 They're going to come out and say, here's the crash I've been talking about. It's getting bad, it's getting bad, it's getting bad, and it's not. If you're an investor and you want to buy a little bit lower, maybe wait a little bit. If you're a buyer, you know, buy lower, maybe wait a little bit. What's up, everybody? So we could be seeing some relief finally with US home prices very soon. Let's hear from the chief economist of Zillow, Skyler Olson, right now. And then I'm going to break this thing down for you. Here we go. Joining us now, Skyler Olson, Zillow chief economist. How is this possible? I mean, homes were already so expensive and then mortgage rates going up. Is it just the lack of inventory? You know, that is, you know, a big, huge, massive part of the picture. You know, when we talk about less homes coming on the market, fewer homes coming on the market, now then say pre-pandemic, we're talking 30, 39 percent down just last month. So the forecast that we've recently updated is we think home prices could grow as much as 5 percent over the course of 2023. Only two months ago, before we saw these radically low new listings numbers, we were forecasting something much more like 1.2 percent, something small. Now, 5 percent, that's on the hotter side of steady and stable. How much risk do we have in the market now with affordability being so low? People are taking, they're spending more of what they're making on housing, and employment's pretty high, but it doesn't always stay there. Yeah, you know, risk is an interesting kind of thing to think about even in this situation. I think because the existing homeowner has access to their pre-existing low mortgage rate, they've fixed it in for decades. For many of them, 70 percent of mortgage homeowners have a mortgage rate below 4 percent. That's a low risk environment. They've got financial stability. They've got lower monthly payments they can afford to save. They do not want to give that up and move on. That's what's keeping the new listings back so much. If we think about from the perspective of a first-time home buyer or a hopeful first-time home buyer, in other words, a current renter that wants to move on, they're experiencing much higher rents than last year. Rent probably takes up around 3 percent more of a median household income. That's a good reason to push forward. So there's low risk that home values will fall. And actually, when we plug in our numbers and run scenarios in our forecasting model, we can really turn mortgage rates up. And it's very hard to get prices to fall because of what we watch new listings do. We're in an environment right now. This is challenging. When I hear you talk about that with rent prices, I think about those rent prices and those shelter costs, how big of a portion of CPI they are. We have these conversations on our air constantly that that portion of CPI, that data factors in on a lag defect. And it's part of the reason why market polls have been saying, hey, listen, disinflation is happening much more quickly than the data is suggesting. But when I hear you talk about high rent prices, it doesn't sound like that's the case. Has rent turned higher? Yes. Well, let's put it, often we have to get pretty specific when we talk about what is happening. So rent grew incredibly quickly over the course of 2022. Then we saw it slow down certainly in the first quarter of this year. Now rent is growing slower than a pre-pandemic place. So the pressure is off of a lot of rent markets. That's also why we've seen multifamily permits suddenly come down. But that does not mean rent is falling anymore. Rent has continued to grow. I think in terms of those kind of overarching rent inflation numbers, I think what we're seeing there, or we can start to anticipate, is that it's a bit of a good sign, not as much of a good sign as I would have wanted to hope in order to get really good confidence that inflation is going to come down. And we can finally get a break on mortgage rates, but it is something less pressure than maybe pre-pandemic. Unlike U.S. home values, the home value picture in those 12 months, that's hotter than pre-pandemic. It's pretty extraordinary. Now the interesting part about that interview is that Zilla revised their home price forecast. They originally said here a couple months ago even that it was going to be around a 3% increase this year, and they upped that to 5%. They went up on it. However, that is still down from where we are right this second. If we go to Redfin data right here, we can see that we are up on the year. We started around 350, and now we're right up here above 380. And so we're up quite a bit. We're up quite a bit more than 5% right now. So what that means is that they believe home prices are going to drop some, and so do I. If you guys have been following me and paying attention to what I'm saying, you'll know that back in April 28th, 2020, I said we're about to have the largest real estate surge that we've ever seen. December 26th of just last year, I said we hit the bottom for prices, and I was a little early for that, but I was only about a month early. We did bottom out in January. And then January 12th on stage in Vegas at the Tikes Summit, I literally said we're about to have a surge, and that's what we had. We had a surge where prices increased from that point. And then here more recently on May 10th, I put out a video and I said, not only are we going to go positive year over year price-wise, but we're going to hit a new all-time high. So I have a track record here of predicting these things, and it doesn't take a rocket science. The real estate market moves really slowly. And if you've been doing this as long as I have, 21 years now, and I'm still learning, I'm still gaining experience, but I've been through a lot of cycles. And I can tell you we're moving into a slower time of year. One reason why we've skyrocketed lately has a little to do with the fact that it's the time of year. We normally have a really great spring and summer, but it has a lot to do with lack of inventory. There's always going to be buyers who need to and want to buy houses. We haven't gotten inventory above the level of the buyers who need houses, much less the ones who just want houses and can't afford them at the new prices. But what I want you to really pay attention to here is home prices over the next, just to say through the end of the year, right? If you look here, we have home prices from 2000 to not all the way present day, but somewhere close. And you can see right there, every single year prices go up, and then they come down. They go up, then they come down. So we have this seasonality to the business, right? Prices up, down every year, right? Let's go back to the chart just so you can see the visualization again. They go up and down every single year. So this year is going to be no different, okay? We also have fewer, fewer sales in the fall, right? We can see that here on this chart. This is, these are sales for the last three years. We can see it starts out really slow. It bottoms out somewhere in January-ish, February-ish. It rises up, it peaks out somewhere mid-year, and then it kind of drifts down a little bit. I believe that we are going to see the same thing this year. We're going to have a very slow fall like we normally do, but it's going to be extra slow because we're having a slower year. We're down 20 to 30% transaction-wise, depending on what market you're in. That's a big chunk. Now, it's not all of it though. See, what you have to realize is that we still have 70% to 80% of the same amount of transactions, even in this very high mortgage rate, escalated really fast, faster than ever probably, and we still have 70%, 80% of the same amount of transactions. You can see this is glass half empty, glass half full. My point with all this is this. When we see sales start to drop like they do every year, when we see prices start to drop, like what's going to happen, like we see every year, what I don't want you to do is to get caught up in all the other YouTubers that have been calling for prices to crash 30% for the last three or four years, and it never happened, who are still saying it's going to happen, it's going to happen, it's going to happen. When this seasonal downturn happens, they're going to come out and say, here's the crash I've been talking about, it's getting bad, it's getting bad, it's getting bad, and it's not. It's just the normal seasonal cycles of the year. That's all that we're going to be running into in a much slower year than normal. That's all this is going to be. So please don't get caught up in the hype of, this is the crash I've been talking about, don't get caught up in the media with prices are down month over month and stuff like that because this is just totally normal. Now, are you going to listen to somebody and listen, I'm not going to sit here and say, I'm right, I'm right, I'm right, because I'm going to be wrong more times than I'm right. I just take really well educated guesses, and this is moving in slow motion. It's not hard to see where everything's going. That's why right now I'm saying, hey, prices are going to drop a little in the fall. We're going to have less sales because it happens every year. It's nothing to be alarmed about, but what you need to do if you're a real estate agent is go all in on your business now, build the momentum going into the fall. If you're an investor and you want to buy a little bit lower, maybe wait a little bit. If you're a buyer, you know, buy lower, maybe wait a little bit. And what I believe that a lot of mortgage people said that mortgage rates would be around five right now. A lot of them are predicting that we would be around 5% right this second. And one reason why I think that we're not there is because we're still in the heat of the summer, and if mortgage rates came down, it would be just pandemonium. There would be so many buyers with no inventory. Lower interest rates would bring us more inventory because some of the sellers sitting on the fence would get off the fence and jump in the game, but I don't think that's a smart move. I think lowering mortgage rates in the slower time of year to try to pick that slower time of year up is a much better way to have a soft landing than to lower mortgage rates during the heat of the summer, which just creates just a frenzy. I think that's actually, I like the way this is playing out. I do think we'll see mortgage rates ease down a little bit throughout the rest of the year, and that'll make it easier going into the fall. That'll create some activity, and everything will be all good, but please don't get caught up in the hype. What's going to happen long-term? I'll make another video on that of what I believe is going to happen and where we're going from there, but I wanted to make this video just to prepare you just so that you realize this is coming. It's going to get slower than it is. Prices, I believe, will take a little bit of a dip. If we go back to Redfin here and we look at prices, you'll see every year we have this. This is just going back for the last two and a half years, but even at this orange line in 2021, that year of the boom, the boom, boom, boom, we still drifted down this time of year. Right now, we still drifted down. Now think about that, and think back to that year and how crazy that year was. Prices went down that year and they leveled out and they came back up and ended a lot higher than they started. Last year was pretty much the same trend. It went up. It peaked out about the same time that it did in 2021. It dropped faster. It dropped harder because of mortgage rates went up so much. And then this year, we started out the same way, coming down. Even in 2021, it started going down, bottomed out the same time it bottomed out every year. And honestly, when we were here, I really wasn't predicting it to hit all-time highs this year. When we got about right here, I said, we're definitely going positive year over year because of this wall that 2022 put up for us to bust right through. And then when we got about right here, I said, you know what, I think we got a chance to go to an all-time new high based on this and what's happening out here. But you already see right here, this reading kind of went flat right there. And I believe we're leveling out and it's going to level out. I think we're going to see a downtrend a little bit. We're going to still end up the year higher. It's going to be a great year. It's going to be probably the most down year that we're going to see in a long, long time. So with that, I hope you got a lot out of this video. And it's preparing you for what's coming. And you can really take that and run with it, see what you can do to prepare business-wise, personally, investment-wise, whatever it is you're doing. If there's anything I can do to help you, put it in the comments below, message me on Instagram or whatever you want to do. I'm here to help you in your business, in your life. And I appreciate you. Have a good rest of your day.