7 reasons Home Prices haven't crashed yet | Inventory And Supply Charts

 
 

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7 reasons Home Prices haven't crashed yet | Inventory And Supply Charts


Introduction to the Housing Market

Seven reasons why prices, house prices haven't crashed just yet. Yeah, a lot of stuff to go into this today. And then we're also going to do a little bit more into the GDP numbers and why the economy is staying so strong. And we have a couple of new charts based on the inventory because the ones that I had before, nobody liked.

7 reasons Home Prices haven't crashed yet

  • Baby boomers, Flush with cash, not going to move
  • Low Mortgage Rates 62% locked into historically low rates. no one will sell
  • Many people are priced out of the market waiting for the prices to crash - high interest rates and affordability
  • New Homes are not being built to match population growth- current building needs to triple to meet demand
  • Short 6.5 million homes- Low inventory in every price range -
  • Months supply of inventory - 6 mos or more is a buyers market, right now we're at 3 months or 665,569 across the US
  • Prices have come down- nationally only 1.7% but that's not a crash.
  • Inflation - even with insurance costing more

And I thought I'd put some visuals on it. And yeah, so let's get into this real quick. Oh, OK.

Let me make this bigger and I can come over here. There we go. Okay. 

Why House Prices Haven't Crashed Yet
Several reasons why the housing crashes have not crashed yet. And I got this from this guy right here and the link is going to be in the blog. So if you want to watch what he's saying compared to what I'm saying, it's what everybody's saying.

At the end of the day, that's exactly right. 

The Role of Baby Boomers and Institutional Investors

Baby boomers have a huge amount of inventory that is stacked up in the houses out there. , I don't even know how many houses we have. I think it's 30 million houses. Something crazy like that. 50 million. They're locked up. They're not going to go anywhere.

As a matter of fact, they're thinking about buying a beach house or they're buying a resort house or they're buying another house to go live in. And that's typically what people do. And this report doesn't even talk about the institutional investors like a black rock it's and whoever purple blocks or whatever they're called an open door, they're buying tens of thousands of houses, keeping houses away from you as a home buyer.

as a homeowner home sellers are intrigued because they're like, I don't have to pay me. I don't have to pay Vito, the realtor, because his. Rates are too high. It hurts everybody in the long run because prices are going to remain high. 

Impact of Mortgage Rates on the Housing Market

Inventory is continuing to stay low mortgage rates. Everybody knows it was two and a half percent for the longest time.

And now that they're up to 7%, they're coming down to 6, but why would you. Sell your house at two and a half percent and then buy another one at seven percent. If you were smart, you would buy another house. You bought into a house and you're like, Oh, you know what? I don't like this house. I don't like the schools.

I don't like the area. I want to move to another place. I can afford more. They're not going to sell that house. They're going to. Continue to rent it or they're going to rent it, take some equity out, and put a down payment on another more affordable house. But when you look at the two rates, the blended rate is still better than if you sold that house and bought another one at six or 7%, just common sense.

This is what I would do. It's what a lot of people are doing right now. 

The Affordability Crisis in the Housing Market

Many people are priced out of the market waiting for prices to crash and the high interest rates are keeping it keeping them from doing it because of the affordability index, which we've talked about before. It's just not attainable for some people.

We talked about it yesterday. We had the rent versus by calculator and how much money you need to make to buy a house here in Silicon Valley. 1. 7 million medium-priced houses. And even if you're at the median income in Santa Clara County, you can't afford to buy the house. You have to have a lot more down or you're going to be paying about 70 percent of your income to housing expenses.

So it just doesn't make sense for that to happen. 

The Problem of New Home Construction

New homes are not being built at the rate of our population growth. We need to over the last. 30 years, 20 years, the amount of new homes being built has been a very small fraction of what it has been in the last three or four decades, all dating all the way back to the '60s, '70s, '80s, and '90s.

We had a bunch of new homes being built to match the population. And over the last decade, it started the last two decades. It started to tear down that's making it hard. For the supply to maintain for the demand. So prices are going to continue. 

Predictions for the Future of the Housing Market

What happens if the market crashes? We don't know, right?

We don't know, cause this is all uncharted territory. We just absolutely are guessing at this point, but these are the major indicators as to why housing prices are continuing to go up, unfortunately for a lot of people, not so much for. For home sellers, I have a couple of listings right now. They're moving out of state or out of the area down to, San Diego or wherever, and they're done, they made their money and take their loot and take off. That's what a lot of people do. And that's the strategy we talk about with buyers. Yeah. It's going to be very expensive for the next five years for you, you'll figure out a way if not, whatever, there it is. So yeah, right now we're short about six and a half million houses based on the demand.
And to match the demand, the growth, the population growth, and the demand, they actually have to triple what they're building right now. And this isn't going to stop for the next 10 years because there's just no way to ramp up and triple the number of houses being built, not talking about apartments or what the black rocks are doing, they're buying developments of houses and turning them around and renting them.

Which I think is stupid. It's great for the investors. It's great for the stakeholders and stockholders, but for us, individual human beings are trying to buy a house, a piece of Americana, you're just not going to be able to do that because it becomes more and more or less and less affordable. All right.

The Current State of the Housing Inventory

My supply of inventory right now. It. Just to show you, this is a great segue into what's going on. I have numbers from the U S perspective and then the Bay area perspective and down into the little cities perspective. You could probably see that down there, but anything that's over six months is typically considered a buyer's market.
Anything under that is a seller's market. And historically the Bay Area has been over the last at least three years. I can tell you all the way back to when I got into this back in the, I don't know, early 2000, yeah, like 2023. I think I got into 20, 2003. I got into real estate. It's always been a buyer's market.

Now. 2008, 2009. That was an anomaly, right? We're not going to go back that far. That's when prices crashed. So let's take a look, quick look here at the U S numbers. Okay. This is the. Us current, the last year's current months inventory. And that's how we figure out if we're in a buyer's market or seller's market.
And even in the U S on average, we haven't been in a buyer's market, I don't know, I want to say five or six years as we were getting out of that glut, like 2018, I think we saw a little bit of an inventory stall. Or a little bit of a market stall in the inventory grew. That was just a very small blip though.

So right now we're at three months on average house takes a sell across the United States. In the United States, right? That's the average and that's the entire United States. They got up to 3. 6 in October because things started to slow down, but the demand was there, even though demand slowed down, the supply has always been too short.

And that's been our problem over here. And right now we have 665, 000 homes for sale active plus or minus, right? That was reported in January 2024. We don't know what February is until that reports out. And that won't be until like. That's 3rd or 4th week of March, so don't wait too long on that going to that in a second.

Analyzing the Housing Market in Different Areas

So what I did is I actually went into every county and every city and I pulled the data and I transposed it here for you. And instead of me showing you all these boring numbers, which. Admittedly, they're boring, right? They're boring. Let's, I decided I was going to show you what the numbers look like in a visual.

Now the big blue bars are us inventory or the us months inventory chart, right? I got that from. Here, Fred, our pal Fred, now Vito, some months are going up. I think we were looking at consistently over six months, but we do have counties like Napa County. I said this all year long last year, Napa was a great place to buy.

Freddie Mac GDP Numbers state a strong economy

We saw housing value actually decrease over the year, right? But now supply is short. Again, let's take a look at this where how do I see if I can get well, let's just do this There we are. See Napa is Two in a couple days and two months. That's 63 64 days of Inventory that's across the entire county right and every area is different, Right?

And we'll go into that in a minute, but even here, look, that's where we are. So some counties in the Bay Area are hurting, that were hurting, but not right now. This one right here was,

I think that's San Francisco, maybe, let's see, Monterey. Monterey blipped up a couple times over six, six months. But now they're way down. Look, they're like inventory is so low right now, guys. And we're going to see this number drill up a little bit, but it's precariously low. Now, I just did this as well, to show you a number.

Inventory And Supply Charts


You can actually take these numbers right here, this thing a little bit bigger so you can see it. There.

These are the averages over the last three years. You can see nothing was over 6%. Okay, and let's take a look at the Pop this down to here so you can see this now. Holy crap. This one's 30, 28 months. Yeah, this is one area, Los Altos Hills. They sell five houses a year, a month, maybe. And they're all the 32 million houses.

So there's not a whole lot of billionaires out there that can afford a 32 million house, right? So that number skews as well as the, I think it's Monteserino. No, this one is

San Martín. San Martín is an odd thing. Again, it's not the price so much, but it's the lack of inventory and San Martín isn't, there are not a whole lot of houses for sale in San Martín. I want to say it's four or five at any given time and not everybody thinks San Martín. They think either Gilroy or Morgan Hill, not necessarily San Martín.

If you look at this, the little microcosms here, let's take a look at San José. San José, it's nowhere near it. And if you look at the. If you look at the average is 1. 5 months on average, and Los Altos Hills is 5. 5 on average. Now, let's just take a look here, at San Jose's straight line. It really isn't going anywhere, right?

I think the highest was 2. 8 and that's when we had that little increment with the rates going up from two and a half percent to seven and everybody freaked out. It still didn't really hurt the supply because. It didn't really help the supply because the demand here is so great.

And then really quick, I just want to talk about this thing right here. 

The Impact of the US Economy on the Housing Market
This is another example, and this is the same article I've been reading over the last week. Recent developments in the U S economy. It says that it's still strong. We're still seeing growth in the GDP and all the differences. Industries where something could happen.

Absolutely. And I think it will, but I don't know if it's going to be housing. I don't think it will be lending mortgages. I think it might be healthcare or automotive that tips this industry, or it could be an exterior factor like China's economy implodes. We don't know. We could be doing stuff right now, all the conspiracy stuff that talks about how we're affecting the China economy because 90 percent of the exports go to the U.S.

S. And we're keeping that economy, that gigantic economy afloat, buying all their little team move stuff and stuff from Amazon. Just it is what it is. And we are an industry of consumers. So understand that this market is not going to change. 

Conclusion: The Future of the Housing Market

hurt anywhere. We absolutely can see the House of Cards fall in a few minutes.

But at the end of the day, inventory is going to stay low compared to demand. If our rates go down from 6 percent down to 5. 5%. We have a whole bunch more buyers in there. That means there's more competition. That means prices are going to continue to go up. What we need to see is our inventory blast off and get to a six-month inventory, which in San Jose or Santa Clara County, we need to have around nine sounds.

They need to be about eight or 900 units for sale at any given time. And right now we're at 200. And in Santa Clara County, we need to see that around 1900 to 2000. And right now that's 658 or something crazy like that. Our inventory is so low and supply is so low and demand is going to continue to go up.

Prices are going to continue to go up. So I hope that makes sense. If you have any questions or comments or tell me that I'm full of crap, please let me know. Love to hear from you. I'm Vito with Abitano. Have a great day. We'll see you out there and have a great weekend.



Vito Scarnecchia Real Estate Broker, Veteran, Dad DRE#: 01407676 408-705-6817 Vito@abitano.com Website: abitano.com https://www.onereal.com/vito-scarnecchia-1 update your home value: https://hmbt.co/bT7qRJ RELOCATION@ABITANO.COM FREE DESKTOP APPRAISAL https://www.propertyrate.com/agent/vitoscarnecchia If you are moving ANYWHERE in the world - Let me know! I know a LOT of AMAZING Agents! Book appointments here: https://calendly.com/abitano/15min Home Buyers Course YT YouTube.com/SanJoseLiving IG https://www.instagram.com/abitanogroup/ FB https://www.facebook.com/vito.scarnecchia/ LI https://www.linkedin.com/in/vito-scarnecchia/ Blog http://blog.abitano.com/ POD https://spotifyanchor-web.app.link/e/oxdH1Hwfcvb Professional Photography by Kim E https://photosbykime.com / Local Real Estate Market and Home Value Report https://hmbt.co/bT7qRJ Financial Intelligence https://docs.google.com/forms/d/e/1FAIpQLSc0R5pjHIAPguZ5GDEB-fTbGJXKpWK3coK9Khymv_GTWkMnyQ/viewform?usp=send_form https://www.onereal.com/vito-scarnecchia-1 Willow Glen's five most expensive homes https://youtu.be/3A_E2ck0ePg




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