Prices Are Falling FAST. Is This 2008 All Over Again?

Prices are falling and yes, it is actually worse than 2008. Despite what you may hear from your local real estate agent who will say it's a balanced market. It absolutely is worse than it appears in the news and in the data. And we're going to go over that here.

We want to hear what you're seeing on the ground. Comment below. What are you seeing locally? We're going to be talking a little bit about national data and then we're going to jump into local data data here in Florida and in Jacksonville specifically where I'm located.

But it is worse than what they are actually telling you. And it's really important for you to have the data so you can make the best decisions for you and your family. And honestly, stop being lied to by agents and people who don't have the full picture. Sometimes they're not doing it on purpose.

Sometimes they just don't have access to the information. But this is the se this is a report from Redfind. It's the second highest April in terms of cancellations on record. 14% of pending home sales are falling through.

Now, this is on the national level. So, it's the second highest April cancellations. Now, in Jacksonville, Florida, we're actually seeing a cancellation rate of near 30 to 35%, almost double what we're seeing right here. We're going to go over the reasons why we're seeing so many cancellations, why sellers are getting so desperate to sell as soon as humanly possible, and what that means for you.

So, sellers, this is another chart that came out from Red Fin. There's more sellers than buyers. And obviously that changed in basically 20 the end of 2023 to 2024. So simply a function of interest rates, mortgage interest rates came up way too much, way too fast and caused the market to just flip.

It inverted right away. This is the estimated number of US home buyers and sellers actively in the market. This seller's number is skyrocketing and it is also misleading because it doesn't include all of the shadow inventory that we have from new construction that are just out there sitting and waited to be listed. Let's dig into what's happening here locally in Jacksonville.

I follow the data on a weekly basis and sellers are getting desperate. Basically, we're seeing a lot of properties come back on market. They're falling through. We have a basically tons of new listings entering the marketplace.

And then the active under contract and the pending sales are starting to slow. And there's a special thing that I want to point out here is why the data is actually worse than it looks is because a lot of the listings are expiring. About one out of 12 listings is expiring every week. Every week, not every month, every single week.

And this means that there's a lot of inventory that's going to be coming back on the market in 30 to 60 days. Homeowners like to keep their property off of the market for 31 days to reset the daycount clock. And so they're going to come back on in 31 to 40 to 50 days. And by that point, you know, school will be back in session in August, very soon in in next month or uh basically two to three months here.

And it's going to significantly impact the buyer demand because many people, most people buy after the busy season. Sales will drop another 50% from from peak busy season and sellers are getting desperate already. It is spring going into summer and it already feels like winter. Here's the math that we're seeing on the ground here.

If you take the new listings, 2574, and you add back the back on market, a lot of agents forget to do this. You got to add back in the back on market, the 606, minus the active under contract, the 591, minus the pending sales, the 1541. We have 1,048 net active listings already added in one week. That is crazy.

We're talking about adding 8 to 10% of the entire supply of inventory in one week. 33% got a price change this week. So, you can see price change 44 4,000. That is crazy.

So, people are dropping every single week. A third of them are dropping their home price every single week to try to sell before their neighbor sells because once their neighbor sells, they're going to be stuck in that property possibly for a long time unless they get the price lower than what their neighbor's house just sold for. We're starting to see this kind of downward cycle and trend that's going very quickly. And that's why it's worse.

It's it's worse than 2008. And I'll explain why that that is. Overall, you know, there's closed sales are down 11%. And right now, only one out of six homes listed for sale are actually successful in in going to to closing in the current market.

Active inventory just from last year is up 68% which is wild. Pending sales year-over-year are down 31%. So, this is how we know more weakness is actually coming. The sale to life list price ratio, what it is listed for versus what it sells for, is 94%.

So buyers are now coming in negotiating at least 6% off of the sale price. Who knows what they're doing on the concessions and repairs. And we are now down 50% on the number of closed sales today than there were four years ago. And this is how we know it's worse than the '08 crisis is that this is the lowest number of unit sales in the last 30 years.

We now have low less number of actual units trading hands than we had during the great financial crisis. And that is the key thing. How many people are actually transacting in this market is the only thing that matters and is the biggest indicator of what's going on. And obviously it's showing up because the fallthroughs, more listings coming on the market, and the price changes that are happening very rapidly.

Now, a picture says a thousand words. Here's Jacksonville with just a slew of inventory. Every week you look at the chart, there's more green dots popping up. But you can see that they're just overlapping each other.

In every neighborhood, there's many, many listings coming on. Now, there are pockets of Jacksonville and of Florida that are doing very well because they didn't have the number the amount of speculation in the hedge funds coming in and gobbling up all this inventory and making in, you know, prices just skyrocket. There are pockets of neighborhoods and areas around town that are high demand regardless of market shifts, but it's few and far between and you need to get with a local top producing real estate agent who actually knows what they're talking about in order to to make this happen. So, why is this happening?

Number one, interest rates. It's an affordability problem. People are getting sticker shocked. They go into the listing, they want to go buy a house, they go and check with their lender, they see what the monthly payment is, and they're just like, "No way.

It is actually, in a lot of cases, cheaper to rent by $1,000 to $1,500 on each house than it is to buy. Why would you buy in that circumstance?" Well, there's a lot of reasons why you would still buy. Not everybody buys purely for financial reasons. A lot of people buy for emotional reasons.

They don't want to be kicked out of their house every year if the landlord decides not to rent to them anymore. They want to stay in one neighborhood for 20 years cuz they're raising kids. There's tons of reasons why you would want to, you know, still buy in today's market that aren't finance related. But if you're an investor and you need to buy and sell or you're a buyer looking to buy or sell in the next year or two, you're buying near the peak and it's going to be a very expensive thing if you're going to try to sell it in a year from now.

Increased inventory. So, the inventory is just booming. We haven't seen uh inventory come on like this before for quite some time. And buyers are becoming more picky and that's why you see more cancellations happen.

Buyers are low on cash. They are absolutely maxed out. We are now advising our sellers, hey, you need to do every repair that they ask for, even the crazy stuff that doesn't even make sense because you just need the transaction to close. And so, buyers absolutely already have the power in this market.

And of course, economic uncertainty with the tariffs, with the administration, with people potentially losing their jobs, companies cutting back on hiring, having it be more difficult to actually get a job. All these factors come into is is right now a good time to buy. And of course, videos like this and other news sources going out and sharing the data of what people are actually seeing on the ground is scaring people from buying. And then secondly, there's inspection and appraisal issues.

If the house isn't brand new construction and it has an inspection, there's lots of things that could freak a buyer out because they don't have the cash and then the appraisal issues are real. Now, in in the checkbox, at least in Jacksonville, the appraiser marks the box that they're expecting a declining market and now they're pushing they're actually decreasing the appraisals that that come through. So, your house may not appraise. And if your neighbor's house down the street sells before yours, tough luck.

You're going to that's going to be the next comp for your house. And that's how you start seeing this kind of cycle downward on the prices at a very rapid rate. That can happen within just a couple of months. A whole neighborhood could lose $50 $60,000 of equity just in 2 to 3 months because somebody got desperate and sold their and kind of fired their house.

Well, that's the next comp for your house that you're going to have to price against unless you have significant upgrades or a superior lot. Here's the national single family inventory. As you can see, we're we're in 2025. So this is the inventory coming up here.

It is rapidly increasing more than any other year. Obviously, these are the boom years that we're competing against, but this is an extremely rapid rate of new single family inventory that's coming on the market and not selling. This is from the John Burns Real Estate Consulting. I like this chart.

It's downgraded many of the markets from normal to slow. As you can see, Jacksonville is right here. So, you can kind of see where the markets are slowing the most. It is not everywhere.

Again, it's the usually the areas that had the most speculation. You can see California, Texas, and Florida are the ones that are getting really hit. Colorado specifically is starting to show lots of signs of weakness, and it's starting to hit a little bit on the East Coast as well. So, areas that were just huge speculative bubbles for investors to bid up prices, where people were migrating to at a rapid rate because of COVID.

Now, we're seeing basically the inverse effect of that. So, what happened to the housing shortage? We were sold this lie by the media that we had so many listings. I mean, s such a shortage of listings and so many people moving to the United States.

Um, I think there's one point where they're like, we're short like 5 million homes in the United States. That data was obviously clearly wrong because we just raised the we raised the interest rate from 3 to 7% over a couple of years and all of a sudden, yes, we do have an affordability crisis, but we have the inventory to house people. And secondly, we we actually overbuilt and especially in Jacksonville. I mean there is a new construction community almost on every corner.

Single family houses, multif family houses, and they are having a very difficult time selling their inventory. A lot of them are underwater and starting to fire sale uh their properties or decrease their rents. We're seeing rents already coming down 8 to 10% across the board in Jacksonville because of this. So, Redin reports that the US home sellers are sitting on $700 billion worth of listings, which is an all-time high.

Of course, this is Redfin's data, so just take it with a grain of salt, but it's it is a pretty significant amount of inventory, and that's already you can already see a day andight comparison today versus what happened in 2020 and 2021. And they also told us that the interest rates were come down, right? Housing from the experts was telling us that, hey, housing's going to come back. Interest rates are going to come down a percent or two.

It's going to be okay. Keep buying, keep buying, keep buying. I don't know why they keep selling this narrative that interest rates are coming down when everybody is completely loaded up with debt and we're facing a fiscal cliff with uh with Congress here in in the big beautiful bill. It's it'll be really interesting to see what happens, but the bond market is screaming, "Please don't do this.

You guys are going to bankrupt the country and the in the you know it's going to be more expensive to borrow so in the future because it's more risk on the US government. So I don't know why housing experts were expecting the the market to recover this year. I guess they expected the Federal Reserve to reduce rates. If they did, we might have another spike in inflation.

People already tapped out. Inflation helps the wealthy. Inflation helps the top 10% of people out there. It doesn't help the bottom 90%.

So, it's kind of silly, you know, looking at this and and thinking, "Oh, those bottom 90%, they're going to benefit from a rate cut." All the gains go to the people who already own own the assets. Okay? Um, but they said rates would come down and and they're not. Here's the reality.

The downturn is spreading. It's spreading really, really quickly. Uh, this is the percentage of counties with declining home values month over month. This is from the Zillow um home value index.

61% of counties now have declining home values month over month. Obviously, last time we saw this type of activity was during the great financial crisis and then also uh during the COVID years where we had that spike, but it is it's uh it's a scary time right now. I would really expect that this will actually go up. Uh we'll probably end up seeing the 2008 2009 numbers locally.

We are obviously already worse than 2008. People just don't talk about it, but the downturn is spreading across the country. We talked about this, but rents are coming down. I even was having a conversation with somebody in South Florida who said rents are down $400 a month, and the tenants are starting to negotiate like crazy with their landlords because they see other similar products that, you know, are three, four, $500 less per month than their product and instantly all of the profit that that landlord had is basically disappearing.

And this is another thing. These hedge funds, I got a phone call from a hedge fund looking to sell about 200 units. They're underwater. The bill is due.

They still have private money. They did not lock in their long-term finance and they're in distress. We're going to see a lot more of that come on. And of course, there's another conversation about the shadow inventory about FHA shadow inventory and VA shadow inventory that is probably going to start being more talked about coming October.

But right now this information is pointing to everything going down and spending is coming down right. So uh consumer consumption expenditures this is from the Bureau of Economic Analysis. Basically uh expenditures from consumers is basically going to be you know a low over the last 5 years and it's continuing to move for move down because consumers are running out of money. They're completely maxed out.

That's why we're starting to see their credit card defaults. There was a report that came out the other day that said that the utilization of HELOCs, home equity lines of credit, where people tap their the equity in their house is like at an all is like at a 17-year high, which basically to me indicates that people are now off of the credit cards and moving to their home equity lines. The average home equity line is like $102,000. They're using their home equity line to live and to continue to spend, which is crazy.

So eventually the running the money will run out. And then the housing payments. Obviously, this is the number one thing. Everything in real estate is tied to interest rate.

Interest rate is the number one factor that's going to impact buyer ability to purchase and that's going to impact the demand and that will impact ultimately inventory. But these housing payments compared to the prior years are just absolutely insane. It's up 4.9% year-over-year. Um, so the more this is the mortgage payment on the four-week rolling average of the median asking price according to a Red Fin.

And just to end it, this is again the only thing that matters is the mortgage rates. I think we're going to continue to see mortgage rates move up. This is counterintuitive to what most people see out there, but I think the c the borrowing cost of the United States is going to go up. The uh Federal Reserve is rolling off as MBS.

It's not buying MBS right now. It's buying treasuries. And this is going to be part of the reasons why interest rates uh for mortgages will remain high. You might see the 10-year actually dip.

Um, but because the government's buying their own bonds back, but they might not be buying the mortgage back securities in the future. It'll be really interesting to see, but I don't see these coming down anytime soon. And frankly, we're in a correction. A correction is 10% drop in prices.

We're already down 10%. That's what we need. We need the affordability to come back uh as soon as humanly possible. And we probably need to go into a crash.

The crash is a 20% decline from peak uh to the bottom. And in some areas of South Florida, we're already there. It's just a matter of time before it hits Jacksonville. I expect we'll be there by Q1 of next year.

And no one else is going to tell you this information. What are you guys seeing on the ground in your market? If you're in Florida, if you're in Texas, let us know. California, I think those are very unique markets.

Colorado, the other markets aren't getting hit as hard, but it's coming for everybody. As you can see from that prior chart that said 61% of all the counties are starting to have price declines. I think that will eventually come for everybody in the future. If you like this content, go ahead and drop a comment, a like.

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