Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast herein
Greenville South Carolina I'm your host
as always Stan McCune realtor right here
in Greenville South Carolina and as
always you can find all of my contact
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use me as your realtor today we're going
to talk about the national trends of
real estate right now
specifically comparing the current
market to what we saw back in 2008.
now before we get into that I'm going to
start by saying that anytime I talk
about National Trends even when I'm
looking at National statistics I'm doing
it through a Greenville lens because the
things that happen in Greenville and the
state of South Carolina are quite
frankly different than what we see in
the rest of the United States in fact
every real estate market is local to a
certain extent there is an extent to
which we're all interconnected but
there's a very real reality where
we're all independent what the market is
here in Greenville is not what the
market is in Tampa is not what the
market is in Tucson is not what the
market is in Seattle and so all of these
markets are individual and they have
their own Dynamics but at the same time
there are National trends for us to look
at that hold true to a certain extent
through all of these but I want to warn
you that when I talk National real
estate it's always through a Greenville
Centric lens so let's start off with
that
now secondly with regard to what
we're looking at here there is a big
debate right now over what is happening
in the real estate market, it's actually
a heated debate I didn't realize this
until just recently on Twitter but there
are two very distinct camps right now
there is the
the market fundamentals in
the current state of the market are
completely different than what we saw in
2008-2009 when we had the the Great
Recession which was a housing Market
recession and the housing market
completely collapsed
there are people that are that say
that it's completely different none of
the statistics would indicate that we're
in anything, it resembles what happened
in 2008 2009 and thereafter and then
there is the other group and this is
the group that tends to be a little bit
more heated and I don't know why I
don't know why they're angry I actually
asked the guy why do you sound angry
online about this
but they're they are insistent no the
housing market is collapsing just like
it did in 2008 and 2009.
and everything is very similar to what
it was back then so it's very
interesting we have two camps that are
are looking at the same data and coming
to very different conclusions and so I
feel like it's worth it for us to look
at some of this data and black knight
Financial Services which tracks a lot of
very helpful mortgage-related data
and delinquency foreclosure-related data
they've released a bunch of
slides and a bunch of information
this past week that I found to be
extremely helpful and so I want to share
some of that with you guys today and so
again
for those of you that are
potentially that had the option to
watch on YouTube you may find this
helpful because we're going to be
looking at several slides here but
I'm also going to describe to you all
that that prefer to listen to the audio
only so the first thing that I'm going
to look at and that we need to discuss
here is existing home sales this is one
of the most interesting things that we
can look at and I'm looking at a slide
that's from verify advisor
perspectives and this looks at existing
home sales going all the way back to
the late 90s all the way through February of
2023.
now here's what we find interesting we
have two very distinct Peaks and four
very distinct valleys on the slide the
first page the first Peak I don't know
where that accent came from but
the first Peak that we see is right
around 2006. that is the number one peak
of home sales when home sales hit
7.26 million at their absolute top and
then we don't see it go above six again
after it falls off because obviously we
know that the housing market
crashed it fell all the way down to
to one of those valleys but we don't see
it go back up again above six until
2020 and that was when it hit the next
Peak right before 2021 of 6.73 so we
have these two distinct Peaks between
roughly 2000 the end of 2005 into
2007 6 and the end of 2020 into 2021
those are the very clear peaks of when
home sales hit their Top Line
6.73 million and 7.26 million in between
we have a few massive valleys and a few
mini Peaks and so obviously the two
biggest valleys that we have were that
chart just completely drops off is in
2000 the end of 2008 into 2009 where
home sales really bottomed out into 3.77
million then they kind of rebounded a
little bit but then they bounced back
down and went all the way back down to
3.5 million that is the lowest number
3.45 million that's the lowest number
and that was in the middle of 2010.
the lowest number on this entire
graphic right here
and by the way, these are these are
seasonally adjusted annualized rate of
monthly sales from the National
Association of Realtors in case you
really want to to nerd out on that data
but then after that crash in 2010
home sales started increasing and they
they kept going up they made their way
up into 2013 then we had another
Little Valley that is just kind of
expected as the market fluctuates they
kept going up a few little valleys here
or there they started to go back down in
2019 and I remember
towards the end of 2019 my broker at
the time thought that we were heading
into a mini-housing market recession
well then we all know what happened 2020
the pandemic happened and then
we had another one of these massive
valleys when the market basically was
just suspended for essentially a couple
of months and we went all the way back
down after we had been hovering around
the five-and-a-half million range that
was kind of where things kind of leveled
off in you know between 2015 to 2019
we were seeing roughly five and a half
million home sales per year
there or sorry five and a half
million home sales per month on this
chart
adjusted per the adjusted annualized
rate of monthly sales
it dropped all the way down to the
second or depending on how you look at
it but up to that point the second
lowest Valley or just the lowest valley
beyond what we had during the Great
Recession so it went all the way down to
4.01 million home sales right after
we went into lockdowns and all of that
which we're now we just surpassed
the three-year Mark of when all
those lockdowns happened well it was
right after that number
jumps all the way back to 6.73 so a
reasonable explanation of why it went so
high so fast is because there was a
backlog of buyers right there was a
backlog of real estate transactions that
had to happen
so that 4.01 number when the market
completely bottomed out simply because
we went into lockdowns it had to over
correct and it did overcorrect with a
bunch of home sales that then followed
throughout the rest of 2020 and then
obviously these numbers continue to
be elevated in the 6 million range
above that standard 5.5 that we had been
seeing until we see another major drop
off this is when mortgage rates start
going up we see a major drop off and now
all the way down to at the beginning
of this year to the lowest number since
the Great Recession exactly 4 million
now why is this important it's important
because we are already in a housing
market recession okay this is very easy
to look at this and just be like oh wow
yeah look at this interesting we've
had all these ups and downs we are in
the worst housing market since the Great
Recession
from the standpoint of existing home
sales that is super duper important
and if you don't
think about anything else consider that
one thing that is the most important
consideration from this what we are
experiencing right now is already
comparable in many ways to what happened
in 2008 2009 you say well it doesn't
feel that way
it doesn't and so that's going to be
something that we're going to talk about
as we continue with the show but
guess what in February the number
bounced back up it bounced back up from
all the way down to that bottom that it
hit in January of 4 million sales
it bounced back up to 4.58 so we're
seeing a very quick bounce now does that
mean that there's going to be an
additional drop that happens later
very possible this is these are where a
lot of these debates are coming from
people aren't sure exactly where
all of these numbers are going to go
from what I see the market seems like
it's heating up as we're entering the
busy season again from a Greenville
perspective I can't speak to some of the
other markets that my listeners might
be listening from
from the standpoint of the Greenville
Market I can definitely feel things have
been heating up for quite some time
now and on the national level it
appears to have been happening as well
but we are currently in a housing market
recession but I've been telling you guys
this for a while if you've been
listening to the show there we are in a
new normal
the market has been fundamentally
changed Forever by the pandemic things
are not going to feel the way they felt
five years ago 10 years ago 15 years ago
it is not going to feel the same it's
it's a very different environment from
what we've experienced in the past
all right I'm going to move on to my
next slide here
new real estate listings so now we have
to ask okay why is this new normal how
can we be in the worst housing market
recession and I'm not going to count the
pandemic because that was an artificial
recession from artificial from the
standpoint of it wasn't caused by
natural economic things it was caused by
a very strange phenomenon that then
resulted in political lockdowns that are
debated to this day whether they should
have been done to the extent that they
were I'm not going to get into any of
that because that's not going to be
profitable for anyone at this point you
all have your opinions and you're going
to hold on to them regardless of what I
say
but we need to discuss okay let's
let's just get rid of that
and even if we don't get rid of
it we can still say that we're in the
worst housing market recession since the
Great Recession since we were just
coming out of the Great Recession in
that 2010 2011 period of time
and so why does it feel different all
right so let's look at new real
estate listings if we're comparing to
pre-pandemic so the percent difference
of real estate listings from from
various different periods of time in
comparison to the same month's average
from 2017 to 2019. what we find is
during the pandemic, there is obviously a
massive drop in real estate listings
that is the largest drop it went down 37
percent in comparison to same month
average of 27 to 2019. and then it
gradually started to build back up
and then the chart kind of fluctuates
with some months being positive in new
real estate listings someone's being
negative the important thing is that we
see a weird Trend where it went
really low and then started to creep
back up and then started to go back down
again
in terms of real estate listings
really dropping off and this is the
environment that we're we're in right
now real estate listings have completely
dropped off and have completely
disappeared basically the past 12
months this has been since the FED has
started again increasing these
interest rates and so now you have this
Dynamic which we've talked about before
a people being scared to sell because
there's nothing to buy or maybe people
don't want to sell because now they're
they're locked into this you know
2.875 cushy 30-year loan why would I
sell and give up that to then now have
to get a loan at six and a half seven
percent whatever you qualify for as a
mortgage rate
you're going to spend disproportionately
more money to not get the amount of
house that would
have bought the previous two years
prior to all of these mortgage rate
increases
and so here we are we're in a cycle
of real estate listings being way way
down and I don't see this changing
anytime soon because if all these people
locked into these cushy 30-year mortgages
rates for like almost free money and
it's going to be really hard for people
to surrender that and to put their house
on the market to move somewhere else
unless they have to relocate for
something or unless they're in a
situation where they can no longer
afford their mortgage which is something
that we'll be talking about in a little
bit so this is a big reason why the
housing market is different than what it
was in 2008 guess what in 2008 there was
a lot more new listings coming on the
mark it and that's what we're
going to be talking about next so let's
look next at this if you're looking
on YouTube, this chart is active listings
so obviously what follows when there's
new listings is in that directly impact
active listings
so active listings had a mean which is a
fancy way of saying average of around
2.3 million if again if you're looking
at this on YouTube, You'll see thousands
on the right but these are thousands
of thousands so think of this where
it says 2500 that's actually 2.5 million
so active listings the average a
number of active listings on this
graphic is roughly 2.3 million active
listings
you see that from the 80s through
basically 2007 it really hovered around
that number and that was really
consistent
and then right before the Great
Recession the the number jumps way up to
four million active listings right
before 2008 and so here is a a big
aspect of what happened
back in 2008 is that we had an insane
amount of Supply remember economics are
all about supply and demand we had a
massive boost in Supply that was
fueled by home builders and a lot of
other things that just by far
outweighed the demand and so we see
this in insane increase that just
basically happens overnight where where
Supply goes from roughly 2.3 million
active listings to roughly 4 million
active listening listings
and then bottom falls out of the
housing market and then we have been in
a complete decline ever since then
and that decline had kind of leveled off
a little bit around the roughly 2013
to 2016 range but then we've seen active
listings get lower and lower each
basically each year since 2016 and the
reason for that a lot of it has to do
is just absorption just more demand in
the marketplace we we have Millennials
coming on board becoming a major buying
Force really more so than Generation X
ever was even Gen X came on board to
some extent during this time there was a
lot of Gen Xers that really got hit hard
by the Great Recession and they weren't
able to start buying until the late
2010s they found themselves buying their
first home in 2017 2018 2019
and then of course a lot of baby
boomers have entered retirement age the
past 10 years and they have the largest
Network worth of any generation
that has ever been tracked as a
generation for a variety of reasons and
so we've got really three generations
like an unprecedented amount of Demand
Being put on the market by
three consecutive and simultaneous
Generations
and that has just brought way more
demand into the marketplace to absorb up
active listings combined with and this
is very important
I don't have a slide for this but I just
know this from my residual knowledge of
what has happened
home builders never ramped up back to
their pre-great recession levels of Home
Building they didn't they took a much
more conservative approach and they've
been much more measured and much more
guarded in terms of how much development
they've been doing and so the net result
of all of that is that we've gone from a
peak of four million active listings
right before 2008 to the most recent
data has us right around 1 million
active listings an entire
depending on how you look at it
basically a 75 drop-off from what we
were right before or depending on the
way you think about it right in the
Great Recession so this is why it feels
different okay has demand fallen off the
cliff as a result of mortgage rates
absolutely there was a massive drop in
demand as a result of mortgage rates but
guess what there has also been a massive
drop in active listings for all of the
reasons that I just described and so
even though during the Great
Recession well you people are expecting
the market to be like the Great
Recession where it's like oh you know my
neighbor there they lost 30
percent of their home value like
overnight
and so this is what people are Waging
War on Twitter and some of these other
platforms arguing that this is going
to happen again and the counterargument
to that is we have
25 the amount of active listings that we
had back then but we have more demand we
back then back in 2008 what was the
predominant buyer pool back then like
what generation was entering the market
it was basically Gen X well they were
crushed by the Great Recession as I
already said baby boomers a lot of them
guess what let me ask you this how many
people in their 60s do you know that
have been in the same house for 20 or 25
years guess what they are con they are a
major contributor to this they bought a
house before the Great Recession and you
know what they're perfectly content to
stay there they have just been there for
20 25 years as the same generation that
has bet has had the same job for in some
cases 20 25 30 35 years things are just
different now than they were back then
obviously
My Generation other similar
Generations we move around a lot more
and so a lot of these things weigh in
with the result that active listings are
at a historical low and
it there there's nothing quite like it I
mean this chart goes all the way back to
the early 80s and nothing on here is
nearly as low as what we're seeing now
and so the result of that is we
can have a recession and a res but have
a housing market recession that feels
much different than it did in 2008.
here's another reason why it feels a lot
different
you look at National delinquency rates
specifically on first-lean mortgages so
not including like home equity lines of
credit things like that the delinquency
rate is also at an all-time low we are
at 3.45 percent the average
4.54 so we are well below the average
delinquency rate but if you're looking
at this on YouTube look at when it's
spiked again this is during the Great
Recession and it but it was starting to
build well before the Great
Recession actually happened
and so these delinquencies when people
went into foreclosure that was a huge
factor in what drove prices down because
prices don't just fall in a vacuum right
I the arguments that you hear from
people on Twitter is they they bring up
these spreadsheets that show all right
here's what the average person could buy
two years ago or three years ago four
years ago and here's what the average
person can buy now and it's like yeah
that that's a big housing affordability
problem like we do have that we have a
housing affordability problem but it's
still not the same because it again even
if housing becomes affordable and that
unaffordable and that causes demand to
drop we still had the issue of prices
don't tend to go down people just tend
to not list their homes this is the
thing and that's exactly what's
happening people just aren't listing
their homes whereas in 2008 2009 2010
2011 people were going into foreclosure
why are they not going into foreclosure
because they have so much equity in
their home right now and even if somehow
the market contracted so much that
people lost 10 15 20 of their Equity
they would still have enough equity that
they would be able to list their home
and sell it without going into
foreclosure now if they if the listings
went up then that would open up some of
these constraints that we have in the
market right now
but it would not open things up to the
extent that they got opened up during
the Great Recession when people went
into foreclosure and now homes were
selling for for pennies on the dollar my
first home I bought for 80 000
it was a foreclosure and I bought it
for eighty thousand dollars and
Fannie Mae paid for some of my
closing costs it was a Fannie Mae no
it was HUD HUD paid for even some of my
closing costs as well
and it's in a great part of
Greenville I used it now as an Airbnb
property
and that was that was my first home
that's Unthinkable now to buy an 80 000
home in a in a good part of Greenville
but that was the way the market was
and that was a home that was just
sitting that home had been on the market
for a long time, I didn't want to buy
that home I wanted nothing to do with it
I even told my wife we went to look
at it I was just like I don't want I
don't want to look at this home but
we were just running out of options
because we kept getting outbid on the
things that we could afford and
that might sound surprising that during
the Great Recession that we were getting
outbid but hey believe it or not during
any Market there are bidding wars and
when you identify good good deals in any
Market you're going to run into
competition and that's what we did and
our first home we bought was was a
foreclosure that nobody else wanted
because it was a overpriced
but it was also it just needed so
much work
and so the Foreclosure dynamics that
we're experiencing right now nothing
nowhere near comparable to what happened
in 2008.
how could we possibly get to what
happened in 2008 that's at the
unemployment rate started going way up
if people really started to lose their
jobs and then they
really just
I mean it would have to be people that
put very very low down payments the past
few years then they lose their job and
they just perhaps they bought like a
year and a half ago so they haven't seen
quite the amount of equity explosion
that in a positive way that some
people did you know the people that
bought in like 2020 their home has
gained 35 40 percent value since that
time so again even if even if it loses a
bunch of value they're still going to be
just fine
the people that bought a year
and a half ago maybe bought right on
the On The Fringe of what they could
afford
and their home hasn't gone up as much in
value as some of the others around us
and now they they potentially lose
their job those are the people that are
going to be the most at risk for going
to foreclosure but the Foreclosure rates
right now still historical lows
next we're going to look at the Black
Knight home price index and so this is
looking at a few different things but
essentially the the annual home growth
rate as well as the monthly change
you've got the monthly change
just straight up and you've got the
monthly change annualized
now what we see on here is
basically the annual home growth
price rate it looks like it's coming
down like it looks like prices are
are going down on homes but actually if
you're looking at the graph here's the
zero percent line so the black line
which is the annual home growth price
growth rate is still above zero percent
and so the most recent which was
February of 2023 we saw a 1.9
year-on-year increase we also sell a
monthly increase now here's an
interesting thing prior to February we
had seen multiple consecutive months of
of negative price growth based on
this price index several months of that
well then that reversed in February of
2023.
why the reason why I think that
that is is because inventory has is
going down I've seen this in Greenville
when I recorded a podcast not too
long ago
where I looked at the Active homes for
sale and it was around like 3200 I
haven't looked the past week but like a
week ago I looked and it was 2 600. I
mean just in a few weeks we had lost you
know like 15 of the of the number of
active listings like that's insane
that's an insane drop in inventory that
just happened in in a very short period
of time and so what's happening is I
think we're seeing all of these people
ramping up as we go into the spring
season people now recognize this new
normal they realize oh I if I wait
you know another six or eight months
there's a good chance that rates are
still high and even if they come down a
little bit they're probably not going to
come down that much to really matter so
I might as well just go ahead and enter
this market and try to find something to
buy now even though prices are still
high rates are still high everything is
not as affordable as it was people have
just had to come to grips with this and
so we had a several months of a pushback
that happened that did result in a
seeing a lower price index nothing
again if you're looking at the graphic
nothing in comparison to what we saw in
in the Great Recession
but still a little bit of a drop that
is again in Greenville we haven't seen a
a drop in prices we haven't had negative
price growth or depreciation
at least not on any meta-level that
we've tracked but again on a national
level based on the Black Knight home
price index we did see that until the
past month
and so what's going to happen is this is
this black line going to go up are we
going to see the annual home price
growth rate go up no most people
that I trust think that this will see
some time down below zero percent that
we will see on a national scale and I'll
show you why in a second that we will
see on the national scale
prices show some sort of depreciation
for a few months and then perhaps by the
end of the year it'll hop back up and
and start to see
appreciation again which by the way
if you look at the
historicals this goes up and down
it's not typically below zero percent
unless we're in you know a bad recession
like what we're in in 2008 but these are
are strange times
but it will be interesting to see if
I think that there's a very good chance
that the spring buying season pushes
these numbers up and that we actually
see instead of just the 1.9 price growth
which is a huge drop off from what we
saw 20 not too long ago that the 1.9
percent
rather than continuing to go down as
I hear people say that they think it
will that it could actually reverse the
trend and keep going back up
now
someone on Twitter that again I keep
referencing Twitter because I've had
arguments with people on here about this
someone started calling me names and
insulting me for expressing my
opinion on this that that basically
agreeing with another person who's
an expert
in the housing market
I believe he's with housing wire
I was basically like you know you
can believe that the market is going to
crash like it did in 2008 but where's
your data what data are you coming up
with all of the data would indicate that
this isn't going to happen and
there's a lot of anger that was
that was responded to with that and
the guy said go ahead and cling to your
National Association of Realtor data
blah blah blah and my response to him
was listen you don't know anything about
me I would love for prices to go down I
represent a lot of investor clients you
realize how incredible it would be for
my investor clients if prices started to
go down I flip houses on the side you
know how nice that would be for me like
I have been preparing for this for a
long time I've been ready for a
recession for a long time
but the reality is that I don't see
it I don't see the like I said before we
are in a housing market recession but I
don't see prices going down with that
recession to the extent that a lot of
people think that they will
we sell prices in our last Market
stats basically Flatline year-on-year
but with the amount of activity, I'm
seeing right now it would it would
pretty much at this point be surprising
in the Greenville area if we don't see
at least moderate increases year on year
continue at least through the busy
season but we'll have to track that
again this is all very new a very new
normal and all bets are off
last thing we're going to look at
here is the month-over-month change in
home price index and we we just talked
about the home price index but it's
important for us to look at regionally
what's happening and so essentially
what's happening is that the HPI the
home price index is being dragged down
by the West California Arizona Utah
Washington State
there's even I'm not sure which
city it is but there's a major city on
Texas in Texas perhaps that's
Dallas maybe I'm I'm not sure I don't
want to say
but there are several major markets
out west that are seeing declines in
their home price index but nothing, not a
single thing, if you go east of Texas, is
seeing is seeing a decline everywhere
else is seeing moderate increases in the
home price index except for a little
sliver up in which I guess is
referencing New York is just kind of
flat at zero percent
but here in South Carolina
we had point two percent
and then it appears it's kind of hard to
read this to read this map but it
appears that North Carolina was 0.1
percent and Georgia was 0.2 percent
so basically
we have a divide between the east of the
the eastern part of the United States
and the western part of the United
States the western part of the United
States is seeing price declines the
eastern part of the United States is
still seeing price increases and the
because the West it disproportionately
pulls things down in a lot of ways
a lot of these decreases that we saw
on the previous things that we
looked at
I think we can attribute primarily to
the west and so this is and and
specifically to the West Coast
and so this is why I say I always when
I'm talking about National Trends it's
always through a Greenville lens because
Greenville is just going to be different
we're going to have this National Data
for the United States which is a huge
country massive country like we tend to
forget that the US is one of the largest
Geographic countries in the world and we
have houses being bought and sold in
every municipality within this country I
guess
it sounded good at least but we have
houses being bought and sold all
throughout this country
and the Dynamics in each of these
sub-markets are not the same
and so again if you're looking at
this and you're trying to wrap your
head around to understand that we have
seen buyer demand drop off that is
causing essentially a housing market
recession but at the same time we're not
seeing prices go down yet it could
happen but we're not seeing it yet
and unless we start to see inventory
pick up unless more people start listing
their homes Unless somehow people start
losing their jobs and going to
foreclosure this is what it's going to
be probably for the next year perhaps
longer we're going to see a suppressed
Market we're going to see fewer closings
but it's going to still feel like a
seller's market because it is still a
seller's market until more sellers start
listing their homes for sale
so the market is not like 2008 if you
if you want to believe that it's like
2008 I've got bad news for you it is not
like 2008 if I start to see it change in
a way that I'm like oh crap this looks
like 2008. I will let you guys know
you'll be the first to know all of you
wonderful listeners of this show
I appreciate all of you guys if you
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can help you with any of your real
estate needs I am your guy thank you
once again for listening and we will
talk again next time