Meet Kevin Is Wrong - Housing Crash of 2022 Still Not Happening

The data available is really sooooo bad.

National Mortgage News scream "House Listings Are Up! Ready to Close More Loans?" Uh, oh, sounds bad. Is that correct?

Well, the article continues "A wave of fresh home listings hit the market in June. Many in the industry project home inventories will continue to grow through July and August, the peak of the home buying season." 

A WAVE of fresh home listings hit the market? A big wave? A small wave? Well, not so big when you look at the data. We'll look at it.

The California Association of Realtors, which is really the most significant organization that SHOULD be informing the market about news, has its latest press release dated July 18, so that's two weeks old, and that is a report of June sales, which is over a month old. 

Why do they not have a weekly update? Don't they have ALL the data?

Then is one of my favorite sources of financial information, Meet Kevin. Now, he is a great source on financial investing overall, but ... his take on the real estate market is "The 2022 Housing Market Crash is Here | Do this NOW." Do what? Panic and sell?

He, like many analysts, relies on 2 misleading pieces of data: housing affordability and new home builder inventory. As a result, he has NOT data showing prices are going down, despite him saying that in his video. He is correct that some seller's had to lower their asking price, but in the end home prices are still going up overall, although more slowing than in the past 2years.

Let's see how both of his contentions are wrong.

Home affordability is misleading in that is highlights a real problem, that most people cannot afford to buy a home, but that has little relation to the current market, as only 7 million sales take place a year out of us US population of over 300 million. Additionally, many people own homes than cannot afford to buy in the current market, but that does not affect the market, or may hold it back. My neighbor, who purchased their home for $150k in 1996 may not be able to "afford" their home at the current market price of $2 million, but they don't need to as they are not selling. In fact, they might not be able to pay the property taxes on that home of over $20,000 a year, but, again, they don't have to.

New homes built for sale, while important to watch, is a small factor in the overall market. We have many 250k more new homes for sale than the all-time low, and are approaching the 2007-2008 number of 550k, we have added millions of families since 2007 and 2008, and that difference in total does not close the gap of resale home inventory reduction, where we have 400k fewer homes than pre-pandemic levels.

The challenge for all news sources is that there is no real exciting news. The market is mixed across the county and has settled into a fairly pedestrian rate of growth nationally, and yet some markets are still red host and others are still warm and growing.

So, what to do?

If you are looking to buy a home and live there for a while, real estate has always been a great long-term builder of wealth and there is nothing to suggest that is changing. If you can afford the home.

If you are looking to move or downsize, it's still a great market to sell, but a bit more challenging than in the last few years.

Finally, if you can find a property that will give you cash flow, this is a great time to get solid cash flow and enjoy the tax benefits of real estate.

--

Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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