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thank you good afternoon I saw this article and I thought should probably do a video on it I'm going to do a little bit more of a deep dive than I normally do on on stuff and we'll just see how it goes let's get straight to the article the headline home Inventory is climbing even faster than this time a year ago and to me you know this isn't like a real big shock this isn't something to be concerned about because we've had I mean over the past two or three years I mean we've had a great market for sellers okay and we're kind of at the end it's kind of petering out now it's petering out mainly because of affordability because of you know stupid stupid High rates but they're going to get worse so maybe we'll see even more inventory uh in the future but let's get into it it says available inventory of homes for sale is on the rise in late September which is very unusual for this time of year in fact inventory is growing faster than this time of year ago so let's go over that so just at least in the St Louis Market from about the end of March to the end of August is when everybody seems to list their house and where everybody seems to move and then it starts getting slow in September and then throughout you know up until the end of March things are kind of grim the stuff that gets sold during this time is usually like Estates is usually a job transfers and you know divorce and the inventory itself the quality and the inventory so like move-in ready stuff not nearly as much not nearly much so you know basically you look at five houses and maybe one of them is a house that you'd actually want to move into at the asking price that had been true for the for the longest time up until the last couple of years when things just went crazy this is a demand driven slowdown because new listing Supply is still running nine to ten percent fewer homes for sale each week than this time last year we're seeing fewer new sellers each week but inventory is building as homeowners or home buyers wait to see if mortgage rates will come down to make purchases more affordable so what he's saying there is that the Fed through raising the borrowing rate we're now at about 7.5 percent on a 30-year fixed that is causing fewer buyers to come to the market to make purchases that's the demand of the of the housing market being blunted by the the Fed uh fewer new sellers also means that inventory can't grow too much the real trouble develops when demand drops in Supply surges and that's what the classic crash is that everyone tells you is going to happen I don't I don't see a crash like I don't see it I see a gradual stagnation of home prices maybe a little drop in home prices over time but I really don't see this 30 30 crash overnight I just I just don't see it and you know fewer fewer new sellers also means the inventory can't grow too much that's right the the idea is is that people are locked in at that two and three percent rate and don't want to move I mean they will not take another mortgage at this level so that's that's I agree with that normally by this point in September available inventory is declining slightly each week it's late in the summer so normally new listing volume drops as the last few seals of the the peak summer months are concluding now what's interesting to me is this is true for where I live in St Louis Missouri I don't know about Florida I mean I I don't I mean I would think people would buy houses all the time I mean the weather's great maybe not during the reigning season but again I would think that they'd always have a robust Market I would think that inventories would stay pretty stable but it's not true in St Louis I do agree with that the fact that inventory grew by nearly two percent this week and last week is telling of how home buyers are reacting to the highest mortgage rates in over two decades well it's it's kind of simple like look if I want to buy a house and what I want to buy is too expensive on a monthly payment I'm not going to buy it at that level and as much as I hate the the economy is set up this way with cheap Credit in the United States that's the way it's been I mean it's been that way since I was born in the 70s we get by on cheap credit and when it gets expensive then everybody's toast and right now it's expensive so it's a problem then it goes into the pending home sales continuing like new pending sales each week continue to run 10 to 15 percent below last year's pace if you follow the National Association of Realtors when they publish their existing home sales report each month you know that the latest report for August showed a sales pace of only 4 million seasonally adjusted annual home sales so um it should not be a surprise that pending home sales have slowed okay given the rates it also is an unsustainable I feel like it's been on sustainable for the past two years to have the amount of growth we've had in pricing and in payments uh just could not go on forever and I think now we're starting to see the results of that we can already see in the in the Nar data that there are no signs of improvement for the sales count through September and October the home sales that are in contract now will close mostly in October and it's not hard to imagine that next month's seasonally just home sales data from Gnar will come in under 4 million so you know a lot of people are having fun online showing like how many real estate agents there are per houses listed and it's ridiculous and it also shows how many real estate agents there are in the United States that's also a ridiculous number as as agents as the supply of homes to sell is less and less there will be fewer real estate agents I knew this I've planned for it it still hurts the wallet but I suspect for the next two years or so not going to be nearly as many calls as I feel that in the past two years and and that's just the way the economy works unfortunately there are now 344 000 single-family homes in contracted close in the next couple of months that's 14 percent fewer than last year and almost 30 percent fewer than September of 2021. again it was going to happen at some point home sales are limited by the decreased demand of course and they're also limited by the various low supply of new listings you can't buy what's not for sale and this goes to my argument that was in a video previously that look if you're going to build single-family homes for rent you're not increasing the home supply okay because people can't buy them they can only rent them and it does not do anything to solve the supply problem we've been talking all year about Market being Supply constrained right now sales are limited by declining demand from still climbing mortgage rates so that's that's his feeling I'm not I'm not against I mean the mortgage rates are a problem now it's I'm not one of those people that says look just drop the mortgage rates and everything's going to be fine I think that there's kind of some structural damage in the economy and we're we're going to get hit no matter what uh I I cannot see the level of credit card debt continuing especially as they raise the rates because the the credit card payments are going to be more Plus student loans are starting this you know this is October so they're starting again resuming for thousands of people that takes money away from the ability to pay credit cards or for new houses or for anything so it ought to be very very fascinating to see this unfold for a while earlier this year demand was exceeding Supply in residential real estate and you could measure that Demand with the price reductions curve improving each week as mortgage rates lurched over seven percent to their new eye suddenly there are fewer offers I agree with that seven percent seems to be the um seems to be the Tipping Point it just seems like once it hits seven everything kind of stopped so if you go to eight percent just think it's going to stop even more and home price reductions are climbing again with 37 percent of the market taking a price cut that's more than any recent year except last year at this time which is kind of interesting because I don't remember I think that this is a national number and I don't think this is a local number prices did not did not uh there were not 37 of the listings did not have a price cut in St Louis last year price reductions are accelerating now which pose negatively for future sales prices well I've always said look if you're going to list your house um you should price it right the chances that you're going to get multiple offers are much better if you price it right than if you price it too high human nature though that greed it just gets to people and they want to have they want to get the most amount of money that they can nothing wrong with that but they are unrealistic because they only see their house in the marketplace in a particular area and they're not really well versed in how that house really kind of compares to the others around it most the time a normal balanced Market will have 30 to 35 percent of the homes for sale that have reduced their asking price in recent months that's a normal market and you know I still think that's too high I do my philosophy has always been list that thing for what what you think it'll sell for and then go for it and I don't normally have to do price reductions so it's just I don't I don't I've never liked pricing things out of Out Of Reach for for the market I've always thought that was kind of ridiculous price reductions are accelerating now which bodes negatively for future sales prices but you know that sales prices that's not units sold so should there be a lowering of asking prices that will cause more transactions so we can see more units sold and again as a real estate agent I want transactions I don't really care about the price okay I want transactions at the at the end of the day I mean I want my buyers to get the the best price possible for the house they purchased I want my sellers to get the best price possible for them to sell the house but you know if if it's a thousand dollars either way it doesn't it doesn't really affect me it really doesn't I I just need transactions and so that four million number is very very important to me

um remember the slope of the line captures how many properties are taking new price Cuts every week and this slope is increasing now well I I'm a little bit I'm a little bit suspect because you know if you like I have this house this in South City that I've seen listed it finally went under contract today Believe It or Not they've been on the market for four months and they've cut the price sixty thousand dollars I went through the house it was a terrible house for that asking price to begin with the agent listing agent should have been shot for even proposing that but I know what happened that agent wanted to get up they were they were buyers okay they wanted she wanted to get those people into that home you know into that new home and then not worry about selling their other home now they got a 50 000 shortfall at the minimum we don't know what the house is going to go for actually it's going to be about 30 days from now so those people are going to be hurt financially by their real estate agent and bad advice what we see now is that year-over-year price gains are barely positive and that is showing the issue of supply the fact that you can have home prices continue to go up uh with with what I would call headwinds of seven percent mortgages shows that things are are wild an alternative argument could be that inflation is that one percent the effects of inflation or your purchasing power I haven't seen it put out there very often but you just got to understand how vicious inflation truly is and how bad it has been since I think it was at least man was it two years ago I was I was saying you know you need this inflation is not transitory once you get inflation it is a hard thing to contain and it just just wasn't great and the comparison is getting weaker not stronger as our current mortgage rates deteriorate there are fewer offers and those that do happen are doing at a slight discount each week last year at this time there are big prices discounts being applied so our October comparisons may get slightly easier but I sure haven't seen any signals of price strength now I did not see big price discounts I've seen new home builders discount mortgage rates but I have not seen asking price decreases and I've not seen like for materials and things of this nature for new construction those the prices those houses are still high at least in St Louis however it's important to note that while buyer demand has backed off this fall there's still no sign of any search in new Supply coming to the market and it can be very easy to focus on the negative momentum that's right unless you've got Supply coming to the market you can't have prices go down people on the fence should also know that while their competition is lessening there's no sign of an inventory flood that may be an important factor in their home buying decision so you know I showed a house this like I said this weekend already under contract most of the time if it goes under contract the first weekend it's going to be uh it's going to be at asking price or above last week I showed a house that was an absolute dog in Kirkwood and it managed to get an offer on the first week I'm I'm anxious to see what happens with that home because I believe that we'll go back uh I will believe it go back on the market it was a dump and the the fact that some agent thought that was a good good thing for their buyer to buy makes me question my profession um but you wouldn't believe so anyway with that I'm going to head on out what do you think is going on with the housing market I mean we've got a little rise in in home Inventory um and it it to me it seems like it we're all within the trends if it's not very uh it's not very you know out of whack things were going to have to come down at some point in time prices were going to have to come down and we're going to be seeing that as we go through the uh the fall and winter of 2023 with that I'm going to head out thank you for watching thank you for listening do me a favor and hit the like button or the Subscribe button or share it to your friends because I am interested in getting to 200 subscribers it would be a mental thing for me and make me happy I think I'm 17 away right now and it would just be good to be at 200 on YouTube rumble's doing great and so that's that thank you again and goodbye