This episode has been slightly edited for readability

(00:03) [Music] Welcome to the Deerwood Realty YouTube channel. I'm John Schink, founder and managing broker of Deerwood Realty in St. Louis, Missouri. I saw this article today, and I almost can't believe it. They say all real estate is local, and I've seen in my own market that things have still been pretty strong for sellers. Prices have continued to go up even after we had the terrible 8% 30-year fixed mortgage rate maybe two, three weeks ago. So, when I saw this article, and everything I've seen from the national perspective said home prices have generally continued to go up, I was really surprised. It's on Point 2 Homes, which used to be a website builder for agents. Let's see what it has to say. It says, "Property values in freefall: Owners who struggled to buy last year have been bleeding money." So far, single-family homeowners lost up to $223 in value every day for the past year, totaling $81,300, while condo owners lost up to $122,500 or $336 per day.

(01:42) Whenever I help someone buy a home, I always say you shouldn't be looking at this as selling it a year from now. You need to look at it like maybe a five-year investment. Even if house prices go up, you've still got the commission to pay, and you're not going to make any money off of the sale right away. That almost hasn't been true for the past three years. That's how strong the market is. I've been watching houses that sold early in the pandemic still manage to clear the previous high price and pay off the commission to the agent. It's unbelievable. During the time that people ask me about houses, I always look at the property history. If I see a house just going up for sale and it was just sold the year before with no improvements made, and I see like $150,000 extra added to the price, I tell my buyers this is just dumb; we can do better than this.

(03:02) I'm surprised this could happen now and hasn't been the case for the last three years. Some brave buyers decided to take the plunge despite historic high mortgage rates. They jumped at the opportunity to buy in a desperate now or never attempt to finally become homeowners. Fast forward to September of 2023, and all they really got was homes that are losing values because of the year-over-year price drops in many of the largest US cities. New homeowners would have to sell their homes for less money than they bought them for. This is what the article says; it's not what I've seen in St. Louis. It could be different. I've seen little things about Phoenix, Austin might be a place where property values have gone down a bit.

(04:03) Zooming in on the year-over-year changes in condo and single-family home prices in the 100 largest US cities, 02 analysts discovered that price corrections are pummeling condo owners in 36 cities and single-family owners in 25 markets. Single-family homeowners in these cities have been losing up to $223 in value every day since they bought their homes last year, while condo owners have been bleeding even more money. The average San Francisco condo owner lost daily would add up to a total of $122,500, which is partly close to the city's median income. It's an odd measure; what relevance does it have between the two?

(05:02) As mortgage rates choke buyers' attempts at homeownership, home prices ground to a halt in many cities and are dropping fast in others. In fact, it's the markets that rose the fastest that are now entering correction territory at the highest speed. This could mean that the buyers who were determined to secure a home at the height of the pandemic buying frenzy are now feeling the market's one-two punch, first by overpaying and now in home value loss. Falling prices are affecting condo owners in 36 cities and single-family homeowners in 25 cities. In 15 of the largest US cities, it wasn't just the condo owners or just the single-family owners that saw their homes lose value; it was both.

(06:01) If you're buying a home for the perfect investment, I don't think that's a good plan. If you're buying a home to live in it and not have to pay rent and try to build equity over time, I think it's always a good time to buy a house. If you feel like you need to buy a house, I don't ever feel like you should be forced into buying a house. In 15 of the largest US cities, both single-family and condo owners are on a downward spiral. The year-over-year decline is substantial enough in some cities that it poses a risk of negative equity for homeowners who bought a home last year.
(06:43) The biggest bust in 15 cities: both single-family and condo owners are on a downward spiral. In Memphis, New Orleans, Detroit, Oakland, San Francisco, San Antonio, Colorado Springs, North Las Vegas, Henderson, Nevada, Austin, Texas, Honolulu, Hawaii, Nashville, Tennessee, Jacksonville, Florida, Chandler, Arizona, and St. Paul, Minnesota. The housing market started slowing down after the unexpected COVID-related effervescence. The successive mortgage rate hikes put buyers to the sidelines, and prices started a correction road. This double blow market means that most of the newly minted homeowners were first hit by the highest home prices in history, only to be cut off from building wealth by the current falling prices.

(07:32) I don't see any joy in someone losing a tremendous amount of value on their home. If you live in one of these cities where they're experiencing rapid declines in home prices, maybe you have a story. Put it in the comment section below. With that, I'm going to head out. Thank you for watching, thank you for listening, and I'll catch you on the next one.