BiggerPockets Real Estate Podcast - BiggerNews: 2024 Housing Market Update (Home Prices, Mortgage Rate Predictions)

Starting point is 00:00:00 Do you ever wish that you knew what was going to happen with your investments ahead of making a big decision? I do. It would sure make things a whole lot easier, but unfortunately, it just doesn't exist. As investors, we have to operate with some level of uncertainty, but today we're going to get you as close as we can to some certainty, or at least an idea of what might happen, by whipping out our sometimes dysfunctional crystal balls and peering into the future of the housing market. Today, we're predicting what happens in the second half of 2024. Hey, everyone, it's Dave. Welcome to today's bigger news episode. In this episode, I'm bringing on two seasoned investors and market watchers to help me read the tea leaves and make some educated predictions about the second half of the year.

Starting point is 00:00:54 First, we have Kathy Fekke. Thank you so much for being here. Kathy, I know this is a tough ass, so please don't hate me for public. making you make economic predictions. Don't hate me if I'm wrong. Let's just make that agreement. Yeah, everyone, be nice to us. This is not the easiest of things to do.

Starting point is 00:01:13 But we're going out on a limb to help you all learn at least how we think about making predictions and operating in an uncertain environment. So thank you, Kathy, for being so gracious. Brian, I know you already hate me. So I figured I just bring you on out of sight anyway and make you do this against your will. Well, I appreciate that. you could redeem yourself if you delete the recording and say 90 days. That way nobody could look back on this and say I was wrong. Yeah, I know. I wish we had that power of editing.

Starting point is 00:01:42 I guess we might, but we would never do that. All right. Well, thank you both for being here. Today, we're going to be reviewing housing market predictions from some of the biggest data houses in the real estate world. And then we will give our take on these predictions to help you make informed decisions in your investing journey. Today, we're going to cover Fed actions and rate cuts. We'll talk about mortgage rate predictions, home price growth. We will be grudgingly discussed crash scenarios. And make sure to stay around to the end because we are going to review a sort of wacky prediction that we found while researching this show. Now, before we get into our predictions, I want to give you all just a quick rundown state of the real estate market.

Starting point is 00:02:24 Here is where we currently stand. And just for everyone's information, we were recording this at the end of July 24. Right now, the rate on a 30-year fixed rate mortgage is 6.81%. For the FHA, it's considerably lower at 6.25%. The median home price right now is up to a whopping 442,000, which is up 4% year over year. Inventory, the measure of supply in the housing market, has been going up pretty steadily this year and is actually at 23% over the previous year. But that doesn't really tell the whole story because we're down 50% from pandemic highs and about 25% or 30% from pre-pandemic levels. So don't get too excited when you hear inventory is going back up. That's just a brief look at the housing market. Obviously, there's a lot more to it. But I think those stats might help

Starting point is 00:03:21 you better frame and understand the conversation Kathy, Brian, and I are about to have. All right. Well, before we get into some of the more housing-specific predictions, I figured I'd let you guys warm up a little bit with some macroeconomic. So we're going to start first with inflation. Morning Star has predicted that the PCE inflation gauge to average 2.4% in 2024 and down to 1.8% over 2025, just below the Fed's 2% target. Bloomberg forecasters are predicting inflation to be at 2.6% by the end of the year. Brian, do you think either of these rather optimistic forecasts are accurate? Well, I think they probably are. What interesting is, if you look at the PCE inflation and break it down into components, the biggest components of inflation,

Starting point is 00:04:18 lately have actually been housing and insurance costs. And housing is actually the biggest component of the PCE inflation we've been seeing lately. So if you were to take housing out, it's already there. In June, it was 1.9% if you took housing out. And housing is already starting to moderate. And I think it's a lagging indicator. And personally, I think we're kind of already there if you're thinking in practical terms and not in governmental new math. Yeah, I just want to clarify what Brian's talking about. We often in the media here, you know, inflation, quote unquote, is at 3 percent or inflation is at 3.6 percent. But the way that it's actually calculated is there's different, they call them baskets of good. So they talk about things like energy or food or in this case

Starting point is 00:05:12 housing. And it's been sort of, at least in my opinion, sort of this whackamol situation, over the last two or three years where some basket of goods would be really, really high for a couple of months, then it would go down. But another one would come up. But the persistent one, as Brian's been talking about, has been housing. But luckily, recent data shows that it has been starting to moderate, and that does bode well for inflation. Kathy, are you as optimistic as Brian?

Starting point is 00:05:43 I am. I think we're there already. I hope we're there already. one of the things I do look at as well is wage growth, and that seems to be slowing down as well as job growth. And so if people aren't making more money, then they won't maybe spend as much, and that could be reflected in the inflation report. So this sounds right to me. The one thing that did concern me was 2025 to 2028 that we'd be under the Fed's target. You know, what does that mean?

Starting point is 00:06:12 That's kind of where I'm at. Does that mean we're looking at more chance? of a recession or is this more stimulus that the Fed's going to do and cut rates even more than expected? It seems like they've been kind of late to the game quite a lot. And so I think, Dave, you've kind of said before, it's like the swerves of the economy were somewhat manageable. The last few years, they've been drastic swerves. So the car is just moving all over the place. So if they are cutting rates too late, this could mean that they're going to have to cut them even more. There's going to be more swerving.

Starting point is 00:06:49 So hard to predict what's coming in three to five years. But hopefully they're not too late to the game. Yeah, I agree. And it does seem from recent press conferences and all the stuff that's coming out from the Fed, that they are less militant and strict about this 2% target than I think people, they were signaling they were going to be. a year or two because it could take a little while. Even these predictions are saying that it's going to be a little while before they get to 2%. But as Brian pointed out, some of the underlying data does seem to suggest that we're on track to 2%. And so I think they're comfortable

Starting point is 00:07:28 starting to consider cutting rates even before we reach that 2% target. At least that's what they're signaling right now. This is actually a very good segue in. into our second topic, which is the other thing the Fed's going to be caring about before they potentially cut rates, which is the labor market. Morningstar, who also made a prediction for us for inflation, they expect a slowing of job growth until late 2025 in response to falling GDP, and by 2026, the unemployment rate, they believe, will rise around one percentage point compared to where it is in 2023. And so that means it would probably be in the high 4%. That would be a pretty big difference from where we are today. Kathy, do you expect the labor market to weaken in that way?

Starting point is 00:08:24 I wasn't really expecting that. It still wouldn't be the end of the world if that were the case. You know, we've seen during the Great Recession, unemployment was as high as 9 or 10 percent, and then during COVID, of course, it was off the charts. So that wouldn't necessarily reflect a major crash to the market if it went up 1%. But I don't think that unemployment will, and this is not based on me having lots of graphs in front of me and lots of data. Just on the one hand, the Fed did slam on the economic breaks. with all these rate hikes so fast and holding them so long. So normally we would see a dramatic response to that with lots of job losses,

Starting point is 00:09:08 and that just hasn't been the case. A lot of the job growth that we've seen over the last few years was kind of a combination of a return of jobs after COVID with then normal job creation combined with a massive unprecedented amount of stimulus that created a lot of that. A lot of that is backed off, right? We're not necessarily at this moment in time seeing a lot of, stimulus, although that could be around the future. And since we're moving into a rate cut environment, that's what everybody seems to agree to. That's a stimulus. It's a shifting of the tides right now

Starting point is 00:09:41 from tightening, tightening, slamming on the brakes to kind of putting the gas on when you cut rates. So I don't know. I don't, I don't see that. But, you know, again, could be wrong. Could be wrong. Again, maybe they're, maybe they're cutting too late. And therefore, you know, it's going to take, there's going to be an aftermath of that, that there would be more job losses than expected. But I don't think so. That's true. But, you know, the way I think about it, at least with cutting too late, is that a quarter, you know, a 25 basis point, a quarter of percent cut is not going to change the math on hiring all that much so that people start hiring a lot. But it does create a little bit more certainty in the environment, which I think would allow people,

Starting point is 00:10:26 businesses to either start hiring or continue with hiring plans, avoid layoffs, just that sort of certainty and mindset shift from the Fed may be enough to stave off further job losses. Brian, what do you make of that? I don't know. I think that, you know, we may see an increase in unemployment in the near term simply because you've already started to see like some larger companies having some pretty significant layoffs as of late, including some tech firms and, you know, numbering in the hundreds. And that is likely, in my opinion, to continue for a little while before the effect of any kind of stimulus that may come our way gets a chance to get its footing. I mean, I'm of the camp that thinks that the Fed was using the wrong tool for the job and that they didn't want to admit it,

Starting point is 00:11:19 so they just kept doing the same thing, even though it wasn't really working. and then waited too long to, you know, they don't want to admit they're wrong, so they just kind of keep it up, and they've kept it up too long, and it's caused a lot of damage in some sectors, and I think that that's going to have some lingering effects. Now, do I think that we're going to see COVID-style unemployment or even 2009-style unemployment? No, not at all. But I wouldn't be surprised at all if we didn't see, you know, a minor to moderate tapering in the near term with a recovery, you know, maybe a year later or so. I'm generally of the same opinion, Brian. I do think that even if the Fed cuts rates, a lot of things and plans have been in action for a while and that we will see unemployment take up. I don't know if it's specifically going to be up to 5%, but probably into the mid-4s. And I just want to make sure that everyone puts that in perspective, 4.5% unemployment rate is not that bad. I mean, in a historical perspective that is still relatively strong labor market. Now, when you dig in

Starting point is 00:12:21 the numbers, a lot of the job growth has been in lower income jobs. So that is a concern, at least something I had. But Morningstar wasn't predicting that, so we don't have to get into that particular topic. But I do think seeing a modest uptake in unemployment should be expected, but I don't think we're going to start seeing some cascading thing where we see just like huge, massive layoffs. At least there's not a lot of evidence that points to that right now. All right, we've got to take a quick break, but when we come back, we'll predict what these labor and inflation numbers will translate into in terms of what we're all really wondering about, which is rate cuts. Stay with us.

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Starting point is 00:16:07 Check it out at RentReady.com slash BiggerPockets. That's RentR-E-D-I-com slash bigger pockets. Hey, investors, I'm here with Kathy Fecky and Brian Burke. Welcome back to our mid-year predictions episode. All right. Well, we've been dancing.

Starting point is 00:16:25 We've been dancing around the whole rate cut discussion for this episode so far. But we have to get into that because that's ultimately what our audience wants to know. As of right now, Reuters is predicting the Fed to cut rates twice in 2024 for a total of 50 basis points. That basically means half of a percentage point. Bank rate says that investors currently expect that the Fed will cut interest rates once this year. There are actually markets where you can see how investors are placing bats and you can deduce what they think the Fed is going to do.

Starting point is 00:17:00 And so we have one prediction at one rate cut, one prediction at two rate cuts. Brian, what's your prediction? I don't have one because, you know, who am I? I'm not an economist. So I listen to kind of a lot of different opinions out there. but one opinion that we really can't ignore is the markets, and the markets are pricing in at least one rate cut this year, possibly two rate cuts. If I were a betting person, I would say that we probably get one rate cut this year, if nothing changes, and there's a possibility that we get to,

Starting point is 00:17:35 I don't think either of them are going to be significant enough to shatter the earth. If we're lucky, we'll get 25 bips once, maybe 25 bips twice. I did just read. read something recently where some traders are pricing in for 75 bips by the end of the year in two cuts, which would mean a 25 bips on one and then a 50 on the other. That's, I think, also possible. I mean, again, like I was saying before, Dave, I think the Fed's using the wrong tool for the job and they need to walk that back before they create more damage. Brian, I don't think you understood the assignment on this episode.

Starting point is 00:18:12 You have to have predictions. All right, then my prediction is we're going to get two 25-bip rate cuts. How about that one? Excellent. There we go. I like how you said you did have a prediction and then later said, if I were a betting man, here's my prediction. Don't worry.

Starting point is 00:18:29 We're not going to hold you to it. We just want to know what your best guess is. With that, Kathy, what is your prediction? I predict that you're going to hold us to it. So are a lot of the listeners. We're going to play it on. future episodes regularly to hold you accountable. That is definitely happening.

Starting point is 00:18:48 But with that said, I really think bank rate is super wrong on this prediction that the Fed won't cut interest rates until November. It's pretty well agreed and accepted that it's going to happen in September. And the data supports that. So I'm not sure where they came up with that. Writers says two cuts. I would agree with them. I'm in the writer's camp today, one in September and possibly one, probably one in November,

Starting point is 00:19:12 because I think everything the Fed's been trying to do, which is to slow down the economy over the past couple years, has finally happened. It's been stubborn. And again, that to me comes back to the largest stimulus that this country's ever seen that just was like lighting a firecracker into the economy. It's taken a while to slow that down, but it's working now. So we're behind other countries that have already started their rate cut cycle. So we're going to have to play catch up, in my opinion, I think there's going to be at least two, just two. I'll just say two. Well, I'm with you, Kathy. Actually, you know what? I'm going to say one. I actually think it's going to be one in September, and then I think they're going to wait and see what happens. Because I do think

Starting point is 00:19:54 there is fear that they could reignite the economy and damage some of the progress that we've been making against inflation. And I actually think the housing market is probably the most sensitive to this. As we've talked about sort of with the labor market, I don't think 25 basis point cut or 50 basis point cut is really going to make that difference. But if they got mortgage rates down to the low sixes, I do think we'd see sort of a reacceleration and interest in the residential market at least. At a time where the housing market is finally starting to slow down, it seems, over the last couple of weeks, we're starting to see trends where appreciation is slowing. And that's what the Fed wants. and I don't think they're going to want to imperil that. I think the signal that will be sent by one single rate cut will be all we get for 2024.

Starting point is 00:20:46 And now you can hold me accountable because I actually made a prediction after making you guys make many predictions. All right, on this note, we're just humming right along. It's almost like this was extremely well planned by our producers that each of the topics flow into each other. Next set of predictions is for mortgage rates by the end of 2024. This isn't even really that interesting. Everyone's predicting the same thing. Fannie Mae says 6.7%. NAR says 6.7%.

Starting point is 00:21:14 The Mortgage Bankers Association says 6.6 and Freddie Mac at 6.5. So basically all of them are saying between 6.5 and 6.7%. Brian, do you have any reason to disagree with this forecast? No, I don't because you'll also notice that these rates that they're forecasting are very similar to rates today. Very bold predictions. Yeah, very bold prediction. They're not off by much. But see, here's something to think about. You know, people oftentimes are paying very close attention to what the Fed does to get signals on what's going to happen with mortgage rates. And it's completely wrong way thinking because the Fed does not control mortgage rates. Mortgage rates are more closely tied to the 10-year U.S. Treasury. And the 10-year U.S. Treasury is guided by traders who are trading these long bonds. And these markets are very forward-looking. and they tend to predict what's going to happen more than react to what's already happened.

Starting point is 00:22:13 And if you've looked at the 10-year curve lately, it's already come down from where it peaked a couple months ago. And I think that's in reaction a lot to the Fed's change in rhetoric. I mean, the Fed has two different arrows in their quiver. One is to take action by moving interest rates. The other is just in what they say. you know, and when they say things like, you know, we think we may have a cut coming, you know, and not quite exactly those words, that signals to traders to get a little bit more aggressive on the long bond side. And I think that a lot of the movement in mortgage rates is already priced in. So if you're waiting for like, oh, I'm going to wait to buy a house until the Fed cuts interest rates by 25 basis points, you might just have missed the mark. I mean, there's really no sense in waiting for that. So I don't think that's going to be. an earth-shattering event, mortgage rate-wise. Kathy, do you agree?

Starting point is 00:23:09 I agree, and I disagree with the way bond traders trade. I think they're extremely reactive and all over the place. They're like little chickens, just afraid of every little noise that they hear. And we have a lot of noise. We've got an election coming up, depending on who gets elected. That could send to the 10-year treasury all over the place. It's so hard to predict where mortgage rates are going to go. With that said, I'm I'm right in there with the 6.5 to 6.7 percent. How's that for my prediction?

Starting point is 00:23:42 No, I don't, I wish they would, no, I don't wish that they would go lower. If rates go lower than that, the housing market will absolutely go bananas in terms of people jumping back in and being able to afford. And that would then affect inflation. So it would be healthier, in my opinion, if these predictions were correct. I think they will be that we're probably not going to see the bond market go that much lower than where it is unless there is a lot of concern about a recession. So then we've got other things to worry about, like a recession, if they go much lower than that. And that affects a whole bunch of things. If people lose their jobs, then that affects housing and so forth. But I, so far, that is not what the tea leaves are saying. Most people are not predicting

Starting point is 00:24:30 that, that there's a recession around the corner. Well, I'm going to be extremely bold and go outside of their forecast to 6.75. I know. It's pretty risky. Pretty crazy. I actually think the forecast is probably right on, but I wanted to say something different than everyone else. So I'm going to say that I think if the Fed only cuts rates one time, that perhaps mortgage rates will stay a bit higher. I think, whatever it is, it's going to be high sixes, right? I think barring a Black Swan event, something that's very unfortunate, it's probably going to be high sixes. And for real estate investors, for people listening to that, like, it shouldn't really matter all that much. I mean, the difference between 6.6 and 6.8 is probably not going to be the difference between whether you buy a deal or not.

Starting point is 00:25:19 So I think you could take some confidence that we're going to stay relatively close to where we are for the rest of the year. Well, Dave, if you're going to do that, then I'm going to go under and I'm going to say 6.45 because of the just the fact that we're going into a rate cutting cycle. This is getting very risky over here. We're really getting crazy with these forecasts today. Getting competitive. I feel like we should put money on it. All right. Well, let's get to the other.

Starting point is 00:25:49 topic that everyone really wants to know about, which is U.S. home prices. So Rezi Club, which is a residential real estate data aggregator, has put together actually a super useful chart here that talks about different forecasts by different financial institutions. And they are talking about 2025. So a lot of what we've been talking about today, just so everyone knows, has been for the rest of the year. This is a 12-month forecast. So, from where we are today, actually from June of 2024, last month we have data for to June of 2025. Goldman Sachs has 4.4 percent, Wells Fargo, 4.3.

Starting point is 00:26:31 I'm going to call out those two because both of those numbers are above the historical average, which is about three and a half percent. So they are saying above average growth for Goldman and Wells Fargo. Then we have the Mortgage Bankers Association and Morgan Stanley, both at 3.3 percent and 3% respectively, so about average. And then the institution saying under average growth are Zellman and Associates at 2.3%. Fannie Mae at 1.5%, Freddie Mac at 0.5%, and Moody's at 0.3%. Zillow's not on here, but I actually saw that they were forecasting a decline over the next

Starting point is 00:27:08 year. So, Brian, where do you come out on this? Where do you think residential prices will be a year from now? You have to make a prediction. I'm siding with my girl Ivy Zellman at Zellman and Associates at 2.2 or 2.3. I'm going to say 2.5%. I don't think that they're going to be very high. I think we're going to have a fairly flat market going into the future for the next year or two. So I just don't see a lot of movement. Even if, you know, Kathy mentioned like if interest rates fall, we could see some runaway home prices. And I tend to think that if interest rates fall enough, we could have some of those demands offset by additional supply because there's a lot of interest rate hostages right now, this being homeowners who have a 3% to 4% interest rate who can't sell right now unless they want to trade into a 6.5% or 7% mortgage rate.

Starting point is 00:28:11 So there's a lot of inventory that isn't hitting the market. We could say pent-up supply that could offset some of the pent-up demand caused by people buying as a result of lower interest rates. So I think all of that's just going to play together and just mean we have a fairly flat, uncertain market for the next 12 to 24 months. So I'm going to bet 2.5%. Over or under, Kathy, 2.5 is off the board. You have to go above or below, Brian.

Starting point is 00:28:40 Oh, yeah. I'm going to swing on this one. Here we go. I already said that I do think that mortgage rates will come down a little bit. And when that does, the floodgates open. You have 15 million millennials at first time home buyer age. You've got low inventory still out on the market. You open up the door to a few more million people able to afford and it's going to be craziness. It's going to be mayhem and that's going to drive prices up. That has been my prediction. for a while that is every time, every time we see rates go down just a little, there's another boom in the housing market. Now, granted, prices keep going up so it gets harder and harder, and mortgage rates have to come down a little bit more to compensate for the higher prices. And like I said, I think they could, considering we're going into this rate-cutting cycle. A lot of things are going to slow down, but I don't see it. I don't see the housing market. So to sum that up in a number, I'm going to go with four.

Starting point is 00:29:40 4.6% growth. All right, 4.6% growth. I'm going to change that to 4.8 just because I like the sound of those numbers. Okay. I'm going to split the middle here and talk about, I think right about average growth. I'll say 3.2%. I actually, I am a little more tempered by this idea that we're going to see explosive runaway appreciation once. we, once the rates start to go down, because on one hand, what we're seeing is that the reason

Starting point is 00:30:17 there's such little supply is because there's low affordability. And that's the reason there's low demand. But saying that we're going to get an improvement in affordability and only demand is going to come back without supply coming back. I'm not convinced of that. I think they're probably going to come back both a little bit at the same time. And I also think in the meantime, before affordability improves, we're already starting to see inventory really start to pick up. It's already up 23% year over year. It's still down like 40% since below the pandemic. So it's still very low. But there is real movement here in terms of inventory. And so I don't think it's going to be this runaway thing. And I do think we're going to see flat-ish around the average, you know,

Starting point is 00:31:02 around the inflation rate appreciation for the next two or three years is my best guess. But again, I obviously don't know. Okay, we have to take one last quick break, but if you've been dying to jump into the conversation with your own predictions while you've been listening, head on over to biggerpockets.com slash forums and a poster takes there. And don't go anywhere.

Starting point is 00:31:23 When we come back, we've rounded up the wackiest predictions out there and you don't want to miss those. And we'll also get Kathy and Brian to weigh in on the housing market crash rumors right after this. People love to call real estate passive income, which is interesting, because most of the investors I know are very busy. Busy finding deals, busy managing teams,

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Starting point is 00:34:46 So we had another prediction I was going to ask you guys about market crashes, but I think I know the answer for this. We've got nose across the board here, right? Well, you know, you look at this, the home price forecast that we just talked about. It's all positive. You know, with Moody's being the lowest at up 0.3%. That's not a housing crash, people. I've been through one. I know what one feels like. In parts of California prices, we're down 70%, you know, during the Great Recession. So we're talking here a slowdown, predicted in home price growth, slowdown in growth, not price declines. Will there be markets? Were there price declines? Of course. And that's what's so frustrating when we take these national numbers and say, you know, the average home price is going to go up with 4.8%. That just, just,

Starting point is 00:35:35 just no average home price. One house on one side of the street and another house on the other side of the street is going to have different value based on their views and so many different things, maybe road noise. So, and then diving in deeper into markets. Brian and I, we study this stuff.

Starting point is 00:35:52 Well, Dave, you do too, like which markets are really going to take off and which ones are going to be more challenged. So anyway, I hate this question. But overall, overall,

Starting point is 00:36:04 yeah, There's, there's, nobody's predicting a home price crash or, unless you're a YouTube, you know, star. If you're a YouTube star, then for sure every single day, there's a housing market crash. Then you have to do it at least once a year. Yeah. Brian, I take it, you have the same idea here. I do. Some of those people, Kathy mentioned, I think I've predicted 10 out of the last two housing crashes.

Starting point is 00:36:31 So, you know, it's kind of what you, you get what you pay for. I guess. No, I don't see a housing crash coming. We don't have the catalyst to it that we've had in previous housing crashes. If you look at the kind of 05 to 08 crash, you know, they had really high debt load on behalf of homeowners. And, you know, that was just a recipe for disaster. And the last price crash before that was the late 80s, early 90s, you know, and there was a, a lot going on then that isn't going on now. So I don't see conditions for that. I think we're going to see stability in a flat market.

Starting point is 00:37:15 But if you're waiting for prices to collapse before you get in and make an investment, you'll probably do what a lot of people have done in the past, which is just sit and wait and watch the thing outrun you. And you'll never get into the market. I tend to agree with both of you. but if anyone listening to this is concerned about a crash or even regionally, like what a decline would mean in your local market, because I do think we are going to see certain areas of the countries,

Starting point is 00:37:43 at least experience corrections, if not a full-bone crash. If you are worried about that next week, a week from today, actually, we're going to be releasing an episode about a potential market crash. We're actually going to just be talking about logistically. Like, what would it take for the market to actually crash in terms of numbers? Like how many homes have to come on the market? How much demand has to get pulled out of the market? And our objective is to allow you to decide for yourself whether you think a market crash is likely.

Starting point is 00:38:14 So if this topic has been on your mind, definitely make sure to tune in next week because we're going to be talking about that. All right. Well, I've gotten through all of our major predictions for today. Thank you, guys. I actually have one more just kind of crazy prediction that we found in, in, in, what? while we were researching this episode. Let me just tell you the headline of it, and then I'll ask you guys if you agree with that.

Starting point is 00:38:40 The headline of the article is, A crisis by young American men will cause housing prices to correct by 20%. There's a person named Meredith Whitney, who said that the clearing price of homes will be some 20% lower than it is today as baby boomers age and downsize. She expects that some 45 million homes will come on the market, she estimates.

Starting point is 00:39:05 Gen Z, who are not buying homes at the same rate as previous generation, and the increase in the number of single men on record will mean that those homes won't get absorbed. Therefore, because young men are living at home and because Gen Z is aging, housing prices will go down 20%. Now, we just talked about the prospect of a crash, but Brian, or Kathy, let's start with you. You're just laughing over there. I take it that laugh means that you find this far-fetched. Here's what I want to do.

Starting point is 00:39:39 I want to have Meredith Whitney and Logan Motishami on this show debating this topic, and it would be fun. I don't know where she comes up with this stuff. I mean, it definitely garners her some headlines. She's been just way out there without much data to support these kinds of claims. And sorry, Meredith, I'm just saying. I find some data to support this because that is crazy. The thing that determines whether or not their prices are going to go up, there's going to be a 20% crash in prices because men aren't working.

Starting point is 00:40:11 Sorry. Most of the men I know are, you know, most, not all. But, you know, this is just headline. This is just clickbait. That's all I could say. I would love, love, love, love. Please, producers of BP, get this debate going between Meredith and Logan. Let's do it.

Starting point is 00:40:30 Let's get Meredith on. I just, I have some questions here. What do you think, Brian? Yeah, I read the article. And, yeah, I agree with Kathy. I don't think there's any chance this is going to happen. One of the theories of the article is that, you know, people, she says this notes say baby boomer. She said people over 50 are going to be downsizing and put their homes on the market.

Starting point is 00:40:54 Well, I got news for you. You know, the medical technology is improving and 50 is the new 40. and I just turned 55 this month, and the house I moved into a year ago is triple the size of my last house. So if they think that mid-50s are downsizing, I think they have it wrong. The other thing is, like I mentioned earlier, there's a lot of people with really low interest rates, and are you going to downsize your home with a 3.5% mortgage to get a smaller house with a 6.5% mortgage and have the same payment? I just don't think that's really going to happen. So, no, I don't buy this argument, I'm afraid.

Starting point is 00:41:33 I just, yeah, I feel like someone basically typed into like chat GPT. They're like, come up with a clickbait article about how just that will inflame people about the housing market. And it was just like this random hodd pod of ideas to put together to claim that the housing market's going to crash. So no, I'm not buying this one. All right, well, Kathy and Brian, thank you so much for joining us today. I really appreciate it. I know that publicly making forecast and predictions is not that fun, but it's fun to listen to. And so we're glad that you came to talk about these things because I do think it's helpful,

Starting point is 00:42:13 at least for our audience, to hear how you're thinking about these things. And I would encourage everyone here to make that your main takeaway, because obviously none of the three of us know what's going to happen. But we all study the markets, look at trends to try and make sense of what high probability outcomes may be in the future. And I encourage you all just to remember that. Try and make decisions based on the most likely outcomes, even if you don't know exactly what's going to happen. If you want to connect with either Kathy or Brian, we will, of course, put their contact information in the show notes below. Or you can connect with them right on biggerpockets.com. Thank you all so much for listening.

Starting point is 00:42:51 For Bigger Pockets, I'm Dave Meyer. soon for another episode of the Bigger Pockets Real Estate podcast. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value in the best markets across the country without making real estate your second job? That's exactly what rent to retirement does. They're a full service, turnkey investment company handling everything for you. In some cases, investors get 50 to 6.000. 75% of our down payment back at closing, plus interest rates as low as 3.75%.

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BiggerPockets Real Estate Podcast - BiggerNews: 2024 Housing Market Update (Home Prices, Mortgage Rate Predictions)

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