 Okay, so I just did a lot of research to confirm that housing prices are definitely falling faster than they were in 2006. Now, I think the only debatable issue here is why they are falling faster than 2006. A lot of economists are saying that we're not gonna see that 27% price decrease like we did from 2006 to 2012 during the Great Recession, but they are saying that we are dropping off a lot steeper this time. So basically what they're saying is we're dropping off steeper, but we're not gonna go as deep as we went back then. Now, we all know about the pandemic housing boom which is what we're calling that little era after the economy reopened. Interest rates were basically nothing. 2.6% was the lowest as it got and literally home prices didn't matter at all because the monthly payments were still doable. They were still affordable. So people were jumping in headfirst. They didn't care how much they paid over the listing price. They just wanted to get a house and there was a lot of FOMO going on and that actually bled over into a lot of the institutional buyers and iBuyers. Like home partners of America owned by Blackstone who went out there and bought so many single family homes. Home builders were upping their game to keep up with demand. They actually slowed sales down just to keep up with the amount of demand that was coming through. Then you have iBuyers like Open Door for example who really ramped up their algorithmic home buying process. So you had just your average families out there who were upgrading because they wanted more space. After the pandemic everybody wanted more space in their house so they wanted to upgrade and get a bigger house. Why not? Interest rates are down. Let's go out and get a house because hey, the houses are gonna be worth more later, right? And then you had all the iBuyers companies out there who were doing the same thing. Then March 2022 rolls around and here comes interest rates and it's nothing that we didn't see coming from a mile away. And as hot as the real estate market was we definitely should have realized as a whole here that the market was gonna lose a lot of steam and we were going to be in this position where things are kind of balancing out. And honestly, when you look at this year compared to 2019, we are really close. We're a little bit down transaction wise but prices are much higher. We are having really a great year when it comes to let's just say real estate agents. I mean, when you look at the commission pool compared to 2019 we're $25 billion more than we were in 2019. So a fantastic year right now and we're just basically coming back down to average what the average has always been in terms of number of transactions and even interest rates. We're a little higher than average there but this was all very telegraphed and this is just a situation that really should teach us a really nice lesson here and a lot of people have PSTD from 2008. So there's a little whiplash here. Back then before that, the golden rule was that real estate never loses value. When you go back to the 50s and 60s and 70s and 80s real estate never loses value. Even when interest rates went to the moon back in the early 80s prices didn't decrease but the 2008 Great Recession taught us that, hey, actually the golden rule can be broken and prices can go down on housing. So everybody looks at 2008. The people that went through 2008, they're like, man, I wish I would have saw that coming and this is what I would have done differently and now that's what everyone's doing. They're preparing for worst case scenario which is in fact gonna help this be such a soft landing. Now again, back to the subject at hand here. We are, it's a very sharp downturn right this second. NAR came out with their data in September which is a couple months ago. So remember real estate data is very lag. What's happening right now is gonna be a lot different than what we're seeing in the data but prices were down 7% average across the country since the highs of July. In July the average price was $413,000 and in September it was $385,000. Now some markets have even taken a bigger hit like San Francisco for example that's taken an 8.2% decrease in price. So home prices are definitely correcting a lot faster than they did back in 2006 when things started to come down and also housing starts, new construction is down 19% year over year from September. There's a cliff that's happening in January. That's what Gene Myers, the CEO of Thrive Builders in Denver said here recently. And as far as housing starts, there was a decline from 2006 to 2012 of 80%. So housing starts went down 80% during the Great Recession but Myers notes that it was a slower turn compared to what's happening now. So that 80% decrease in housing starts was big but it was over the course of six years and we went down 19% just year over year just in the past couple months. Now a lot of the home builders still have a lot of stuff pending from earlier in the year at these higher prices. They do have a higher than average cancellation right now around 20, 25% but they're gonna have an okay third quarter or maybe an okay fourth quarter but he said where things are gonna get really ugly for new construction and these builders is gonna be in the first quarter of 2023. Now why are home prices falling faster than 2006 right now? Redfin CEO, Glenn Kelman thinks it's this. He thinks that a lot of the boom was because of the iBuyers and institutional buyers, okay? And he thinks that the reason why we're falling faster than 2006 is also because of the institutional buyers and the iBuyers. And what he's thinking there is that because of the institutional buyers and the iBuyers that are out there, they're just trying to flip properties. They're just trying to turn and burn. So he feels like and he's an iBuyer himself. Now Redfin, they stated that they have $350 million worth of homes on their balance sheet right now. And he said that investors and people that are flipping houses and these big institutions as the market has turned, they're willing to slash prices just to get out from under the inventory. And so a regular everyday seller, they're not just gonna start slashing their prices because they don't have to sell, they don't wanna sell, whatever the case may be. They're gonna supply and demand is gonna play a part in what the regular everyday seller does, but the institutional sellers, they're gonna slash and they're gonna try to get out from under this stuff. So in his opinion, what's happening here is that these investors are slashing their prices and it only takes one property, one low sell on a subdivision to affect the appraised value of all the other homes in the subdivision. So he feels like these investors and these iBuyers are responsible for part of the boom and they're also responsible for why things are falling so fast. I kind of tend to disagree here. And the reason is is because the iBuyers and the institutional buyers make up a very small percentage of the overall transactions in the country. And so I feel like that's not a really good reason why things went up so fast. Things went up so fast because interest rates were so low and regular everyday people wanted bigger houses because after the pandemic, a lot of people work from their homes, so on and so forth. And heck, it's the American dream. You wanna own a big house if you have low interest rates and you can afford the payments, why not go get a bigger home? So I think that's what drove the pricing, the housing boom. And then I think why things are falling so fast because things went up so fast and then interest rates, again, see, I think both sides of it has to do with interest rates. And now you have a combination of high, high, high prices and very high interest rates comparably to where the monthly payments have become undoable. Have Open Door, who just recently has reported that like 40% of the homes that they sold a few months were actually sold lower than the price that they actually bought the house at. So they were already taking a loss. Even when they sell the house for more, they were still taking a loss because they have other fees and commissions and rehab and everything else. But now they're actually selling them, the selling price, the contract price, is lower than what they're buying the houses for. So although interest rates have caused a historic pullback in transactions and buyer demand, we still have a problem here, ladies and gentlemen. And that is inventory. We have not found any inventory anywhere in builders with 19% down on housing starts. It's not gonna come from there. It's not gonna come from owners who are sitting on three and a half percent interest rates. Where's the inventory gonna come from? And that, my friends, lies the problem. And the way that I see this playing out is that there's so much underlying demand still there. People still want to own houses and upgrade and buy houses. We have such a huge generation coming through in their prime buying years. And I think that what we're gonna see is prices just adjust to the level where people can afford the payments. And we are gonna keep on truckin'. So I thought this was interesting. I wanted to share my thoughts about it with you. If you would, please leave me a comment. Let me know your thoughts. Hit the subscribe button if you haven't already. And we'll see you guys on the next video. Let's go.