Top Three Videos – March 1, 2024

Housing Market Overvaluation and Potential Correction

• Home prices remain 30 to 40% overvalued from their long-term norms, despite a collapse in buyer demand.
• The 13-year average of inflation-adjusted home prices in America shows that we are still in a massive bubble on prices, 80% above the long-term average.
• The exponential rise in home prices deviates so far from historical norms that waiting for a correction is the rational choice.
• Home prices in certain cities like Austin, Texas are already down 17% from peak in just a year and a half, indicating a potential correction of 30-40% in the housing market.
• If prices go up way above the growth in income historically, it’s not a sustainable situation and either prices need to go down or incomes need to go up.
• The number of single family units actively under construction is a leading indicator of the economic cycle, with a potential 30-40% correction in the housing market.
• Nick Gerli believes the housing market is 30 to 40% overvalued, calling it the biggest bubble of all time.
• “I think it’s within months. I think it could be before the election. It’s risky to predict that. But that’s what the tea leaves tell us and Cycles tell us and history tells us that all bubbles burst.”
• The housing market correction could be as high as 30-40%.

   

Economic Indicators and Influences on Housing Market

• Property insurance costs have gone up 50% in Florida and insurers are dropping out in California, theoretically reducing demand and increasing supply, yet home sales are at the lowest level of all time.
• “To hear that the work is starting to dry up for contractors is a really interesting potential leading indicator of where things are going economically.”
• “The stock market has to have one more vertical move and then it rolls over and crashes, all bubbles end in crashes.”
• The dramatic lowering of interest rates through QE and the artificial push down by the FED printing money had a significant effect on lowering the price of a home by lowering the cost of a mortgage.