2024 WORST YEAR FOR HOUSING MARKET EVER?
TLDRThe housing market in 2024 is predicted to be another slow year, continuing the trend from 2023 with annualized home sales expected to be around 4.19 million. Despite some markets still experiencing bidding wars, the overall national trend shows a decline in home sales, with March 2024 seeing the largest drop in over a year. Median home prices are still rising, but this is considered misleading as prices have significantly dropped from their peak in June 2022. Inventory is increasing, which is positive for potential buyers. The Northeast is the only region with an increase in home sales, while the Western U.S. is experiencing the most significant decline. Mortgage rates are also increasing, which is likely to further impact the housing market. The video also discusses the challenges faced by homeowners, including the inability to afford their homes and the potential for increased inventory due to financial struggles, suggesting a shift towards more affordable housing options in the future.
Takeaways
- 📉 The housing market in 2024 is predicted to be another slow year, with annualized home sales projected at 4.19 million, which is lower than the 4.3 million in March 2023.
- 🚨 Despite the overall downturn, some markets are still experiencing bidding wars and quick sales due to low inventory and high demand.
- 🌸 March 2024 saw the largest decline in home sales in over a year, which is unusual as spring typically marks an uptick in the housing market.
- 📈 The median home price increased by 4.8% year-over-year to $393,000 in March 2024, but it is still $20,000 below the peak price in June 2022.
- ⚠️ The speaker cautions that the median home price may not be a reliable indicator of the overall housing market and plans to elaborate in a future video.
- 🏠 Good news for potential home buyers as inventory is increasing, up 14.4% from the previous year to 1.11 million units as of March numbers.
- 📉 Home prices in certain areas like San Francisco have seen substantial declines, with examples of price drops as high as 50%.
- 🔺 The Northeast is the only region where home sales increased by 4.2% in March, suggesting a different market dynamic compared to the rest of the country.
- 📈 The Western half of the United States is experiencing the largest decline in home sales, down 88.2% from the previous year.
- 📚 Mortgage rates are expected to rise rather than fall, which could further impact housing affordability and slow the housing market recovery.
- 🏡 Even with significant down payments, potential home buyers are finding monthly payments too high, indicating the financial strain of current housing costs.
Q & A
What was the annualized rate of home sales in the United States in 2023?
-The annualized rate of home sales in the United States in 2023 was barely 4 million sales.
According to the March 2024 numbers from the National Association of Realtors, what was the trend in home sales compared to the previous year?
-Home sales in March of 2024 experienced the biggest decline in more than a year, with a decrease of 4.3% on an annualized basis from the previous March.
Why might the median home price still be increasing despite the decline in home sales?
-The video suggests that the median home price may not be a reliable measure of the overall housing market at the moment and that a future video will explain why it is considered a 'complete lie' currently.
What was the peak year for home prices according to the script?
-The peak year for home prices was 2022, with June being the specific peak month.
How much has the median home price dropped since its peak in June 2022?
-The median home price has dropped by about $20,000 since its peak in June 2022.
What is the current trend in housing inventory according to the March numbers?
-As of the March numbers, the inventory is up by 14.4% from the previous year, indicating a positive trend for potential home buyers.
In which region of the United States did home sales increase in March 2024?
-Home sales in the Northeast region increased by 4.2% in March 2024, which was the only region to experience an increase.
What percentage decline in home sales is observed in the Western half of the United States compared to a year ago?
-The Western half of the United States is seeing a decline in home sales of 88.2% compared to a year ago.
What is the current prediction for annualized home sales in 2025?
-Top economists are forecasting 4.6 million annualized home sales in 2025.
Why might some people be hesitant to buy a house even with favorable mortgage rates?
-Some people might be hesitant to buy a house due to the high costs associated with homeownership, including property taxes, insurance, and maintenance costs, which can add up to a significant monthly expense even without a mortgage payment.
What is the significance of having a paid-off home for retirement?
-Having a paid-off home can significantly reduce monthly expenses during retirement, potentially making it easier to manage finances with a fixed income like Social Security.
Outlines
🏠 2024 Housing Market: Slow Start and Predicted Decline
The video discusses the sluggish performance of the housing market in 2023, with annualized home sales at a mere 4 million. It predicts a similarly poor year in 2024, with the National Association of Realtors reporting the largest decline in home sales in over a year for March 2024. Despite some markets experiencing bidding wars, the overall trend is downward, with the annualized sales prediction for 2024 at 4.19 million homes. The video also addresses the disconnect between falling sales and rising median home prices, suggesting that the latter is not a reliable indicator of the market's health. It ends with a positive note for potential buyers as inventory increases, hinting at an upcoming video that will challenge the validity of the median home price as a market measure.
📉 Housing Affordability and the Impact of Mortgage Rates
The speaker elaborates on the factors affecting housing affordability, emphasizing that the only significant improvement in this area will come when housing inventory increases. The video highlights Florida as a region where affordability might improve as inventory is already rising. It also discusses the case of a person with a 5.25% mortgage rate on a $370,000 property who, despite attempting a loan modification to extend their mortgage term and reduce monthly payments, ended up with a 52-year mortgage term and minimal change in their monthly costs, indicating potential fraud or mismanagement. The narrative includes an anecdote about a high-end property with a significant drop in value and touches on the challenges that even those with low mortgage rates face in maintaining their homes due to high property taxes and insurance costs.
💸 The Financial Burden of Homeownership and Its Effect on Retirement
The video presents a scenario from a viewer in Houston, Texas, who despite being able to afford a 70% down payment, finds the monthly costs of homeownership, including insurance, taxes, and HOA fees, to be too high. It discusses the financial strain of maintaining a home, even without a mortgage, due to escalating property taxes and insurance costs. The story of a retired couple from Arizona who managed to live comfortably because they owned their home outright is shared to illustrate the importance of being mortgage-free for a peaceful retirement. However, it's cautioned that owning a home free and clear is no longer a guarantee for a stress-free retirement due to additional costs associated with property ownership.
🚧 Homebuilder Stocks and Market Cooling Signs
The video addresses the decline in homebuilder stocks, which is indicative of the cooling housing market. Housing starts have dropped by 14.7%, the steepest decline since April 2020. Homebuilders are reportedly offering significant incentives to attract buyers, such as price cuts and mortgage interest rate buy-downs, but are still struggling with excess inventory. The slowdown in new construction projects by builders is seen as a response to the difficulty of selling existing homes and the decision to focus on clearing the current inventory before adding to it.
🔍 A Look Ahead at the Real Estate Market
In the concluding part, the video suggests that the coming years will be interesting for the real estate market. It encourages viewers to subscribe for updates and teases the next video, promising more insights into the housing market's trajectory.
Mindmap
Keywords
💡Housing Market
💡Annualized Rate
💡Median Home Price
💡Inventory
💡Mortgage Rates
💡Loan Modification
💡Down Payment
💡Property Tax
💡Home Builder Stocks
💡Housing Starts
💡Affordability
Highlights
2023 was one of the slowest years in real estate history with only around 4 million home sales on an annualized rate.
2024 is predicted to be another poor year for the housing market with no signs of improvement.
Despite some markets still experiencing bidding wars, the overall trend across the nation is a decline in home sales.
March 2024 saw the biggest decline in home sales in over a year, contradicting the typical spring market uptick.
US home sales in March 2024 dropped by 4.3% on an annualized basis from the previous March.
Annualized sales prediction for 2024 is 4.19 million homes, based on March sales figures.
Median home prices are still rising, but this is considered misleading and not representative of the overall housing market.
Home prices have substantially dropped from their peak in June 2022, with a median price drop of $20,000.
Inventory is increasing, up 14.4% from last year to 1.11 million units, indicating a slow return to a more balanced market.
The Northeast is the only region where home sales increased in March by 4.2%, defying the national trend.
The Western half of the United States is seeing the largest decline in home sales at 88.2% lower than a year ago.
Mortgage rates are beginning to rise again, which is expected to further cool the housing market.
Economists forecast only a slight improvement in home sales in 2025, predicting 4.6 million annualized home sales.
Many homeowners are struggling with high monthly payments, including property taxes, insurance, and mortgage payments.
A case study shows that even with a 70% down payment, monthly costs for a home are still too high for some potential buyers.
Home builder stocks are falling due to a 14.7% year-over-year decline in housing starts.
The decline in housing starts suggests a significant cooling off in the housing market, with builders offering incentives to sell existing inventory.
Having a paid-off home in retirement is still considered beneficial, but with high property taxes and insurance costs, it's no longer a guarantee for a comfortable retirement.