Many remain skeptical due to some conflicting reports fresh new data is pointing to a troubling future one of the first things you will hear from Crash Skeptics is the fact that Nationwide prices are showing no signs of a downtrend and this is somewhat technically true the most famous and
Most commonly used index to measure home prices in the United States is something called the case Shiller index as of the latest reading for September of 2022 home prices have decreased from their peak in June by only a tiny 2.5 percent so because of this many like to point
Out that homes are simply cooling a crash is out of the question as we still remain 38 percent higher than pre-pandemic levels but this measurement isn’t really capturing what is happening on the ground right now the case Schiller is Infamous for being a lagging indicator without boring you to death if
You really dig into the technical details of how the case shoulder index is created what you see is that it uses an average number that looks back nearly three months this means that while home prices could be collapsing the change wouldn’t look as severe on the case Schiller especially in that initial
Phase where we see the first signs of a downtrend this isn’t just my opinion we can prove this by looking at Red thin numbers as you may already know Redfin is mostly a real estate listing platform and they have some of the largest real estate data sets in the world not only
Are their numbers accurate they’re also fast Redfin can look at listings in real time and figure out averages without digging through County records which are often delayed and lag behind the prices we see listed on websites like Zillow and other prop tech companies essentially the case is a great
Indicator but like many others it often lags what’s actually happening in the markets in real time so the ultimate question is what do these numbers say well like I mentioned earlier the case Schiller peaked in June of 2022 while the Redfin numbers peaked in May one month before the Schiller now this may
Not seem like a big deal but if we dig further we can see an obvious Divergence that explains why so many investors are panicking looking at the drop on the Shiller we can see that prices have fallen two and a half percent from top to bottom a drop in the bucket meanwhile
On the Redfin report prices have already fallen 12.6 percent that’s a huge difference in the real estate World remember typically prices barely move year by year and to see a 13 drop in a few months is a massive warning that should tell you everything you need to
Know about the future of this Market at the end of the day the case Chiller is simply not keeping up with how quickly this crash is moving the truth is hidden in plain sight the crash is already underway and it’s not just Finance YouTubers who are talking about it it’s
Prominent CEOs that work in the industry Lance Lambert a Fortune Magazine recently spoke to co-star CEO Andy Florence co-star is conserved by many to be a global leader in commercial real estate analytics and information and the CEO was very clear where he thinks this Market is going saying quote people who
Think a 10 drop in home prices is what’s coming or dreaming a 20 dip is more comfortable you have institution after institution making similar comments KPMG one of the largest and most respected accounting firms in the country just yesterday announced that they expect the case Shiller to drop 20 by the fourth
Quarter of 2023 and remember this is the national average in pumped up markets the damage will be significantly worse for example in Boise Idaho which was arguably the most inflated Market in the US after the pandemic prices there have already collapsed over 20 percent despite the national average being down
Just 13 percent by those same numbers this is more than double the norm and dozens of other American cities fall into the same inflated boat so you may be asking yourself what’s next well hopefully what’s next is you hitting that like And subscribe button if you’re
Enjoying the video thus far last time we made it to 4 000 likes and I hope this video can get to that same level now back to the crash if nationally prices are down 13 according to what is likely the most accurate up for they figures
And in hot markets they are already down more than 20 percent where is this all headed well according to many this may end up worse than 2008. the number one topic when experts discuss a crash like this is the source everybody knows that in 2008 the housing market crashed due
To bad loans this was famously dramatized in the infamous movie The Big Short and essentially what happened is that loans got too easy to obtain home ownership soar but not in a good way too many people were buying with income that didn’t match the debt they were
Inheriting and on top of that new subprime markets allowed people to jump into loans with teaser rates that created an illusion of affordability this all exploded with the subprime market blowing up and soon after housing went into a long spiral downwards along with the entire economy but today loans
Look completely different the standards have improved the rules have been changed and the subprime market is essentially non-existent so if that Foundation is solid and healthy what could cause the market to break well the answer is pretty obvious but for some some reason it isn’t talked about it’s
Investor withdrawal for the past 10 years Big Wall Street investors have come in and changed a single family home markets all kinds of companies including Open Door Redfin Zillow and countless others have jumped into markets and begun purchasing real estate these are what they call eye buyer programs
Essentially it was a business where you can get an instant offer for your house and this massive company will come in and buy it for cash this transformed the market because these offers were often more than fair in fact in many instances companies were offering much more than
What seemed to be the perceive fair value these were massive Tech props unprofitable Giants that weren’t focused on profits for rather growth so in many instances these massive institutions were competing for market share they were attempting to buy up entire cities even if it meant losing some money on
Each house what this did is that it created an environment where prices soared eye buyers were purchasing hundreds of thousands of homes and re-listing them for absurd amounts of money inflating entire markets this worked for many years especially in the post-pandemic boom as extremely low interest rates and a euphoric
Environment help push prices along at a pace we have never before seen in history in fact the entire operation was a self-feeding loop as these companies inflated entire neighborhoods it attracted mom and pop investors smaller operations who practiced the real estate churn mentality buy a house change the
Floor paint the rooms wait a couple of months and sell for extreme profits this type of behavior further inflamed prices and what was left is this a situation where investors represented a large share of buyers according to Redfin reports in Q4 of 2021 investors bought
Nearly one in five homes sold in the U.S this is even mentioning the fact that in other cities this number was even higher in Vegas as an example nearly 30 percent of all homes sold that quarter went to an investor and these numbers are probably diluted with other data just
Using simple logic if we take out the homes that were sold via private deals and only look at mid-priced homes sold and attracted of neighborhoods that percentage would surely rise to something absurd the reality is that investors at one point last year had essentially taken over the market and
This is now all exploding leading to the final point the source of this collapse will not come from Bad loans instead it will come from the complete implosion of eye buyers we’ve already seen Redfin essentially liquidate their single-family Holdings and with others battling bankruptcy it’s only a matter
Of time before we see the complete withdrawal of investors from the market remember that in 2008 subprime mortgages as a share of total mortgage origination only ever reached a high of 13 and that 13 percent even when diluted by everyone else who already had a mortgage and
Those that had mortgages paid off was enough to bring down the entire Market 13 of loans were bad and everything went under now with nearly 15 to 20 percent of all homes going to investors what happens when they all pull out at the same time the same mechanisms that cause
Prices to rapidly eyes will now do the opposite especially in the face of higher rates and a slowing economy when you look at companies like open door which lost 928 million dollars in Q3 alone you have to wonder about the future of this space many claim that the
Company is on the brink of bankruptcy and it’s easy to see why this post by Kevin Magna captures the problem in one screenshot in the suburbs of San Francisco you can see that Open Door simply can’t move its inventory in this case they listed a home for 2.2 million
And now nearly six months later it’s still for sale with a price cut of nearly half a million and this is just one deal multiply this scenario thousands of other times and you can see exactly why many are wondering how many months this company really has left and
How much of the entire industry will suffer when slash if they liquidate whatever the case may be we are in for an interesting 2023 as I buyers and investors flee real estate following record-breaking price collapses thank you guys for watching as always please make sure you hit that like And
Subscribe button if you enjoyed it and don’t forget to drop a comment below I would love to hear from anyone that sold their house to an eye buyer in 2021 or 2022
