NAR reports huge drop in pending home sales - Does It Matter?

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

New data from the National Association of Realtors show a significant decline in pending sale contracts on the U.S. Housing Market. This is the biggest drop since 2022, and a signal that the U.S. Housing Market correction is gaining steam.

Mainstream news sources such as Bloomberg, Zillow, and Redfin are now all admitting the U.S. Housing Market is heading towards a correction in 2025. Listings are up and now sellers are cutting prices at the highest level in 10 years, especially in cities like Tampa, Phoenix, and Las Vegas.

Purple is Bad, Red is Good

For instance, the Bloomberg article on the drop in pending home sales they quote the chief economist from the National Association of Realtors who claims it's all about mortgage rates. So while the mainstream in real estate is now admitting there's a downturn they're not really admitting why it's happening. They're saying it's because mortgage rates are at 7%. They're blaming also things like economic uncertainty due to tariffs, but the reality is those things have nothing to do with why the housing market is correcting and why buyer demand is so low. In fact the one reason why prices are now dropping and will continue to drop is the fact that prices are too high.

Home values exploded during the pandemic way faster than the growth of income. This created a housing bubble when prices go up more than income, that's a housing bubble

You can see over the last 135 years home prices adjusted for inflation have never been this expensive. So we are quite literally in the most expensive period to buy in U.S. history in terms of prices adjusted for inflation

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James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

@Ken M. I have a very different optics/perception of all this.

Notice how these heat maps of all the decline markets, overlay in almost perfect lock-step with previous years heat maps of the hottest, strongest, fastest appreciating markets?

That is a very important stand-out data point.

Yes, without a doubt there is these assorted other little factors at play which honestly have been at play for years; interest rates, rate-locked, incomes lagging inflation etc etc.. But these are all nothing new, these have been in effect for some time now.

Now keep in mind I am an active trader on NYSE.

What I see is what we see in stocks literally all the time, it's fundamental to stock and options trading.

What I am seeing is called Price Consolidation.

Things are trading within a range, not breaking up, not breaking down, and following a strong trend that ran.

We had an EPIC strong trend that ran for a heck of a time. A 10% step back after an 80% run-up is not an "oh-no" anything, it's just Price Consolidation.

One indicator that we are in Price Consolidation is volume. We have not seen volume with a surge nor fall off a cliff, volume is holding steady in it's channel.

Question is what comes next?

In NYSE trading terms we'd be looking for indicators of a roll-over where things break down, trading down, which is generally from the run-up over shooting fundamentals on momentum OR something of significance changed in the fundamentals and market prices down to the level of fundamentals.

In trading down, sure, momentum events can happen. For example TSLA recently shot from 350 too sub 290 due to the Musk/Trump tweet wars. But stocks trade FAST. Real Estate does not, and is less susceptible to such.

In real estate momentum events require much bigger, deeper, substantive drivers. We don't have any of those factors right now.

Next action which I see as most applicable for real estate now is Trading Sideways.

Trend Fatigue is for sure at play, as is New Entrants and Sentiment including Consumer Sentiment and Investor Sentiment. As is Pent Up Demand.

All this witches brew spells sideways market.

Lastly, and I believe 2nd most likely, is Price Breakout.

This is like what happened when NVDA rebounded from low around 90 too 120's and sat there for a time in Price Consolidation, and than Broke out to it's now trading channel around 145.

Price Break-outs require buyer demand and justifying catalyst.

In Real Estate we have buyer demand in spades, Pent Up Demand is a massive loaded spring. We don't have a justifying catalyst. That could be a significant drop in mortgage rates, something significant to increase median incomes, or as we saw in covid days a FOMO event.

Keeping in using a NYSE simile:

I see a sideways market of Price Consolidation for general market with specific micro individual markets doing there own micro-market things both up and down.

With a Breakout hungrily waiting for it's catalyst to explode.

A "Crash" which would be 30% or more drop to median prices, I lend a <5% potential on a macro level. Only via a Blackswan is this feasible. And the very nature of a Blackswan is it's completely unseen, unknown and unpredictable. So that 5% is generally the omnipresent 5% blackswan potential meaning, nothing pointing to any 30%+ drop potential.

I lend a <20% potential to a macro decline into next lower Price channel, which would be median home prices declining by 11%-17%.

I lend an 80% probability of macro real estate trending within a 10% channel of median home prices, with historical seasonal adjustment, for foreseeable future.

Sunbelt I peg with a 12-18% downward deviation for price correction, which is actually just rubber-band effect from the over-shoot of the upward momentum it had.

All in all, much of this was long seen and predicted as very normal "next cycle" actions from what went through prior.

I also lend a 100% certainty prediction of posts and videos calling for an imminent crash, collapse, GFC type "reset". I don't understand the doom obsession but they lap-up every little sneeze of things.

Lastly, the most likely Spector hanging out there is of a currency crisis. And when that comes to pass, there will be huge volatility but in general real estate will skyrocket. Asset's in general will jump but real estate is a unique asset also being 1 of the fundamental human needs.

After such jump is time to sell, because what comes next if the jump is big enough is the real risk of socialized housing. Picture a USA where median rents are 65% of median incomes..... Yeah, that's a lot of pressure to radically shift things.

That's when James will be Bitcoin rich, property poor, and watching it all go haywire on tv from a veranda in Cape Town..... Always have your exit strategies, right.

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Ken M.:

New data from the National Association of Realtors show a significant decline in pending sale contracts on the U.S. Housing Market. This is the biggest drop since 2022, and a signal that the U.S. Housing Market correction is gaining steam.
Mainstream news sources such as Bloomberg, Zillow, and Redfin are now all admitting the U.S. Housing Market is heading towards a correction in 2025. Listings are up and now sellers are cutting prices at the highest level in 10 years, especially in cities like Tampa, Phoenix, and Las Vegas.
Purple is Bad, Red is Good

For instance, the Bloomberg article on the drop in pending home sales they quote the chief economist from the National Association of Realtors who claims it's all about mortgage rates. So while the mainstream in real estate is now admitting there's a downturn they're not really admitting why it's happening. They're saying it's because mortgage rates are at 7%. They're blaming also things like economic uncertainty due to tariffs, but the reality is those things have nothing to do with why the housing market is correcting and why buyer demand is so low. In fact the one reason why prices are now dropping and will continue to drop is the fact that prices are too high.

Home values exploded during the pandemic way faster than the growth of income. This created a housing bubble when prices go up more than income, that's a housing bubble

You can see over the last 135 years home prices adjusted for inflation have never been this expensive. So we are quite literally in the most expensive period to buy in U.S. history in terms of prices adjusted for inflation

Been saying this for a year, something has to give, either prices or an entire generation will never be able to afford a home.
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- Patrick Roberts
  Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
  1y
  Quote from @Chris Seveney:
  
  Quote from @Ken M.:
  
  New data from the National Association of Realtors show a significant decline in pending sale contracts on the U.S. Housing Market. This is the biggest drop since 2022, and a signal that the U.S. Housing Market correction is gaining steam.
  Mainstream news sources such as Bloomberg, Zillow, and Redfin are now all admitting the U.S. Housing Market is heading towards a correction in 2025. Listings are up and now sellers are cutting prices at the highest level in 10 years, especially in cities like Tampa, Phoenix, and Las Vegas.
  Purple is Bad, Red is Good
  
  For instance, the Bloomberg article on the drop in pending home sales they quote the chief economist from the National Association of Realtors who claims it's all about mortgage rates. So while the mainstream in real estate is now admitting there's a downturn they're not really admitting why it's happening. They're saying it's because mortgage rates are at 7%. They're blaming also things like economic uncertainty due to tariffs, but the reality is those things have nothing to do with why the housing market is correcting and why buyer demand is so low. In fact the one reason why prices are now dropping and will continue to drop is the fact that prices are too high.
  
  Home values exploded during the pandemic way faster than the growth of income. This created a housing bubble when prices go up more than income, that's a housing bubble
  
  You can see over the last 135 years home prices adjusted for inflation have never been this expensive. So we are quite literally in the most expensive period to buy in U.S. history in terms of prices adjusted for inflation
  
  Been saying this for a year, something has to give, either prices or an entire generation will never be able to afford a home.
  
  It wouldnt surprise me if owning a home becomes more and more of a privilege and less commonplace over time, similar to Hong Kong and other places.
  0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1y
going to be a run on Kentucky..
It has slowed in some areas no doubt. in other markets my clients as long as its a clean BRRR home well priced sells within 2 weeks and thats in multiple states I fund in..
Interest rates I believe is a big driver.. And what I think is happening is when they started to go down folks who were contemplating moving were getting ready to launch only to have them raise back up and now they are staying put again.. I think alot of folks were just wanting to pull the trigger once rates came down into the 5s since that did not happen.. U see this big slow down. WE have to keep in mind not everyone is a first time buyer with no money.. A huge amount of homes in the us something like 30 to 40% are owned free and clear.. So its a mental as well.
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- James WilcoxBusiness Member
  Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 603 votes
  1y
  Quote from @Jay Hinrichs:
  
  going to be a run on Kentucky..
  It has slowed in some areas no doubt. in other markets my clients as long as its a clean BRRR home well priced sells within 2 weeks and thats in multiple states I fund in..
  Interest rates I believe is a big driver.. And what I think is happening is when they started to go down folks who were contemplating moving were getting ready to launch only to have them raise back up and now they are staying put again.. I think alot of folks were just wanting to pull the trigger once rates came down into the 5s since that did not happen.. U see this big slow down. WE have to keep in mind not everyone is a first time buyer with no money.. A huge amount of homes in the us something like 30 to 40% are owned free and clear.. So its a mental as well.
  
  I agree with @Jay Hinrichs. I've said it before and I'll say it again, getting the pricing right from the start is key. Properties that are priced correctly out of the gate tend to sell quickly. Even NAR has pointed out that after two price drops, the chances of a sale happening drop significantly, and I've definitely seen that play out firsthand. I've still had multiple-offer situations when the pricing is spot on early, but if you start out even slightly too high, it becomes much harder to sell later. Buyers have always been picky, but right now, they're especially cautious and maybe rightfully so.
  Also, send all those Kentucky buyers my way, y’all! 😄
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  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Wilcox:
  
  Quote from @Jay Hinrichs:
  
  going to be a run on Kentucky..
  It has slowed in some areas no doubt. in other markets my clients as long as its a clean BRRR home well priced sells within 2 weeks and thats in multiple states I fund in..
  Interest rates I believe is a big driver.. And what I think is happening is when they started to go down folks who were contemplating moving were getting ready to launch only to have them raise back up and now they are staying put again.. I think alot of folks were just wanting to pull the trigger once rates came down into the 5s since that did not happen.. U see this big slow down. WE have to keep in mind not everyone is a first time buyer with no money.. A huge amount of homes in the us something like 30 to 40% are owned free and clear.. So its a mental as well.
  
  I agree with @Jay Hinrichs. I've said it before and I'll say it again, getting the pricing right from the start is key. Properties that are priced correctly out of the gate tend to sell quickly. Even NAR has pointed out that after two price drops, the chances of a sale happening drop significantly, and I've definitely seen that play out firsthand. I've still had multiple-offer situations when the pricing is spot on early, but if you start out even slightly too high, it becomes much harder to sell later. Buyers have always been picky, but right now, they're especially cautious and maybe rightfully so.
  Also, send all those Kentucky buyers my way, y’all! 😄
  Kentucky looks hot!
  0 Reply
- James WilcoxBusiness Member
  Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 603 votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Wilcox:
  
  Quote from @Jay Hinrichs:
  
  going to be a run on Kentucky..
  It has slowed in some areas no doubt. in other markets my clients as long as its a clean BRRR home well priced sells within 2 weeks and thats in multiple states I fund in..
  Interest rates I believe is a big driver.. And what I think is happening is when they started to go down folks who were contemplating moving were getting ready to launch only to have them raise back up and now they are staying put again.. I think alot of folks were just wanting to pull the trigger once rates came down into the 5s since that did not happen.. U see this big slow down. WE have to keep in mind not everyone is a first time buyer with no money.. A huge amount of homes in the us something like 30 to 40% are owned free and clear.. So its a mental as well.
  
  I agree with @Jay Hinrichs. I've said it before and I'll say it again, getting the pricing right from the start is key. Properties that are priced correctly out of the gate tend to sell quickly. Even NAR has pointed out that after two price drops, the chances of a sale happening drop significantly, and I've definitely seen that play out firsthand. I've still had multiple-offer situations when the pricing is spot on early, but if you start out even slightly too high, it becomes much harder to sell later. Buyers have always been picky, but right now, they're especially cautious and maybe rightfully so.
  Also, send all those Kentucky buyers my way, y’all! 😄
  Kentucky looks hot!
  Hotter than a bonfire on a bourbon trail night! :)
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
It sounds a lot like the lock in effect is still in effect, as it obviously is. But too many “news” sources already declared it over, or at least ending.
80-90% of sellers are buyers? What’s the motivation to pay 50% more for a home priced the same, or 100% more for a slightly more expensive home? You HAVE to be moving, combining households, or some other life event that just isn’t happening that often.
If housing is at all time unaffordable levels, what do sellers need to buy a new place? All time high selling prices. Can’t get em? Can’t move. Property either sits on the market or gets taken off and they stay put. As Jay said the only people who can switch house at “almost no cost” (5-6% selling costs?) are people selling paid off properties for something about the same or cheaper.

if prices are going down, there’s no incentive to quickly sell for anyone that’s going to buy another property. “Oh no, housing prices are going down. I better sell my home quick, and buy another one…”
4 Reply
- Patrick Roberts
  Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
  1y
  Quote from @Bill B.:
  
  It sounds a lot like the lock in effect is still in effect, as it obviously is. But too many “news” sources already declared it over, or at least ending.
  80-90% of sellers are buyers? What’s the motivation to pay 50% more for a home priced the same, or 100% more for a slightly more expensive home? You HAVE to be moving, combining households, or some other life event that just isn’t happening that often.
  If housing is at all time unaffordable levels, what do sellers need to buy a new place? All time high selling prices. Can’t get em? Can’t move. Property either sits on the market or gets taken off and they stay put. As Jay said the only people who can switch house at “almost no cost” (5-6% selling costs?) are people selling paid off properties for something about the same or cheaper.
  
  if prices are going down, there’s no incentive to quickly sell for anyone that’s going to buy another property. “Oh no, housing prices are going down. I better sell my home quick, and buy another one…”
  
  This is a large part of what I'm seeing in my markets, which is obviously just an anecdotal observation. There is relatively little forced selling right now. Many sellers are in no need to sell and will take their house off the market if they cant get what they want for it.
  I have one client who moved into a new primary and listed his old home for $300k over the two private appraisals he got for it prior to listing. He's nominally cut the price twice in small amounts, but has said that he's not "giving it away." If he doesnt get what he wants for it, he wont sell it - and he doesnt need to. He can comfortably afford to keep both houses for at least a few years if he chooses.
  To your point, buyers are being equally as picky. Theyre not going to pay $2k-$3k/month more than they currently pay unless they get exactly what they want. I think this is why the market is largely freezing and transactional volume is so low. For every loan I close right now, I have 5-10 would-be buyers who want to buy, have decent income and credit, but cant afford current prices. As soon as on-market stuff gets within reach, they'll be buying. Whether this comes from slight declines in prices or interest rates is yet to be seen, but I suspect these would-be buyers will put a floor under prices at some point that is higher than most are expecting.
  The only thing that I see bringing home prices down significantly anytime soon is major, prolonged stress in the labor market. It wouldnt surprise me if it's more likely that we see inflation return and wages grow rather than unemployment jumping a huge amount.
  1 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Patrick Roberts:
  
  Quote from @Bill B.:
  
  It sounds a lot like the lock in effect is still in effect, as it obviously is. But too many “news” sources already declared it over, or at least ending.
  80-90% of sellers are buyers? What’s the motivation to pay 50% more for a home priced the same, or 100% more for a slightly more expensive home? You HAVE to be moving, combining households, or some other life event that just isn’t happening that often.
  If housing is at all time unaffordable levels, what do sellers need to buy a new place? All time high selling prices. Can’t get em? Can’t move. Property either sits on the market or gets taken off and they stay put. As Jay said the only people who can switch house at “almost no cost” (5-6% selling costs?) are people selling paid off properties for something about the same or cheaper.
  
  if prices are going down, there’s no incentive to quickly sell for anyone that’s going to buy another property. “Oh no, housing prices are going down. I better sell my home quick, and buy another one…”
  
  This is a large part of what I'm seeing in my markets, which is obviously just an anecdotal observation. There is relatively little forced selling right now. Many sellers are in no need to sell and will take their house off the market if they cant get what they want for it.
  I have one client who moved into a new primary and listed his old home for $300k over the two private appraisals he got for it prior to listing. He's nominally cut the price twice in small amounts, but has said that he's not "giving it away." If he doesnt get what he wants for it, he wont sell it - and he doesnt need to. He can comfortably afford to keep both houses for at least a few years if he chooses.
  To your point, buyers are being equally as picky. Theyre not going to pay $2k-$3k/month more than they currently pay unless they get exactly what they want. I think this is why the market is largely freezing and transactional volume is so low. For every loan I close right now, I have 5-10 would-be buyers who want to buy, have decent income and credit, but cant afford current prices. As soon as on-market stuff gets within reach, they'll be buying. Whether this comes from slight declines in prices or interest rates is yet to be seen, but I suspect these would-be buyers will put a floor under prices at some point that is higher than most are expecting.
  The only thing that I see bringing home prices down significantly anytime soon is major, prolonged stress in the labor market. It wouldnt surprise me if it's more likely that we see inflation return and wages grow rather than unemployment jumping a huge amount.
  
  I've recently bought three houses where the sellers have no intention of buying anytime soon. They just simply have found rentals that are more affordable than their mortgage and maintenance costs on their houses, so they sold. I may be in a niche market, but if I am, I'm sticking around this one for a while.
  
  0 Reply
- Stetson Oates
  Member since 2024 · 65 posts · 63 votes
  1y
  Quote from @Ken M.:
  
  Quote from @Patrick Roberts:
  
  Quote from @Bill B.:
  
  It sounds a lot like the lock in effect is still in effect, as it obviously is. But too many “news” sources already declared it over, or at least ending.
  80-90% of sellers are buyers? What’s the motivation to pay 50% more for a home priced the same, or 100% more for a slightly more expensive home? You HAVE to be moving, combining households, or some other life event that just isn’t happening that often.
  If housing is at all time unaffordable levels, what do sellers need to buy a new place? All time high selling prices. Can’t get em? Can’t move. Property either sits on the market or gets taken off and they stay put. As Jay said the only people who can switch house at “almost no cost” (5-6% selling costs?) are people selling paid off properties for something about the same or cheaper.
  
  if prices are going down, there’s no incentive to quickly sell for anyone that’s going to buy another property. “Oh no, housing prices are going down. I better sell my home quick, and buy another one…”
  
  This is a large part of what I'm seeing in my markets, which is obviously just an anecdotal observation. There is relatively little forced selling right now. Many sellers are in no need to sell and will take their house off the market if they cant get what they want for it.
  I have one client who moved into a new primary and listed his old home for $300k over the two private appraisals he got for it prior to listing. He's nominally cut the price twice in small amounts, but has said that he's not "giving it away." If he doesnt get what he wants for it, he wont sell it - and he doesnt need to. He can comfortably afford to keep both houses for at least a few years if he chooses.
  To your point, buyers are being equally as picky. Theyre not going to pay $2k-$3k/month more than they currently pay unless they get exactly what they want. I think this is why the market is largely freezing and transactional volume is so low. For every loan I close right now, I have 5-10 would-be buyers who want to buy, have decent income and credit, but cant afford current prices. As soon as on-market stuff gets within reach, they'll be buying. Whether this comes from slight declines in prices or interest rates is yet to be seen, but I suspect these would-be buyers will put a floor under prices at some point that is higher than most are expecting.
  The only thing that I see bringing home prices down significantly anytime soon is major, prolonged stress in the labor market. It wouldnt surprise me if it's more likely that we see inflation return and wages grow rather than unemployment jumping a huge amount.
  
  I've recently bought three houses where the sellers have no intention of buying anytime soon. They just simply have found rentals that are more affordable than their mortgage and maintenance costs on their houses, so they sold. I may be in a niche market, but if I am, I'm sticking around this one for a while.
  
  I think the locations play a huge roll as well. Florida, I think is more of owners being tired of the hurricanes and insurance increases. If you pair that with the rates being high, Florida will be crushed.
  1 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
1y
@Bill B.

all well said. i've made offers to owners of paid-off, distressed, vacant properties and they've been turned down, since i'm not willing to pay closer to retail for a house that needs work.

in some cases the owners would rather sit on them vacant and just pay the taxes every year than accept a price lower than they think they deserve. without the mortgage payment there isn't that monthly reminder.

@Jay Hinrichs
to your point the first time buyers get a lot of media coverage but they're not the only buyers.

0 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
1y
@Patrick Roberts
since the homeownership rate is actually still up since the GFC it's not so much that fewer people own, it's just that they're not trading as often. not sure what that means long term.
1 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
1y
It's just sad in a lot of ways.
I am fortunate to have the means, and to have prepared for a long time to purchase a house at this point in my life in the area we want to raise a family.
This area, Highlands Ranch, CO, is known for being family friendly. Good schools, very safe, well maintained, with an HOA that, in my view, does a fantastic job keeping things fun, organized, and reasonable from a cost to benefit ratio.
It's really sad, however, that a good number of folks here are empty nesters, who I believe would ordinarily move out and downsize, but can't or won't, because of their low interest rate.
These homes that would be best occupied by families, just getting started. But, instead, they are occupied by people in their late 50s, who surely would rather be at the beach, in the mountains, or in the city (someplace where happy hour does not BEGIN at 8:00 PM on weekdays...).
The lock in effect is having major negative consequences for my generation. I am one of the lucky few to have the means to overcome it.

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2 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
1y
@Ken M. I have a very different optics/perception of all this.
Notice how these heat maps of all the decline markets, overlay in almost perfect lock-step with previous years heat maps of the hottest, strongest, fastest appreciating markets?
That is a very important stand-out data point.
Yes, without a doubt there is these assorted other little factors at play which honestly have been at play for years; interest rates, rate-locked, incomes lagging inflation etc etc.. But these are all nothing new, these have been in effect for some time now.
Now keep in mind I am an active trader on NYSE.
What I see is what we see in stocks literally all the time, it's fundamental to stock and options trading.
What I am seeing is called Price Consolidation.
Things are trading within a range, not breaking up, not breaking down, and following a strong trend that ran.
We had an EPIC strong trend that ran for a heck of a time. A 10% step back after an 80% run-up is not an "oh-no" anything, it's just Price Consolidation.
One indicator that we are in Price Consolidation is volume. We have not seen volume with a surge nor fall off a cliff, volume is holding steady in it's channel.
Question is what comes next?
In NYSE trading terms we'd be looking for indicators of a roll-over where things break down, trading down, which is generally from the run-up over shooting fundamentals on momentum OR something of significance changed in the fundamentals and market prices down to the level of fundamentals.
In trading down, sure, momentum events can happen. For example TSLA recently shot from 350 too sub 290 due to the Musk/Trump tweet wars. But stocks trade FAST. Real Estate does not, and is less susceptible to such.
In real estate momentum events require much bigger, deeper, substantive drivers. We don't have any of those factors right now.
Next action which I see as most applicable for real estate now is Trading Sideways.
Trend Fatigue is for sure at play, as is New Entrants and Sentiment including Consumer Sentiment and Investor Sentiment. As is Pent Up Demand.
All this witches brew spells sideways market.
Lastly, and I believe 2nd most likely, is Price Breakout.
This is like what happened when NVDA rebounded from low around 90 too 120's and sat there for a time in Price Consolidation, and than Broke out to it's now trading channel around 145.
Price Break-outs require buyer demand and justifying catalyst.
In Real Estate we have buyer demand in spades, Pent Up Demand is a massive loaded spring. We don't have a justifying catalyst. That could be a significant drop in mortgage rates, something significant to increase median incomes, or as we saw in covid days a FOMO event.
Keeping in using a NYSE simile:
I see a sideways market of Price Consolidation for general market with specific micro individual markets doing there own micro-market things both up and down.
With a Breakout hungrily waiting for it's catalyst to explode.
A "Crash" which would be 30% or more drop to median prices, I lend a <5% potential on a macro level. Only via a Blackswan is this feasible. And the very nature of a Blackswan is it's completely unseen, unknown and unpredictable. So that 5% is generally the omnipresent 5% blackswan potential meaning, nothing pointing to any 30%+ drop potential.
I lend a <20% potential to a macro decline into next lower Price channel, which would be median home prices declining by 11%-17%.
I lend an 80% probability of macro real estate trending within a 10% channel of median home prices, with historical seasonal adjustment, for foreseeable future.
Sunbelt I peg with a 12-18% downward deviation for price correction, which is actually just rubber-band effect from the over-shoot of the upward momentum it had.
All in all, much of this was long seen and predicted as very normal "next cycle" actions from what went through prior.
I also lend a 100% certainty prediction of posts and videos calling for an imminent crash, collapse, GFC type "reset". I don't understand the doom obsession but they lap-up every little sneeze of things.
Lastly, the most likely Spector hanging out there is of a currency crisis. And when that comes to pass, there will be huge volatility but in general real estate will skyrocket. Asset's in general will jump but real estate is a unique asset also being 1 of the fundamental human needs.
After such jump is time to sell, because what comes next if the jump is big enough is the real risk of socialized housing. Picture a USA where median rents are 65% of median incomes..... Yeah, that's a lot of pressure to radically shift things.
That's when James will be Bitcoin rich, property poor, and watching it all go haywire on tv from a veranda in Cape Town..... Always have your exit strategies, right.
6 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  @Ken M. I have a very different optics/perception of all this.
  Notice how these heat maps of all the decline markets, overlay in almost perfect lock-step with previous years heat maps of the hottest, strongest, fastest appreciating markets?
  That is a very important stand-out data point.
  Yes, without a doubt there is these assorted other little factors at play which honestly have been at play for years; interest rates, rate-locked, incomes lagging inflation etc etc.. But these are all nothing new, these have been in effect for some time now.
  Now keep in mind I am an active trader on NYSE.
  What I see is what we see in stocks literally all the time, it's fundamental to stock and options trading.
  What I am seeing is called Price Consolidation.
  Things are trading within a range, not breaking up, not breaking down, and following a strong trend that ran.
  We had an EPIC strong trend that ran for a heck of a time. A 10% step back after an 80% run-up is not an "oh-no" anything, it's just Price Consolidation.
  One indicator that we are in Price Consolidation is volume. We have not seen volume with a surge nor fall off a cliff, volume is holding steady in it's channel.
  Question is what comes next?
  In NYSE trading terms we'd be looking for indicators of a roll-over where things break down, trading down, which is generally from the run-up over shooting fundamentals on momentum OR something of significance changed in the fundamentals and market prices down to the level of fundamentals.
  In trading down, sure, momentum events can happen. For example TSLA recently shot from 350 too sub 290 due to the Musk/Trump tweet wars. But stocks trade FAST. Real Estate does not, and is less susceptible to such.
  In real estate momentum events require much bigger, deeper, substantive drivers. We don't have any of those factors right now.
  Next action which I see as most applicable for real estate now is Trading Sideways.
  Trend Fatigue is for sure at play, as is New Entrants and Sentiment including Consumer Sentiment and Investor Sentiment. As is Pent Up Demand.
  All this witches brew spells sideways market.
  Lastly, and I believe 2nd most likely, is Price Breakout.
  This is like what happened when NVDA rebounded from low around 90 too 120's and sat there for a time in Price Consolidation, and than Broke out to it's now trading channel around 145.
  Price Break-outs require buyer demand and justifying catalyst.
  In Real Estate we have buyer demand in spades, Pent Up Demand is a massive loaded spring. We don't have a justifying catalyst. That could be a significant drop in mortgage rates, something significant to increase median incomes, or as we saw in covid days a FOMO event.
  Keeping in using a NYSE simile:
  I see a sideways market of Price Consolidation for general market with specific micro individual markets doing there own micro-market things both up and down.
  With a Breakout hungrily waiting for it's catalyst to explode.
  A "Crash" which would be 30% or more drop to median prices, I lend a <5% potential on a macro level. Only via a Blackswan is this feasible. And the very nature of a Blackswan is it's completely unseen, unknown and unpredictable. So that 5% is generally the omnipresent 5% blackswan potential meaning, nothing pointing to any 30%+ drop potential.
  I lend a <20% potential to a macro decline into next lower Price channel, which would be median home prices declining by 11%-17%.
  I lend an 80% probability of macro real estate trending within a 10% channel of median home prices, with historical seasonal adjustment, for foreseeable future.
  Sunbelt I peg with a 12-18% downward deviation for price correction, which is actually just rubber-band effect from the over-shoot of the upward momentum it had.
  All in all, much of this was long seen and predicted as very normal "next cycle" actions from what went through prior.
  I also lend a 100% certainty prediction of posts and videos calling for an imminent crash, collapse, GFC type "reset". I don't understand the doom obsession but they lap-up every little sneeze of things.
  Lastly, the most likely Spector hanging out there is of a currency crisis. And when that comes to pass, there will be huge volatility but in general real estate will skyrocket. Asset's in general will jump but real estate is a unique asset also being 1 of the fundamental human needs.
  After such jump is time to sell, because what comes next if the jump is big enough is the real risk of socialized housing. Picture a USA where median rents are 65% of median incomes..... Yeah, that's a lot of pressure to radically shift things.
  That's when James will be Bitcoin rich, property poor, and watching it all go haywire on tv from a veranda in Cape Town..... Always have your exit strategies, right.
  I know very little about the stock market but my casual observations are
  
  1. Selling stocks happens pretty much the same day you issue the "sell" but selling real estate can take months, correct me if I’m wrong (no hidden agenda, just a fact)
  
  2. I believe both non owner occupied properties and stock are treated as investments for tax purposes (excluding a personal home)
  3. It's easier to price a stock than to price a property since a stock is transacted daily
  4. Esoteric things like a pipeline rupture by an unknown reason in the Baltic Sea
  can affect oil prices & oil stocks and so on
  5. Ordinary people try to buy houses, mostly to live in, but investors treat property much differently and are looking for growth or cash flow or inflation protection or tax write offs
  6. Unbeknownst to most people with retirement plans, they are in the stock market whether they realize it or not
  7. You don't have to put a new roof on your stock shares (virtually no maintenance)
  8. It isn't always a better deal for a homeowner to own a house than to rent
  9. There are some places you can't expect appreciation, it may happen but it may not in your lifetime
  10. The only way stocks get bedbugs is if they are your renter's stocks and they have bedbugs
  
  I agree with the thought that we are in a bifurcated housing market, good some places, bad other places.
  
  And since interest rates on housing are generally the same across the country, I don't believe interest rates are the issue. Rates were always 8% from the time I was a kid through most of my adult investing.
  
  But prices for houses have gone ballistic compare to people's incomes. I for one think that a $37,000,000,000,000 debt plays a role. It's from giving everything to everybody. That makes us generous . . . with our kids money.
  0 Reply
- Nikita Odnoralov
  Investor · Castle Pines CO · Member since 2021 · 16 posts · 10 votes
  1y
  @James Hamling well put!
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @James Hamling:
  
  @Ken M. I have a very different optics/perception of all this.
  Notice how these heat maps of all the decline markets, overlay in almost perfect lock-step with previous years heat maps of the hottest, strongest, fastest appreciating markets?
  That is a very important stand-out data point.
  Yes, without a doubt there is these assorted other little factors at play which honestly have been at play for years; interest rates, rate-locked, incomes lagging inflation etc etc.. But these are all nothing new, these have been in effect for some time now.
  Now keep in mind I am an active trader on NYSE.
  What I see is what we see in stocks literally all the time, it's fundamental to stock and options trading.
  What I am seeing is called Price Consolidation.
  Things are trading within a range, not breaking up, not breaking down, and following a strong trend that ran.
  We had an EPIC strong trend that ran for a heck of a time. A 10% step back after an 80% run-up is not an "oh-no" anything, it's just Price Consolidation.
  One indicator that we are in Price Consolidation is volume. We have not seen volume with a surge nor fall off a cliff, volume is holding steady in it's channel.
  Question is what comes next?
  In NYSE trading terms we'd be looking for indicators of a roll-over where things break down, trading down, which is generally from the run-up over shooting fundamentals on momentum OR something of significance changed in the fundamentals and market prices down to the level of fundamentals.
  In trading down, sure, momentum events can happen. For example TSLA recently shot from 350 too sub 290 due to the Musk/Trump tweet wars. But stocks trade FAST. Real Estate does not, and is less susceptible to such.
  In real estate momentum events require much bigger, deeper, substantive drivers. We don't have any of those factors right now.
  Next action which I see as most applicable for real estate now is Trading Sideways.
  Trend Fatigue is for sure at play, as is New Entrants and Sentiment including Consumer Sentiment and Investor Sentiment. As is Pent Up Demand.
  All this witches brew spells sideways market.
  Lastly, and I believe 2nd most likely, is Price Breakout.
  This is like what happened when NVDA rebounded from low around 90 too 120's and sat there for a time in Price Consolidation, and than Broke out to it's now trading channel around 145.
  Price Break-outs require buyer demand and justifying catalyst.
  In Real Estate we have buyer demand in spades, Pent Up Demand is a massive loaded spring. We don't have a justifying catalyst. That could be a significant drop in mortgage rates, something significant to increase median incomes, or as we saw in covid days a FOMO event.
  Keeping in using a NYSE simile:
  I see a sideways market of Price Consolidation for general market with specific micro individual markets doing there own micro-market things both up and down.
  With a Breakout hungrily waiting for it's catalyst to explode.
  A "Crash" which would be 30% or more drop to median prices, I lend a <5% potential on a macro level. Only via a Blackswan is this feasible. And the very nature of a Blackswan is it's completely unseen, unknown and unpredictable. So that 5% is generally the omnipresent 5% blackswan potential meaning, nothing pointing to any 30%+ drop potential.
  I lend a <20% potential to a macro decline into next lower Price channel, which would be median home prices declining by 11%-17%.
  I lend an 80% probability of macro real estate trending within a 10% channel of median home prices, with historical seasonal adjustment, for foreseeable future.
  Sunbelt I peg with a 12-18% downward deviation for price correction, which is actually just rubber-band effect from the over-shoot of the upward momentum it had.
  All in all, much of this was long seen and predicted as very normal "next cycle" actions from what went through prior.
  I also lend a 100% certainty prediction of posts and videos calling for an imminent crash, collapse, GFC type "reset". I don't understand the doom obsession but they lap-up every little sneeze of things.
  Lastly, the most likely Spector hanging out there is of a currency crisis. And when that comes to pass, there will be huge volatility but in general real estate will skyrocket. Asset's in general will jump but real estate is a unique asset also being 1 of the fundamental human needs.
  After such jump is time to sell, because what comes next if the jump is big enough is the real risk of socialized housing. Picture a USA where median rents are 65% of median incomes..... Yeah, that's a lot of pressure to radically shift things.
  That's when James will be Bitcoin rich, property poor, and watching it all go haywire on tv from a veranda in Cape Town..... Always have your exit strategies, right.
  I know very little about the stock market but my casual observations are
  
  1. Selling stocks happens pretty much the same day you issue the "sell" but selling real estate can take months, correct me if I’m wrong (no hidden agenda, just a fact)
  
  2. I believe both non owner occupied properties and stock are treated as investments for tax purposes (excluding a personal home)
  3. It's easier to price a stock than to price a property since a stock is transacted daily
  4. Esoteric things like a pipeline rupture by an unknown reason in the Baltic Sea
  can affect oil prices & oil stocks and so on
  5. Ordinary people try to buy houses, mostly to live in, but investors treat property much differently and are looking for growth or cash flow or inflation protection or tax write offs
  6. Unbeknownst to most people with retirement plans, they are in the stock market whether they realize it or not
  7. You don't have to put a new roof on your stock shares (virtually no maintenance)
  8. It isn't always a better deal for a homeowner to own a house than to rent
  9. There are some places you can't expect appreciation, it may happen but it may not in your lifetime
  10. The only way stocks get bedbugs is if they are your renter's stocks and they have bedbugs
  
  I agree with the thought that we are in a bifurcated housing market, good some places, bad other places.
  
  And since interest rates on housing are generally the same across the country, I don't believe interest rates are the issue. Rates were always 8% from the time I was a kid through most of my adult investing.
  
  But prices for houses have gone ballistic compare to people's incomes. I for one think that a $37,000,000,000,000 debt plays a role. It's from giving everything to everybody. That makes us generous . . . with our kids money.
  
  Lot's to unpack here Ken.
  Yes, as I had mentioned the speed at which change moves in the stock market is fast, very fast. For example with various trading platforms we measure speed to order executions in fractions of seconds, and it matters.
  Real Estate market moves changes through at speed of a sloth on vallum in comparison.
  My main point is that trading NYSE is very centric on pattern recognition. To the common person on the street those of us chart-nerds would probably sound like autistic savants as we discuss chart analysis.
  All this data for the Real Estate market, I am see patterns. Very clear patterns jumping out.
  And next one looks for confirmations. I am seeing confirming indicators as well.
  Both of these investing markets have a component of sociology.
  For example, NVDA is a rock solid company and has been as steady as they come. Yet, share price walked off a cliff from ~$150 tumbling all the way to ~$90. There was zero issues within the company, all but nothing changed. What did happen was people in mass freaking out over tariff announcement and the ensuing political poo-storm.
  This is a unique attribute to "good" investors/traders on NYSE vs Real Estate. When trading stocks & bonds we actively think a lot about how people in mass will act, however logical or illogical, when and why.
  In Real Estate it seems the general expectation is it always transacts in perfect logic. I assure, it does not.
  In trading on Wall Street volatility is where $ is made. And BIG volatility, those BIG illogical moves is where BIG $ is made.
  Real Estate is exactly the same.
  For those who want to run down the rabbit hole of market analysis I think there is a lot to be gained and learned from study of how active traders perform market analysis. And how traders predict market moves.
  Appreciation is actually not half as elusive a thing to predict as many make it out to be. The general thought that appreciation is a property getting worth MORE is generally incorrect. Appreciation in large part is the money becoming worth LESS.
  With that understanding it should be easier to see the things that make money (USD) worth LESS are known, factual actions and factors. With that, readily predictable.
  Go back years in my posts to early covid when they were cranking up the money machine and many were banging the doom-gong. I was shouting from the hilltops BUY - BUY - BUY because it was mathematical massive inflation was being created.
  There is additional nuances to appreciation but point is when we are talking adjustment to USD measured in billions and trillions, yeah, the result is not hard to predict.
  So in truth, homes have NOT gotten any more expensive, they havn't, take a historical review of home prices vs say gold. But WAGES, holly-hell have those DROPPED.
  Yeah, I can feel many scratching there heads thinking what the heck am I taking about, there income hasn't gone down..... You must think in terms of purchasing power and inflation adjusted. If your wages number stays the same but the $ is worth LESS, that is a decline in wages.
  And that divide has gotten to be of epic size. The disparity gap is a disparity grand canyon.
  Same time as were up against a currency crisis. We as in planet earth. The world runs not only on debt but on debt CREATION. That economic basis has a finite runway and were now into the stripped yellow zone of that runway warning were about to run off the end into the graves and there after off the cliff beyond.
  This is where bond market comes into things.
  There is only 3 options for this: (A) attempt to inflate it away. That is a can-kicking action that won't work for long as inflation begets inflation which hastens the speed off the end of the runway. (B) AUSTERITY. This simply will not happen because the scale of such that would be needed would literally collapse governments world wide. (C) Currency reset. This is most likely to a point that it's almost certain, and BTC seems to be the social conditioning mechanism to pave the way for it. No it won't be BTC, because no chance would the powers that be allow an uncontrolled currency. The AMERO or DGC, something of that nature. And by the play book it would be a deploy the crisis to deliver the "cure" type thing.
  Regardless the path A,B or C, the outcome for assets is the same: up UP and away! Especially real estate.
  Don't believe me, look to post soviet Russia.
  Real Estate has survived and weathered many different currencies over the ages and stood the test of time as THE store of wealth and value, regardless of the token of the day that we trade value in.
  End of day that's all the USD is, a token of value.
  3 Reply
Rob Bergeron
Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes
1y
Y'all better start getting creative and come up with solutions for these sellers! Go Team!
0 Reply
Henry Lazerow
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
1y
I do wonder what would happen to housing if Gavin Newsom won presidency 2028, could he implement similar laws California housing has for rest of US or do state laws override federal for things like rent control, etc.? I know IL state has laws against rent control which has prevented Chicago from implementing it.
0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @Henry Lazerow:
  
  I do wonder what would happen to housing if Gavin Newsom won presidency 2028, could he implement similar laws California housing has for rest of US or do state laws override federal for things like rent control, etc.? I know IL state has laws against rent control which has prevented Chicago from implementing it.
  State overrides federal on states rights issues like housing. Congress would have to approve and that's not at all likely.
  0 Reply
- James Hamling
  Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
  1y
  Quote from @Ken M.:
  
  Quote from @Henry Lazerow:
  
  I do wonder what would happen to housing if Gavin Newsom won presidency 2028, could he implement similar laws California housing has for rest of US or do state laws override federal for things like rent control, etc.? I know IL state has laws against rent control which has prevented Chicago from implementing it.
  State overrides federal on states rights issues like housing. Congress would have to approve and that's not at all likely.
  
  Not exactly.... It's kind of a bit grey.
  
  In some ways States trump Federal, in others Federal trumps State.
  
  For example take discrimination in housing, Federal trumps states. A state could reenact segregation and it would not be legal.
  
  A lunatic commy at white house with a gaggle of lunatic commys on capitol hill could, in theory, see a whole assortment of interesting interpretations of constitutional law and do things like decide housing is a human RIGHT, and then enforce codes to such.
  
  Or decide various rents are "price gouging" and issue out mandates for what acceptable rents are per markets.
  
  Things could get crazy if crazy people have the power and will to do crazy stuff.
  Keep in mind we have now seen drag-queen story time for grammar school...... Not even Twilight Zone got as weird as reality has gotten in recent years.
  0 Reply
- Ken M.
  OP
  Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
  1y
  Quote from @James Hamling:
  
  Quote from @Ken M.:
  
  Quote from @Henry Lazerow:
  
  I do wonder what would happen to housing if Gavin Newsom won presidency 2028, could he implement similar laws California housing has for rest of US or do state laws override federal for things like rent control, etc.? I know IL state has laws against rent control which has prevented Chicago from implementing it.
  State overrides federal on states rights issues like housing. Congress would have to approve and that's not at all likely.
  
  Not exactly.... It's kind of a bit grey.
  
  In some ways States trump Federal, in others Federal trumps State.
  
  For example take discrimination in housing, Federal trumps states. A state could reenact segregation and it would not be legal.
  
  A lunatic commy at white house with a gaggle of lunatic commys on capitol hill could, in theory, see a whole assortment of interesting interpretations of constitutional law and do things like decide housing is a human RIGHT, and then enforce codes to such.
  
  Or decide various rents are "price gouging" and issue out mandates for what acceptable rents are per markets.
  
  Things could get crazy if crazy people have the power and will to do crazy stuff.
  Keep in mind we have now seen drag-queen story time for grammar school...... Not even Twilight Zone got as weird as reality has gotten in recent years.
  Federal wins on existing, litigated, Federal law.
  
  On rare occasion the court accepts a case that might modify a Federal law. I believe one of my cases may have modified federal foreclosure law after the District Court decision but you never really know. They don't send you a telegram saying "hey, that was pretty good, you really got us on that one, now we have to rethink how we handle that type of situation." You just have to see what legislatures do.
  
  But it wasn't accepted to the Supreme Court. It didn't have enough universal application. States & lenders started applying changes anyway. Was it my case that caused that? Who knows. Even though the largest muti billion dollar title company in the county was the opponent, I won, and they changed a policy internally. That's really all you have to do, Is change how they do things not inact laws
  
  It's unlikely existing state or federal challenges to the existing federal or state law would make it to the Supreme Court in any one Presidential term to be modified by the Court. I'm a simple guy, I invest as things are, not as they might or might not become.
  0 Reply

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