You’ve heard all the real estate gurus and real estate experts say for the last few years, the market’s going to crash. There’s going to be foreclosures. Prices are going to drop. Uh, it’s gonna crash. Uh, so here’s a question for you.

 

Where are all the foreclosures? When are the home prices?  Really? Where are the 50 percent off signs? Where are homes buy 1 get 1 free?

 

Nothing out there, really. And the biggest question is, where did all the affordable homes go? Where are they? In this video, I’m gonna give you 7 to 8 points on why home prices have not crashed, and they may not crash anytime soon. So stick around.

 

But first, let’s look at some facts. Mortgage rates are so high. When will they be coming down? Inflation has been very high. Yes.

 

The numbers show inflation has reduced, but the prices of goods, prices of autos, prices of gas, everything else is so expensive. How can someone afford homes, yet prices are staying high? Let’s look at those. For the last few years, you and me have been lied to with the wrong data, with the wrong predictions. So let’s analyze exactly what’s happening.

 

By the way, at the end of this video, after the 7 points, I have another bonus point that nobody talks about and I’m gonna hand it to you so you know the real facts on top of the 7. So stick around till the end. So why haven’t the prices come down? Well, the first point is there’s a lot of sellers who are rate locked and what we call our rate locked sellers. As you may know, in 2020, 2021, rates went down to 2 and a half, 3 percent, and everybody refinanced.

 

Everybody refinanced, technically speaking. A lot of people have rates under 5 percent, rates under 3 percent, and a lot of those sellers or homeowners are not selling. They’re not gonna sell their home at 2 and a half to 3 percent and then go buy something at 7, 8 percent. That’s not gonna happen. The other thing is if they bought a home for $500,000 $600,000 3, 4, 5, 6 years ago, now they’re worth $700,000 $800,000.

 

So until the rates come really down, these sellers who what we call rate lock sellers are not going anywhere, which adds to the shortage of homes. And because of the shortage of homes, prices are staying stable or actually going up. The second reason why home prices are holding and going up is because the importance and the massive number of baby boomers that are coming up every day. On a daily basis, so many people are becoming baby boomers. These baby boomers have a lot of equity in the home.

 

They have a lot of assets. They have a lot of cash, and they have a lot of stocks and bonds and trust. And this group of people, a very large group of people with a lot of money, are willing to buy their dream homes, are willing to buy their second homes, are willing to buy their homes for rentals, and they are pouring money into real estate. They may move down and buy a bigger home, or they may sell their bigger home and move into a smaller home in a nicer area or a nicer neighborhood or a much more expensive home or even move out of state and buy several homes, if not just 1. Nothing’s gonna stop them.

 

And this group is growing by the day, not by the month, but they’re growing by the day. As the NAR says, which is the National Association of Realtors, baby boomers have the upper hand in the home buying market. By the way, if this is your first time coming to my channel, thank you for watching. And if you can subscribe and even make some comments on what’s happening in your neighborhood, we would greatly appreciate it. Let’s go on to point number 3.

 

Reason number 3, as you know, prices have skyrocketed for the last 3 or 4 years. They may still skyrocket more or at least go up and up and up. A lot of the buyers who thought they would wait from the expert’s advice, from the expert analysis, they waited and waited and they did not buy. Now they are realizing that the prices are still going up, rates are going up. There, some of them are coming back in the market because they are frustrated and they’ve been wanting to buy a house.

 

They waited and waited, they can no longer wait. They want to wait, but they don’t want to wait because now they have to buy. The family is growing or they have a relocation, job transfer. They want a bigger house or a smaller house, sell their expensive home and buy a smaller home. They cannot just wait.

 

They become impatient, and I don’t blame them. So the demand is there for buying. So as long as there’s demand, there is a stability in home prices. Let’s look at what’s happening on prices. Of course, home prices and home sales are hyper-local.

 

It may be different in your neighborhood, but let’s look at what’s happening overall. And by the way, make some comments on what’s happening in your neighborhood. We’d like to find out. Let’s look at this chart from home price expectation survey where they survey hundreds and hundreds of experts and analysts and see what they’re saying about home prices coming up in the next few years. In 2023, they expected a price rise, and we’ll find out.

 

This chart compares December to December. So in 2024, they expect prices to go from 2023 December to to 2024 December by 2.17 percent. In 2024, by another 2.17 percent. In 2025, 3.2 percent, and if you go back to 2027, it’s going to go up by 4.18 percent. So if you think you cannot afford a home right now, wait till 2027, and depending on what mortgage rates do, hopefully they’ll drop so you can afford a home.

 

But in anticipation of higher prices, a lot of the people are still buying right now, keeping the demand higher and keeping the inventory low. As long as the inventory is low and as long as buyers are buying, homes are going to either stay stable or they’re going to go up. And you may consider why are people buying or why are you as a buyer buying right now with the high home prices? Well, if you are renting, the home rental rates have also gone up. Let’s look at this chart that talks about rents.

 

Buying a home means avoiding rising rents. When you rent, your monthly payments generally goes up each time you sign or renew a lease. So as the prices went up, rents went up, and they are sky high right now. So that’s 1 of the reasons a lot of the buyers still wanna buy homes. As I mentioned earlier, people are frustrated.

 

They don’t wanna pay high rents. They don’t wanna pay the mortgage for the landlord. They wanna pay their own mortgage, and that’s why there’s a demand for home staying strong. Another key point to remember if you’re a renter and if you’re thinking of buying is that when you buy with your fixed rate mortgage, your monthly payment is locked in for the length of your home loan versus rent, they could go up every year, every year because the landlords are in turn in general greedy. They will increase the rent whenever they can and they always do.

 

If we look at this chart, median asking rent since 1988, as you can see, it has nothing but gone up. In 1988, the rents were near 350. In quarter 3 of 2023, it’s almost $1,450 nationwide, which is very cheap. For example, in Anaheim Hills, Orange County where I’m where I’m at, rents are probably $3000 on average, but the rents you can see have gone up. So as the home prices go go up, which they have for the last 40 years, rental rates have gone up also.

 

They go hand in hand. So word of caution, if you are thinking of buying now and I hope that you are thinking of buying now, then 1 thing you have to remember that if you are a buyer now, you have to be a long term buyer. Chances are you may buy a house right now and you’re paying high price, top dollar, you’re paying high mortgage rates. Chances are it may drop for 2 or 3 or 4 years. Prices may drop.

 

But if you stay there for 7 years, 8 years, 10 years, 15 years, it’s definitely gonna catch up. If it goes down, it’ll come up. Historically, home prices on average rises at 4 percent per year if you take the 4 year average. Whenever you sell, in the long term, you will always gain. You will have extra equity, and all the money that you’ve paid in there will add up in your equity and you can sell it at a higher price when you decide to move.

 

So at in this economy, in this moment, high inflation, high interest, high prices, you must have a long term plan if you’re a buyer. Reason number 4 is supply and demand. We are in uncharted territories, uncharted waters. We don’t know what’s going to happen. We don’t know how long the shortage is going to last.

 

So let’s look at this when it comes to new home builders. Few years ago, new home builders pulled back on building homes because they thought the market was going to slow down. They thought foreclosures are coming. They thought the buyers will stop buying. So they slowed down.

 

And as it is, they cannot keep up with the homes that are needed today. So that’s creating another shortage of homes. 31 percent of all the homes sold last year were new build homes. So when they slow down, that number of homes slows down as well, and that created or is helping with the shortage of homes. And with the shortage of homes, prices stabilize or prices go up.

 

The other thing to note since the pandemic or post pandemic or even during the pandemic, everything went up, lumber prices went up, concrete went up, home prices, home building, the labor, everything has gone up. So the home prices are going up for new home builders and they did cut back. Land prices have gone up and getting permits and fees from cities and everything took longer and longer. So there was a slowdown when it came to new home bills and that’s affecting the shortage right now. Another factor is, is from 2012 to 2022, the number of households grew to 159,000,000.

 

That’s the number of households that formed. But during the same time, the homes that were built during that period, 2012 to 2022 was only 12,000,000. So we had a shortage of a few million homes for sale. So that’s keeping the shortage higher right now. Of course, in some areas there’s a lot of new homes and in some areas there’s not a lot of homes.

 

So it’s very different. As I mentioned earlier, the home sales and home selling activity is very hyper local. Let us know what’s happening in your area when it comes to new home constructions. Are there a lot of homes being constructed? Are they being bought?

 

Or is there a slowdown in new home construction being built? And as few months ago, a lot of the builders were giving incentives because the markets slowed down, especially when the rates went up to 7 and a half, 8 percent. The buyer stopped buying totally. So a lot of the new home builders gave a lot of incentives up to $60,000 in incentives for buyers to buy a home. So that really helped.

 

And that kept the home buyers buying new homes because of all the incentives so they could keep up with the higher interest rate. So a lot of these buyers bought at high interest rate, but they got a lot of incentives to make up for it. Reason number 5 is supply of home inventory. I talked about this before, but let’s look at it at a detail. The supply of homes nationwide right now as of 2023, end of 2023 is 3.3 months only.

 

In other words, if no homes come on the market today, it’ll take 3 and a half months to sell all the homes, which is a pretty fast pace. If we’ll go back to 2008 when we had the big recession, when we had the big oversupply of homes, in 2008, there were 10 months supply of homes versus 3.3 right now. During the pandemic in 2018 and 2019 and 2020, there was 4 months supply. Right now, we are at 3.3 months supply, even with the high rates, even with the high prices. So as the inventory stays low, the prices stay stable or go up.

 

As you know, right now it has been a seller’s market. The lower the supply, the higher the price, and it’s a seller’s market. In 2008, when there was 10 months of supply, that means there were homes on every street. There were 2 or 3 homes for sale and they were not selling. It took 10 months, almost a year to sell a house.

 

It was a buyer’s market. They could say, Hey, knock off 100000, knock off 50000. They could get the homes. Right now it’s a seller’s market and they’re saying, Hey, you want to buy my house? Pay me 10000 more, pay me 50000 more.

 

And buyers are paying that because the inventory is low and because inventory, as soon as it hits the market, it’s being sold within 3 months. Of course, that’s a national average. In your area, it may take 4 months, but in some areas like in Orange County or Anaheim Hills where I’m at, it’s taking less than 20 days to sell a house. So the inventory controls the prices. The lower the inventory, the higher the price, higher the inventory, lower the price.

 

So the big lie when it comes to saying that the prices will drop, the only time the prices will drop is when there’s a surplus of homes. Right now, we don’t see any surplus of homes. We see shortage of homes. So until we get to that surplus, which means it takes 5 to 6 months to sell a home, then it becomes a buyer’s market and then the prices can drop. So right now, if you’re a buyer, it is still a seller’s market.

 

It’s a seller’s advantage, but that does not mean that you should not buy, but just be aware that you can end up paying the higher prices. If you’re a buyer, don’t get discouraged because the good news is that even though there’s a shortage of homes, inventory is low, inventory is tight. The home prices are not jumping like they did in 20 21, 20 22. Prices were jumping 5, 10, 15 percent per year. Of course, depends on your market.

 

But right now, as I mentioned earlier, they’re going up 1 percent, 2 percent, 3 percent overall. Of course, in your area, it could be declining or in some areas, it could be up. But good news is the rate of increasing price has gone very slow. It’s going up at a snail’s pace, but the fact is it is still going up. If you look at this chart, it shows where the prices have gone up more than 10 percent since September 20 22, Los Angeles, 24 percent, almost, San Diego, 18 percent, Indianapolis 10 percent.

 

So the prices are jumping in certain areas, especially in the metro areas. At the same time, there are areas where home prices are actually cooling. If you look at Dublin, California, prices have dropped 15 percent since May 20 22. We may think it’s gonna be higher, but San Francisco has dropped 13 percent. Palo Alto has dropped 12.82 percent near San Francisco and Redmond, Virginia number 10 has dropped by 11 percent.

 

As I mentioned earlier, prices are up or down. Locally, it may vary. Check with your prices or in your neighborhood. Let us know if your neighborhood is going up or down. We sure like to find out and see what’s going on nationwide as of today.

 

The seventh reason about home prices not coming down is because of history. Let’s talk about the prices now. Home price changes during the last 6 recessions. These were pretty big recessions. In 19 80, the prices jumped 6.1 percent.

 

19 81, up by 3.5 percent. 19 91, there was a drop of 2 percent. And in 2001, up by 6.6 percent. Of course, in 2008, which was not a recession that we probably ever gonna see again, there was a drop of 20 percent, which was a big 1. But in 20 20, during the recession, prices went up by 6 percent.

 

That means 4 out of 6 recessions, prices went up. What does that mean? If we have a recession coming up, are the prices gonna go up? History will tell us when history is created in the next year or the next couple of years if there is a recession. We’ll see if prices are gonna go up or if they’re gonna come down during a recession.

 

Now let’s talk about the bonus points that I promised you earlier. Thanks for sticking around for so long. Basically, I wanna talk about 3.3 bonuses why prices may not come down. Number 1 is during the pandemic, a lot of the homeowners could not move when they wanted to move. So what did they do?

 

They went and remodeled their homes. A lot of people spent a lot of money remodeling and now they’re not moving out anymore because they added a room or added a kitchen or made it bigger, added the yard or a pool or whatever, and they’re not moving out because they are comfortable and they spent a lot of money. The other reason is that a lot of the workforce during the pandemic created work from home. And of course, as we know, a lot of the big companies are calling them back, but a lot of the people are still working from home. So the sellers that may sell to move are not selling anymore that keeps the inventory low.

 

And the other thing, the other major point that nobody has ever talked about is what we call the inheritance money. Right now in the first point, I talk about the baby boomers that have a lot of money and they’re spending it on their own buying their homes. But inheritance money, there’s trillions of dollars worth of assets, real estate, trust, stocks, annuities, life insurance, all they’re sitting as inheritance money solely to young kids, 35 year olds. Lot of the down payment, hundred thousand dollars, 200000 dollars came from their parents or their grandparents. So there’s a lot of inheritance money being poured into the economy, especially the real estate economy.

 

So the demand is there, and that’s how people are buying a lot of homes. So as long as money is being poured into the housing market, the supply will stay short. And as long as the supply stays short, prices are gonna hold. Please watch this video if you’re concerned if there’s a foreclosure coming. So watch this video, and I appreciate you watching.

 

If you have any questions, direct message me, and I’ll be glad to help you.