Housing Bubble 2.0: Homes Most Overvalued Since Great Recession, Mortgage Refinancing Plunges

Housing Bubble 2.0: Homes Most Overvalued Since Great Recession, Mortgage Refinancing Plunges



hey everybody my name is Jason and this is bull boom bear bus thank you for joining me okay so we're back with another housing market update okay keep in mind links to today's information and charts be down in description you do want to click the expand button where it says show more and the links gonna be right down in there okay that same link will take you to our home page so if you don't like sitting through the ads there's going to be a link at that home page okay can go in there and that way you can get our other platform to go on there's our Twitter link there and some other stuff in there that you might be interested in alright and also speaking of bitch shoot there that you'll find the link of that at the home page you might find some videos there that weren't YouTube friendly that I had decided to put over on that platform so if you're interested maybe check that out there okay so what's going on in housing well in the United States here we've got housing at the least affordable levels since the financial crisis right so in about ten years so we're going to go over the numbers and go over the charts on that okay we're seeing the continued slowdown in real estate as mortgage applications dropped to four year lows and this is as interest rates hit an eight-year high ok so volume on mortgage applications was lower by 16 percent versus a year ago and that is according to the Mortgage Bankers Association okay now an interesting quote out of Michael France and Tony he is the Mortgage Bankers Association chief economist and he says about the housing market he says the following quote the housing market has been out of whack with home prices increasing at twice the rate of income growth unquote he also goes on to saying following quote that was not sustainable unquote so to hear that coming out of the mouth of someone from the Mortgage Bankers Association I think that's a pretty big statement ok in in previous busts and in previous years it was uncommon to find someone with in the industry admitting that prices were out of whack or admitting that housing was in a bubble and I think that might have come back to bite him for example we've shown the clips here even the Federal Reserve Chairman didn't admit that there was a housing bubble or maybe they didn't know but I've I find that very unlikely that they didn't know so maybe these some of these people are coming back trying to save face especially now with all this getting out on the internet and spreading very quickly you know maybe some of these housing insiders want to get out in front of the curve and actually tell the truth about the real situation with the housing market right now okay and we've shown other clips the red fin CEO and other investors that we talked about here regarding housing ok now the biggest drop-off was actually mortgage applications to refinance okay so those applications have been falling for more than a year now in volume here recently was 33 percent lower than a year ago so according to new data out of black night rising interest rates have cut the number of eligible borrowers who could benefit from a refinance in half this year okay it's also being reported out of CNBC that the even though overall mortgage applications are falling but the adjustable rate portion of those mortgage applications actually increased by nearly 8 percent so there's that phrase again adjustable rate mortgage we thought it was gone away after the financial crisis and after the housing bust but it's being implemented still and being used here utilized here in this current housing market okay so again applications shop to four-year low mortgage applications that is as interest rates hit eight-year high okay over to some charts now and we're going to show you how housing now is the least affordable that it's been since the financial crisis so in about 10 years we'd have to go back 10 years to find housing this unaffordable now when we say unaffordable we are comparing home prices to incomes right and we know that it's really out of whack again because people are just borrowing as much as they can and home prices are not based on true technicals which would be comparing that to people's incomes kph also have investors and flippers that kind of throw off that that data as well okay so comparing home prices to incomes isn't the only thing you should look at and that's why we like to cover a lot of different topical like home flipping and investors buying up properties get loose lending but let's look at incomes compared to home prices okay because it is part of the picture it should be the main factor determining home prices but sadly that's not the system that we're in right now okay but here it goes it now takes 23.6% of median income to make the monthly payment on the average priced home and this is nationwide making housing the least affordable that it's been in nearly a decade okay and this is put out there by mish talk under the money mavin dot IO section so when looking at incomes needed to purchase an average price home of course we see out here California being the worst okay now surprised to see this the second highest looks like Maine up here okay so this chart breaks down the darker blue areas are the least affordable where incomes are really really off compared to how high home prices are so we see Oregon in the dark they're 27% okay we'll go over here we see New York and these other states Massachusetts it looks like okay in some of these states that may not be that home prices are the highest in the nation but it could just mean that their most out of proportion with what the incomes are you see Maryland in here at 28% and we see over here the darker blue looks like South Dakota 28% and the most affordable where homes are not as far out of proportion when compared to incomes is the Rust Belt here we've got Michigan 16% 13% Ohio okay 15% Iowa 19% Wisconsin 17% Nebraska also very affordable and speaking of California again on the topic of California Prop 10 was defeated that would have implemented more strict rent control provisions so the midterms were just yesterday so I thought would admit I thought I would mention that cane it's interesting just looking at the overall picture of the u.s. here we see the West in the darker blue compared to all the white here in the middle and over on the east but a lot of this out west as Californians moving to these other states heavy out migration to Texas Arizona Nevada Oregon and surrounding states out here okay so now let's look at charts that are gonna visualize this level of unaffordability when you look at home prices compared to incomes okay this is still out of money maven that IO put out by Mis talk here and they've given us a Fed chart here a phred chart okay which is based on fed data and we see the blue line across the bottom well that's the real median household income in California and we're going to look at a more broad nationwide one here in a moment but California is the most extreme example since we're the most unaffordable so I wanted to put this one out there and you see the recession here in the dark color of the dark line there okay that shaded area going down here and we saw how incomes really we're pretty steady they definitely weren't rising much maybe between three and six percent according to this mean home prices really got out of whack leading up to the 2008 financial crisis and housing bubble ending and of course we saw a median home prices take a pretty big drop in California and technically they should have dropped all the way down back to the blue line this is the the real level that they really should be at when it comes to fundamentals but as we all know fundamentals are thrown out the window and this banking system that we're in right now but you go back 30 or 40 years the mid-80s here and we see up until then it actually home prices actually were correlated with incomes okay that's where when banks were somewhat on a leash and now let's call it a deregulated bailout economy that we're in now banking system okay so moving away from California now a more nationwide snapshot here again out of money maven dot IO we're gonna link to this and again a Fed chart and this is the Case Shiller twenty City index and this takes twenty of the largest cities in the US and median home prices again compared to incomes and if we look again at the red line we see that we're way beyond this 2006-2007 peak before the financial crisis and again we saw the disconnect starting in the late 90s early 2000s here in home prices tried to correct the government came in the bailouts the loose lending started again alright putting most people into debt once again and here we are and look at incomes down here in the blue line and they've been stagnant or barely have budged right since the last financial crisis so why is that if the economy is so good if unemployment so low why our income so stagnant well we should probably do a whole video about it but I like to call it the bread crumb economy right so many corporations with record profits over the last five to ten years okay the biggest tax cut that they've been given in in many many decades but it's being used for and I said I'll say it again it's being used for stock buybacks larger CEO compensations we'll talk about that in a different video but the CEO to lower-level employee ratio is the worst that it's ever been it's basically uncharted territory so we've never seen this level of greed and separation between the lower middle compared to the upper class okay so what's going to happen in the next downturn when home go down like this again are we gonna see bailouts again or could this next decline be the recession of all recessions okay there's a wild card on the White House nobody knows really what he's gonna do even the mainstream media is out there trying to figure out what he's gonna do okay he's been speaking out against the Fed Kate is it all the show well nobody knows for sure that's why when we look at these things and analyze these things we have to say well this could happen or this may happen there's no guarantees and if anyone tells us that they know exactly what's going to happen well I wouldn't believe him because unless they have a really good crystal ball okay but thanks for watching everybody I hope to see you down in comments and again if you'd like to ask me a direct question please come over to Twitter and there's going to be a message link at the top of the page and that way I can easily find your question or your message or your comment if it's something that you definitely want to get a response to versus putting it down into comments which is going to be you know in YouTube for example it's going to be hundreds of other comments and I might not actually find it down there okay hope to see everybody here next time thank you for watching bye now you

33 thoughts on “Housing Bubble 2.0: Homes Most Overvalued Since Great Recession, Mortgage Refinancing Plunges

  1. All you have to do is understand the Federal Reserve System and who owns it (has nothing to do with our government and of course fractional Reserve banking. Yes, your showing valid points but, you totally miss the underlying issues. No person in the White House or in government or Wall street has anything to do with this. All Puppets playing their assigned roles: To Keep you divided and not seeing the real phony system you live in. Go read Creature From Jekyll
    Island. (that is good starting place if you wish to go down the deep rabbit hole of this stuff.

  2. I saw this coming at least 3 years ago with commercial real estate with the Multi-Family apartment buildings for sale. When I started seeing overvalued buildings going for prices like $75,000 per unit or more in certain areas, I knew it was going to trickle down to the residential as well.

  3. In houston there is a housing shortage. More buyers than sellers. Then u have large companies coming in buying up neighborhoods & renting them out. The middle class is gone & so is the american dream.

  4. Here in Las Vegas rent is going higher and home prices are very expensive. The hosing market is “labeling.” Realtors will tell you it’s a sellers market and the market is doing great. Of course, what else can they say. They just wanna make money

  5. Just to put things into sobering perspective, every 1% adds about 9% to the carrying cost of the mortgage for the same property, not including any ongoing/future home appreciation; so the mortgage for the same avg house last year is now 17% more expensive, same house no upgrades etc. the prob in the 80s when interest rates were much higher was there wasn’t the kind of YoY home appreciation that’s been goin on since the late 90s now to help offset them. Watch how the market will look in a year close to 6%…

  6. Excellent work Jason. Thanks for keeping us informed. Things may about to get Krazy here in the land of milk and honey. ( Beautiful Las Vegas) We just elected the first democrat governor in over 20 years along with newly elected democrats throughout state government. Neighbors are now calling this place Eastern California. When the raiders get here that should really cement our destiny or fate.

  7. Hello 🙂 Just discovered your content and I like it! Do you think house prices are finally going to drop in SoCAL? B/c in San Diego everything is still out of reach….

  8. Wage stagnation is a result of the emphasis on Share Holder value above all else. The priorities are short-term quarterly profits, executive bonuses, and stock performance. Keeping employee compensation down is essential to achieve these things and increase shareholder value. As mentioned in a recent article, stagnant wages are a "feature" of the economy now and are considered the norm. Don't count on wage growth to any significant extent.

  9. If money was only going to stock buybacks, there would not be so many factory openings and jobs being created. Same-old, Trite "let's all hate rich corporations" Fake leftist propaganda. Boring.

  10. If going just by the looks of the chart 2022-2025 may be the rough years. But are some going to wait possibly 7 more years to buy or just be 7 years in to paying off a 15-20 year mortgage?

  11. Hey Jason? What is your opinion on the housing market in San Diego. I am currently stationed in Hawaii, but hoping to relocate to San Diego in a few years. We rent and saving up a lot of cash from the previous sale of our old home. What trend do you see in San Deigo in regards to price drops and mortgage start? You mention that you recently sold your apt. Was it hard and did you make the money to expected to made and did you overpriced it and have to drop the price a few times?

  12. Your chart at 7:45 is comparing real income to nominal home prices. You need to switch this to real home prices to compare properly. It’s still a large divergence and speaks to a coming correction. Same problem with your Case-Shiller index. It’s nominal being compared to a real number.

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