BiggerNews: 2024 Housing Market Update

Dave:
Do you ever wish that you knew what was gonna happen with your investments ahead of making a big decision? I do. It would sure make things a whole lot easier, but unfortunately it just doesn’t exist. As investors, we have to operate with some level of uncertainty, but today we’re gonna get you as close as we can to some certainty or at least an idea of what might happen by whipping out our sometimes dysfunctional crystal balls and peering into the future of the housing market. Today we’re predicting what happens in the second half of 2024. Hey everyone, it’s Dave. Welcome to today’s bigger news episode. In this episode, I’m bringing on two seasoned investors and market watchers to help me read the tea leaves and make some educated predictions about the second half of the year. First we have Kathy Fettke. Thank you so much for being here, Kathy, I know this is a tough ass, so please don’t hate me for publicly making you make economic predictions. Don’t

Kathy:
Hate me if I’m wrong. Let’s just

Dave:
Make that agreement. . Yeah, everyone be, be nice to us. This is not the easiest of things to do, but we’re going out on a limb to help you all learn, at least how we think about making predictions and operating in an uncertain environment. So thank you Kathy for being so gracious. Brian, I know you already hate me, so I figured I’d just bring you on out of spite anyway and make you do this against your will. Well,

Brian:
I appreciate that you could redeem yourself if you delete the recording and say 90 days. That way nobody could look back on this and say, I was wrong, .

Dave:
Yeah, I know. I wish we, we had that power of editing. I guess we, we might, but we would never do that. Alright, well thank you both for being here today. We’re gonna be reviewing housing market predictions from some of the biggest data houses in the real estate world, and then we will give our take on these predictions to help you make informed decisions in your investing journey. Today we’re gonna cover Fed actions and rate cuts. We’ll talk about mortgage rate predictions, home price growth. We will begrudgingly discuss crash scenario and make sure to stay around to the end because we are going to review a sort of wacky prediction that we found while researching this show. Now, before we get into our predictions, I want to give you all just a quick rundown, state of the real estate market. Here is where we currently stand and just for everyone’s information, we are recording this at the end of July, 2024.

Dave:
Right now the rate on a 30 year fixed rate mortgage is 6.8100000000000005% for the FHA, it’s considerably lower at 6.25%. The median home price right now is up to a whopping 442,000, which is up 4% year over year inventory. The measure of supply in the housing market has been going up pretty steadily this year and is actually at 23% over the previous year. But that doesn’t really tell the whole story because we’re down 50% from pandemic highs and about 25 or 30% from pre pandemic levels. So don’t get too excited when you hear inventory is going back up. That’s a just a brief look at the housing market. Obviously there’s a lot more to it, but I think those stats might help you better frame and understand the conversation Kathy, Brian and I are about to have. Alright, well, before we get into some of the more housing specific predictions, I figured I’d let you guys warm up a little bit with some macro economics. So we’re gonna start first with inflation. Morningstar has predicted that the PCE inflation gauge to average 2.4% in 2024 and down to 1.8% over 2025 just below the fed’s 2% target Bloomberg forecasters are predicting inflation to be at 2.6% by the end of the year. Brian, do you think either of these rather optimistic forecasts are accurate?

Brian:
Well, I think they probably are. You know, if the way interesting is if you look at the PCE inflation and break it down into components, the biggest components of inflation lately have actually been housing and insurance costs. And housing is actually the biggest component of the PCE inflation we’ve been seeing lately. Uh, so if you were to take housing out, it’s already there. Uh, in June it was 1.9% if you sub if you, uh, took housing out and housing is already starting to moderate and I think it’s a lagging indicator. And I personally, I think we’re kind of already there if you’re thinking in practical terms and not in governmental new math.

Dave:
Yeah, I just wanna clarify what Brian’s talking about. We often in the media hear, you know, inflation quote unquote is at 3% or inflation is at 3.6%, but the way that it’s actually calculated is there’s different, they call them baskets of good. So they talk about things like energy or food or in this case housing. And it’s been sort of, at least in my opinion, sort of this whack-a-mole situation over the last two or three years where some basket of goods would be really, really high for a couple of months, then it would go down, but another one would come up. But the persistent one, as Brian’s been talking about, has been housing, but luckily recent data shows that it has been starting to moderate and that does bode well for inflation. Kathy, are you as optimistic as Brian?

Kathy:
I am. I think we’re there already. I I hope we’re there already. Uh, one of the things I do look at as well is, is wage growth and that seems to be slowing down as well as job growth. And so if people aren’t making more money than they won’t maybe spend as much and that could be reflected in, in the inflation report. So, um, this sounds right to me. The one thing that did concern me was, uh, 2025 to 2028, uh, that we’d be under the fed’s target. You know, what does that mean? That’s kind of where I’m at. Does that mean we’re looking at, um, more chance of a recession or is this more stimulus that the fed’s gonna do and cut rates even more than expected? It seems like they’ve been kinda late to the game quite a lot. And so I think Dave, you’ve, you’ve kind of said before, it’s like the swerves of the economy were somewhat manageable. Um, the last few years they’ve been drastic swerves, so the car is just moving all over the place. So if they are cutting rates too late, um, this could mean that they’re gonna, they’re gonna have to cut them even more. There’s gonna be more swerving, so hard to predict what’s coming in three to five years, but hopefully they’re not too late to the game. Yeah,

Dave:
I, I agree and it does seem from recent press conferences and all the stuff that’s coming out from the Fed, that they are less militant and strict about this 2% target than I think people they were signaling they were going to be a year or two because it could take a little while. Even these predictions are saying that it’s gonna be a little while before they get to 2%, but as Brian pointed out, some of the underlying data does seem to suggest that we’re on track to 2%. And so I think they’re comfortable starting to consider cutting rates even before we reach that 2% target. At least that’s what they’re signaling right now. This is actually a very good segue into our second topic, which is the other thing the fed’s gonna be caring about before they potentially cut rates, which is the labor market. Morningstar, who also made a prediction for us for inflation, they expect a slowing of job growth until late 2025 in response to falling GDP. And by 2026, the unemployment rate they believe will rise around one percentage point compared to where it is in 2023. And so that means it would probably be in the high 4%. That would be a pretty big difference from where we are today. Kathy, do you expect the labor market to weaken in that way?

Kathy:
I wasn’t really expecting that. Uh, i I it still wouldn’t be the end of the world if that were the case. Um, you know, we’ve seen during the great recession, unemployment was as high as nine or 10%, and then during covid, of course it was, uh, off the charts, um, so that that wouldn’t necessarily reflect a major crash to the, to the market if it went up 1%. But I, I don’t think that unemployment will, uh, and this is not based on me having lots of graphs in front of me and lots of data. Just on the one hand, the Fed did slam on the economic breaks with all these rate hikes so fast and holding them so long. So normally we would see a, a dramatic response to that with lots of job losses, and that just hasn’t been the case. A lot of the job growth that we’ve seen over the last few years was kind of a combination of a return of jobs after covid with then normal job creation combined with a massive unprecedented amount of stimulus that that created a lot of that, a lot of that is backed off, right?

Kathy:
We we’re not necessarily at this moment in time seeing a lot of stimulus, although that could be around the future. And since we’re moving into a rate cut environment, that’s what everybody seems to agree to, that’s a stimulus. It’s a, it’s a shifting of the tides right now from tightening, tightening, tightening, slamming on the brakes to kind of putting the gas on when you cut rates. So I don’t, no, I don’t, I don’t see that. Uh, but you know, again, could be wrong, could be wrong that again, they may be, they maybe they’re cutting too late and therefore they’re, you know, it’s gonna take, there’s gonna be an aftermath of that, that there would be more job losses than expected. But I don’t think so. That’s,

Dave:
That’s true. But I, you know, the way I think about it, at least with cutting too late is that a quarter, you know, a 25 basis point, a quarter of percent cut is not going to change the math on hiring all that much so that people start hiring a lot. But it does create a little bit more certainty in the environment, which I think would allow people, businesses to either start hiring or continue with hiring plans, avoid layoffs, just that sort of certainty and mindset shift from the Fed may be enough to, to stave off further job losses. Brian, what do you make of that? I

Brian:
Don’t know. I think that, you know, we may see an increase in unemployment in the near term simply because you’ve already started to see like some of the larger companies having some pretty significant layoffs as of late, including some tech firms and, you know, numbering in the hundreds. And that is likely, in my opinion, to continue for a little while before the effect of any kind of stimulus that may come our way, uh, gets a chance to get its footing. I mean, I, I’m of the camp that thinks that the Fed was using the wrong tool for the job and that they didn’t want to admit it, so they just kept doing the same thing even though it wasn’t really working and then waited too long to, you know, they don’t wanna admit they’re wrong. So they just kind of keep it up and they’ve kept it up too long and it’s caused a lot of damage, uh, in some sectors. And I think that that’s gonna have some lingering effects. Now do I think that we’re gonna see Covid style unemployment or even 2009 style unemployment? No, not at all. Uh, but I wouldn’t be surprised at all if we didn’t see, you know, a minor to moderate tapering in the near term, uh, with a recovery, you know, maybe a year later or so.

Dave:
I’m generally of the same opinion. I I do think that even if the fed cuts rates, a lot of things and plans have been in action for a while and that we will see unemployment tick up, I don’t know if it’s specifically gonna be up to 5%, but probably into the mid fours. And I just wanna make sure that everyone puts that in perspective. 4.5% unemployment rate is not that bad. I mean, in a historical perspective, that is still relatively strong labor market. Now when you dig into the numbers, a lot of the job growth has been in lower income jobs. So that is a concern, at least something I had, but Morningstar wasn’t predicting that. So we don’t have to get into that particular topic, but I, I do think seeing a modest uptick in unemployment should be expected, but I don’t think we’re gonna start seeing some cascading thing where we see just like huge, massive layoffs. At least there’s not a lot of evidence that points to that right now. All right, we gotta take a quick break, but when we come back we’ll predict what these labor and inflation numbers will translate into in terms of what we’re all really wondering about, which is rate cuts. Stay with us.

Dave:
Hey investors, I’m here with Kathy Fettke and Brian Burke. Welcome back to our Mid-year predictions episode. Alright, well we’ve been dancing, we’ve been dancing around the, the whole rate cut discussion for, for this episode so far, but we have to get into that because that’s ultimately what our audience wants to know. As of right now, Reuters is predicting the Fed to cut rates twice in 2024 for a total of 50 basis points. That basically means half of a percentage point bank rate says that investors currently expect that the Fed will cut interest rates once this year. There are actually markets where you can see how investors are placing bets and you can deduce what they think the Fed is going to do. And so we have one prediction at one rate cut, one prediction at two rate cuts. Brian, what’s your prediction?

Brian:
I, I don’t have one because I, you know, who am I, I’m not an economist so I listen to kind of a lot of different opinions out there. But one opinion that we really can’t ignore is the markets. And the markets are pricing in, uh, uh, at least one rate cut this year, possibly two rate cuts. If I were a betting person, I would say that we probably get one rate cut this year. If nothing changes and there’s a possibility that we get to, I don’t think either of ’em are gonna be significant enough to shatter the earth. Uh, if we’re lucky, we’ll get 25 bips once, maybe 25 bips twice. I did just read something recently where some traders are pricing in for 75 bips by the end of the year in two cuts, which would mean a 25 bips on one and then a 50 on the other. Uh, that’s I think, also possible. I mean, again, like I was saying before, Dave, I think the fed’s using the wrong tool for the job and they need to walk that back before they create more damage.

Dave:
Brian, I don’t think you understood the, uh, assignment on this episode. You have to have predictions, .

Brian:
Alright then. My, my prediction is we’re gonna get 2 25 BIP rate cuts. How about that one

Dave:
? Excellent. There we go. I like how you said you did have a prediction and then later said, if I were a betting man, here’s my prediction, we’re don’t worry, we’re not gonna, we’re not gonna hold you to it. We just want to know what your best guess is with that. Kathy, what is your prediction?

Kathy:
I predict that you’re going to hold us to it. . So are a lot of the listeners ,

Dave:
We’re gonna play it on future episodes regularly to hold you accountable.

Kathy:
That is definitely happening, but with that said, I, I really think bank rate is super wrong on this prediction that, uh, the Fed won’t cut interest rates until November. It’s pretty well agreed and accepted that it’s gonna happen in September and the data supports that. So not sure where they came up with that. Um, writer says two cuts. I would agree with them. I’m in the, in the writer’s camp today, one in September and possibly one, uh, probably one in November because I think everything the Fed’s been trying to do, which is to slow down the economy over the past couple years has finally happened. It’s been stubborn. Um, and again, that to me comes back to the largest stimulus that this country’s ever seen. That just was like lighting a, a firecracker into the economy. It’s taken a while to slow that down, but it’s, it’s working now. So, uh, we’re behind other countries that have already started their rate cut cycle, so we’re gonna have to play catch up in, in my opinion, I think there’s gonna be at least two, just two. I’ll just say two . Well,

Dave:
I’m with you Kathy. Actually, you know what I’m gonna say one, I actually think it’s gonna be one in September and then I think they’re gonna wait and see what happens. ’cause I do think there is fear that they could reignite the economy and damage some of the progress that we’ve been making against inflation. And I actually think the housing market is probably the most sensitive to this as we’ve talked about sort of with the labor market. I don’t think 25 basis point cut or 50 basis point cut is really gonna make that difference. But if they got mortgage rates down to the low sixes, I do think we’d see sort of a re-acceleration in interest in the residential market, at least at a time where the housing market is finally starting to slow down. It seems over the last couple weeks we’re starting to see trends where, uh, appreciation is slowing and that’s what the Fed wants.

Dave:
And I don’t think they’re gonna want to imperil that. I think the signal that will be sent by one single rate cut will be all we get for 2024. And now you can hold me accountable ’cause I actually made a prediction after making you guys make many predictions. All right, on this note, we’re just humming right along. It’s almost like this was extremely well planned by our producers that each of these topics flow into each other. Next set of predictions is for mortgage rates by the end of 2024. This isn’t even really that interesting. Everyone’s predicting the same thing. Fannie Mae says 6.7% and AR says 6.7%. The Mortgage Bankers Association says 6.6 and Freddie Mac at 6.5. So basically all of them are saying between 6.5 and 6.7%. Brian, do you have any reason to disagree with this forecast?

Brian:
No, I don’t. ’cause you’ll also notice that these rates that they’re forecasting are very similar to rates today. ,

Dave:
Very bold predictions.

Brian:
. Yeah, very bold prediction. They’re, they’re not off by much. But see, here’s something to think about. You know, people oftentimes are paying very close attention to what the Fed does to get signals on what’s gonna happen with mortgage rates. And it’s completely wrong way thinking because the Fed does not control mortgage rates. Mortgage rates are more closely tied to the 10 year, uh, US treasury. And the 10 year US treasury is, uh, is guided by traders who are trading these long bonds. And these markets are very forward looking and they tend to predict what’s going to happen more than react to what’s already happened. And you’ll have, if, if you’ve looked at the 10 year curve lately, it’s already come down, uh, from where it peaked, uh, a couple months ago. And I think that’s in reaction a lot to the fed’s. Change in rhetoric.

Brian:
I mean, the Fed has two, uh, different arrows in their quiver. One is to take action by moving interest rates. The other is just in what they say. Um, you know, and when they say things like, you know, we think we may have a cut coming , you know, and not quite exactly those words, uh, that signals to traders to get a little bit more aggressive, uh, on the long bond side. And I, I think that a lot of the movement in mortgage rates is already priced in. So if you’re, if you’re waiting for like, oh, I’m gonna wait to buy a house until the Fed cuts interest rates by 25, uh, basis points, you, you might just have missed the mark. I mean, there’s really no sense in waiting for that because I don’t think that’s gonna be an earth shattering event mortgage rate wise.

Dave:
Kathy, do you agree?

Kathy:
I agree and I, I disagree with the way bond traders trade. I think they’re extremely reactive and all over the place. They’re like little chickens just afraid of every little noise that they hear. And we have a lot of noise. We’ve got an election coming up depending on who, depending on who gets elected that could send the 10 year treasury all over the place. Um, it is so hard to predict where mortgage rates are going to go. Uh, with that said, I, I’m, I’m right in there with the 6.5 to 6.7%. How’s that for my prediction? Uh, no. I, I don’t, I wish they would. No, I don’t wish that they would go lower if, if rates go lower than that. The housing market will absolutely go bananas in terms of people jumping back in and being able to afford and that would then affect inflation.

Kathy:
So it, it would be healthier in my opinion, if, if these predictions correct, uh, I think they will be that it, we’re probably not going to see the, the bond market go that much lower than, than where it is unless there is a lot of concern about a recession. So then we’ve got other things to worry about, like a recession if they go much lower than that and that affects a whole bunch of things. If people lose their jobs, then that affects housing and so forth. But I, so far that is not what the tea leaves are saying. , most people are not predicting that, that, uh, there’s a recession around the corner.

Dave:
Well, I’m gonna be extremely bold and go outside of their forecast to 6.75 in. I know it’s pretty risky, pretty crazy. I actually think the forecast is probably right on, but I wanted to say something different than everyone else. . So I’m gonna say that I think if the Fed cuts only cuts rates one time, that perhaps, uh, mortgages, uh, mortgage rates will stay a bit higher. Um, I think high, whatever it is, it’s gonna be high sixes, right? I think like barring a Black swan event, something that’s very unfortunate, it’s probably gonna be high sixes. And for real estate investors, for people listening to that, like it shouldn’t really matter all that much. I mean, the difference between 6.6 and 6.8 is probably not gonna be the difference between whether you buy a deal or not. So I think, uh, you could take some, some confidence that we’re gonna stay relatively close to where we are for the rest of the year.

Kathy:
Well Dave, if you’re gonna do that, then I’m gonna go under and I’m gonna say 6.45. I like it because of the, uh, just the fact that we’re going into a rate cutting cycle. This

Dave:
Is getting very risky over here. We’re really getting crazy with these forecasts today.

Kathy:
Getting competitive. I feel like we should put money on it, .

Dave:
Alright, well let’s get to the other topic that everyone really wants to know about, which is US home prices. So Resi Club, which is a residential real estate data aggregator, um, has put together actually a super useful chart here, um, that talks about different forecasts by different, uh, financial institutions. And they are talking about 2025. So a lot of what we’ve been talking about today, just so everyone knows, has been for the rest of the year. This is a 12 month forecast. So from where we are today, um, actually from June of 2024 last month, we have data for to June of 2025. Goldman Sachs has 4.4%. Wells Fargo 4.3. Um, I’m gonna call out those two because both of those numbers are above the historical average, which is about 3.5%. So they are saying above average growth for Goldman and Wells Fargo, then we have the Mortgage Bankers Association and Morgan Stanley both, uh, at 3.3% and 3% respectively. So about average. And then the institution saying under average growth are Zelman and Associates at 2.3%. Fannie Mae at 1.5%, Freddie Mac at point percent, and Moody’s at 0.3%. Uh, Zillow’s not on here, but I actually saw that they were forecasting a decline over the next year. So Brian, where do you come out on this? Where do you think residential prices will be a year from now? You have to make a prediction.

Brian:
I’m siding with my girl Ivy Zelman at Zelman and Associates at two point, uh, was it 2.2 or 2.3? I’m gonna say 2.5%. I don’t think that they’re gonna be very high. I think we’re gonna have a fairly flat market going into the future, uh, for the next, uh, year or two. Uh, so I just, I just don’t see a lot of of movement. Even if, you know, Kathy mentioned like if, uh, interest rates fall, we could see some runaway home prices. And I tend to think that if interest rates fall enough, uh, we could have some of those demands offset by additional supply because there’s a lot of, um, interest rate hostages right now, this being homeowners who have a three, uh, or to 4% interest rate who can’t sell right now, uh, unless they want to trade into a six and a half or 7% mortgage rate. So there’s a lot of inventory, uh, that isn’t hitting the market, or we could say pent up supply that could offset some of the pent up demand caused by people buying as a result of lower interest rates. So I think all of that’s just gonna play together and just mean we have a fairly flat uncertain market for the next, uh, 12 to 24 months. So I’m gonna bet 2.5%

Dave:
Over under Kathy, two point five’s off the board. You have to go above or below Brian.

Kathy:
Oh yeah, I’m gonna, I’m gonna swing on this one. Here we go. Uh, I already said that I, I do think that mortgage rates will come down a little bit and when that does the floodgates open. You have 15 million millennials at first time home buyer age, you’ve got low inventory still out on the market. You open up the door to a few more million people able to afford and it’s gonna be craziness, it’s gonna be mayhem and that’s gonna drive prices up. That has been my prediction for a while. That is every time, every time we see rates go down just a little, there’s another boom in the housing market. Now granted, prices keep going up so it gets harder and harder and mortgage rates have to come down a little bit more to compensate for the higher prices. Um, and I, and like I said, I I think they could, considering we’re going into this rate cutting cycle, um, a lot of things are gonna slow down, but I don’t see it, I don’t see the housing market. So to sum that up in a number, I’m gonna go with 4.6% growth ,

Dave:
All right, 4.6% growth. I’m gonna

Kathy:
Change that to 4.8 just ’cause I like the sound of those numbers.

Dave:
Okay, I’m going to split the middle here and talk about, I think right about average growth. I’ll say 3.2%. I actually, I am a little more tempered by this idea that we’re gonna see explosive runaway appreciation once we, once the rates start to go down. Because on one hand what we’re seeing is that the reason there’s such little supply is ’cause there’s low affordability. So it’s, and that’s the reason there’s low demand. But saying that we’re gonna get an improvement in affordability and only demand’s gonna come back without supply coming back, I’m not convinced of that. I think they’re probably gonna come back both a little bit at the same time. And I also think in the meantime, before affordability improves, we’re already starting to see inventory really start to pick up. It’s already up 23% year over year. It’s still down like 40% since below the pandemic .

Dave:
So it’s still very low, but it is, there is real movement here in terms of supply, uh, of inventory. And so I don’t think it’s gonna be this runaway thing. And I, I do think we’re gonna see flat-ish around the average, you know, around the inflation rate appreciation for the next two or three years is my best guess. But again, I obviously don’t know. Okay, we have to take one last quick break. But if you’ve been dying to jump into the conversation with your own predictions while you’ve been listening, head on over to biggerpockets.com/forums and poster your takes there. And don’t go anywhere When we come back, we’ve rounded up the wackiest predictions out there and you don’t wanna miss those. And we’ll also get Kathy and Brian to weigh in on the housing market crash rumors right after this. Welcome back to bigger news. Let’s jump back in. So we had another prediction. I was gonna ask you guys about market crashes, but I think I know the answer for this. We got nos across the board here, right?

Kathy:
Well, you know, you look at this, the home price forecast that we just talked about, it’s all positive. You know, with Moody’s being the lowest at up 0.3%, that is, that’s not a housing crash. People, I’ve been through one, I know what one feels like in parts of California prices we’re down 70%, you know, during the great recession. So we’re talking here, a slowdown predicted in home price growth, a slowdown in growth, not price declines. Will there be markets where there are price declines? Of course. And that’s what’s so frustrating when we take these national numbers and say, you know, the average home price is gonna go up 4.8%. That, that just, it’s just no average home price. One house on one side of the street and another house on the other side of the street is going to have different value based on their views and just so many different things, maybe road noise. So, um, and then diving in deeper into market. So Brian and I, we study this stuff. Well Dave, you do too. Like which markets are really gonna take off and which ones are gonna, are gonna be more challenged. So anyway, I hate this , but, but overall, overall, yeah, there’s, there’s, nobody’s predicting a home cri a home price crash or a, um, unless you are a YouTube, you know, star. If you’re a YouTube star, then for sure every single day there’s a housing market crash,

Dave:
Then you have to do it at least once a year. Yeah, Brian, I take it you have the same idea here.

Brian:
I do. Some of those people Kathy mentioned, I think have predicted 10 out of the last two housing crashes. So, you know, that’s kind of what you, you, you get what you pay for, I guess. Um, no, I don’t, I don’t see a housing crash coming. Uh, there’s, we don’t have the catalyst to it that we’ve had in previous housing crashes. If you look at the, uh, kind of oh five to oh eight crash, uh, you know, they had really high debt load on behalf of, uh, homeowners and, uh, you know, that was just a recipe for disaster. And the last price crash before that was the late eighties, early nineties, you know, and there was a a lot going on then that isn’t going on now. So I, I don’t see conditions for that. I think, uh, we’re gonna see stability in a flat market. But if you’re, if you’re waiting for prices to collapse before you get in and make an investment, you’ll probably do what a lot of people have done in the past, which is just sit and wait and watch the thing outrun you. And, uh, you know, you’ll never get into the market. I,

Dave:
I tend to agree with both of you, but if anyone listening to this is concerned about a crash or even regionally, like what a decline would mean in your local market, ’cause I do think we are gonna see certain areas of the countries at least experience corrections, if not a, if not a full blown crash. If you are worried about that. Next week, uh, a week from today actually we’re gonna be releasing an episode about a potential market crash. We’re actually gonna just be talking about logistically like what would it take for the market to actually crash in terms of numbers. Like how many homes have to come on the market, how much demand has to get pulled outta the market. And our objective is to allow you to decide for yourself whether you think a market crash is likely. So if this topic has been on your mind, definitely make sure to tune in next week.

Dave:
’cause we’re gonna be talking about that. All right, well I’ve gotten through all of our major predictions for today. Thank you guys. I actually have one more just kind of crazy prediction that we found in, in while we were researching this episode. Lemme just tell you the headline of it and then I’ll ask you guys if you agree with it. The headline of the article is, A crisis by Young American Men will Cause housing prices to Correct by 20%. There’s a person named Meredith Whitney who said that the clearing price of homes will be some 20% lower than it is today as baby boomers age and downsize, she expects that some 45 million homes will come on the market. She estimates Gen Z, who are not buying homes at the same rate as previous generation. And the increase in the number of single men on record will mean that those homes won’t get absorbed. Therefore, because young men are living at home and because Gen Z is aging, housing prices will go down 20%. Now, we just talked about the prospect of a crash, but Brian or Kathy, let’s start with you. You’re just laughing over there. , ,

Dave:
I take it that laugh needs that you find this farfetched.

Kathy:
Here’s what I wanna do. I wanna have Meredith Whitney and Logan Moto Shami on this show debating this topic and it would be fun. I don’t know where she, she comes up with this stuff. I mean, it definitely garners her some headlines. She’s been just way out there, uh, without much data to support these kinds of claims. And sorry, sorry, Meredith. I’m, I’m just saying I find some data to support this ’cause that is crazy. The, the thing that determines whether or not their prices are gonna go up, there’s gonna be a 20% crash and prices because men aren’t working. Sorry. Um, uh, most of the men I know are, you know, most not all, uh, but you know, it, this is just headline, this is just, just click bait. That’s all I could say. I would love, love, love, love, please, producers of BP get this debate going between Meredith and Logan.

Dave:
Let’s do it. Let’s get Meredith on. I just, I have some questions here. What do you think, Brian? ?

Brian:
Yeah, I, I read the article and, uh, yeah, I’m, I’m agree with Kathy. I don’t think there’s any chance this is gonna happen. You know, one of the theories of the article is that, you know, people that, she says this, uh, notes say Baby boomers, she said people over 50 are gonna be downsizing and put their homes on the market. Well, I got news for you. You know, the, the medical technology is improving and 50 is the new 40. And, uh, I’m, I just turned 55 this month and the house I moved into a year ago is triple the size of my last house. So if, uh, if, if they think that, you know, 50, mid fifties are downsizing, I think they have it wrong. The other thing is, like I mentioned earlier, there’s a lot of people with really low interest rates. And are you gonna downsize your home with a three and a half percent mortgage to get a smaller house with a six point half percent mortgage and have the same payment? I just don’t think that’s really gonna happen. So, uh, no, I, I don’t buy this argument. I’m afraid. ,

Dave:
I just, yeah, I, I feel like someone basically typed into like chat GBT, they were like, come up with a click bait article about how just that will inflame people about the housing market. And it was just like this random hod podge of ideas to put, put together to claim that the housing market’s gonna crash. So, no, I’m not buying this one. All right. Well, Kathy and Brian, thank you so much for joining us today. I really appreciate it. I know that publicly making a forecast and predictions is not that fun, but it’s fun to listen to. And so , we’re glad that you came to talk about these things ’cause I do think it’s helpful, at least for our audience to hear how you’re thinking about these things. And I would encourage everyone here to make that your main takeaway because obviously none of the three of us know what’s going to happen.

Dave:
But we all study the markets, look at trends to try and make sense of what high probability outcomes may be in the future. And I think encourage you all just to remember that try and make decisions based on the most likely outcomes, even if you don’t know exactly what’s going to happen. If you wanna connect with either Kathy or Brian, we will of course put their contact information in the show notes below, or you can connect with them right on biggerpockets.com. Thank you all so much for listening for BiggerPockets. I am Dave Meyer, and we’ll see you soon for another episode of the BiggerPockets Real Estate Podcast.