Epic Real Estate Investing - 2025 Housing Market SHOCK: 5 Predictions You Can't Ignore | 1425

Episode Date: February 14, 2025

In this explosive episode, we break down the shocking Fannie Mae report that has the housing market in a standstill. From the paralyzing 'lock-in effect' freezing homeowners in place to the stark divide between hot and cold regions, the growing inventory crisis, and the looming construction catastrophe—this is the real state of the market. We’re diving deep into recession red flags, the game-changing shifts coming by 2025, and what the Fed's potential pivot means for your future. Plus, we’ve got insider strategies for homeowners, buyers, and investors to navigate the turbulence and unlock new opportunities in real estate. Don't miss these critical insights—adapt now, or risk getting left behind! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. The housing market isn't just cold. It's frozen solid. By the end of this, you'll understand why 2025 could be the year everything changes. Because February 2025, Fannie Mae just dropped a bombshell report

that has economists reaching for their panic button. Here's what they're not telling you on the nightly news. Five predictions that will shake the very foundation of the American housing market. And warning, this isn't for the faint of heart. If you're looking for sugar-coated optimism, then click away now. Prediction number one, the lock-in effect

paralyzes the market. Three years ago, 80% of mortgages were written below 4%. Today, we're staring at 6.5%. This isn't just numbers. It's millions of Americans trapped in their homes. Meet Sandy in Denver, 2021 starter home, 2.8% rate. Now she needs to upsize for her growing family. The problem, trading that golden ticket for today's rates. On a $400,000 mortgage, her payment jumps from $1640 to $2528 monthly. That's $8,88,000.8,000. extra every single month for 30 years. The total cost, an extra $320,000 over the life of the loan. And Sandy, she's not alone. In California, a homeowner with a $700,000 mortgage would face a $1,50 monthly increase. In Seattle, $1,200 or more. This isn't just about monthly payments.

It's about dreams deferred. And that's what the data says. But here's what's actually happening on the ground. While 62% of mortgages remain below 4% per core logic, The real story is in regional disparities. In pricey markets like Denver and Seattle, 78% of homeowners face payment increases over $800 a month if they sell. But in affordable Midwest markets, 43% could upgrade without payment shock. So the key insight here is, this isn't paralysis, it's strategic stagnation. Savvy homeowners are leveraging equity through Helox, up 18% year-over-year for renovations rather than selling. While traditional bridge loans often means sacrificing your low rate. Innovative 2025 programs let you tap equity without

refinancing your existing mortgage. So consult the mortgage specialist to navigate this possibility for yourself. It's not for everybody, but if the shoe fits, you should consider trying it on. And here's a quick tip for you. Target homeowners who've owned five plus years in high appreciation areas. They have equity to work with, and they are more likely to consider creative financing options. And while this lock-in effect reshapes individual homeowner decisions, it's feeding directly into an even bigger market shift. And here's where it gets really interesting. Prediction number two, the American housing divide becomes a chasm. Forget red states and blue states.

2025 story is boom states versus doom states. The sunbelt's still growing. Austin is up 8.2%, Phoenix is up 6.4%, Miami 7.1%. But look, north, Chicago, prices are down 2%. point three percent. Detroit falling 3.1 percent. And builders know it. In Florida and Texas, permit applications are up 50 percent, while Northeast applications hit a 10-year low. First-time home buyers in traditional markets aren't just getting squeezed. They're getting locked out entirely. The numbers tell the story. Median home prices. Austin, $580,000. That's up 8.2%. Cleveland, $220,000. That's down 1.8%. This isn't just a price gap. It's an operating. It's an operating.

opportunity gap that's reshaping America's housing landscape. And that's what the data says. But here's what's actually happening on the ground. Builder permits, that tells the real truth. Austin, permits are up 32%. That's up from the 2004's baseline. Phoenix, they're up 28%. In Chicago, they're up 9% contrary to popular belief. The real divide, affordable versus luxury markets. You see, entry-level homes, houses priced less than $300,000. That inventory, is down 41% nationwide. While homes of $1 million or more, that inventory is up 19%. And while this geographic divide grows wider, it's creating an even more pressing crisis that nobody's talking about. Prediction number three, the inventory crisis deepens. The National Association of Realtors' latest

bombshell, we're at 2.9 months of housing supply. A healthy market needs six. Let that sink in. In Seattle, homes under $500,000, just 142 listings. That's dead. down 68% from 2019. And Boston's inventory below 400,000, that dropped 82%. The cause? Well, boomers, they're not downsizing like everyone thought. They're aging in place. Meanwhile, 14 million millennials are fighting for scraps.

That's what the data says. But here's what's actually happening on the ground. The nationwide supply. Four months of inventory for single family, 6.2 months for multifamily. The crisis, it isn't absolute. It's priced here specific. So for homes under $400,000, there's a 2.3 month supply. 68% of those sell in less than 30 days.

They're going fast. And builders are responding. 61% are now offering rate buy downs on entry-level models. You know, last week, my student JT found a $400,000 house per $320,000 using one simple approach, targeting properties that were on the market for 60 days or greater with a very specific letter campaign. You know, a little know-how and support that can go a long way. And while this inventory squeeze has buyers frustrated, it's forcing builders into a position

that we haven't seen in over a decade. Prediction number four, new construction hits crisis mode. The Census Bureau's December numbers, 494,000 unsold new homes. That's up 10% year over year. That's the highest in 15 years. But here's the real thing. Eight and a half months of supply, that's nearly double what's healthy. So builders are panicking.

33% are slashing prices by at least 5%. Over 60% are offering desperate incentives. Mortgage rate buy downs to 3.99%. They're offering free upgrades, closing costs. They're covering those. And Florida and Texas builders, they're drowning in inventory, facing 5 to 10% price cuts just to move properties. That's what the data says.

But here's what's actually happening on the ground. Yes, unsold inventory hit 494,000 units. That is a 15-year high. But consider, 53% are spec homes. Homes priced less than $500,000. $71% sold within 90 days with these incentives. And construction starts. Despite all of this inventory, they're up 16% month over month in December.

This isn't 2008's speculative bubble. It's targeted building where the demand exists. And while builders struggle with their inventory, brace yourself for what might be the most shocking prediction yet. This is number five. Recession signals are flashing red. With median new home prices at $427,000 and 7% rates, only 16% of American households can afford.

afford to buy. That's lower than 2008. And yes, today's buyers have better credit, 750 versus 715 in 2006. And foreclosure rates, they're just 0.6%. Not 2008, 4.6%. But when 84% of Americas are priced out, that's an economic powder keg. And that's what the data says. But here's what's actually happening on the ground. While median prices require $107,000 income per the National Association of Realtors, first time. buyers, they're adapting. 38% are using family co-signers. That's up from 12% in 2022.

29% are buying 2 to 4 unit properties to offset the costs, and Builder 321 buy-downs are saving $12,000 annually. So the real story? 14 million millennial households are forming through 2007. They're not waiting.

Creative financing deals surged 41% last year. And while these warning signs have many experts predicting Doom, they're missing three critical catalysts could change everything in 2025. First, the Fed's pivot. Mortgages potentially below 6% by summer. You're skeptical on that one? Fair enough. You know, every inflation spike sends rates jumping. But here's what matters. Even brief rate dips create buying windows. I mean, in November, a quarter point drop triggered a 7.2% sales surge. Imagine what a full point could do.

Number two, construction reality check. Yes, starts are up 16%. Permits are surging 50% and growth markets. So are there over supply fears? Well, let's do the map. We've underbuilt by 6.8 million units since 2012. So when you add 1.8 million new households forming annually, but we're only building 1.5 million units? That deficit grows by 300,000 houses every year. Even at record building pace, we're looking at a decade plus to catch up. This isn't just numbers. It's simple supply and demand. And three, the millennial momentum. Fourteen million new buyers need roofs over their heads, backed by 5.2% wage growth. When Pokemon cards or PS5s are scarce, prices soar. Yet, people ignore this same law of supply and demand with housing. I mean, think about it. We're short,

millions of homes, but we keep adding hundreds of thousands of new households every year. Something has to give. These buyers will either rents or they will buy, but they need to live somewhere. And with rising rents, pushing payment parity toward ownership, which way do you think this ends? This isn't a 2008 do-over. It's a market reinventing itself. The winners will be those who understand that the market isn't crashing. It's just evolving. Adapt or get left behind. So some action steps for you, for the homeowners, the buyers, the investors. First, the homeowners. Low inventory means maximum leverage, but timing is critical. So if you're sitting on a sub-4 percent rate. Consider this. Use your equity position now while inventory is tight and pull cash out

at your current rate to buy your next property before selling. This lets you househap the market, buy at today's prices, and then sell when rates drop and buyers flood back in. Focus on markets with strong job growth, where prices have room to run. Think Research Triangle, Austin's Tech Corridor or Phoenix's Biotech hub. Now, two, the buyers, this is for you. Your strategy needs to match these market conditions. So target that 750 plus credit score. Go to work on that. It's your ticket to the best rates when they do drop. But here's what most miss. Build relationships with local lenders now, because they're going to call you first when special programs hit. And those special programs they hit all the time. You want your phone to ring when they do. And then watch those sunbelt markets.

Builders are offering five to 10% price cuts plus rate buy downs. Stack these incentives with FHA's 3.5% down program? And suddenly, that unaffordable market looks doable. And now number three, investors, this is for you. Should have focused on two types of properties, over-leverage new construction in the Sun Belt, an aging inventory in growth markets. I mean, the 60-plus days on market, they're proving there now that there's flexibility and price and terms with retail sellers. And there is a third property type, because this market's creating the perfect storm for off-market deals. You see, while everyone waits for perfect market conditions, real wealth is built by finding motivated sellers. Fortunes are built in bare markets.

I mean, it's said that people who buy real estate during bad markets make three times more money than those who wait for good market. No kidding. Kind of changes your definition of what's good and what's bad, doesn't it? And why is that? Because smart investors know one simple truth. Motivated sellers exist in every market. and there are three types of sellers who need solutions, regardless of the market timing.

The first type, those experiencing personal distress, like divorce, job transfers, inheritances, you know, life, it doesn't wait for market conditions. The second type are those that are experiencing financial pressure. And you can see that through tax liens or missed payments or underwater properties. These situations, they create urgency. And then there's the property problems, properties that need repairs or they got, the landlords got problem with the tenants or the properties got code violations. These headaches make sellers very flexible on terms.

And these sellers, they need creative solutions, seller financing and subject-to solutions. But here's the reality. You need to understand these strategies before you need them. You know, last month I predicted that Phoenix and Austin sellers would lead the creative financing revolution. Today, Core Logic confirms 27% of Southwest sellers now accept lease options or subject-to deals.

That's triple-2024's rate. The same patterns are emerging in Florida's new construction market where 41% of builders are offering seller financing to move their inventory. And if you've been following me, you know that my students know how to do this, and they prove it every day. They're locking in off-market deals within 45 days using our proven system, from finding the deal to funding it to closing it. If you'd like to join us, head over to epicapprentice.com for the details. You can answer a few questions, and then I'll personally review your situation for immediate opportunities and wins. that we can find for you. 2025 is going to be a defining year in real estate.

The question is, which side of history will you be on? The one waiting for perfect conditions or the one creating opportunities regardless of market conditions. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe

button when they get here and I'll take great care of them. God loves you, and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know, home for us, we got the cash flow. This podcast is a part of the C-suite Radio Network.

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