Real Estate Outlook

Hey everyone and thanks for jumping back Into the real estate verse Today we're going to carry out a Systematic overview of many of the real Estate charts that I have on my website To get a better understanding as to Where the real estate market currently Is if you guys like the content make Sure you subscribe to the channel give The video a thumbs up and also check out The sale on into the cryptographers Premium at into the Let's go ahead and jump in so the real Estate market is honestly not something I have a whole lot of experience with in Fact I would guess that many of you are Probably more experienced in the real Estate market than I am so I do want to Come at this from a perspective of you Know trying to be humble because I'm not I'm not very knowledgeable about this Space at all okay with that said you Know at some point I think it would be Nice to to more in you know more get Into the real estate State market and That's why I have started to follow it Over the last few years Because I do find it to be an Interesting asset class up until now Throughout my investing career I've Mostly just stuck with equities and Cryptocurrencies and occasionally Commodities but for and again for the Most part it's just been equities and

Cryptocurrencies haven't really dabbled Too much in the real estate market Um other than from you know for for Personal for personal stuff so let's Take a look at some of the real estate Charts and and let's just go through Them systematically again I don't really Have any predictions on the real estate Market because it's it's honestly not Something that I've Um you know that I'm that familiar with If we take a look at so we have the Website here the macro we have a real Estate section so I just want to go Through some of them so the first one is The purchase only house price index for The United States and I'm gonna scroll Down so you can read the descriptions of These if you want to I'm not going to go Through every single one but this is an Interesting one because you can see how I mean it does just generally go up with Time Um even it even went up throughout the crash okay So the real estate market certainly does Not have to feel the same effects of of Every single crash in the stock market I Mean this was like a two and a half year Bear Market back during crash And the real estate market according to This never really skipped a beat and it Wasn't until you know 2007 2008 where it Really started to roll back over and it

Didn't fully bottom out until around 2011. okay now ever since then it Started to move back up uh you can see That it moved up at a fairly healthy Pace and then starting in you know in Really March of 2020 or so may of 2020 It just shot up I wonder why right well you know you Print six trillion dollars and people Are gonna go look for a place to invest That and the real estate market is I Mean historically over a very long Period of time it has been a great place To to invest your money doesn't mean That there's not occasional bear markets Right you can see we had a bear Market Over here and note by the way that bear Markets in real estate Can last for years you know I mean the The last real one that we had according To this chart you know last from 2007 Until 2011 but I think According to some Charts it probably lasted even later 2012. also remember that it's a very Localized thing I mean in some areas you Probably didn't even see house prices go Down that much during that time period Whereas in other areas you probably saw Them drop quite a bit so it is a very Localized thing it's not like you know The real estate market in Austin is Going to be the same as real estate Market in New York or Miami or Los Angeles or you know anywhere right I

Mean it's going to be different no Matter where you go Um one of the interesting things though Is when you look at this you can see That you know back over here in 2008 it Sort of slowed down a little bit but Then it kind of just slowly crept back Up right like it slowed down and it Almost seemed like it was gonna come Back down and it sort of did right like You can see from from June of 06 to July It actually came back down a little bit Which was the first time it had come Back down a long time but then it more Or less reversed course For another you know three quarters of a Year or so so maybe three you know about Three quarters or so it then started to Go back up and it wasn't until the Following year that it really started to Come back down very quickly one way one Thing we could do is look at a month Over month percentage change okay and And you'll see right here right there Was one month where it was negative and Then what happened right it just it Slowly scaled back up and then we saw The the the bottom of the real estate Market fall out now where are we today Because I mean today is a very Interesting time we have interest rates That are are you know I mean the FED Funds rates at five and a quarter uh we Have 30-year fixed fixed mortgages

Approaching seven percent and if you Look today what has happened you know it It scaled back some in mid last year But really ever since August or so it's Been kind of slowly trending up although Some of these months have actually been Slightly down so you could more or less Say it was down kind of went up sideways For a bit somewhere negative some were Positive but recently it started going Back up okay I mean that's that's an Undeniable Trend I mean like you know no Matter how you look at it right like the Last couple of months has been going Back up and I mean again over here we Saw something I mean it sort of slowed Down and that might have given people The impression that the real estate Market was going to roll over but then It kind of you know just kept going back Up for almost another year right not Quite but almost another year it just Started going back up and then in 2007 Um it really started to fall down okay Now remember I would say that there is some there There's some truth to the idea in my Opinion that Equities can go down and the real estate Market can churn along right just fine But I don't think the reverse is true Okay now there might be data out there To to disprove that and I would be Willing to to change my stance if if

Presented with data that did disprove That but I would be you know my sort of Thinking here and it's at least Supported by at least this chart Is that if the real estate market goes Down then equities would likely go down With them one of the reasons I would Think that is because a lot of people Tie you know a lot of their net worth in Real estate and if If the real estate market comes down a Lot then the wealth effect I imagine Would take take hold and and people will Just be less willing to invest in Risk Assets if if some of the you know if Their entire net worth has gone down a Lot because a lot of people do Concentrate a lot of their net worth in Real estate so I think you could make The case that while Equities can go down and the real estate Market not care if the real estate Market goes down I think equities do Care okay so I don't think you're gonna You're I don't think you'll typically See periods where real estate's going Down you know significantly and equities Keep going up without without skipping a Beat I mean you can see here once the Real estate market started to turn so Too did did equities okay But again recently it started going back Up if you look at the month over month Percentage change you can see we did get

You know a couple negative months right Here we had another couple of negative Months right here but recently it has Gone back up to the upside now if you Look at the year over year percentage Change that tells a slightly different Story uh mainly because you know while It has gone up some recently I mean if You if you if you look at this has gone Up some recently it's still Significantly different than the prior Trend it was on I mean the prior Trend Was basically just almost vertical you Know I mean just going going straight up Um but now this has certainly slowed Down a lot so when you look at a year Over year percentage change You might look at this in your initial Reaction and I've seen this happen on Twitter a lot as well right you see Something going down therefore you think It's Contracting that's not true right This is the derivative right it's a it's A year-over-year percentage change and So as long as it's above the zero line It's still you know the year over year Percentage change is still going up it It's just going up at a slower Pace it's Like when you see when you talk about Inflation right If inflation's eight percent one month And then seven percent the next month it Doesn't mean you're experiencing Deflation it means you're experiencing

Disinflation you have you still have Inflation right it's just inflation Isn't as bad as it was the prior month So in this case the year-over-year Percentage change is still positive from March 23 to March 22. it's just that the Percentage the rate at which it's gone Up is going the the rate at which it's Going up is going it has been going down Okay so you know at one point back in February of 2022 you can see that the Market was up you know 19 or so year Over year now it's only up about three And a half percent year over year and if It continues this trend then it wouldn't Take too much longer for it to go Negative although you could argue that It it's starting to level out a little Bit and and it it might start Um You know not it might start to to sort Of uh come into some type of a base Right it doesn't have to just go Immediately negative it could come down To these levels over here which is still Growth even if it's not Um even if it's not as high growth as we Saw once upon a time okay But that is of a a very interesting Chart to me because Um you know you can see that it started To go back up has that happened before Yeah it happened back over here it went Up for another year or so uh and then

And then the market finally started to Turn but even when it even when it turns I mean it's such a long process I mean You know this whole this whole process Here of slowing down was in February of 06 and it didn't even really get back to That point until basically February of 08 I mean it's a couple years so this Market this Market moves very very Slowly Um we can also take a look at the Zillow Home value index so if you take a look At that I mean it more or less tells a a The same story uh except for I mean if You look over here kind of plateaued Went sideways for quite a long period of Time and then slowly started to go back Down Um where is it right now right it kind Of plateaued here it went back down for A little bit it started to slowly go Back up recently if we look at a month Over month percentage change you can see That it's currently at around point Three percent or so so it's still Slightly less than probably the average Over here but it's not it's not it's not As bad as it was right it's not a Negative territory so you actually have Seen that to go back going back up as Well recently Looking at mortgage rates always Something interesting Um you know 30-year fixed latest a 6.71

Percent so you know if you think about Mortgage rates One of the reasons I think you could Argue that the prices went down at the End of last year or sorry mid last year Going into the third and fourth quarter Maybe the third quarter is because There was a sort of like people were Just shocked by high interest rates Right and so a lot of people didn't want To buy houses Um and and so the demand dropped okay But I think the issue right now for for The FED is that demand is has started to Come back some Um and it's not necessarily like insane Demand but I imagine a lot a large part Of it is just there's not a lot of Supply on the market right so the demand Isn't that high uh because interest Rates are higher but There's not a whole lot of supply and so With the demand that there is it's Sufficient to you know to keep prices Um out very you know at pretty elevated Levels uh just because no one really Wants a lot of people don't want to sell Um And who can blame them I mean if you Locked in a more you know 30-year fixed At like three percent or less then it You know it would be a hard a hard Choice to to make a move especially if You plan on buying another house because

If you're gonna buy another house and You have to go from paying three percent To paying seven percent that's a that's A big decision right you're basically Going to have the same a same the same Monthly payment for a house that's a lot Less expensive so I mean it's hard for Hard people to make that move now I Imagine there are circumstances that do Require it there's always going to be People moving for a job Um so you know there's there's always Going to be people that are going to be Selling and buying uh there could be Major life events that could be going on Or people get laid off and and sometimes People just can't afford it and so maybe They sell their house but they're not Looking to buy another one they might be Become a renter or something Um so that's something to think about I Mean 30-year fix is at is at 6.71 you Can see it's actually been trending Slightly high recently our arguably the The you know people are starting to get Used to higher interest rates as well You know one of the things I mentioned On on one of the prior videos that we Did on real estate maybe eight months Ago or so I don't know was You know I said one of the things we Talked about is how you know six or Seven percent in the in the context of History isn't really that high it's just

It's high to Millennials because we Haven't really experienced anything Different but in the context of history I mean like my you know when I when I Talk to people that are Um a generation older than me you know Getting a house and having like a 13 12 13 14 mortgage was pretty normal now the Counterpoint of course is that house Prices were a lot lower so it it was a a Bit easier to you know to to go into Something like that Um but but the rates were were a lot Higher at the time now we have really High rates and much higher prices so I It's it's of course very difficult for a Lot of people Um To to Really jump into into Home Ownership although there are some charts That suggest that home ownership Continues to stay on the rise if we look Out at things like delinquency rates on Real estate secured loans you can see That it's still pretty low okay at this Time I mean it's still pretty low it has Slightly ticked up recently but Um not a whole lot I mean you can also See that it went up slightly during crash but it wasn't really a Huge impact on the real estate market as A whole Um so nothing really too significant to Look at here and again if you look at

Say like a year-over-year change it is Starting to get close to that positive Territory which historically isn't great For markets if it were to do something Like that Um but it's not there yet and at the Current Pace uh it would still take a Few months uh just to even even get to That point even if it were even if Delinquencies were to still go up if we Look at the net percentage of domestic Banks reporting stronger demand for Real Estate phones this is one of the things That shows you how how Um How little demand there is right this is For commercial real estate I mean look At this right it's it's Dow I mean it's At negative 67.2 percent So again this is the net percentage of Domestic Banks reporting stronger demand Negative 67 right so the demand has not Been nearly what it you know what it Used to be Um but but the real estate market at This time at least a residential real Estate still holding strong I know some Commercial real estate is is starting to Get into some trouble Um if we look at residential sales the Sales price of houses sold so if we look At the median you can see that it Actually has gone down recently okay so This is um uh quarterly data right so

You can see like you know q1 of 2022 Q2 Q3 and Q4 there's a big drop from Q4 to Q1 a big drop And we don't often see major drops like That so looking at say a quarter over Quarter percentage change this is pretty Significant right I mean there's Actually in in all the data that we're Tracking here I I'm not seeing a period where the Quarter over quarter percentage change Was as low as it is right now If we look at a year over year Percentage change you can see that it's Currently at 0.854 percent Okay now there's only a few times in in In over the last several decades that It's even gone negative right I mean we Have the 19 or the early 1970s we have Over here during 1982 where it went Negative you can see that it went Negative back in the 90s early 90s and Then also of course in 2007 2008 Um and then there was a period of a Brief period right here where it went Negative in 2011 and then also of course In 2019 and and Um and you know just you know in that 2019 period late 2018 early 2019 and mid 2019. what's interesting is that Normally when this goes negative You can see that the stock market Doesn't really like that a whole lot Right when it goes negative the the

Doesn't necessarily mean that it's like A major crash by the stock market uh There's a period in 2016. Um or sorry there's a period where was It it was it was right here in the early 1990s where you know the market the Market had a a nice little correction When the real estate market median sells The prices uh price of houses sold in The United States went negative but I Mean the stock market did pick back up Once the housing market picked back up But again usually when it goes negative Um it hasn't been a great thing right Now it's not negative it's it's still Slightly positive but I imagine that it It you know next quarter this could Certain this could certainly go negative I mean this is a big drop too is when You think about I mean this was from 13.2 percent to 0.854 over one quarter So you add a couple more you know add Two or three more quarters on here good Chance you're gonna see this you know See this go negative if um if that pace Continues if we look at the new single Family homes sold you can see that Actually been going up recently okay and And maybe looking at a year over year Percentage change as actually positive Okay So from this perspective it looks like The housing market in the short term has Picked back up a little bit and there's

No denying it I mean no it could it Could go back down Um Again I'm not I'm not an expert on real Estate by any search of the imagination But I do know that there's some Seasonality to it Right I mean I think a lot of a lot of Listings go up and sort of the Springtime and and a lot of people are Buying in the spring and summer and then As you get later on into the year uh Maybe it's not as you know not as as Um popular but I don't I don't really Know I'm not I'm not that plugged into That if we look at new houses for sale Oversold ratio you can see that actually It has been coming down right I mean It's been coming down so much quickly if We look at it say a quarter over quarter Percentage change you can see that it's Negative we've had plenty of periods Where this thing was negative if you Look at a year-over-year percentage Change there haven't been as many Periods as it was negative as when you Look at quarter over quarter but do note That it has entered into that negative Territory at negative 10.59 however this Metric does not always correspond to Major drops in inequities right and There's periods where this goes negative And it doesn't really mean it doesn't Really mean anything for the equity you

Know for equities or you know the stock Market in general so not not put too Much weight to put there One thing that I I suppose you could say That higher interest rates have caused Is that the amount of months it takes to Sell a new home has been going back up So we we were at a a level of about one And a half months so and I don't even Know where that's coming from I mean I Guess on average maybe it was one and a Half months but from where I'm sitting And what I was looking out on the market Most of the um most of the houses that You were you you know you would see get Listed that were you know somewhat Decent houses were going almost Immediately but I guess there are a lot Of homes that might not be as desirable And and those of course could sit on the Market for a number of months so the Average it ended up being 1.5 here at The lowest point in late 2022 but it has Come back up and now it's currently Setting at 2.8 but if you zoom in here You can see that it hit 2.8 last month And then it hit 2.8 again so uh this is Still I mean the housing market is still You know somewhat tight in that sense is It you know the houses aren't really Sitting for very low long Um the issue is just that there aren't a Lot of houses available okay So you have a situation where you know

Demand there's still some demand even at Higher rates maybe people want to make Cash maybe people just don't care about Paying a higher higher interest rate Um but you don't have a ton of inventory And so you know we're kind of in a Sticky situation there if we look at Housing starts like housing units Started you can see that it's actually Been trending down since um you know Really since early 2022 a year over year Percentage change shows you that it's Currently negative and you can see prior Periods when it was negative here on the Chart and I mean again normally normally Risk assets don't like this but again There are periods where it didn't really Seem to matter right so you can find Examples where it did matter you can Find examples where it didn't matter There's plenty of periods over here in The 90s where it went negative and it Didn't really seem to matter much at all Okay I mean if it goes very negative Right like 2000 2009 or like in 1975 Five or in you know 1970 or so right if It gets very negative then I imagine it Would have some type of more material Effect on risk Assets in general due to Things like the wealth effect that we Previously talked about And if we look at housing units under Construction you can see that it's also Potentially found a a local top but it's

Really hard to know because you know I Suppose you could make the case that It's it's it's going to slowly come back Down last month it actually went back up A little bit so you could make the case That it's sort of in this process here The Counterpoint of course is that there Is a period back over here in the 1980s Where it sort of started to roll over Um in in 84 and then it just started to Pick back up again it didn't really Started downtrend until 86. so again That was another another two year period Where it seemed like it was about to go Down but then it actually went back up Before actually and then coming to Coming down quite a lot and if you look At a year-over-year percentage change of This metric you can in fact see that Significant moves to the downside on This do tend to correspond to recessions Okay you know you have exhibit a exhibit B and C and and so on and so forth okay So when you get when you get major moves Like this it does tend to correspond to Recessions which of course is the gray Shaded region on the chart right now This metric is currently at 0.359 Percent so it's it's in danger of going Negative but it's not negative just yet And you'll note that there are several Periods over here where I just went Slightly negative and and then the Market just sort of picked back up again

Okay So going negative isn't even really that Big of a deal it's it's if it goes to Say you know like negative 30 or Something Um that tends to be an ominous sign for For the economy in general like negative 20 negative 30 that's more of a more of An issue right now uh you know it's at 0.359 the month before it was at 2.27 Before that it was at 6.64 if you were To look at a month over month percentage Change Um you can you can see that we have had Some negative months although it has not Been that detrimental just yet and then Finally I wanted to look at this chart This is an interesting chart the home Ownership rate because it actually is Kind of interesting because it it tells You something that might not be that Obvious like in the home ownership rate Meaning uh if you're not familiar I mean It's just the the proportion of Households that are owner occupied That's actually been going up Um I mean it found sort of a local Bottom here back in in the summer at 21 It's actually been going up recently so I know a lot of people feel priced out Of homes and and not and not and wishing They could afford one uh right now home Ownership has has been back on the Rise Um so people's people have been uh you

Know still still buying homes and Whatnot and when you can see it was back In in 2004 and 2005 it was only up here At around uh 69 or so back in in um You know March of 2020 it was uh rather Our April's around 67.9 but again it's It's just still is slowly going up right Now do note that the level that it Currently is at is actually the same Level that it was at back in the early 1980s when we also had a period of high Inflation and where we actually had to Uh two recessions back to back to Actually get that inflation under Control if you look at owner's equity Level in Real Estate you can see that You know I mean it generally Trends Higher there are periods where it goes Down one of the periods where it went Down was of course back in 2007 and 2008 2009 and you can see that it bottomed Out here in about early 2012. now this Again this normally goes up right if I Put this on a log scale you can see that It normally goes up But there are times where it goes down Like back over here and also recently it Actually has been going down okay but The rate at which it's been going down Looks to be Um You know getting getting better right Like it's not getting worse and you Could picture that by looking at a

Quarter over quarter percentage change Right like you can see that the first Quarter it was was pretty negative at Negative one point let me switch to a Percentage it was at negative 4.68 then Negative 3.42 the negative 2.23 so it Has been going down but the rate at Which it's been going down Um has has been uh decreasing right like It hasn't been going down As as much as or at least the rate Hasn't been as bad as it was but again I Mean it still is going down and if you Look at a again if you look at a Year-over-year percentage change when it When it goes negative like this Historically it's not a great sign Um but even in that case I mean it can Take a long time to play out I mean look At look at this back in in the doc uh or In the financial crisis you can see that It went and first went negative in 2006 But we know that the market you know the Real estate or the equity Market didn't Really start to turn Until a year later in October of 2007. So this just went negative here in in I Mean you can see that it just went Negative here in January of 2023 right This is a quarter quarterly quarterly Thing uh and it just went negative Um last quarter okay so again these These these things take a long time to Play out and I guess the question is

Does it play more out like one of these Where it's it's sort of just down here And then right back up or does it go a Lot deeper like we did during the during The financial crisis if you look at the Rental vacancy rate Um you know it's actually been going Down uh ever since 2009 recently it's Starting going back up right so like Since January of 2022 or so early 2022 You can see it's it really started to go Back up it hit a low here in October 2021 at 5.6 and then a double bottom Here at 5.6 in April 2022 and then it's Been slowly turning higher and it's Currently sitting at 6.4 percent if you Look at a year over year change of that You can see that it has in fact gone Positive right Um which of course is not not a healthy Sign if they're if they're if the Vacancy rate is going up right that's Not a not a good sign Um but that's where it currently sits And then the last thing is is kind of an Interesting metric that furniture and Home Furnishing Furnishing sales Um Very cyclical metric right very cyclical And you can see that it normally tops Out here at the end of the year as it's Reported right December Um and I mean right now it's it's kind Of hard to read honestly like on on

Shorter time frames but Um I mean if you look at it sort of from Like a uh a bird's eye view let me Remove the price of the s p and Recessions as well Um it has slowed down some right like This pace that it was going up at seems To have slowed down some but I also Don't think you can look at this and say That it's entered into a sustained Um period of contraction right like it's Hard to know at this point it could be Rolling over but it's also hard to know Uh just because we don't really have a Whole lot of data anyways I think we'll Wrap it up there this is my you know These are some of the charts we have on The real estate market again I'm not an Expert at it just wanted to talk about Uh what's going on in the real estate Market provides some opinions and and Just try to become a little bit more Aware of what's going on and maybe in The future I will uh I'll get into the Real estate market myself anyways if you Guys like the content make sure you Subscribe to the channel give the video A thumbs up and again check out the sale On into the cryptoverse premium at into The thank you for tuning In subscribe and I'll see you next time Bye


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