Today's Home Price Gap is 19% Larger Than 2008
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- čas přidán 26. 05. 2024
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In this video, we look into the gap between new home prices and existing home prices.
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DISCLAIMER: This video does not provide investment or economic advice and is not professional advice (legal, accounting, tax). The owner of this content is not an investment advisor. Any securities, trading, or market discussion is incidental and solely for entertainment. Nothing herein shall constitute a recommendation, investment advice, or an opinion on suitability. The information in this video is provided as of its initial release date. The owner of this video expressly disclaims all representations or warranties of accuracy. The owner of this video claims all intellectual property rights, including copyrights, of and related to this video.
I’m in Ohio and the housing market here over the last 7-8 years is unlike anything I’ve ever seen. Homes that were bought for $130K in 2015 are now being sold for $590k. I’m talking about tiny, disgusting, poorly built 950 square foot shit boxes in quiet mediocre neighbourhoods. Then you’ve got Better, average sized homes in nicer neighbourhoods that were $300K+ 10 years ago selling for $750k+ now. Wild times.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
Personally, I can connect to that. When I began working with a fiduciary financial counsellor, my advantages were certain. I got into the market early 2019 and the constant downtrends and losses discouraged me so I sold off, got back in Dec 2021 this time with guidance, Long story short, its been 2years now and I’ve gained over a million dollars following guidance from my investment adviser.
This is huge! think you can point me towards the direction of your advisor? been looking at advisory management myself.. seeking ways to invest and make more money with the uncertainty in the economy.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Aileen Gertrude Tippy” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.
please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
'Carol Vivian Constable, a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
Mortgage rates are currently at an all time high since 2000(23 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
My partner’s been considering going the same route, could you share more info please on the advisor that guides you
Finding financial advisors like Vivian Carol Gioia who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
She appears to be a true authority in her profession with over two decades of experience. I looked her up on the internet and skimmed through her site, very professional. already sent her an inquiry hoping for a response soon.
The problem with these new homes are those horrible HOA Karens.
On the ground level it’s scary that houses are worth more and more, when they’re being built extremely poorly. I’ve seen many home inspection videos showing how low quality these homes are. Sellers in this market are blatantly extorting and scamming buyers. Supply is so tight buyers seem to have no choice but to accept this.
Nothing a winter coat can't fix if all the walls fall over in the winter.
Great video! For 2024, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You are right! I’ve diversified my $450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
Do you mind sharing info on the adviser who assisted you?
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I am grateful for your assistance. My finances have been in disarray, and I have experienced multiple losses in my 401k, IRA, and mutual funds. I hope that Melissa can provide me with the guidance needed to rectify the situation before it reaches a critical point.
I grew up in an area of Miami that is mostly made up of * middle-class Cuban Americans where just five years ago a house would cost 250-350k for the most part.
Now the cheapest one goes for 600k. Forget working class being able to afford them. A professional lawyer, engineer, etc. would now struggle to buy a home in that same neighborhood. Something needs to change and it will change.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Rhe market has been crazy lately, a few surprises here and there.. with all the global happenings taking place I think it’s safe to say that a severe global recession is looming
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult.
Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
The problem is that people don't have the knowledge needed to succeed in a challenging market. Only highly qualified professionals who had to experience the 2008 financial crisis could help to earn a high in these challenging conditions.
Recently, I've been considering the possibility of speaking with consultants. I need guidance because I'm an adult, but I'm not sure if their services would be all that helpful.
In Canada, developers have been catering to speculators and investors, building tiny shoebox condos. Well investors are gone now and guess what: nobody wants to buy a 400sq foot condo to live in. At least not at these prices.
the last part is key, "at these prices" lots of people would by or rent a 400 sqf home if it were cheap
When I shop for condo, I put the min area at 800sf nothing under that is even worth considering
Developer should have catered to investors because of the shortage in rental housing. Super big win! Now they need to go back and make regular homes.
Same phenomenon in the US. Boom generation would sell if the capital gain exemption had been adjusted for inflation and 1,600 to 2,000 sq ft patio homes were available.
@@kingbonezai4925 Virtually everyone in Ontario and British Columbia is shutout of any type of home even a 400 square foot apartment. The government rescues them by cutting the Bank of Canada rate whhen they shold be riasing the Bank of Canada rate and giving them a 100 year mortgage.
The problem is that much of the new homes are in areas that people no longer want to move to.
Cause they're all on the outskirts of towns and they want premiums or more for them despite the location being worse.
I live in a low cost of living area and my house isn't huge, maybe about 2000 sqft -> 2300 sqft and it's in the center of literally everything driving distance wise it costs about 250-300k.
There's larger houses on the outskirts around 2600 sqft that sell for like 200k.
Yep - this is the most sensible answer. The places that people want to live already have homes with people living there. New homes are just furthering the suburban sprawl that nearly no one wants anymore. The solution here won't be simple.
Yes and the market is so distorted that these homes in these less desirable areas aren’t priced accordingly- they’ll be listed at only a slight discount of a home the same size in a high demand area. The prices need to reflect the location and in many areas that still isn’t happening.
Agreed. I think the takeway is new home supply and possibly areas around them have vulnerability. I also think a lot of these new homes are not high quality, and have high supply. I also agree the location is often lower as you suggested.
Yep. We need to look at zoning laws. But NIMBY's won't allow it for obvious reasons.
I was just looking at a house that sold at the end of 2019 for $484,000 when you could financed for 3.75%. It's now on the market for $780,000 and would need to be financed for around 7%. In 2019 with 20% down that is a $2,218 monthly payment. Now it's $4,551 and your downpayment cost you an extra $75,000. This is absurd. A 63% increase in sale price and a 100%+ increase in the monthly payment.. in FOUR years. And I bet it sells for full ask too... I do understand how this keeps going.
It won't. The US economy will follow the rest of the world into recession soon (my guess is that it will be after the election because the government will do anything it can to make that happen) and the stock market will have a huge correction. There's approximately 1½ times as much debt as 2008, so I guess that the markets will drop by 1½ times as much as in 2008. A similar correction is coming in real estate, but slower (after 2008 it took about 8 years) and a lot of people are going to be gigantically underwater with their mortgages.
Hold onto your hat, it's going to be a rough ride.
@@ivancho5854 agreed. and we are in the minority here. most people i talk to think home prices will continue to rise. impossible. for the simple reason that wages are not going up. headed for a huge crash in 2025.
@@Unfluencer Exactly. 1929 was almost 100 years ago and there's no one still alive who witnessed it and can say, "Hang on, I've seen this movie." Although it will be a very deep recession, I don't think that it will last as long though. Maybe between 3 and 5 years. The ultimate driver of any economy is demographics. The retirement of the Baby Boomers is what is causing this recession and the next demographic wave should lift us up in about that timeframe, everything else being roughly equal. I think, but I've been wrong before.
I foresaw this a year and a half ago, so I've missed out some, but I'm cautious by nature and this will serve me extremely well this time I hope. After the crash when everyone else is shell shocked I'm going to be mega bullish.
All the best. 👍
I'm in the exact same boat. There are houses here being listed for $100-150k higher than even the peak just a couple years ago. Realtors and sellers are still on a high thinking they're going to make crazy money on real estate. Low inventory and people moving into my area has kept the prices dropping much, it at all.
Many Americans will suffer if there is an economic crash and that is the last thing anyone should want.
Sometimes blue is new construction and blue was existing homes- so confusing. Make it the same through the whole video
I was going to comment about it!
Sorry about that! We’ll correct it on the next one. My misstep.
@@EPBResearch you do outstanding work Eric, and you take feedback very well. Kudos
Using brain hard. Make easy, me dumb.
I came here to say this.
I took the data you guys presented about new vs used homes a few months ago in another video. So we went new build shopping and secured a new build with them buying down my rate to 5% fixed, closing cost covered and 30k off price tag. Thank you for sharing the data!
Much better than most housing market stuff on YT. Only thing missing is the severe underbuilding from 2008-2018 leaving us at a structural deficit of available housing relative to population growth.
Illegal aliens are creating a massive upward pressure on housing prices that nobody seems to want to mention.
I’m a new dad, I moved to the Bay Area a few years ago and I’m thinking of purchasing a single family home, but with real estate prices currently through the roof, is it still a good idea to buy a home or should I invest in stocks for now and just wait for a housing market correction? I heard Nvidia and AMD are strong buys.
it’s a personal decision, but according to Forbes, housing activities will remain stagnant for the most part of the year, so maybe hold off a little.
well you could put a downpayment on a home and as well diversify as much as you can into Ai and pharm. stocks like Pfizer and JnJ.
Certain Ai companies are rumoured to be overvalued and might cause a market correction, I’d suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I.
this is all new to me, where do I find a fiduciary, can you recommend any?
My CFA ’’ Vivian Carol Gioia, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..!
Thank you. Your videos are so informative, unbiased, and clear.
In other words, the high interest rate is actually keeping the existing house prices higher as nobody will move out of their existing house and take a mortgage at the current rates, so the supply stays low. So paradoxically high interest rate is now driving home price inflation.
Not exactly. The high interest rates are causing a lockin effect causing people to not want to buy or sell. And lowering interest rates would help here. However it will increase the cost of a home that someone can afford due to lower payments. This will increase demand faster causing prices to shoot way up given that there is a demand for houses at higher prices.
What the fed is going for is to make it harder to do business on the hopes that large companies start to lay off their workers and for small businesses to collapse. This will cause deflationary pressure on the jobs market by decreasing jobs. It will also force people to sell their homes of foreclose due to being unable to make payments increasing supply and decreasing demand.
Fed had chosen the route that will hurt a lot of people to reduce inflation.
@@zackeryhardy9504 Isn't that what the Fed is supposed to do? There's no way to maintain our current economic structure without hurting *someone*. The question is who do the Fed Reserve and our elected leaders choose to hurt?
@@bobriquardo5317 It is what they are supposed to do. They have to combat inflation somehow. Unfortunately they can only affect interest rates meaning we all are paying massive taxes through interest to pay for the government's out of control spending.
Interest rates are low not high.
@@bobriquardo5317 In Canada its always the savers and retirees who get decimated by low interest rates. Many Canadians are leaving for Mexico after the Bank of Canada cut our interest rates.
AFAIK: Almost all New Construction comes with an HOA, because the local governments will not issue development permits for subdivisions without an HOA in place to protect income tax revenue. Can you look into / report on whether HOAs are a factor at all? Personally, the main reason I don't buy a new home is the HOA.
HOA are the worst
Another outstanding market summary. Thank you.
ur videos r amazing, the animations r crisp!
Excellent analysis, thank you. You have improved.
New homes are too far away from city centers nowadays. I'd rather buy an existing home in an interesting area with things to do nearby than in a new suburb in the middle of nowhere. This is becoming especially important as US population stops growing and even begins contracting, potentially leading to a Detroit-style collapse of the suburbs.
US population isn't projected to peak until 2080. Even if the bearest of demographers are accurate and the population peaks in 2050 that's way too far from now timewise for it to have an affect on pricing today.
@@rathelmmc3194 Real estate is all about location and there are plenty of places in the US that already have declining population
@@nicolasgirard2808 And when the whole country is depopulating its going to be like Detroit where a few areas hold value and everything else effectively goes to 0.
@@rathelmmc3194just like Italy and Japan. They literally have homes in 2nd tier cities and suburbs that sell for $1. They’re desperate to get people moved in to keep their population from hitting 0.
Well if we do see this stagnation of population in the US by 2050 you buy a house today and the housing shortage will be long gone before you pay off your 30 year mortgage. Better like the house you buy or be willing to sell it for half in the next 20-30 years if it comes to that.
Best economics channel in CZcams, thanks
This is absolutely a lowered price discovery situation. Sellers are legit delulu in CRE and residential
Great video. Thank you for sharing
That’s because the existing homes have a loan on a non bank entity’s or non-government enterprises balance sheet . They lever up with that equity. A brand new loan can be subsidized by inflated prices and home values without crushing the existing loan books. The system is so fragile that if home prices went down even a little it can bring down the house of cards.
Great research. It was really informative
I love your videos! I'm an engineer and appreciate a data driven approach to understanding current trends. Thank you and please keep it going!
It doesn't matter. They're gonna keep going up.
Very informative video! It seemed like you were making the point at the very end that the only way we get out of the deadlock of high home prices is by keeping the real interest rates positive, which will result in fewer new home builds and mass unemployment due to builders letting people go. Did I understand your point correctly?
Subscribed. Upvoted.
Thorough video. Maybe the most important factor here is that 85% of the housing market in discussion is existing home sales which you mention after over 10 minutes. I would include that upfront so viewers will better understand housing price stubbornness now and going forward. I am a new subscriber...thanks
New and existing homes in my neighborhood have sat unsold for 6 months. Nothing over $350k or so sells.
It's very regional. Where I live homes sell in 10 days or less.
@@jonathantaylor6926 Depends on price, not region. Any house in any region in any market can sell in 10 days or less if it's priced to do so.
What location?
@@jonathantaylor6926I’m seeing houses sit for months now in Texas. Won’t be long before you see this across the nation.
@@RichardBurke-qd7vi medium sized town less than a mile off I40 in central US
yeah. savvy developers trying to get these houses off before a big ass crash and less savvy home owners trying to wait for a peak
Really thoughtful and well presented data and assertions. Thank you! One crit on the data viz. It would be helpful to keep the usage of colors representing new v. existing consistent through your charts, so your audience does not need to track the legends once they learn your usage of red v. blue representation. The colors flip-flopped through your video, so I had keep re-evaluating your charts while listening to your talk track. Not a huge deal, but it definitely would be easier to track to a consistent representation through the entire video. Thanks!
Where are these cheap new homes at? I’m not seeing anything here in the Atlanta suburbs that’s under $300K beside bombed out buildings that look like they were transported here from Beirut.
Great great info.
I doubt this data exists in a useful format but I’d be interested to see the percentages of new/existing homes within certain radii of work centers. All the best places to work already have nearby homes, that’s why they’re not going down.
The land is cheap in the middle of nowhere and that’s where builders are expanding to.
Dont worry, wherever there are people, jobs will surely follow. People need to be serviced locally always.
People don't understand that mortgage payment is only one of the costs of owning a house. Insurance, maintenance, tax, ... are all going up so many cannot afford their house even though they are still locked in a low mortgage !
If you didn't know about tax, maintenance, and insurance, then you deserve to fail. Same as a car.
except all of those are accounted for outside of maintenance in your mortgage
Wow if you can’t afford your home at a 3% or lower rate you bought way beyond your means.
@@fabioj- they are not accounted. Even if they didn’t , they wouldn’t be adjusted for inflation
Mortgage is PITI: principal, interest, taxes, insurance. I don't own yet but at least do the bare minimum and take a FTHB course before spouting nonsense.
Thanks for your great videos.
I would be curious to know if there is a metric for age of home buyers. What generations are buying homes and which is not. Curiousity.
Hi, towards the end of the video you mentioned higher unemployment from QT will overpower the low supply situation. Can you expand on that? What does that mean? Awesome video!
Top shelf content
One of the key contributors for inventories levels of existing homes being so low is the historically low mortgage rates those home owners have. A recent report (Alto Research I believe) states over 78% of existing US mortgages have 4% or lower rates. the combination of buying and refinancing has put us in a tough spot as far as normal market buying and selling activities. A really good data point to understand is the % of existing homes on the market that are non-primary residence (vacation or investment properties). I suspect we are seeing a significantly higher number of non-primary residence homes on the market which means less people are actually moving. We are in a home price stall period and will need 18-24 months of continued downward pressure to bring home prices back to normal historical trend alignment. Very frustrating to see existing homes listing for 40% higher then they should be. Additionally this downward trend of sales activity is putting pressure on the new home as both permits and new build starts are trending lower. Architect billings for multi-family residence is also trending down which means we have to get inventory increases from existing homes to help. Not sure how we will get out of this mess, but I blame the 2020-2022 bubble and the continued resistance of existing home prices falling back in line with historical trends. Best of luck for those that need to buy and sell in the next couple of years.
Very true, but people eventually get fed up and want to move and will lose money to do it. If we were completely economically rational beings we wouldn't be in this mess. So the way out is that people aren't completely economically rationale.
If you really think about it, those with interest rates around 2% (my family has a couple homes in California at those rates) even THE LOAN can be thought of as an ASSET in a way because you can pass-on the existing loan to the buyer of the home (which in turn increases the value of the deal when considering home price of an existing home with fixed low interest rate comparing 2% to 7% LOL).
@@RandomRabbit007I'm not sure if your statement is accurate. I do not recall the proposition this is tied to, so if you know it please pass it along. My understanding is there is a law that allows the seller who turns around and buys another home in California can transfer their property tax basis from one property to another resulting in potential decreased property taxes. I'm not familiar with any law allowing one to transfer their mortgage or rate to another party. I could be wrong but this would be a huge surprise to many.
@@michaelsd284 I dont believe you can pass-on “property tax basis” unless you’re elderly (I think 60 years+). What you CAN do is do a 1031 exchange and avoid paying “capital gains” taxes all together on the sale. You can pass tax basis when you inherit property from the death of a relative.
@@RandomRabbit007 OK, so the idea from your prior comment that "one can passing-on the loan to the buyer" is not correct.
You can’t compare new homes and existing homes like fruit. New homes have better building codes, more energy efficient but usually are smaller but come with garages. The homes themselves are better but are usually in communities with strict HOA rules, little to no privacy and the builders finance your loan at a lower rate in order to be able to sell their homes. Resale/exisiting homes are usually older designs but remodeled, no HOA, and the best part is in the BEST LOCATIONS. That is one huge thing resale’s have on new homes because the best locations are usually taken up already.
Now, all that said the result of what is best for you depends on you not on everyone else’s factors.
Good video. One thing not covered is the difference in existing homes vs. newly built homes, both in home quality and location. Many of the newly constructed, "spec", housing... is simply not as well built as it was over the past 20 years. (Look up any videos on home quality issues from the major housing builders, especially the largest one.) Then, there is location. Many existing homes are simply better located, closer to city cores, "people's jobs", etc. New homes... built on former farmland, filled in land (with potential settlement issues... do your research), etc. And, these locations usually have poorer transportation access and government amenities such as parks and schools.
Good land is getting hard to come by, and well built houses (for a good price) generally can't be. Sure, you can find distant land and pay more money to custom build a home, but now you don't have the good location... or the good price. And, all of this... is at the local level, not even covering entire city markets.
In rural West Kentucky, town of 20k, county of 40k, you can’t get anything three bedroom (1,200sqft) under $150k unless the gutters are falling off and the windows are boarded up, and those still bring $125k.
In some of the cities with price declines, there is also net outbound migration
In some cities, like Atlanta, part of the issue is net inbound migration -- specifically of people from other states with high incomes
In MD, our wages went up around 24% however we've been priced out of the housing market for decades.
I suspect the reason for the deviation is almost exclusively Price Discovery related, with maybe a little location benefits underlying the added valuation.
It makes no sense your depreciable structure would be worth MORE when built earlier
Price discovery doesn’t happen as they are preventing foreclosures too
I live in St Louis and bought my 3 bed 2 bath home for 168k in November 2022. One of the best cost of living cities but also statistically a very dangerous place to live.
Best time in the last 100 years to buy an home today.
For this kind of analysis, it's important to take the first through third rules in real estate into account:
1. Location
2. Location
3. Location
New housing starts are being built in less desirable locales far from city centers. You can build a new house, but you can't build a new prime location. It's nature that these new homes are going to sell for less than established homes on more desirous plots.
I guess you don't see it by looking at the charts but in short nobody wants to buy and nobody wants to sell. It totally makes sense too in this environment.
I like the stalemate and this will force a recession if money doesn’t move. Then the sellers will be forced to come to the level of buyers as buyers have no room at all
This doesn’t seem to account for the fact that new developments are more likely to be built in worse locations (desirable locations having already been mostly built on.
Then also, it seems new builds are more likely to have an HOA, or have a higher HOA, than existing homes.
This video was interesting. Haven’t really heard anyone point this out yet.
you talk about location in terms of some cities vs others, but one of the issues for demand vs supply is that the younger generation doesn’t want to move to the suburban fringe where a lot of new SFH are built. So it’s not just that the new homes are smaller, they are in the wrong location given the preferences of a younger generation, one that has less kids and does not benefit from or enjoy suburbia
It doesn’t matter what young people are doing. Middle aged people are the ones buying the houses.
Instead of Average what about median?
Also, in my area new home prices are skyrocketing
how did you make this? after effects?
Wow this is good content
Low supply situation isn't going to be cured by unemployment. If/when builders stop delivering product due to a recession, it will only exasperate the situation. Population isn't decreasing, thereby, demand for shelter is growing, not shrinking. Households may be doubling up with generations or accepting smaller housing units due to affordability, but demand isn't being destructed in the US (yet).
In Canada the gap is about 300 percent higher than in 2008. Everyone except the richest is shut out of our housing market forever.
in my overpriced/overbuilt ski town for-sale signs are flying up over the last month. this summer will be a bust for real estate. building will crash soon after. then come the layoffs. our economy is in a tailspin held up by borrowed money that is running out quick.
one of the major reasons for the new homes being cheaper than the old homes is location location location. The older housing stock is closer to the urban core, and those properties are getting a boost. Those interior properties have rising property and land values. Meanwhile the newer less established neighborhoods are the ones with the new homes, and those are further away from the city centers. Thus they cost less. The extra cost is in travel and time expenses. However, as these outskirt area get larger, they inevitably become their own nodes and centers for commerce - or they just SUBURBANIZE to death.
What does "an overpowering of the low supply situation in the existing home market" at the end of the video mean for existing home prices? They will continue to skyrocket if the fed holds interest rates high? Please explain for someone looking to get into a starter single family home
Yes, I wanted to know what this was insinuating as well. Please explain further. Are you insinuating existing home prices will increase because of low supply in an increasing unemployment situation?
@@lauragraves2948 Prices will collapse as people are forced to liquidate their homes when they're unable to afford them due to unemployment.
new homes and existing homes are in generally different areas as well.
Another reason existing selling for more?:
Homes in prime locations sell for more. There's not a lot of new homes in prime locations since that space is already built and where there's lots of new construction are often less desirable locations.
but is it also possible that the difference is due to the geographical locations of the new builds, given that location matters in the home valuation?
Nice video EPB. The New vs. Old homes comparison is meaningless right now because this global real estate crash has just started and real estate prices across Australia, New Zealand, Canada, USA, China and Europe will crash down to their 2012 levels within the next few years. Caveat Emptor!!!
Contractors and architects still quoting in the $400/sqft range in my area. I would love $200/sqft lol.
I feel like a graph showing average price per square foot versus just total cost might be more accurate? Lots of tiny home communities being built might be dragging that average new home cost down.
the quality of new homes especially for appartments/townhomes are awful companies are cheaping, not only that but they decrease the square footage in order to get additional value apartments used to be 900/1000 sqr ft for 2bedroom 2 bath down to 550-650 at least in the vancouver area so it would make sense people are willing to pay less since they are getting less
@EPBResearch I would love to see how you modify your analysis after conferring with Nick Gerli at Reventure (if you haven't already).
You should do this on Canada!
thanks
New homes around the mid Atlantic region are on tiny lots, townhomes, or condos. They are really undesirable.
The ratio of price / (sq.ft + ∆ * lot size) seems like a much more accurate indicator.
I feel like housing is still being affected by Boomer demand and they want smaller yards. Big yard with smaller footprint homes are definitely not being built in any meaningful amounts.
It seems like this situation is eventually going to normalize, it's just a question of when. Could be several years...
Does anyone remember during the peak of the pandemic dealerships trying to sell new cars with huge mark-ups over MSRP? That didn't last forever.
The Fed has raised interest rates, but also raised liquidity provided to banks. This has stagnated or moved housing prices sideways for almost 2 years. Had the Fed not provided this extra liquidity to the market for the last few years, we'd be in a recession. The extra Fed liquidity is pushing housing prices sideways. The most important aspect to all prices is Fed liquidity provided to the markets. This can stagnate markets and prevent a bad recession and is the new Fed tactic to prodding the economy.
Do a video on the Fed increasing short-term liquidity and how it pushes prices up.
Amazing
The other problem is this is an income growth economy, not a credit growth economy. Higher rates won't have the same effect to slow things down as credit isn't the driving force.
This is telling me the new homes are being built in low value locations or with poor planning strategies. Stack houses are no longer sufficient.
The issues that caused the 2008 housing crises aren’t in place today. Predatory lending practices with variable rate loans to people who couldn’t afford them is what caused the record foreclosures and the subsequent collapse in MBS’ values which of course threatened the solvency of the entire US banking system.
Even though housing prices are sky lending practices are much tighter and the likelihood of a 2008 style housing crash is very low. Not impossible but the conditions are quite different.
So essentially in the next year or two it will be a better buyer’s market if the current trend follows historical trends.
In 2005 when I was 21 there were houses I could buy after working 1 year. Today it would take me 20-40 years to buy a house. The houses have gotten bigger, more expensive, and only people my age of 41 or older can possibly buy one. Good luck to young people. They aren’t even trying to build 1 to 2 bedroom homes of modest quality anymore.
Ben Bernanke: "To the extent that home prices begin to rise, consumers will feel wealthier, they’ll feel more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they’ll, you know, make a better return on that purchase. So house prices is one vehicle. Stock prices-many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend."
thats a big ask though, the FED won't be holding restrictive rates much longer as they are very pro employment.
I think the reason why existing homes are more expensive than new builds is because of location. At least in my city new builds are being built further and further away from the city.
Old houses are still close to the central business district and new houses are further and further out. So difference between exurb economics & inner suburb economics probably explains the gap. And your comment about some regions having no new housing at all probably makes the national average look weird.
Concerning the left chart at 2:09
Can someone ELI5 why we don't see deflation instead of just disinflation when M4 decreases? Does it have to do with velocity of money lagging behind? Or maybe the flight to real assets? Other factors like supply chain issues?
Disinflation is a _Slowdown_ in the *Rate* at which prices are rising, while deflation is a decrease in prices.
It's simply because M4 hasn't been negative for long enough.
Inflation is an increase in the money supply and/or the credit supply. Credit actually has been increasing meaning that there is still inflation or at least no deflation. The biggest lie is that inflation is the increase of prices. That lie gets the government and the Federal Reserve off the hook for the real inflation they create. Government just wants the people to blame "greedy" business and property owners for jacking up the price.
@@shotelco I understand that but that isn't what I asked. Using your definitions, I'm essentially asking why we only see a slowdown in the rate at which prices are rising, while not seeing a decrease in prices.
@@snakyjake9the rich are still buying, propping up the market... anyone with cash is still bidding... there is two separate economies and gap is getting bigger and bigger
New homes are also in less desirable sprawl while existing homes tend to be closer to amenities and higher political representation in city centers.
Home prices higher for longer
lol
Look at house payments (existing will be much lower due to interest rates). That's the difference
Price per square foot is a better metric to explain the price of new homes
theres actually a huge inventory of homes trying to be sold and no1 is buying them
Yup. Listen to Melody Wright.
Not near me. Housing prices are elevated and going up with homes being sold in a few days or less.
Not surprising with actual home prices. Its way overflated.
@@MagicSwizzle I would bet money that you live near where a lot of government jobs exist or are being created.
Yup, my family bought a lot and is building a custom home on it instead in California ... We dont want a tiny home with no front yard or back yard. This is all signs of positivity in the coming 1-2 years I'd say
Supply is low because the bottom hasn't fallen out of the economy yet. Signs are already pointing to a pretty nasty recession within the next year. The inventory problem will be solved in short order in that case. Such is the nature of massive debt bubbles. Sad that it was ever allowed to get to this point.
Supply???? New homes are poor substitutes because they’re NEWER??? how can that be… must be some other factor: size, location, zoning, amenities, taxes etc etc
What is Real M4?
This economic cycle it is taking a longer time for home prices to fall. It will happen as unemployment has started to rise and prices will fall by at least by 25% with significant number of foreclosures.
inventory != MLS listings. There is plenty of inventory but people are pricing according to number of MLS listings. The era of the MLS being the only way to sell a house is over.
I make a very good salary and cannot afford a home existing or new home construction for me to afford a home prices would have to cut literally in half.
New homes are smaller, on smaller lots, of lower quality, and in less desirable areas than the existing home stock. The mismatch in product-market fit drives higher days supply.
It’s like saying the average existing home is 2400 sq feet with a steel frame in Newport Beach CA. And the average new build is 1700 sq ft with a straw frame in Detroit.
💯
One thing to keep in mind when comparing new vs existing homes is land and location. After Eisenhower created the federal highways sytem we had huge amounts of cheap land relatively close to most metros downtown and major employment centers. Fast forward almost 70 years are we are running out of land. Miami for example has no new single family home construction because there simply isn't land to do so. NY, DC, etc are the same.
However the south is less built out and still has room. Look the cities with more new construction, Dallas, Phoenix, LV, Denver, etc. The south will get a bit of relief from this new construction and as single family homes become more unaffordable nationwide, the get between these areas wiil widen pushing more people to move.
Jobs move ppl not homes. And as ppl love jobs due to all this madness everything will fall into place
@@EclipseEditzx3 companies realize they can move to more affordable locations and be more profitable. For example Intel is investing in building facilities in Columbus Ohio.