Debunking the Southern Housing Market Meltdown | 1-Minute Market Update w/ Martin Perdomo

Is the southern housing market on the brink of another meltdown? This week, we tackle this pressing question with none other than Nick Gurley, CEO of RE Venture Consulting. As mortgage applications show a slight uptick from last week but remain significantly lower than last year, we dissect the surge in home searches and what it means for potential buyers and sellers. The median home price has reached an unprecedented $397,582, with new listings up by 7.3% from last year. Despite these numbers, homes are sitting on the market longer and fewer contracts are being signed, signaling a notable shift from the pandemic-era frenzy.

Nick Gurley warns of a possible housing bubble, comparing current conditions in states like Tennessee, Georgia, and Florida to those before the 2008 crash. However, not everyone is sounding the alarm. Mark Fleming from First American Financial Corporation and David Linger from REMAX provide a counterpoint, arguing that the supply-demand imbalance and potential demand surge when mortgage rates drop make a significant price dip unlikely. We also explore the broader economic implications for the southern states, particularly those reliant on construction and tourism. This episode is packed with critical insights and expert opinions you won't want to miss.

Transcript

Speaker 1: 0:01

Are the southern states facing a housing collapse? I'll talk about that in a minute, so before that, let's take a look at this week's housing data. Today is July 12, 2024, and this is your weekly real estate market update. This week, 1% of folks are submitting mortgage applications than last week. That's a small win, but compared to last year at this time, there are 13% fewer people applying for mortgages. Also, searches for homes for sale went up 17% compared to last month. Basically, more people are swiping right on the housing market, but compared to a year ago, searches are down 14%. That's not quite as hot, as crazy as the market was in the last few years. So lab people are window shopping for houses now, but it's not quite the same frenzy as it's been right after COVID.

Speaker 1: 0:57

Moving on to prices, the median price to snag a house right now is a whopping $397,582. That's flat point, 7% more expensive than last year. This price is the highest it's ever been and it's been going up faster than any point in the last four months, which is really interesting, as inventory is going up. Speaking of prices, the asking price for houses is currently at $406,000 even, which is the lowest it's been in the past three months. There might be some deals to be found if you're patient and keep looking. So there's a difference here, guys. The median asking is $397,000 and then the average asking price is $406. So if you were to buy a house right now, your mortgage payment would be $2,742, a mortgage at 6.5% interest rate. It's a big commitment, so make sure you're ready to pay up before diving.

Speaker 1: 2:00

In this year, fewer people are signing contracts to buy houses compared to last year, down by 3.5%. This means there might be more houses sitting on the market and potentially more options to choose from if you're looking to buy. Speaking of inventory, new house listings are up 7.3% compared to last year. This means you might have a wider selection of houses to choose from if you're cycling right on the idea of buying a place. Lastly, the median time a house sits on the market is 32 days, which is four days longer than last year. So it might be a bit more effort to find a buyer compared to the hot market we had in the previous few years.

Speaker 1: 2:46

So again, strange market. This is what Redfin is telling us. That, as it pertains to the data, it's a really strange market. Rates are coming down. That's why we see mortgage applications spike up a little bit. We'll see where this goes. I think we're going to see a couple of rate cuts this year. I think we'll see one in September and then we might see one in October, a couple of rate cuts. When that happens, it's going to be a frenzy again. I think the market is going to heat up all over again. This has to happen. It's what happens in real estate. The market is cyclical. It goes up, it comes down, and here's where we are. We're in a slower market right now, but that will change when interest rates change.

Speaker 1: 3:23

Looks like the For sale signs are popping up everywhere as new home construction booms, but demand cools down. Nick Gurley, ceo of RE Venture Consulting, warns of a looming housing bubble, pointing to the record high number of new homes for sale. According to Gurley, home prices in states like Tennessee, georgia and Florida are significantly overhauled, leading to a sharp increase in available homes. This situation mirrors the pre-2008 housing crash conditions, with months of supply metric, which indicates how long it would take to sell all available homes at the current sales rate, rising alarmingly. However, not everyone shares Curley's pessimistic view. Mark Fleming from First American Financial Corporation and David Linger from REMAX believe that prices won't drop significantly due to the ongoing supply-demand imbalance and potential future demand when mortgage rates decrease. Despite price cuts and rising inventory in some areas, prices in many southern cities remain high. While some cities like San Antonio and Cape Coal have seen health values drop, others like Austin and Myrtle Beach have experienced only minor declines. Jell insists that the region's economy, heavily reliant on construction and tourism, could face significant downturn, especially if remote work continues to decline.

Speaker 1: 4:57

First of all, nick, I watch this guy's content and I check him out. He has been wrong for the last three years. He has good data, but his interpretation of the data has been totally off basis. Nick, every time you go on your channel and, by the way, I watch your content, but I watch his content for the data, not for his energy and his advice. He's very pessimistic. He's been absolutely incorrect. For the last three years in a row, he's been calling a crash a crash, a crash, a crash. He's been wrong. So I am siding on the side of being a little bit more optimistic, because it's we still have a. While he is right, there is a decrease in values going down in down south. Absolutely, we are seeing values coming down.

Speaker 1: 5:45

I don't know that we're going to see a crash in the south, because I believe when the rates come down, we're going to see the man shoot up. And remember, guys, remember this we have six to 10 million depending on who you talk to six to 10 million new immigrants that migrated into the United States of America. We have to house those people. So think about that recipe. It's just kind of common sense for me. We can have all of these crazy things happening in the market right now, but at the end of the day, when those rates click down a couple of notches and, by the way, this week Mr Jerome Powell was testifying in Congress and he didn't indicate that he was going to lower rates, but what he did indicate that we were in the right trajectory and we had the right momentum to getting to maximum employment and the inflation number where they wanted it.

Speaker 1: 6:36

So here's what's going to happen when they do lower the interest rates. What will happen is that buyers are going to come back in the market. Why? Because we have a shortage of home and we have a high immigration population that just moved in, moved into our country, that has to be housed, and that's going to create a problem. Maybe it happens this year, maybe it happens next year, but one thing's for sure is that is going to happen. It's just simple arithmetics, guys, simple math. Inventory is still at an all-time low. We have a bunch of people that moved in. That's going to create crazy demand.

Speaker 1: 7:12

Then you put rates. Then you lower rates. They're going to have to lower rates, guys. Right, they're going to have to lower the rates. Then you lower rates. Boom, there you go. Recipe for another boom. It's coming. It's just a matter of one. Will it be next year or will it be the following year? But it's coming. I don't see a crash. It's just there's too much we have our population blew up too much in the last three years for us to see a crash. And this has been your weekly real estate market update. I'll see you guys next week. Peace out.