HUGE Changes On The Horizon for The Housing Market!

JUST IN!!! The number of closings continues to drop across the county as mortgage interest rates continue to climb! The real estate market is still holding strong currently, but what will chane this narrative? Real estate investing continues to be a struggle, first time home buyers are having a tough time breaking into the market, and would be move up and downsizing buyers and sellers feel stuck! Join me for the latest trends in the real estate market so you know if making a move is right for you and your family!

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Full transcript:

there’s some huge things going on right now in the real estate market and I can’t believe I’m about to say this but the Midwest is outpacing the coasts for Market competitiveness you heard that right we’re going to dig into the Nationwide numbers for what’s going on in the real estate market so it can help you decide if it’s the right time for you to buy or sell or just stay put and there’s really nothing normal about what’s going on all predictions have been wrong for the last few years from the smartest most high-paying people in the world all the way down to your typical YouTube pundits you know throwing fear out there to try to get clicks so let’s take a No-Frills no fluff approach and really look at the numbers because each market is going to be different and the only way to know what’s right for you is to dig into what the numbers say they lead all of my decisions I’m Alex Saldana I’ve been a real estate agent since 2010 and I’ve helped thousands of home buyers owners and investors get their questions answered and on this channel I like to answer those questions in a really no BS sort of approach so if you’re new here consider subscribing so there’s really a couple of main categories that’s the driving force of everything and we always start with closed price so when we hop over into the Redfin data center which I’ll have a link in the description below for this that you can check out and look at your individual metro area or rural area to kind of see what’s going on but you can follow me step by step if you want so we can talk about the numbers together right so median sales price what you’re looking at here is a chart of the last 10 years okay and the most important one being the national one that’s what all the biggest headlines are going to be talking about right so so far as of June 2023 July is not quite out yet uh 426 000 as the median sales price okay with a low of 383 in January so from January so far I mean we’re up a solid 10 in price sort of the fastest price appreciation times we’ve ever had now all the headlines out there have been talking about what happened last year nationally we had about a you know eight to 12 percent price decline depending on where you were at in the country but since then we virtually recovered that entire dip in the market even with interest rates being about seven percent today so last year we were sitting at 432 000 as the high we were sitting at 426 so we’re all waiting to see if July pulls the rabbit out of the hat and gets us above last year’s numbers meaning we have appreciated over the last 12 months which everybody he was worried about now something to pay close attention to the National numbers don’t show it as well but let’s take a really hyper Market let’s pick on Seattle for a minute okay I’m in the Denver Market with there’s there’s kind of a bundle of a city’s Austin Seattle La San Francisco uh Boston who have really high prices and we go through a ton of volatility usually the higher priced areas do see more of that volatility so what we’re looking at here in Seattle we can see the peak was at 850 000 and it dropped all the way down to seven hundred thousand okay that was what over fifteen percent Seventeen percent price drop in a six-month window that was really scary now that’s not the norm however let’s just erase the last few years and get to pre-covered numbers what is normal for a price adjustment from Summer which is always the peak of housing prices in the US June and July tend to be the peak doesn’t mean that’s the best time to put your house on the market best time is actually about March to may but that’s a whole other story uh but from this point in July until January every market across the country has a decline in prices well what’s normal for your market so if you pull up your Market let’s go back to um let’s go back to 2018 okay so we can see in Seattle 2018 the peak was 580 000. and the low was 517 000 so that’s a 60 000 price drop over about a six month span so ten percent to them is roughly normal last year was a little bit more abnormal um we can come in let’s look at Philadelphia let’s just take a lower price City and going back in 2019 their Peak was 236 and they went down to 200 000. so that’s more than a 10 price adjustment uh even in a lower priced City so what we’re going to expect over the next handful of months is what’s typically normal is a price drop so it’ll be really interesting to see coming up if we do just have the normal price adjustment that we always have year after year or if we do get walloped again with 15 plus because that could drive us even further down and bring more people off the sidelines on the buy side but it’s all dependent on what interest rates are doing let’s hop over to new new listings so this is really what’s driving our Market getting a little bit balanced is that we just don’t have a lot of new listings coming up out of the market so looking at this time period looking at all the national numbers in June of 2023 there were approximately 577 000 properties that hit the market in the month of June okay to get that few new listings to hit the market we have to go back two twenty twelve when there were 573 000 properties that hit the market we haven’t had this few new listings in over a decade and that is absolutely driving what prices have done kind of stabilized I mean if we had as many new listings hit the market let’s say as we did last year which we had 810 000 compared to this year at 580 000. can’t do that quick math in my head but that looks like about 20 to 30 percent less new listings that hit the market in 2023 than 2022 so if we had that many new listings that hit the market and we’d be getting slaughtered on price right now now here we’re looking at active listings on the market so no matter when you put your house on the market if average days I Market in your area is 60 days this number will calculate just how many listings are currently on the market Nationwide we’re looking at roughly 1.5 million of active inventory on the market how does that compare to last year well last year in June we had approximately 1.7 so good 10 12 percent more active listings on the market last year than this year and you can see from this chart I mean it’s just a roller coaster we haven’t had this few active listings in June in the last decade so we’re kind of setting some new precedences here we’re kind of setting some records across the board uh and this is why it’s really difficult to predict what’s going to happen now the number that everybody’s freaking out about is how many have closed okay so this is the big number remember real estate transactions happen every day all across the country doesn’t matter if interest rates are 16 or they’re two percent they’re always going to happen however you got to remember how many people are tied to the real estate industry that rely on the number of transactions happening I’m a real estate agent we’re paid on commissions so we’re paid on total volume if I sell a 10 million dollar home it’s the same as me selling you know 10 1 million dollar homes lenders are in a similar position they get paid on how much money they lend out most businesses around the real estate industry are not calculated like that you’ve got title companies title companies are paid purely on the amount of transactions that they do uh you’ve got home stagers you’ve got appraisers you’ve got home inspectors you’ve got photography companies you have a lot of other businesses that are related to the real estate industry that only get paid based on how many transactions are happening and what we can see here is that in June of 2023 there are approximately 509 000 closings that happened in the month of June last year there were 616 so that’s a solid 20 difference year before that in 2021 726 so once again we have to go back nearly a decade to get to closing numbers that were just as low as what they were in 2023 and that’s freaking a lot of people out this is a fascinating number to look at for the different markets this is probably my favorite one because this really gives you a pulse on what’s happening in your neck of the woods so number of price drops per active listing so let’s go ahead and pick on Seattle again because it’s the most fun because their Market is just so crazy volatile uh it’s hard to compete on any level for any numbers there so in 2022 as of February which was like the low of interest rates this is right before things really started to Skyrocket for interest rates they had 11 of active listings had a price drop so one out of ten bye let’s see October so 10 months later nearly 50 percent of all active listings on the MLS have had a price drop that is wild now nationally that number of course is going to be a little bit less 5.6 was February of 2022 and then we peaked out nationally about 21 so one out of five houses on the market as of October of 2022 had a price drop done to them now this year so far we’ve of course gone down but now we’re starting this uptrend again so going back to the cycle of real estate is that typically from anywhere from February till about the middle of May is the best time to put your house on the market for just about every Market out there you have suppressed amounts of inventory but yet buyers are really starting to ramp up and the case appears where you know you have kids you want to move during the summer time well you typically want to find your place first that you want to to buy then once you have that under contract you go through the closing process then you get your house prepped to put on the market after you’ve moved so it’s easier for everybody and so your house might hit the market late May middle of June something like that to make your life as easy as possible for that kind of move up buyer and so what we see is we see a flood of inventory in June and July and then at that time buyers have either a gotten beat up like crazy during the Spring months and multiple offers and being super competitive and so they’ve actually withdrawn from the market or they’ve gone on vacation and basically so many buyers just hit the pause button come the middle of summer and that Trend continues for the rest of the year until about January where then it starts to pick back up again so the moral of this story is if you’re a home seller you want to be selling between February until about May those are the best months in my opinion to be a seller if you’re a buyer right now is when you actually want to enter the market but this is when most of the buyers are the most tired out there so this is what’s driving all the goofiness in the market right now even though closings are really drastically down compared to the last few years the market has kind of stabilized in a funky sort of manner and this article came out just the other day and it really kind of hit home and there’s a very good reason why this happened so the headline is just one percent of the nation’s homes have changed hands this year the lowest share and at least a decade okay and a couple of the bullet points saying you know 14 out of every thousand homes changed hands and the first half of 2023 compared to 19 of every 1 000 in the same period in 2019 which is a 25 difference in those numbers and in the more drastic cases like this in San Jose California about six out of every thousand homes in San Jose was selling in 2023 which is an extremely low number and then over in Newark New Jersey 20 out of every thousand homes so there must be something going on there that I don’t know about that a lot of people are moving because that’s really high compared to the national average but what’s driving this is interest rates now I know the obvious part is that hey interest rates are much higher so you could no longer afford what you were able to afford when interest rates were three percent I mean if you could afford a 500 000 house back in 2022 you might only be able to afford a house that’s 350 000 today that’s a big difference it kicked a lot of buyers out of the market that never ever returned but we can see here we’re flirting with seven percent again now of course this affects the buyer pool but this is also affecting the seller pool and this is why because everybody who is a move up buyer or a downsizing buyer has a very Stark reality I have a handful of clients right now that would love to either move up and buy a house at two to three thousand square feet when they had a starter home and around a thousand square feet or I have downsizing buyers who have the 3 000 square foot home that want to be in the 1500 square foot home and I know what you’re saying just put these people together well there’s a reality here that even if you wanted to buy and sell at the same exact price let’s pretend that everything was five hundred thousand dollars okay and you had a hundred thousand dollars in equity in your house which would be a 20 down payment for a 500 000 house if you have a loan at three percent or under for that five hundred thousand dollar house with a hundred thousand dollars in equity you might be paying literally eighteen hundred dollars or less per month now you go to sell that house you put the hundred thousand dollars down on your next place now you have a mortgage for four hundred thousand dollars on your new place that might be thirty four hundred dollars so all these potential movers are looking at these numbers going I don’t want to pay more than double on my monthly mortgage like that doesn’t make sense because we all got really spoiled with three percent interest rates and it hasn’t hit home yet people haven’t outgrown their homes enough just to stomach having a mortgage that’s twice as much as what you’re in now and especially for downsizing buyers like that makes almost no sense you got a three thousand square foot house maybe it’s a two-story with a basement well you could sell that and have twice as much mortgage or you can just live on the first floor and ignore the basement and ignore the upstairs and ask me how many people I have in that exact same scenario and so a lot of us agents do have people like that sitting on the sidelines which is depressing the numbers of transactions across the country which in turn is stabilizing what should be a really wacky market now with the wackiness in the market I know I’ve had this experience here I’m in the Denver Market I have a lot of clients that are moving to the Midwest but I’ve never really dug into how competitive the Midwest is becoming and Redfin once again knocks it out of the park with their data and they have ranked the 15 most competitive cities in the country based on things like multiple offers uh how many properties are coming on the market how many are selling every single month and week and what it pulls up here is kind of fascinating Fayetteville North Carolina which granted I know is closer to the east coast comes in at number one with a rating of 87 of competitiveness but then we get into this Middle America Fort Wayne Indiana number two in the country right now for competitiveness to buy a home Omaha Nebraska Richmond Virginia Wichita Kansas San Jose California Virginia Beach Anchorage Alaska Chesapeake Virginia Buffalo New York El Paso Texas Lincoln Nebraska so here is the bigger Trend uh the biggest pool of buyers should be Millennials it’s the biggest generation Baby Boomers are retiring at record numbers and what we’re seeing is where Millennials want to live are simply out pricing them Austin Denver San Francisco Seattle they’re getting to the age where they’re starting to have multiple kids they probably moved away from home and now they’re in an environment where they want to buy a house and they’ve maybe saved up 50 Grand but that probably doesn’t buy them what they want where they want and so they’re deciding to move back home to the Midwest which a lot of people are from I mean I’m in that boat too now I am an elder Millennial I was born in 81 so I’m on the cusp I’ve kind of denied it for many years but I’ll cave I’ll give in I’m a millennial ladies and gentlemen and I moved to Denver from Chicago and I’ve had a lot of my clients make that move back to the Midwest where they can buy a house I mean Arkansas is a great example you can get a real home in the 200s so you can have a mortgage that’s two thousand dollars a month or less you can have a beautiful four bedroom three bath 2500 square foot home to potentially raise a family in be closer to your family which as we all know once you start having kids you’ll really realize how invaluable Grandma and Grandpa are when it comes to babysitting right and so they’re placing a value on going back to potentially where they’re from or just in general to markets that are much much cheaper because frankly they’re getting priced out of lots of markets across the country but if you are a first time home buyer out there you really need to watch this video on what the average income can actually afford you in different markets across the country and if you love the latest best information on the real estate market hit the like And subscribe button and I’ll keep the information coming to you