[Music] It's a good World good World why are home prices still going up Now before I dig in and try to answer That question and I believe I have an Answer to that question first understand Why I'm even making this video we see Demand right now to purchase houses at An all not an all-time low but decades Low so we see demand absolutely being Crushed right now you guys we also see Active inventory and new inventory Accelerating we see double almost the Inventory that we had in 2022 we see Interest rates that have absolutely Skyrocketed And yet when we look at Median sales price averages of existing Homes it appears that prices are still Going up so the question is you guys What gives now first of all again before I really dig in understand when I'm Talking about this the specificity is so Important everything we're talking about Is macro if you want to go micro if you Want to know what's going on in your Housing market the really the only way To do that is subdivision analysis you Got to look at comparable data usually About three comps to come up with value In a property subdivision now some Properties don't have subdivision in Those situations generally you need to Know what's going on in the general
Vicinity of where you want to purchase The home and also you guys understand When I'm saying why aren't price going Down I'm only talking about existing Homes and I'm only talking about certain Areas we have prices going down with Existing homes already in several areas Across the Nation and we have new homes Absolutely plummeting in prices so we're Talking about existing because again as We can very very clearly see here median Sales price for new houses sold in the United States this was updated March 25th it's going to update in a few days Okay it's been going down since October Of 2022 and I've already looked at Shrinkflation shrinkflation had nothing To do with this initial massive drop Right here because houses went up in Both average square foot and median Square foot during that time frame However during this time frame right Here you could make an argument of Shrinkflation but what we need to Understand is is this is under reported Prices are going down whether it's from Shrinkflation or not but the problem is Is they're being propped up from the Lack of transparency you guys these Prices should be down way more now I get A lot of people saying oh you can't look At this you can't look at this because The prices of new homes don't matter Because it's only a small section of
Total housing units it's only a small Piece of the pie so we can't look at it It doesn't matter but I would disagree Because when we look at this chart which Is median sales prices of houses sold For the United States we can see that Values have been going down since Q4 of 2022 now this data you guys takes into Account both new homes and existing Homes and so my question to these Bulls Are if it's such a small piece of the Pie why is median sales price value Going down when we look at the big Picture and so I already know what You're thinking the title of this video Is is why our home price is still going Up but the two charts I just showed you Showed the opposite say and that's why I'm trying to tell people it is so Important that you understand what's Going on in your area and that if you Really want to look at true and accurate Data you got to see the subdivision I Don't know how else to put it I know the Public doesn't have access to that so You got to try to find a great realtor Now a lot of people tell us the reason Why prices are still going up is because The lack of inventory and certainly we Can see the lack of inventory here we're Sitting at an active unit count this is Not pending this is active Okay we're Sitting at almost 700,000 I believe we Need to get to
900,000 to a million active units to Have price decline again but I want to Show you as well right before the end of 2019 going into recession we had Slightly over 1 million active units so In other words we only need a couple Hundred th000 active units sustained Which we can get in 2024 so long as the interest rates stay High if we get there if it's sustained We are on our way back to recovery and Balance lower rates more affordability We'll have to go through some pain but We need it sustained but nevertheless You guys that may not be why prices are Going up all I'm saying is this is kind Of keeping things propped up I don't Necessarily think this is the only Reason that prices are going up now Another thing that we're told is the R Lockin effect or the golden handcuff Effect this is a great data set from the Kobayashi letter he's on Twitter X Twitter whatever it's called I go on There they got some great data on X Twitter I'm shocked that you know how Much effort people put into it but this Is the rate locking effect you guys Basically I want you to take a look at The effective rate so the effective rate Is like you know when you throw Everything together here's what the Average rates are okay 3.82 right now Interest rates are sitting at
7.43 so this massive Gap here that's the Golden handcuff but what I want to point Out is we're near the decade average of Interest rates so we are very close to The decade average effective rate now This is going to continue to go up Because this Gap is so different and That means that anyone that's Refinancing cash out and anyone that's Purchasing is going to send the Effective rate higher which will dampen The effects the golden handcuff effects Okay but again these are some of the Reasons that we're told prices are going Up but here's the crazy thing I found You guys and I'm going to bring up two Data sets we're going to take a look at National Association realtor's data and We're going to take a look at Freddy Max Data and I'm going to show you guys Something that is insane in something That may define and explain why are House prices going up when demand's Going down when inventory is going down I mean isn't there this whole law of Supply and demand that all the Bulls Been talking about so and another thing Price cuts are like historical high so Price Cuts historical High you throw That into the mix how could it possibly Be going up now I think part of that Answer is in mortgage purchase Application you guys mortgage purchase Applications as tracked by Freddy Mack
Are up quarter over quarter but what I Want to point out here is look at the Size of the loan amounts again this is Going to be linked in my description This is from Freddy Mack this is let me Read this quick paragraph for you guys What is driving in increased demand this Year if we break out purchase Applications by sales price groups this Is the bingo so now we know is the the Rich that are making the numbers look Inflated or is just everyone buying is It the rich or is it everyone buying we See that purchase applications for Higher priced homes have rebounded more In the first three months of 2024 than Lower priced homes from the same period Last year and look at the shocking Growth year-to dat versus year-to dat Over one and this is just purchase Applications remember people will still Pay cash so we'll look at that data in a Minute this is only people that are Getting loans look at this guys over 1 Million doll loans so over 1 million That has increased year-over-year 63.7% 63.7% Oh my gosh so so far I would say yeah if People that are getting over a million Dollar loans and they purchasing over a Million dollar houses and that is Skyrocketing then yes that does impact Median sales price but look it guys 900 To a million also massive growth
47% and 800 to 900 22% 7 to 800 11% and Until we get To shocking shocking 600 to 700,000 3.5 To 600 7.5 and then it just drops off This is this is insane you guys if it's Over 700,000 the Market's absolutely on Fire so mortgage purchase applications Are on fire for loan amounts over 700,000 the median household income most People can't touch 700,000 so it doesn't Matter to us you guys what matters is The bottom tier so looking at the Mortgage purchase applications alone we Can say with there is a probability that That is impacting prices going up when In reality they may not be going up at All in the tear that we want to purchase In basically it's a bunch of Boomers and People that have a whole bunch of money Out there spending money like crazy so If things go bad probably they're going To get hurt and if people wanted to wipe Out the middle class and you know mess Up the rich people I mean this is a way To do it I mean they're going to Continue to spend their money at the Worst time to buy real estate but that's Just mortgage purchase applications what Happens when we add you know cash Transactions and we just look at Transactions for real estate sales let's See what that looks like this is Regional sales price for existing single Family homes for March of 2024 and again
You guys what I'm trying to point out is This is another Factor on why prices are Going up it's not only golden handcuff It's not only inventory it's just that The rich are rich and they can keep Doing what they're doing when we go down You guys and we look at the bottom row And understanding that the columns Represent different price points for Transactions look at this 500 to 750,000 We look to the left every one of those Is down year-over-year so that means Transactions under 750,000 are all down Year-over-year but what's up guys look It 750 to a million that's up 5% Year-over-year and shocking the worst Price point this you know these are Going to have massive impacts on median Sales price because it's over a million Dollar that's up 14% year over year so my question is Based on the data that I went over what Do you think is the biggest impact on Home prices still going up you guys Think it's lack of inventory golden Handcuff effects you think it's just the Rich manipulating the numbers because They can still buy while as the rest of Us cannot I mean what do you think the Reason is I'll tell you this you guys I Could tell one of the biggest reasons That I believe that home prices have not Continued to go down is unemployment I Mean unemployment leads everything
Unemployment is toxic poison toxic waste To the housing market the entire housing Markets buil on house and cards okay Hope you guys understand that the equity Growth was not sustainable it did not Match income consumers cannot save Defaults are skyrocketing but the Unemployment rate's low but understand That even the unemployment rate is also Built on a house of cards because a lot Of that is part-time jobs is gig jobs And a lot of that guys is government Jobs as well all things that feed Recession and all things that will end Quickly during recession personally I Think the job market has a lot to do With it I think government deficit Spending has a lot to do with it guys But it's very intriguing to look at what Is impacting median sales price because Again there's two things right there's a Few things that could impact it either Everyone is purchasing houses and Driving the median sales price up or Lower priced homes aren't selling as Much but high-priced homes are selling More so that could be another reason Again why home prices appear to be going Up but when I do my own subdivision Analysis here in Houston I can find Multiple properties in 2021 values so on The other hand in Todd sack's housing Market he has bidding wars so in other Words the only blanket statement that we
Can make at this point blanket statement About the housing market is the entire Housing market for normal people is way Too unaffordable and we need balance to Come back even the professionals Pitching the fear of missing out will Also say we need balance to come back Because we feel the recession already You guys this is a crazy crazy situation I really believe we need to be cautious Let me know how I did let me know if you Guys enjoyed that data everything will Be linked in my description shoot me Some comments below throw me a Bonkers If you learn something now other than That if you're out there investing in Real estate you guys know I wish you Luck and I hope you win
