Transcript
Dave Meyer (0:00)
The housing market is experiencing one of its biggest shifts in decades. Opportunities are becoming more abundant, but so are risks. So you have to be an informed investor to learn how to separate good deals from bad and dominate in this new era of the housing market. Here's what you need to know. Hey, what's up, everyone? It's Dave Meyer, head of real estate investing at BiggerPockets. Welcome to our monthly housing market update. Amidst all of the crazy stuff going on, the continuous change in the economy and the housing market, this segment, this monthly housing market update that we do, is quickly becoming one of our most popular, important shows that we do every single month. So we're excited to have you here with us to talk to you about what's going on in today's episode. We're going to start with an overview of the national housing market and we always talk about how real estate is local and that is true. But there are a lot of things that you need to know about the broad, biggest, high level trends that will inform what's going on in your market and will inform your strategy. So we're going to start there. We'll also talk about some of those regional trends. Obviously, we can't get into every single market, but we're going to talk about broadly what's happening in different pockets of the country. We'll next talk about macroeconomics. I know that sounds boring, but we need to sort of understand the why behind what's going on in the housing market. Yes, inventory is going up. Yes, we are seeing higher mortgage rates, but why are those things happening? By understanding why those things are going on in the first place, we can start to get an idea of what might come next. We obviously cannot predict the future, but sort of understanding the background to what's happening in the market will help us prepare for everything that's going to come. So that will be second. And then lastly, although this show and episode is mostly focused on data, I am at the end going to talk a little bit about strategy and just share some of my personal perspectives I am using to guide my own decision making. Let's do this. First things first, like I said, we're going to start with the national housing market and I'm going to share with you the biggest, broadest picture. First, we have entered and are in what is an expanding buyer's market. You may have heard me say this on recent shows recently, but basically what this means, what being in a buyer's market means, is that there are now more sellers than there are buyers. A recent study Just came out from Redfin that shows that There are about 1.95 million sellers in the housing market. So let's just round up to 2 million. And there are about 1.45 million buyers in the housing market. So there are 500,000, half a million more sellers today in the housing market than there are buyers. And the reason that makes this a buyer's market is because all of those sellers, there's all those extra sellers, they're going to have to compete for buyers, right? If there are 2 million properties, 2 million people trying to sell their house, but there are only 1.5 million, roughly, I am rounding here, 1.5 million buyers, those sellers are going to have to compete for the buyers. And the way that they do that is by either lowering their price or. Or offering concessions like rate buy downs, covering closing costs, or any of a million different concessions that a seller can offer. But because they are competing for buyers, that's what makes it the buyer's market. That means that buyers have the leverage to negotiate with sellers when they're going to buy deals. So that's sort of the exciting thing about what's going on in the housing market, because that means if you're in acquisition mode, if you're looking to build your portfolio, you. You are going to be able to get better deals today than you were three months ago or six months ago, or, you know, really over the last couple of years. I think the other side of that, though, is that prices could be falling. Like I just said, the way that sellers compete for these buyers are by offering concessions. And the primary concession that buyers typically want is a lower acquisition price. And this dynamic can drive down prices in the housing market. And I think it's really important to know that prices are still up year over year. We are not in any sort of crash. But I believe that the probability of a correction on a national level, basically prices falling modestly on a national level, is pretty high. I obviously can't say for certain, but I agree with recent updates on forecasts that we got from Redfin and Zillow that they think that prices are going to fall 1 to 2% year over year by the end of this year. And I think the probability of that happening is pretty high. And so that's sort of the big broad picture that we're seeing on a national level, prices are likely to go down a little bit. That means there are going to be better deals for investors. But obviously that comes with risk of price declines that as investors we need to mitigate because we don't want to buy something where prices are just going to drop off a cliff after we buy it. So that's what we're going to be talking about a little today. And again, that is sort of the national housing market. Not every market has the exact same dynamics, but as I'll show, almost all markets are following this trend. So that doesn't mean that every single region, every single market, is going to go from, you know, plus 2, plus 3% growth this year to negative prices. But a lot of markets, even the hottest ones, might go from plus seven to plus four. So all of them are sort of cooling off. There are very few markets that are actually heating up and where acceleration and price growth are appreciating and going up. So that's the big picture. But let's talk for a minute about why this is happening. Because as you can imagine, there's basically two reasons. There's two ways that we can go from a seller's market like we've been in for the last couple of years into the buyer's market that we're in today. You could have more sellers or you could have fewer buyers. You could also have some combination of two. But we're actually having one clear thing. What is happening is that we have more sellers. More people are putting their homes on the market for sale. It may not seem like this when you read the news or when you hear about consumer sentiment or everything else that's going on in the economy, but buyers are actually pretty stable. You look at the amount of people looking for homes, if you actually look at home sales, if you look at the number of people who are applying for mortgages, they're all pretty stable year over year. Actually, the most recent data shows that the number of people applying for mortgages in May of 2025 was 20% higher than the year before. And so that part is not going away. So if you hear people saying, no one's buying, no one wants to buy, that's not true. What's happening is more people are selling. And honestly, this has taken a long time. I think we've had really, really low numbers of sellers in the housing market for years now. And so basically heading back towards something that's more normal. Like I said before, Redfin right now is estimating that we're at about 2 million sellers in the market. And that number has been rising quickly over the last two years, let's say. But we are still below where we were pre pandemic, like in 2019, before everything changed. We were at about 2.2, 2.3 million. So we're still about 10, 15% below what would be a pre pandemic norm of sellers. So let's just keep that all in proper perspective because it's easy to say, hey, there's so many sellers, there are less buyers, everything's going to crash. But we need to remember that the data is showing us it's going back towards more normal pre pandemic levels. Not that we are going anywhere close to sort of the red flag territory that we're in in 2007, 2008, that kind of thing, thing. You see this across all of the data and I'll just share some of that with you. But basically inventory, which is a really good metric, if you want to learn one metric in the housing market, learn what inventory means and start following it because it really measures the balance between supply and demand. It measures the balance between buyers and sellers. And what we're seeing right now is that inventory is about 1.5 million. That is still below about the 1.8, 1.9 million that we expected before the pandemic. So things are moving back towards that more traditional level. We don't know if it will go all the way back up, we don't know if we'll go past that, but we're still below that pre pandemic level. So that's, I think, a good sign for the short term stability of the market. We see the same thing in days on market. Another really good way to measure the balance between supply and demand. That's still well below pre pandemic levels. And I think if you are worried about the crash, if you are looking at or hearing people saying that the housing market is crashing, I think there's one other data point, one thing that I always look at and I recommend people look at as well, which is mortgage delinquencies, because prices going down, a correction like the one I was talking about before, where prices go down, you know, 1%, 2%, even up to 5, 6%. These types of things are normal in the housing market. The housing market, just like a lot of other markets, are cyclical and so things go up. We've had an amazing run of home prices for the last 15 years, basically, well, 14 years. But there are times when prices flatten out or decline. And I think we are entering one of those periods. But to have a true crash, two things have to be true. It can't just be prices going down 5%. That is not a crash. That is a normal correction for things to enter that true crash territory, price declines have to combine with forced selling. Basically, people have to stop paying their mortgages because they can no longer afford to do that. That gets them in the situation where you could be underwater on your mortgage and since you're not paying on that mortgage, the banks could foreclose on you. And that can create this sort of vicious cycle of increasing inventory, falling prices, people defaulting. That's a really bad situation. And so in these housing market updates, one of the things I'm going to continuously remind you about, so every month I'm going to share this with you, is the mortgage delinquency rate. Because this thing, if mortgage delinquencies stay relatively low like they are now, it is below 1% of all mortgage are seriously delinquent. We're at 0.86%. Things will correct, prices could go down, but there's not really a risk of a big true crash. Of course this can change, everything can change. But right now that is not looking very likely because that 0.86% less than 1% of people is below where we were in 2017. It was below where we were in 2018. So it is going up a little bit. But I think a lot of that is due to the end of moratoriums on foreclosures and the end of forbearance programs. And we're still actually below where we were like in 2000, 2002, just for some context, when we were in 2007, 2008, the true crash, that delinquency rate was literally 9 to 10 times higher. It was above 7%. And so we are not really at risk of that right now, but that is something that we should all be keeping an eye on. So that's my big picture overview of the national housing market. Things are cooling, prices are softening, but the risk of a crash still remains relatively low in my mind. That said, there are tons of uncertainties geopolitically right now, trade policy, all of that could change. And so the chances of some black swan event coming and totally changing everything that I'm saying here are bit higher than normal. But I'm trying to just share with you what what we know. This is the data that we have today and this is how I interpret that data. I do want to talk a little bit about regional differences, but we do have to take a quick break. We'll be right back. This segment is brought to you by Resimply the All in one CRM built for real estate investors. You can automate your marketing, Skip trace for free. Send direct mail and connect with your leads all in one place. 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