You're (Probably) Ignoring The Biggest Housing Crash Since 2008

Investors and sellers are really starting to panic about the real estate market because interest rates are staying stubbornly high and likely to go higher into the future. And let's dig into what's going on nationally and what's going on in Florida. And lastly, what's going on in Jacksonville where we're seeing an extreme amount of distress and why that is and what buyers and sellers can do in this situation and what investors can do in this situation because it tends to get worse every single day. Every piece of data that we see coming out here in the marketplace.

So, the first thing is that the sellers are freaking out. Home sellers are so fed up with cutting their listing prices, they are frankly just taking their homes off of the market altogether. We're seeing this left and right. There's a record number of canceled listings and expired listings come onto the market.

It's a huge opportunity for real estate agents and investors to go find the people who are truly motivated to sell in this type of market and will accept the today's market prices. It's interesting the psychology behind this which we'll get into. This is an article that just came out and we'll continue to see more articles come out about the distress in the sellers mindset of why they can't reduce their price to get get to normal market conditions. Again, rates came from 3% all the way up to 7% just within a short period of time.

And sellers are still pretending and living in a world that doesn't exist anymore in 2020 and 2021. So, here's the process. Sellers are in the five stages of grief, which is pretty interesting. Number one is denial.

My house is worth a lot more than that. Number two is anger. The real estate agent isn't doing any work at all to sell my house. We get this a lot.

And the reality is the best marketing tool to sell your house is improving the price. If you're having issues with your house selling, drop a comment. Let us know where you're at. We want to hear from homeowners and see if we can help you out.

Send us an email. We can take a look at your property for you and let you know, hey, is it actually overpriced or does your agent suck. It is true. A lot of agents do suck out there.

A lot of probably the bottom 60% of realtors shouldn't even have their license in my opinion. But if you can get in touch with one of the top agents, it can completely change your game. And you need somebody who's going to tell you the truth and not lie to you. Then number three is bargaining.

If I can just break even, there's a lot of people who bought from 2022 to 2024. They now have to move and unfortunately uh that's worse than breaking even. We say the break even period is between 5 to seven years of owning a house because the transaction costs are high. You usually have to pay between 5 to 7% to sell your home and it also costs you going in.

And if you know appreciation is about three to four percent per year, it's going to take a couple of years to to go up u to offset those costs. But the reality is your house is also aging and you need to make upgrades to your house in the upkeep to the house during that time period. Number four is depression. I was a fool to buy this house.

We're seeing a lot of regret buying happening. That happened especially in 2022 in new construction communities. These houses are being turned into rentals, which is freaking out the investors even more because now they're getting a ton of competition from investor from just retail buyers. They're turning them into rentals with brand new construction houses that are competitively priced.

And then acceptance. It's not my fault. I don't control the market. I may not be able to afford to sell now, but in the meantime, I'll be living in a beautiful home.

They kind of just accept the fact that they made a really bad purchase at the peak of the market, and they're going to have to deal with the consequences. They're either going to capitulate and go to the market price and actually sell and chase the market down if they don't or they're just going to sit in their house and not move for some reason or try to find a way to rent it out. Unfortunately for rentals, rental prices are also coming down which is freaking out investors across the country, especially here in Florida. It.

What happens next is we had this huge slogan that went around the entire country. Date the rate, marry the house, and and basically it was implying that you would be able to refinance your home for a lower interest rate and get your payment down over the next few years. And people are still pushing this narrative. And it's wrong.

Uh there's a strong possibility that with the passing of the BBB and the the fiscal deficit skyrocketing $5 trillion over the next two years that we're going to have more inflation in the future on top of the tariffs that are coming through which is basically a national federal sales tax because Goldman Sachs says 70% of tariffs are passed through to borrowers and we're starting to see that if there's a Walmart report that came out recently but frankly the consumers are financially strained And this mantra does not help them. And clients say that they were led astray through this. So, you know, sellers are getting stuck. They're in a really tough spot.

They can't sell it. They can't refinance it. What do they do? So, one of the issues that is leaving all these buyers on the sidelines is that the prices are just crazy.

So, this is the median house payment for the median household income. So, people are paying a record amount of their household income in order to purchase a home, which is just sidelining a bunch of people. So, we either need prices to come down or rates to come down or both for this to make sense. It's not that the demand isn't there.

People want to buy houses. It's just not possible because it's not affordable. In Jacksonville specifically, we always say the locals are priced out. They literally cannot afford a three $4,000 payment when the median household income is 65 $67,000 per year.

So, it's really brutal. Now, it's an extremely unusual period of time. This is a chart that's really cool. It's uh the S&P Core Logic Case Schiller US index in the interest rate of the 30-year fixed mortgage rate.

You can see that o the end of October 2022 was the pure peak price versus the interest rate. And we believe that the prices will have to come down probably to 2019 levels, which is about a 30 to 35% decrease. And if you're an investor hearing that or a seller hearing that, you're freaking out. If you're a buyer hearing that, you're celebrating.

And if you're a renter and you're looking to buy in the future, you're you're absolutely celebrating as well. But the reality is that we need to have mean reversion and go back to, you know, a a state of normaly. You know, that's that makes it possible to have home ownership here in the United States for the next wave of first-time home buyers because the age of the first-time home buyer is now up from 30 years old just a decade ago to 38 years old. And people are putting off buying their first house because it's not affordable and they're putting off starting their family because it because it's not affordable and it's an absolute problem that we'll be discussing on this is what's going on with US demographics too.

Further, you know, the house prices have just skyrocketed over the last 40 years because interest rates have been falling for 40 years and interest rates are the number one factor for house appreciation. And then number two, median income has not kept up at all. Look at that. It's a 3.x 3.6x a 6x multiplier in income, but house prices went up 5.3x.

It's a huge difference. So, it's just not the same as it used to be in terms of home ownership and the cost to be able to upkeep your property. Leading indicators are negative. This is the conference board leading indicator.

It's now down 17.8%, the biggest since the financial crisis. So, people are not feeling positive about the future of the economy. And it's the lowest level in 11 years. And we posted the third straight month which has triggered a recession signal.

So recession signals are kind of sounding off across the board from business leaders and from consumers who are racking up record levels of debt and their businesses aren't selling more units. It's actually because the units they're selling are priced higher but their margins aren't as strong. So they're they're starting to struggle. We're in a monster bubble.

This comes from Reventure. It's a really great charts. US home price history. Inflationadjusted K Schiller home price index.

And as you can see, we are way far and beyond the 2008 bubble and we're at least 10 to 20% higher than we were at that period. And consumers are absolutely loaded up with debt. It is different than 2008, but I fear that in at least Florida, it's going to be a lot worse. And you'll be able to tell from these charts coming up that your area is not going to be the same as Florida and Texas.

And there's a lot of reasons why that might be. In the comments below, comment where you're at. Let us know. Give us a like and a comment.

And um let us know where you're at and what you're seeing on the ground in your local market. So overall, we're just overvalued. This is from a total US perspective, but the total US is overvalued about 16.5%. In Jacksonville, the numbers and the models that I'm running, we're overvalued at least 35% uh from the peak in uh 2022.

We've come down about 10% across the board and we're expected to come down another, you know, 15% here in the next year based on my projections and how much inventory is coming on. Now, we're not expecting to get any help from the Federal Reserve. This was like coming out of a Black Mirror episode the other day watching this interview where Trump met with Powell at the Federal Reserve uh building that they have under construction and Trump was just going after Powell for, you know, the cost of the construction and Powell was correcting him left and right. It was pretty amusing to watch.

But the, you know, this is a really interesting story because the Federal Reserve is supposed to be completely independent from politics. They have a dual mandate. You know, stable maximum employment and inflation target of 2%. Inflation is around 2.7 2.9% depending on which gauge you're looking at.

So, but the reality is there's no reason to lower interest rates. We're at all-time highs in the stock market. We're all time highs with Bitcoin. For the majority of the United States, we're at all-time highs for real estate, too.

It's only specific areas of the country that are really struggling with the housing inventory and the investors are absolutely freaking out in those areas that are going down very quickly. So, we're kind of seeing the tale of multiple cities here and uh we'll dig into that data. Another thing that's interesting is the consumer is just getting crushed. The consumer has maximum debt right now.

They have tons of delinquencies going on and they're at higher interest rates. So now the credit card interest rate, you know, used to be an average of like 15 16% and now we're up to 22%. And so consumers have more debt and a higher rate. And I think this is going to really slow housing into the future.

And of course, because the consumer is is bogged down, we're at near record lows of existing home sales due to these mortgage rates increase in the amount of debt that the consumer has. There's charts out there that show that, you know, more than 65% of people getting FHA loans have a debt to income ratio of more than 43%. So, I mean, it's just unbelievable how much debt the average consumer is buying. Locally here.

When we see buyers in the market, they're either cash and very wealthy and moving from somewhere else and so the price doesn't matter or they're a local that's just buying frankly at the peak of the market using every dollar that they can or borrowing from family members or a gift from family members to make it work. It's very rare or a dual income family that's been saving for years and years. Unfortunately, my fear for them is that they'll be buying at the top of the market. They're going to get stuck with a weak agent that's not going to be able to negotiate to reduce that type of risk.

And uh that's part of the reason why we see the existing home sales as low as possible right now. Now, closed sales are down everywhere. So, let's see. I mean, you can see versus 2019, which was like a pretty normal year.

The end of 2019, actually, we thought we were going into a recession, but in Jacksonville, Florida, which is right here, you can see we already have 14.9% less sales than than we had in 2019, which is absolutely insane. Uh and we think that these number of sales will continue to decline into the end of the year as we start to experience seasonality. We could see a total decline versus 2019 of around 25 to 30% at the end of this year. Now, why sellers are giving up an article written by Bill McBride, he's phenomenal uh he called the housing crisis of 2008, two years before that bubble burst and this is what he wrote in 2007.

He said even though current housing bubble is probably the largest ever both in price terms and fundamentals and geographically etc etc the typical bubble does not pop rather prices declined slowly in real terms over several years. This is exactly right. We're probably going to see about a 3 to fouryear time period especially here in Florida where prices will adjust downward. This is because home prices display strong persistence and are sticky downward.

Sellers tend to want a price close to recent sales in their neighborhood. And buyers sensing prices are declining will wait for even lower prices. This is true. We're seeing a massive number of people get pre-qualified for to buy and then they don't buy because they're just waiting for the perfect deal to to come through.

This means real estate markets do not clear immediately. It's an liquid asset. And what we initially observe is a drop in transaction volumes is exactly what we're seeing now, followed by sometime later by price declines. This is exactly what is happening right now.

For how long will prices decline? Although some can draw lessons from previous housing busts, we have to remember that different areas will experience different price declines. This is absolutely true. Now, in Jacksonville, we have a record number of investors.

In Atlanta, they have a record number of investors. In Raleigh, Durham, they have a ton of investors. In Austin, Texas, right? The areas that had these massive number of investors are going to be the ones that are going to have the housing busts the most because they come in, they bid up the prices to an unsustainable level and then they want to get out when it doesn't make any sense anymore for the pricing and they sell and they panic sell.

This is something that's really important you need to keep an eye on. This is called the silver tsunami. According to the stats that we've been looking at, 80% of up to 80% of boomers, people 61 years or older, will be dead in the next decade and their houses will come on the market and either transfer through inheritance or they'll sell them before they uh they pass away. Warren Buffett's Birkshshire Hathaway is even talking about this, saying demographics could lead to a home price collapse between 13.1 and 14.6 Six million boomers will abandon home ownership from 2026 to 2036, raising housing industry fears that such a large inventory of homes could lead to price collapses.

Sometimes I wonder who's following me behind the famous people I know for sure. This is from a from an ex account. But as baby boomers age, they're expected to leave behind homes that many prospective buyers won't be able to afford. This could shake the already tenuous housing market as demand among older and younger buyers shift towards smaller and affordable homes.

This is definitely true. You see the builders, they're not building in affordable price ranges for most of the time. They're building in the $500 to $700,000 price point, which just is not possible for most people to afford a 56 $7,000 monthly payment. It's just out of control when they could rent the same house for for $2,000 or $2,500.

Now, the South specifically is getting hammered and seeing a massive inventory spike. So, the investors that I talked to up north and out west, they're not freaking out as much as folks here in the south that, you know, our housing inventory is basically higher than the other three regions out there, which is absolutely insane. Now, prices are falling as you can see in specific areas. You know, we're seeing Texas, we're seeing Florida, Arizona, some areas of California, Georgia, definitely North Carolina.

These areas are getting hammered. And the areas that are doing well are areas in the north and in the west. So, this is the one-year change in home prices in America's 50 largest metros between June 2024 and June 2025. You can see that there's a stark contrast between the north and the south and where there are investors just gobbling up inventory and where there weren't investors gobbling up inventory.

So, a lot of the 2020 to 2022 migration that occurred is now caused these areas to explode in popularity and had a ton of migration. Now, those are the areas that are getting hit the hardest. So, several cities are at risk of near-term declines in prices. This map is really helpful.

You can see the gray is where prices are already falling. Florida, basically all Florida is falling at this point. Prices likely to fall within one year. You can see, you know, Texas, uh, Memphis, Nashville, Raleigh, New Orleans.

Raleigh's already had price decreases and so has Texas. It's been a lot of issues and the more resilient areas are the north, you know, where there's limited inventory, limited areas for uh the builders to build inventory. Here's another chart of Florida specifically, not just the south, but Florida is just skyrocketing in inventory. You walk down the streets here in Jacksonville, you'll see five or six for sale signs per almost per street.

It's absolutely crazy. So, you know, you have as a buyer, you're going to be able to negotiate a phenomenal amount. You need to get again with a top agent who knows how to negotiate the best terms for you. And because there's so much inventory coming on, rents are falling, too, especially because we overbuilt here in Jacksonville and in the south with multif family homes chasing rice rent increases.

Now, this shows that Jacksonville specifically is is doing a little bit better than it actually is. It shows right here, Jacksonville, Atlanta. It says that it's up since March. That is just not true.

Jacksonville is down about 10 to 15% depending on the area around town. So, it makes me wonder about the credibility of this chart alto together and if it's just behind because the people I talked to on the ground who own these businesses are not saying what's happening on this chart. So, I think that uh there's going to be a lot of change in these charts over the next six months. I think a lot of the media sources are behind 6 months on this reporting and so it's worse than what the data is already telling us and this comes from uh way maker research, JPI research, real page market analysis and real real page is a huge uh uh property management software.

Now here's the charts for Fresno, Detroit, Tuxen, uh Austin, Cape Coral, Providence, and Sarasota. You can see a lot of the ones the cities are in Florida and Sarasota's dropped more than 40% in rent price over a year. That is basically ground zero for this type of crisis for investors who are just slashing prices to get out or get some sort of cash flow. It's absolutely terrifying.

Now, the stress is starting to show up in Florida in a bunch of different ways. There's a year-over-year change in serious mortgage delinquency rates by state. As you can see, Florida is by far the worst. Uh then you can see South Carolina is one of the second worst.

You can see Georgia and then you can see Texas from there. But we are seeing the most distress in the entire country here in Florida specifically. Now I have several predictions. My prediction moving forward for 2025 2026 is that speculators are going to lose all of the money they gained if they bought between 2021 and today.

I believe that they're going to lose their equity that they put into the property and they're probably going to lose another 30 to 35% from when they purchased. There's going to be a lot of occupancy fra fraud. The Philly Fed came out and said that onethird of investors who were purchasing from 2020 to 2024 were committing occupancy fraud. That basically means they were saying that they were purchasing the house for primary purposes to live in, but they actually purchased it just to turn it into a rental right away.

In in doing so as a primary they got a lower interest rate and uh they said that onethird of investors use this strategy which is absolutely crazy. There's also going to be defaults on FHA and VA loans that are coming up. So FHA loans peaked at like 15.3% back in uh fe February March time period. And on September 30th, these loan loss mitigations that came out during the you know the the years that we had the 2020 to 2022 basically all those defaults put the payments on the back end of the loan and just attached it to the loans.

And so we haven't had any foreclosures for the last 5 years for FHA and VA. And we believe that those will start showing up early next year and could be another wave of massive foreclosures, especially here in Florida. That would impact the housing supply. Further, the student loan defaults are rising and ruining people's credit, making it harder for them to purchase properties.

They're going to start garnishing wages starting October 1st. And the worst demographics are for Florida, right? We have a negative birth to death ratio. There's more people dying than are being born and up to 80% of the boomers are going to be dead and we have 22% of the population here in Florida that are boomers are older.

So we could see a massive amount of inventory hit the market going into the end of the year. And now you can start to see this storyline really freaking out investors who went really big these last few years. Other facts that should terrify you is that 68% of consumers are living paycheck to paycheck. Since 50 to 80% of a housing appreciation has been due to falling interest rates, the inverse of that could mean if we go up another percent and interest rates from here, it's going to crack this housing market right down the middle, especially here in the south.

Rental prices are already down. Uh we're already at the lowest number of sales since the great financial crisis. So, it's already worse than the financial crisis. Prices are dropping rapidly.

A lot of people aren't talking about this as much, but it's down 10 to 15% in some areas. And the homebuilders are competing like crazy and the affordability crisis is in full swing. When you talk to locals who've lived here their entire life as renters, they feel like they've gotten completely priced out and, you know, everything around them continues to just move up in price and it's putting a ton of stress on them. It's now, frankly, cheaper to rent than to buy.

So, you know, in a lot of cases, it doesn't make sense to buy. So then the people who have their listings that they can't sell, they turn them into rentals and then rents continue to move down. And if you're an investor and your rents are going down and your expenses are going up because expenses have gone up about 50% for home repair since 2020 and home builders are still building despite all of this. So, they have these new brand new properties that they're willing to buy down your rate all the way down to the 3% in order to get you in there on the payment and still sell to you at full maximum price.

And this is a huge risk if you're buying because when you go to sell, then the person's going to get an interest rate at today's market price. So, if they if they bought your rate down for three to three to 3.75%, you have to stay in that house for 30 years. Otherwise, when you sell it, it's going to be worth way less because the value of your house is actually now in your mortgage and not into the to what it can sell for. So, you have to stay with that house a very long time if you're going to buy in today's market with that type of messaging.

Now, look, sellers are removing their listings from the market at a record rate. And that is why things look a lot better than they actually are. So, let's go over this. You can actually do the math with me here.

This is the oneweek hot sheet from MLS in Northeast Florida Association of Realtors. How you look at it is you add up the new listings and then you add on the back on market. These are the number of listings that are coming onto the market. So this is about 3,000 properties that have come back on the market and are active competing inventory.

Then you have to subtract the active under contract and then you have to subtract the pending deals. And when you add those up, it's about 2,000. So there's 383 more net active listings in one week when you look at it from that perspective, which gives us 7.3% listing growth in that week. Now, when you subtract these out, there's 771 expireds and canceleds together, which means that you have to then minus out those ones that did not sell.

And that is why it doesn't look like we have as much inventory. The sellers are giving up. They're saying, "I'm going to wait for longer. I'm going to wait for the price that I can actually sell it for." but they're clueless because they don't understand that the prices will be coming down over the next few years.

And a lot of these people are truly motivated to sell. They're just going to have to relist their property in the next 90 days. So, we expect to see a massive amount of inventory come on from now until the end of the year is buyers back off from a seasonality perspective and sellers get more desperate and they're going to start chasing the market down and panic selling. And that panic selling is really bad for investors if an investor has to sell or they're no longer cash flowing on their property.

The other thing is look at this. The price changes. Okay. 3,800.

This is about 33% of properties are dropping their price in a single week. A single week. This is unheard of information. So, we're seeing changes very, very quickly here locally.

And if you need help selling your house, reach out to us. We have the top agents in this marketplace. You need help in Florida or anywhere around the country, we can give you a birdeye view of what needs to be done to your house to actually get it sold. The majority of the time, you're not going to like what we have to say.

There are instances when it is probably the agent's pro fault of of not marketing it correctly, not being able to get it in front of the right people or not providing you enough details on what needs to be fixed up on the house before getting it sold or maybe not even staging it. So, these are things that you want to talk about um with your agent or you're happy you feel free to reach out to me. I'm happy to help you as well. So, large investors are freaking out.

In summary, lower rents, there's lower prices, there's higher maintenance costs, there's higher taxes, there's less migration of these these cash buyers or these investors buying cash and the builders are still overbuilding. So, here's the thing I recommend. If you are a real estate agent and you are taking listings, this is what we recommend inside our company. We want you to put a clause in your listing agreement for canceled and expired that the seller will pay you a fee to reimburse you for your marketing expenses because you we all know it doesn't make sense to take the listing overpriced if you're going to spend $1,000 $2,000 marketing the house out of your own pocket for it to just be totally unrealistic with the seller.

So, this is an extra form of protection for you in terms of uh making sure that the seller is truly motivated and would agree to those type of cancellation fees. And secondly, only take realistic sellers who get it. Just like you were starting to qualify buyers out there, you know, a couple years ago, you just wanted to work with super qualified people. You have to qualify your sellers as well.

Are they truly motivated to sell? Do they have a good reason to sell? Are they realistic on the pricing? Are they willing to consider price improvements in the future if they get no activity in the next few weeks?

We have a couple listings at our company. They're brand new. They like they look beautiful, perfectly staged, amazing marketing, and they haven't got a showing for the first two weeks in like affordable price points, and they have to slash the prices to make it feel like it's a deal for the buyer. And I swear, the second you get the property priced correctly, it will transact like that.

You'll see four or five buyers come. They're watching. People are watching on the sidelines waiting for prices to get affordable. The second it gets affordable, the sale will happen.

It's better to sell sooner rather than later because the later the more you wait, the lower that that your house will sell for. That other sale that happened in your neighborhood will be the new comparable sale against your property and you're not going to be able to sell it for higher to somebody with a loan because it's not going to even appraise with the bank. So, that is my advice for you if you're a real estate agent. If you want to reach out to me, I would love to connect with you.

Drop a comment, do a like. This is a new channel. And of course, check out my Substack. I have a lot of information on there that I can't share on YouTube.

So, be sure to look up that information below in the show notes. And I look forward to talking with you and giving you an update next week. See you later.