be anything to worry about except if you happen to live in one of these U.S cities. How is that for a transition? According to Black Knight research, 14 of the 50 largest U.S Housing markets have seen home prices fall by six percent or more. And if you're curious which markets those are the top was Austin Texas with a 13.6 decline since March 2022, Seattle Washington at nine and a half percent, San Francisco at eight Point nine percent Pittsburgh Pennsylvania at 5.4 percent, and New York at 2.2 percent.

In terms of which states are falling the fastest right now, Nevada is leading the way at 4.8 percent, followed by Arizona California Utah Idaho DC Colorado Oregon Washington, and Massachusetts. In fact, home prices fell throughout 31 to the entire United States, which is the highest level in over a decade. However, just remember that not all markets are equal and some are actually seeing prices continuing to go higher. For example, Myrtle Beach South Carolina is up 15.4 percent, Fayetteville North Carolina is up 14.7 percent, followed by Fort Lauderdale St Louis Hollywood not California Boca Raton Cleveland and Clearwater which are all at least up 10 percent.

All of that means that even though some parts of the country are falling, others are doing quite well and boosted by what seems like relatively low inventory. Because of that, homebuilder confidence is once again hitting its highest level since 2022.. that's because Builders are taking advantage of all the recent low inventory and are doing everything that they can to make a profit. So as far as what you could do about this as well as what's in store for the future, here is what you came for: Zilla believes that from now through March of 2024, home prices will actually Rise by another 1.7 percent, except that's the national average and that's weighed down by some cities which are not expected to do very well.

As they explain, Zillow expects some of the biggest home price upticks to incur in markets like Knoxville Tennessee Savannah Georgia Winston-Salem North Carolina Johnson City Tennessee and Wilmington North Carolina where basically they think that the southeast will see the biggest gains. On the other hand, though, the worst drops throughout the next year are expected to occur throughout markets like San Francisco Boulder Colorado Denver Reno Nevada and Las Vegas. Now nationally, Zillow also expects home prices will increase a total of three and a half percent in 2023. 3.4 after that, 3.3 after that, and 3.2 percent in 2026.

CoreLogic also tends to agree with this as well, with their estimate coming in at a 3.7 gain for the rest of the year. They also believe that the most at-risk markets right now are going to be seeing throughout Utah and Boise Idaho with a 50 to 75 likelihood of seeing a substantial decline over the these next 12 months. That's why I believe that the best course of action right now is if you enjoy your home, you like it and can afford it, you might want to stay. If you're a buyer, be patient.

shop around your mortgage rates, try to get the best deal possible, and don't be afraid to walk away if the numbers don't work. I Personally would not be flipping homes in this market I wouldn't be making any short-term bets nationally if there's not expected to be any sort of Mega crash and time is on your side. So that's why I'd only buy a home that you intend to keep for at least seven to ten years. That way, you're able to ride out any short-term fluctuation in price and you'll have enough time left over to subscribe if you haven't done that already.

So thank you guys so much as always, feel free to add me on Snapchat or Instagram And don't forget that you can get a free stock with all the way up to a thousand dollars with our paid sponsor Public.com Down Below in the description when you make a deposit with the code Graham Enjoy! Thank you so much And until next time.