500K More Sellers Than Buyers. Housing Collapse Begins

Well, it seems like the news has finally caught on with the nightmare scenario that's happening in real estate and housing in the United States. Let's jump into what is going on, some of the charts and uh other pieces of information that have come out this week that are important for you to take a look at. So, the first thing that came out this week was Red Fin. More sellers than buyers.

There's nearly 500,000 more sellers than buyers according to Red Fin's data. You can see the chart over time what it looks like. Obviously, you can see, hey, the Fed reduced rates and all of thematic automatically there's a ton more buyers and obviously a lot less sellers and now we're starting to see the opposite once rates came up and buyers are starting to fall off and sellers are starting to skyrocket. I think this chart is phenomenal and tells the story very clearly what's going on and it's one of the number one charts that I've seen out there.

Redfin just got acquired by Rocket Companies, a mortgage uh company with you might have heard of Quick and Loans. That's this company that now owns Redfin. Uh they did a all stock transaction for 1.75 billion. Uh because Redfin model honestly is not very good.

The W2 employee model for real estate agents for salespeople is not the best. Uh let's just put it that way. We've had a lot of experience with the Red Fin situation. Let's move on.

Let's go into the why uh why are there so many sellers and so few buyers out there right now? Well, the reason why is housing payments are crazy, right? Once you have the interest rates come up for the mortgage payments, it's just it's the worst ever. It's the worst ever time to purchase real estate um from an affordability uh perspective.

You can see here uh the the average payment now is $2,882 in a lot of cases. And you'll see this out there is it's way better to rent than to buy. Uh this is one of the numbers out there that kind of show you know why would you buy a place and pay 2,800 when you could rent the same place for 2200. So obviously prices have to come down.

This is everything is a function of payment. So let's look at this. This is the gap between mortgage rates and home prices. And you can see that the gap is just widening and widening and widening and of course it'll start to come through and even off here.

So prices are expected to come down. How much will depend on the area, the school district, the supply of construction for new construction, all of those factors. Um because each market is hyper local and unique. And the se spring selling season has been brutal.

Here in Jacksonville, we're actually down 31.3% on pending sales. This research though on the chart comes from Apollo Research Company. And this is homebuilder traffic. So you can see the homebuilders.

I mean, it was a weak start to the beginning of the year and it's continuing even during busy season to be really, really slow. And this is why you're starting to see new construction do sales on their property$1 $150,000 off their property and give you massive incentives like rate buy down. They'll buy down your rate to 5% to make it financially make sense to purchase versus renting a similar unit. New home sales inventory is skyrocketing, especially in the south.

And so that's what this data shows here. Uh we're worst in the great financial crisis standpoint from a number of homes for sale in the south. This is new home inventory as well. I think this chart's really telling.

You can see how many properties are under construction. So one of the things that we see in Florida specifically is there's so much speculation. Uh this is a boom bust type of market. And so whenever they see a lot of demand, builders go crazy.

They start building as much as possible, take advantage of the hot market. And then they miss the boat. They don't realize when things are starting to slow down and they continue to just build, build, build build. And then there's an over supply of inventory.

Meanwhile, migration to Florida has slowed. People actually migrating out of a lot of areas around Florida now and going back to where they came from because of return to office because maybe they don't like the lifestyle anymore. Maybe the wages don't they lost their job and the wages locally here don't support their lifestyle. They can't do it anymore.

But there's a ton of new home inventory that's on the market. This is blue area and obviously the completed one is starting to move up as well and not started. There's a lot of lots that are just sitting not not being started until the demand shows up. Now prices are nuts.

This is the rule of 28. Um and what it is saying is that there must be a decline of 46% to close the affordability gap. What this means, this chart is basically saying is the housing payment should not exceed 28% of your gross income. And for in order for that ratio to match, it would need to drop.

The prices would need to drop 46%. Now, I've done the math for Jacksonville, and the math comes between 32 to 39% drop from current market prices today for it to make more sense to either buy a property as an investment property or even to have a property uh to purchase and have it be comparable from a mortgage versus a rent standpoint. So, this prices are just nuts right now. It's out of control.

And we know exactly why that is because the Fed reduced rates and then a lot of speculators came in and just bit up the prices very quickly. Now we're paying the price for that. This is US housing pending home sales index. It's actually worse if you look at the similar kind of chart for locally in Jacksonville.

We're at great financial crisis type lows here. And we expect this to continue the rates situation and we'll talk about this later in the video is really dependent on what's happening with politics right now with the tariff wars and with the budget deficit. We'll dig into that more. So comment below.

What are you seeing in your local market for housing? We want to hear from you as well and let when you comment definitely put where you're located to because that helps because every area of the country is completely different. Home sales are super low also for existing homes and we're great financial crisis lows here. This chart's pretty self-explanatory.

And the thing that's interesting is that rental vacancies are jumping higher than the pandemic high. So we're seeing this is for apartment list. So this is for apartments vacancies. This is really bad.

Multif family apartments are getting absolutely hammered in some areas of the country. Prices are already down 30 40% with cap rates completely blowing out and then vacancies on top of that. I know in Jacksonville we are completely overbuilt for multif family. Uh you see a new construction area of multif family almost on every single block and some of them are even sitting you know 20 30 40% uh vacant and they're having to do massive leasing specials to get people to move in.

Even though they have great amenities. I mean they're building great stuff. It's just the migration that came to Jacksonville is no longer here and the wages here do not support the rents that they're charging people. So rents have come down and the problem with this is it's a cycle.

So once somebody sees who's currently renting a house sees another house that's cheaper in the same neighborhood, what they're going to do is they're just going to negotiate with their current landlord or they're going to move to the cheaper house. And all of a sudden you see the rents come down pretty quickly and that's a huge problem. And vacancies are up on single family rentals too. This chart's a little bit cut off, but it comes from the Fred St.

Louis homeowner vacancy rate in the United States. Now, the inventory change. This is a really cool chart that came out from Business Cycle Research, and it shows here in Florida that we have 28% more inventory than what we had in 2018 and 2019. Now, when I was selling in 2019, we thought those were the end of times where it was like really slowing.

Houses were sitting on the market 120 150 days. And basically, what happened was it's worse than that period. We thought we were going to recession. We actually think CO extended the housing market significantly obviously for for 3 to four years.

And now if we're going back to precoid numbers, we're now in a worse situation than we were in pre-COVID. You can also see the the chart that just says higher inventory. It's great to look at. Shows Texas, Colorado, Arizona.

I think Arizona is actually worse than this chart is showing, but you can see some markets are still doing really well. The north, places that really got hit during the pandemic and people were relocating out. Now, we're seeing the opposite trend where those areas are actually doing pretty well. Now, picture says a thousand words.

This is Jacksonville, Florida. We've got over 11,000 active listings in the marketplace and we have 12,000 realtors. So, it's almost a listing per realtor. It is crazy.

And we're seeing more inventory come on every single week. About 800 units net active listings come on the market every week. The reason why we don't see even more inventory is because we're seeing a ton of these actually expire and cancel and usually they want to relist within the next, you know, two to three weeks and get back on the market. So, we're going to continue to see inventory add to this situation.

So, if you're a home buyer, you have the power now. You are able to go out there and negotiate. You need one of the best agents in the area. So, if you need the one of the best agents, let me know.

I can get you in touch with them. I know how to interview them. I know how to tell if they're good, if they're actually going to guide you and tell you the truth, or if they're just going to lie to you to get another commission check. I will let you know.

I'll get you in touch with the ones that will really look out for you and make sure they're negotiating like crazy rather than just trying to get a commission check. Now, not every market is the same. So, here's months of supply that comes out and you can see Jacksonville here's at 5.2 month supply. Doesn't feel that way.

It feels a lot worse because pendings are are sky like pendings and fallroughs are skyrocketing. There's a report that came out by Redfin. I think it was like 15% of deals are falling through. In Jacksonville, we're seeing almost 30% 35% of deals falling through.

So, it's tough. If you're an agent out there, we feel for you. You're doing a lot of work for free. You're putting multiple properties under contract and deals are falling through.

There's ways to mitigate those falls. We got the strategies on that um to to kind of fight those things over up front. But you can see obviously the Texas and the Florida areas have the month of supply that are moving up the highest. I'm surprised by Washington DC I thought would Doge.

I thought this would be a lot higher. I think it is. Um, so we'll have to look into that data. And because prices are coming down, we actually see monthly housing payments falling in 12 major metro areas.

Jacksonville was number one with a 4.2% decline. This is simply because prices are coming down. We have houses that used to sell for, you know, 450, 440. They're now selling for 380.

Obviously, that's going to decrease the monthly mortgage payment. Let's look at demographics. People are getting married later. This is another problem.

So people are getting married later. This is men and women usually around 30 years old now instead of maybe in their early 20s or mid20s. Over time this is going to change the home buyer in in what they're doing. So let's look at this.

The median age of the first-time home buyer is now, you know, if they get married at 30 and they buy a house at 38. Firsttime home buyers at 38. That is crazy to me. It's just because it's completely unaffordable and out of reach for everybody.

They have to save for their down payments. They may have student loans. They have car loans, right? Everybody is loaded up with so much debt.

The average consumer has no cash and is loaded up with debt and they have to delay, delay, delay the median age of the first-time home buyer. There's another chart I actually want to uh I don't have here, but I'll tell you about it. Is that the average seller is 58 years old and the average buyer, not first-time home buyer, this is just for first time, the average buyer is also 58 years old. So, it's like the boomers are selling houses to the boomers, which is pretty interesting.

Now, how's the consumer doing? Well, the consumer is stressed out. I mean, it's horrible. This is the percent of loan balances that are 90 plus days delinquent.

And it's getting worse. Every month that we track this and look at this, it's getting much look worse. Look at that. Credit cards, the student loans, they're just loaded up with debt.

They're not going to be able to have the down payment to purchase a home. Um, they can barely pay their existing debt that they have. They're no longer consumers are no longer able to really tap their equity, at least in the south, to be able to do like a heliloc or something to roll up all their debt and and roll that into their house versus having the higher interest rates with their credit cards or student loans. So, it's just going to be a problem.

They're going to have to pay these back. People are going to have to get two to three jobs to to make it work. Home prices are too high. This was a survey.

I couldn't get more information on where this came from, but I liked it because I think it's accurate. Home prices are just too high. What has stopped you from buying a house right now? Too high.

Absolutely. Yeah, they're 30, 40% too high. Mortgage rates are too high. That is absolutely impacting the payment for sure.

There's not enough inventory. Not many people said that. And the economic environment is uncertain. There's a lot of people who are scared of this tariff stuff.

They're scared if they buy a house that it'll be worth less next year. And then there are people who are starting to be concerned about their job and their income. I actually have met a lot of people who are specifically worried about their job and their income in today's market. And a lot of people are reporting it's really hard to find a job right now.

Um and job openings are slowing down. So here's the reality. The the consumer is still spending is now spending more in consumption than they're making in their income. And so you when this happens obviously the debt collectors will start coming.

You can't continue to spend more and and have less income for very long. Eventually all the cash will dry up and all the credit cards will dry up and this will you know have some sort of consequence out there. We see that with CLA that's now lost over hund00 million on their buy now pay later scheme. I would call it a scheme because that's just delaying the inevitable.

I don't these banks are absolutely taking advantage of consumers who are not financially literate and companies are also hurting. US corporate profits fell most since the global financial crisis days and everybody's like oh it's okay stocks are really high stocks are high it doesn't matter if if profits are low. It it matters a lot. And then we're seeing the let's see this chart right now.

Revenue is also down. This is the S&P sales per share and it's at one of the lowest levels for for quite some time since the pandemic. And the reality is that stocks are completely disconnected from Main Street. This is the Schiller PE ratio.

This is one of my favorite metrics and it just shows that we are way far and beyond where stocks need to be. And so the who's lying? Is the consumer lying or are stocks lying? And I think part of this is also the AI bump is really pulling the stock market completely higher.

I think most stocks are not doing very well. I think most companies are not doing very well and it's just because we have this little technology shift that's happening that's creating a lot of opportunity to be honest and companies will be able to come more profitable over time with the implementation of AI. Uh but I still think they're overpriced and I think they will come down just like real estate's overpriced you know 30 40%. I think the same is true with the stock market.

I'm actually actively short the stock market. I know, don't get crazy. It is a very risky thing to do, especially in the time of AI, but I put my money where my mouth is and I am bearish on the market. There's a lot of cash on the sidelines.

Money market funds, why would you invest in something that's risky? You don't think if it has upside if you can invest in money markets, make four, five, six%. And so, if you look at this as a percentage of the entire GDP, it's it's actually not that much. And if you look at this as you know the government continues to print cash every single year the value of your dollar becomes less and less every single year then this really doesn't you know seem that big of a deal of of a chart but there are there is a lot of money on the sidelines in money markets at the moment.

So let's dig into politics. What do we see happening? This is something that is putting buyers on the sidelines who are a little bit concerned uh about, you know, either tariffs and there's this new bill that came out that passed in Congress and is going to the Senate and they're and they're putting they're actually sending it back and forth to each other to try to figure out how do we actually make cuts, but realistically the uh the House GOP package would increase deficits by a significant amount. Some proposals say 4 trillion, some say it's 3.1 trillion, but ultimately the problem with this bill is that it doesn't solve any of the debt problems and all the work that Doge has put in to try to reduce spending.

It's actually increasing spending. So, if the Republicans pass this through, they're just as bad as the the Democrats in terms of their spending. And this really isn't a political issue at this point. Like, we are bankrupting our children.

I've got three kids personally. We're bankrupting our children, future generations, for from being able to to use the USD. Like our the value of our currency is just going to go down. Rates will spike because countries won't uh lend to us anymore for cheap and the economy will slow and we'll that's exactly how empires fall is when basically the politicians spend all of the money that we have on things that don't create enough value.

So the CBO projects that the actual federal debt is going to be higher. They have a track record of basically scoring and miscoring a lot of these legislations. They're pretty accurate in the short term, but not very accurate for the long term. But the actual federal debt is just moving higher and higher um at a more rapid rate as we see interest rates rise.

And unfortunately, the their solution so far has been, hey, let's just print more money. Let's not actually focus on solving the problem here. Let's just print more. And the value of your dollar has just eroded every single year.

So this is the purchasing power of the US dollar. It's it's really rough. I I think one of the solutions that the politicians will do is they'll just continue to print until the bond market says enough. You're no long we no longer trust you with uh the US dollar anymore and we're going to raise rates and probably move our investments to other countries.

That could happen who knows this year, next year and five years from now. But there will be a point where they other countries will not trust our US dollar. And what is this doing? This is causing basically America is a credit risk again.

Is the risk-free rate really the risk-free rate if bond markets react to this uh this deficit problem that we have? So credit default swaps is basically an insurance on default have gone up for the risk-free rate uh for the US government debt. So this is this is a red flag. This is basically the bond market telling politicians, stop spending, start cutting.

It's not a political issue. This is really an issue for all Americans that we need to we all recognize, hey, if we spend more than we bring in, eventually we're going to go out of business. It's just like yourself as a consumer. You can't do that for very long.

And the bill really is interesting. It doesn't really seem to help the bottom. It really seems to help the wealthy. This is obviously a chart that came out um from Wharton Upen.

And it's pretty clear to me that, you know, hey, most of the gains from this reconciliation bill would be going to the to the wealthiest Americans. So, that includes me. So, I'm I'm happy about it, but I'm also upset about it because I don't think this is the right thing for the long-term uh of the country. I think we actually need to cut a lot of these benefits and a lot of these loopholes.

And that was the promise of the president that he would do this. So, they need to go back to the drawing board and really find a way to um reduce the spending. One other problem that people are concerned about is the student loan repayment. So, people are starting to get their credit hit by having their student loans um default or be delinquent and their credit scores are dropping 150 points.

If they have a co-signer or a co-gar on those, they're also dropping. This is making it harder for them to be able to purchase a home. So, there's a lot of delinquency going on there. Now, here's a funny chart.

This is a sad fact and this came up is uh Only Fans is the only revenue efficient company in the world and no one comes close. This is revenue per employee, $37.6 million uh per employee at Only Fans, which is incredible. So, you know, this is it's funny because you see a lot of people say, "Oh, you need to go get another job or go go make an Only Fans. That's where people make the most money." But look at that.

Compared to Nvidia and all these other companies, it's it's actually pretty incredible as a as an organization. It looks like they're going to be purchased out and probably be monetized as well. But it's a sad fact that this is what people are turning to in order to make revenue. Do these days.

Another interesting piece of information that came out is that the used price of Teslas have come down significantly. So, might now be a time to buy a Tesla. Obviously, there's political factors there. Here in Florida, we don't have people lighting cars on fire or anything like that for using their Teslas.

But let's be honest here. This is a really fast changing market and the every month the real estate market has more data coming out that makes it worse and worse and worse. Once the headlines pick up this information which they are starting to then the consumer is aware of what's going on and they ask more questions. I think that's a good thing.

Consumers need to be careful in this market. So what do what do you do if you're in business? If you're a real estate agent you need to think long term. You can't think short term.

You need to think about how you're going to run your business over the next 10 years. You need to understand that down markets is where the foundation is set for the next upturn. So set yourself up for massive growth. This period of time I believe will probably last two to three years.

You set the foundation. You get amazing skills. You learn how to do short sales and foreclosures. You learn how to do creative financing, seller financing subject to you find creative ways to make income in this market.

And this market will reward creativity. And then on the upturn, you'll be the most skilled person out there. You can't play business and thinking like a year-to-year thing. You need to think in decades.

And you need to partner with the best and have people around you who are positive. Yes, we need to understand what is going on the ground dayto day and where the market is so we can educate our customers on making the best decision, but you need somebody who's positive. You need somebody who's ambitious, somebody who understands how to get things done regardless of the circumstances and does it with a smile on their face. And that's why grit is key.

And if you haven't read Grit by Angela Duckworth, I recommend that being one of the number one books if you're an entrepreneur or real estate agent, uh, because it really tells you this is what ultimately makes a difference, not the market. You can't complain to the market about your results. It's about what you do and how you respond and how you persevere and move through. See you guys later.