 we are going to see, I believe, a flattening in prices because we are getting close to that unaffordability ceiling, which we will hit. We're also going into the fall season where things seasonally always slow down. So we are entering into a slower season throughout the year and we're bumping up against with high mortgage rates that unaffordability ceiling. So we will see things start to slow down and flatten out. They're not just going to go to the moon forever, but this is something I want to tell you if you're a real estate agent. Hey, Amen. Yeah. Moving patterns are actually holding, but home prices are weakening. Home prices are weakening, guys. Watch out now. Some of the still hottest migration markets, in part because of higher mortgage rates, but also due to the demographic makeup of those moving in. This is according to a new study from Bank of America. Take a look at the top five markets for population growth in the first two years of the pandemic, Tampa, Orlando, Austin, Phoenix and Las Vegas. These markets all saw home price gains between 30 and 50% according to CoreLogic. They're all still seeing population growth, albeit about a third as much, but prices in these markets are now reacting differently. So prices are reacting differently. So if we really look at this chart here, you'll see that the first column there shows you two years worth of appreciation. And the second column there just shows you one year of appreciation. So that could kind of seem a little, they show you this stuff really fast. And if you're just a consumer, you're not really studying data, you don't really realize kind of what you're looking at. You look at that and you think, oh my gosh, Tampa here, it went from 44 to 12%. Man, that is crazy. Although 12% is still amazing when you consider how fast interest rates went up. This was the fastest interest rate hike that we've seen in our life, let's just say. And real estate prices have survived this. And it's because of the regulations that the government put on lending after 2008 that really created a cushion for the fall of the next real estate crash, which is what we're experiencing. This is the crash guys. This is it. We're there. We're going to have about the same amount of transactions in the U.S. as we had in 2008. This is the crash. The reason we're not seeing and won't see a price crash is because of what they did with the mortgages. Thank you for doing that. But this chart can be a little misleading when you think about this is two years and this is just one year of data. Now, when you look at Austin, Austin's down 0.2%. Now, later in this video here in just a second, I'm going to dive into the actual data of some of these specific markets that I can really show you what's really going on in these specific markets. So let's continue. Last year, even as mortgage rates doubled, home prices remained strong in Tampa and Orlando. But Austin, which still has positive population growth, saw prices fall. Vegas and Phoenix saw much smaller price gains. Why? Well, demographics and home building. Austin's inflow is largely younger Americans, many of whom are either renting or buying less expensive homes. Compare that to Tampa and Orlando, where wealthier baby boomers are heading, boosting prices. There was also heavier home building in Phoenix and Austin, leading to more supply, which always tempers prices. As for cities with the big pandemic outflows, well, New York, Boston, San Francisco, San Jose and Seattle. Now, look at this. Even the towns that had outflows, people that left, people that left because of the pandemic or whatever was going on politically or whatever the reason was, people that left towns, we still saw a massive, I mean, let's think guys, 13% over two years is incredible for New York. 18% in Boston. For people to be leaving like they were, and to see this kind of increase, even over a two year period, is absolutely phenomenal. And again, this chart shows you two years on the first column and one year there on the second column. And when you look at this chart, you think, oh man, San Francisco, prices are negative. You see 5% down right there. San Jose prices down 6%, Seattle down 4%. So when you look at this, you just automatically think, especially as just a consumer that doesn't study real estate data and all that stuff, you look at this and number one, you think, wow, like Seattle, for example, it's up 36%. And then you see down 4%. Well, your brain doesn't even register quick enough to realize that 36% is over a two year period. And then the 4% is year over year. So let's actually dive into this. Let's look at the charts for some of these markets just trying to show you the reality of what's really happening. So let's start with San Francisco. They said that it was down 5%. However, when you look at where we started on the year, we started at 1.3 million on the median sales price in San Francisco. And now we're at 1.525. We're up over 200,000. And we're about to. We're just a couple of ticks away there from going positive year over year, which is going to happen. Now, what they said was that we were down 5%. According to Redfin, we're only down 3%. But this is more up to date than Core Logic, which is what they were going by. So we'll give that to them that it was probably 5% whenever that data came in. But we're much closer now and we're definitely up on the year, guys, from 1.3 to 1.5. So when we see these charts that we see on the news and it says San Francisco down 5%, that's year over year. That doesn't mean that prices aren't on the upswing. We are up 200,000 median prices since January 1st. Now, we are going to see, I believe, a flattening in prices because we are getting close to that unaffordability ceiling, which we will hit. We're also going into the fall season where things seasonally always slow down. So we are entering into a slower season throughout the year and we're bumping up against, with high mortgage rates, that unaffordability ceiling. So we will see things start to slow down and flatten out. They're not just going to go to the moon forever. But this is something I want to tell you, if you're a real estate agent, we are going into the fall season. It's right around the corner. And if you're not buckled up right now and putting your foot on the gas, if you're doing better than you did last year, and I know a lot of you are doing better than you did last year, don't let up right now. Don't get comfortable. Don't think this is the market because it's going to slow down. And when it slows down, you're going to wish you would have really been pushing hard now to build that pipeline of prospects that might want to buy herself. If you're struggling or even thinking about getting out of the business and you're still trying, you're still in there, you're still trying to make it happen, you better really wake up because if you think it's hard right now in the heat of the season and when things are the best throughout the year, just wait to the fall, it's going to get worse. So I just want to give you a little, so I just want to give you a little, so I just want to give you a little, so I just want to give you a little motivation right now to get out there and really push hard if you want to end the year strong and start 2024 out really strong. Okay, let's dive back into this data. What was another market they had? San Jose. All right, let's look at San Jose, San Jose, same thing, started at 1.277 and now we're at 1.496. We're literally up 200,000 there and we're positive on the year 2%. They had us down 6%, which is probably what the core logic, the two month lag data comes in at because we were negative year over year right here, but we're positive year over year right now baby and we're up 200,000 on the median price. So prices are on the rise. The next one that they have with Seattle. Take a look at Seattle. We started out at 700 and we are at 802 right now. We are up baby and we're about to have positive year over year. Like I said, it's going to level out. We're going to see this little rainbow shape. We'll see where we end the year going into the slower season and everything, but we are on the upswing guys. We're not on the downswing. We're on the upswing. So let's continue. In the first two years of the pandemic, prices there gained, despite the outflows, likely because of low supply. And last year, those markets still lost population, but prices held positive in New York and Boston, but they went negative in the other three. That's because pre-pandemic prices in the West had overheated so much that they just had harder to fall. There's also less supply in those Western cities. Amen. Diana, thanks now for more on the health of housing. Our next guest is giving us an exclusive preview of their housing report coming out Monday and it shows affordability isn't improving. So for more on that report, let's bring in Andy Walden of Black Knight. Andy, what did you guys find in that report? I think this adds another wrinkle to what Diana's talking about, because once we look at May data, our latest home price index, what you see is some really strong firming, and I would venture to say heating out there and housing market almost universally. So those markets that Diana was talking about, your West Coast markets that had seen been seeing prices fall, they're now firming up as we move into the summer months on a lack of inventory. Diana, you were talking about this earlier. This is seven percent mortgage rates. I wonder who the buyers are then in all these different markets who are able to take on that kind of debt? Well, it just means whoever has that kind of money to put down, or if you're not using a mortgage at all, which we're seeing an actual rising share of home buyers are going all cash because they want to be competitive. But look, you know, yesterday we had the CEO of Compass on and he said seven was the new normal and that was fine. I got to say I don't really buy that. I think when it comes to affordability with higher home prices and mortgage rates now over seven percent, there simply is a line where some people either can't afford that monthly payment or they're not going to qualify at that rate. Andy, what do you make? Yeah, absolutely. And that's what I'm talking about. We're going to hit that ceiling of unaffordability where debt to income ratios don't make any sense because when prices get so high and mortgage rates are still over seven, then we're going to hit that ceiling. And that's when I really believe we're going to see this price leveling. We're going to see the fall season come into play and you're going to wish you had your foot on the pedal the whole time really preparing for that little seasonal downturn that we're going to see. But this is what's very interesting here. All right, let's keep watching. Think of what Diana was reporting earlier, this idea of demographics and migration patterns post pandemic really shaping the housing market for years to come. Yeah, I don't know about years to come, but absolutely it has the last couple of years, right? And you saw this big inflow into those markets you saw as Diana talked about. They overperformed the market significantly with this outside money coming in. And now you're seeing those markets more reliant on local market income. And as Diana talked about, if you look at rates getting up to seven percent yesterday, according to our optimal blue data, home affordability just hit its lowest level in 37 years. We're past where we were in October of last year. So to your point of demand out there and who's buying, I think you're going to continue to see a lot of downward pressure on demand. It's just this lack of inventory that continues to hold prices where they're at. And what's going to convince people to actually sell and produce more inventory? Yeah, I mean, that is the key question, right? And sellers have shown no inkling of returning back to the market. Those existing homeowners that are the lifeblood that drive 85, 90 percent of all listings continue to back away and back away and back away this summer. And even when we saw rates get down to six percent earlier this year, you did not see any semblance of them returning. Now, the one place that we've seen some bright spots is the new build. We saw an overperformance in in May. We still have a lot of units under construction. So that Yeah, but new build is not going to get us where we need to be. New construction is not new construction has been behind for more than a decade and a half to the population growth. So what we're not going to new build is not going to get us where we need to be. We need existing homeowners to get off the fence, right? That's always been about 80 percent of the inventory. And we're down 30 percent new listings from existing homeowners. And like he said, when interest rates got down to six, they did touch into the six range, they even hit into the high fives for a second. We didn't see that influx of existing homeowners hit the market, right? So it's going to take something even lower than those high fives to get some of those existing homeowners off the fence. I'll tell you this, though, that is a brewing pent up demand situation because you've got a lot of homeowners, existing homeowners who want to move, who may even need to move. They just are forcing themselves to stay. They fill a handcuff there with their low rates and every single day that need to move or that want to move is growing and continuing to grow and grow and grow. And it's going to get to a point where something breaks and these people just have to do it. Their family has grown, they got a new job, they did whatever. And they're going to get to the point where enough is enough. And it's going to be when rates come down to whatever that's going to be five, five and a half over the next couple of years. And that I think is what's going to really level out this, this inventory problems, getting rates back down into the low fives. And that's when we're going to see the existing homeowners jump off the fence. And until then, we're just not going to have much inventory and home builders are going to continue to just crush it look like they are right now. That's the only spot where you can see some inventory coming to market and that's going to be a big player as we move forward. But the distress inventory foreclosure levels, delinquencies at near record lows, foreclosures, delinquencies, near record lows. And this is Black Knight. This is a company that really watches the data there on the pre foreclosures and the foreclosure market and everything like that. We are near record lows when it comes to foreclosures. We're not going to see the inventory push from the foreclosure side. It's going to come from existing homeowners and that's going to be directly related to mortgage rates. Let's get it. Existing sellers unwilling to sell. So, it's going to have to be those new builds. I just don't think there's enough volume there to return us to normal. Andy, we just have a couple of seconds left in the show, but I do want to get your thought on what could break that log jam. Is it just build, build, build? I mean, I think that's part of it. I think you're going to see the more pressure put on the Fed to keep rates high for long. And I think you're seeing that the market kind of realized that over the last couple of days with bond yields and 30 rates holding high. I think it's going to be continued Fed pressure and absolutely building is going to be a component of it. I just don't think that's going to get us all the way there. We're going to get us there. It's not going to get us there. New building is not going to get us over that inventory threshold. So, he asked the gentleman the question straight up, what's going to create that situation where we get out of this deadlock of existing homeowners wanting to sell. He asked them twice if you watched the video there. He asked them twice and he just can't answer the question. Nobody has the answer of how we're going to get inventory into the market that's much needed to really balance prices out. Now, prices are going to balance out naturally, organically because of the unaffordability, but that's not going to bring prices down. It's just going to level them off. We may see a slight little normal seasonal decrease in prices throughout towards the end of the year. That's just normal, but we're not going to see that massive crash that some people say is going to happen. And I guess for some reason some people want to happen. But nevertheless, I wanted to do this video because I saw this and I thought, man, if I were a consumer that didn't pay attention to real estate and I saw those charts, I would think, oh my God, you know, San Francisco prices are down. They're negative and they are down from the peak. They are, but they're on the upswing. Are they going to level out from here? I believe so. I think they're going to go up a little more and I think we're going to see that leveling. We may even see a slight downturn through the season and then pick back up for 2024. So anyway, I hope this gave you a different perspective when you're watching the news to go out there and do your own research and find all this out on your own. I'll see you on the next video. Let's go.