2024 WORST YEAR FOR HOUSING MARKET EVER?
TLDRThe housing market in 2024 is predicted to be another slow year following the sluggish sales in 2023. Despite some hot markets still experiencing bidding wars, the overall trend shows a decline in home sales. March 2024 saw the largest drop in sales in over a year, with an annualized prediction of 4.19 million homes sold, slightly higher than Wall Street's prediction. The median home price continues to rise, but this is deemed untrustworthy as a market measure. Inventory is increasing, which is good news for potential buyers. The Northeast is the only region experiencing a slight increase in home sales, while the Western U.S. sees the most significant decline. Mortgage rates are expected to rise, not fall, affecting affordability. Stories shared in the video highlight the financial struggles faced by homeowners, emphasizing the importance of being cautious with mortgage modifications and the impact of high housing costs on retirement plans. Home builder stocks are falling due to decreased housing starts, indicating a cooling market and a potential surplus of unsold homes.
Takeaways
- 📉 The housing market in 2024 is predicted to be another slow year, with annualized home sales forecasted at 4.19 million, which is lower than the 4.17 million predicted by Wall Street.
- 🏠 Despite a general decline, some markets are still experiencing bidding wars and quick sales due to low inventory and high demand.
- 📈 The median home price increased by 4.8% year-over-year to $393,000 in March 2024, but it is still $20,000 below the peak price in June 2022.
- 🚨 The speaker cautions that the median home price is not a reliable measure of the overall housing market and plans to release a video explaining why.
- 📦 Inventory is increasing, with a 14.4% rise from the previous year to 1.11 million units, which is good news for potential home buyers.
- 📈 The Northeast region saw a 4.2% increase in home sales in March, contrasting with the overall decline in other regions.
- 📉 The Western half of the United States is experiencing the largest decline in home sales, down 88.2% from the previous year.
- 🔺 Mortgage rates are starting to rise again, which could slow down the housing market recovery, as they are tied to the 10-year treasury market.
- 💰 Many homeowners are struggling with their mortgage payments, and some are resorting to loan modifications, which can lead to longer repayment terms and higher overall costs.
- 🏡 A viewer shared that even with a 70% down payment, the monthly costs for a home are still too high, highlighting the financial burden of homeownership.
- 👴 A retired viewer emphasized the importance of having a paid-off home for a comfortable retirement, but noted that even without a mortgage, property taxes and insurance can be substantial.
Q & A
What was the annualized rate of home sales in the United States in 2023?
-In 2023, the annualized rate of home sales in the United States was barely 4 million sales.
According to the National Association of Realtors, what was the trend in home sales in March 2024 compared to the previous year?
-Home sales in March 2024 experienced the biggest decline in more than a year, with a drop of 4.3% on an annualized basis from the previous March.
What was the median home price in March 2024 according to the National Association of Realtors?
-The median home price in March 2024 was $393,000, which was a 4.8% increase year-over-year.
Why is the speaker skeptical about the median home price as a measure of the overall housing market?
-The speaker is skeptical about the median home price because it does not reflect the current state of the housing market accurately, and they plan to make a full video explaining why it is considered a 'complete lie' at the moment.
How did the housing market in the Northeast differ from the rest of the country in March 2024?
-Unlike the rest of the country, home sales in the Northeast region actually went up by 4.2% in March 2024.
What was the decline in home sales in the Western half of the United States compared to the previous year?
-The Western half of the United States saw a decline in home sales of 88.2% lower than a year ago.
What is the current trend in housing inventory according to the March numbers?
-As of the March numbers, the inventory is up by 14.4% from the previous year, with 1.11 million units available.
Why are home builder stocks starting to fall?
-Home builder stocks are falling because housing starts are down by 14.7%, indicating a cooling off in the housing market.
What is the significance of the decline in home builder starts?
-The decline in home builder starts, which is the steepest drop since April 2020, signifies that the housing market is slowing down and builders are struggling to sell their inventory.
Why might having a paid-off home not guarantee retirement comfort anymore?
-Even with a paid-off home, the costs of property taxes, insurance, and maintenance can be so high that they equal or exceed a mortgage payment, making it still expensive to own a home and not necessarily ensuring a comfortable retirement.
What is the current prediction for annualized home sales in 2025?
-Top economists are forecasting 4.6 million annualized home sales in 2025, which is not a significant improvement over the current situation.
Outlines
📉 Housing Market Stagnation in 2023 and 2024
The video discusses the slow real estate market in 2023 and predicts a similar trend for 2024. Despite some markets experiencing bidding wars, the overall national trend shows a decline in home sales. March 2024 saw the largest drop in home sales in over a year, with an annualized rate of 4.19 million homes sold. This is despite the typical spring uptick in the housing market. The median home price is still increasing, but the speaker cautions that it is misleading and plans to release a video explaining why. Inventory is rising, which is good news for potential buyers, and there are significant regional variations, with the Northeast experiencing an increase in home sales, unlike other regions.
🔍 The Impact of Mortgage Rates and Loan Modifications
The speaker talks about the relationship between the treasury market and mortgage rates, noting that rates are rising rather than falling as many expected. This is affecting the housing market affordability. The video also covers a case where a person attempted to modify their mortgage to lower monthly payments but ended up with a 52-year mortgage term and no significant change in payment. This unusual situation raises concerns about potential fraud or misunderstandings in the loan modification process.
🏠 The Financial Burden of Homeownership
The video highlights the financial challenges of homeownership, including high property taxes, insurance costs, and the burden of maintaining expensive homes. It shares a story from a viewer in Houston, Texas, who despite being able to afford a 70% down payment, finds the monthly costs of homeownership still too high. The viewer's situation underscores the growing apprehension around taking on the financial commitment of buying a home, even for those with significant financial means.
👴 The Retirement Implications of Homeownership
The video discusses the importance of having a paid-off home for retirement, using a story from a retired viewer who managed to live comfortably because they had no mortgage or rent payments. However, it also points out that with current home prices, property taxes, and insurance costs, even having a paid-off home may not guarantee an affordable retirement. The video advises viewers to aim for a paid-off home but to be aware that additional costs may still present challenges.
📉 Decline in Home Builder Stocks and Market Outlook
The video concludes with a discussion on the decline in home builder stocks due to a significant drop in housing starts. This drop indicates a cooling housing market, with builders offering incentives and facing challenges with unsold inventory. The speaker suggests that builders are starting to scale back on new projects to focus on selling existing inventory, which may impact future market availability but reflects the current slow market conditions.
Mindmap
Keywords
💡Housing Market
💡Annualized Rate
💡Median Home Price
💡Inventory
💡Loan Modification
💡Mortgage Rates
💡Home Sales Decline
💡Realtors
💡Property Taxes
💡Housing Affordability
💡Economic Indicator
Highlights
2023 experienced one of the slowest years in real estate history with only 4 million home sales on an annualized rate.
The housing market in 2024 is predicted to be another abysmal year with no signs of improvement.
Despite a slow market, certain hot markets still experience bidding wars and quick home sales.
March 2024 saw the largest decline in home sales in over a year, contradicting the typical spring market uptick.
US home sales in March 2024 dropped by 4.3% annually, and annualized sales prediction stands at 4.19 million.
Wall Street viewed the slight increase from the predicted 4.17 million to 4.19 million in sales as positive news.
The median home price is still rising, up 4.8% year-over-year to $393,000, but is considered untrustworthy as a market measure.
Home prices have dropped significantly from their peak in June 2022, amounting to a $20,000 decrease on median prices.
Inventory is increasing, with a 14.4% rise from last year to 1.11 million units, signaling a slow return to a more balanced market.
The Western half of the United States is experiencing the most significant decline in home sales at 88.2% lower than a year ago.
Mortgage rates are beginning to rise rather than fall, which could further impact the housing market's recovery.
Economists forecast only a slight improvement to 4.6 million annualized home sales in 2025, assuming mortgage rates decrease.
Many homeowners are struggling with their current mortgage payments, indicating potential issues ahead for the housing market.
A case study involving a 52-year mortgage and lack of payment reduction raises concerns about loan modifications and potential fraud.
Homes in certain areas, even with low mortgage rates, are being sold due to the high costs of ownership.
A Houston, Texas buyer with a 70% down payment capacity still finds monthly costs too high, reflecting the broader affordability crisis.
The importance of having a paid-off home in retirement is emphasized, but current costs of home ownership may challenge this traditional strategy.
Home builder stocks are falling due to a 14.7% decline in housing starts, indicating a significant cooling off in the housing market.
