The Bizarre Florida Crash (2023 -2030 Housing Crash)

in the summer of 2022 as the case Schiller index began to crash reversing the gains we had seen for over 11 years something interesting began happening in a few bizarre Pockets throughout the country from Seattle to San Francisco the trend was clear the market was reversing course at a pace worse than 2006. this development had many people worried that a strong real estate crash one rivaling the great financial crises was underway however there were asterisks in other areas frustration grew as prices refused to budge and follow this trend for example in Miami Florida the dip in values began just as it did in the rest of the country the case Schiller there began falling in September of 2022 showing signs that Florida prices were finally reversing the insane gains we had seen since February of 2020 but this reversal proved to be short-lived just three months later in December prices were once again flat with the index even going up during the start of 2023 and one of the biggest real estate markets in the United States dates a new storyline had begun to enter the mainstream the theory was that this unique state was immune from a crash in today's video we explored his possibility and look at what's at stake and how it relates to the rest of the country can these markets show us what's likely to happen in the next year and are there flashing signs that suggest something big is about to happen this summer to understand this I took data from retin publicly available for download using their data center page and what it reveals is a story that starts before 2020. you see take for an example the Miami Market Miami was never really known to be affordable but housing in the suburbs before 2020 was a different world compared to today just three years later in January of 2020 it was still possible to buy a reasonable house within the area for around three hundred and sixty thousand dollars so remember this was a time where interest rates hovered around 3.7 percent which means an average home buyer would need around twenty two hundred dollars a month to afford a house that was of reasonable quality in a fair location within the suburbs now after the events of 2020 we saw Miami experience nothing short of a Super Bubble by the end of that year the median sale price had jumped 18.3 percent going from 360 000 to nearly 440. many people at this point were simply shocked how can housing possibly behave like a penny stock in one of America's largest real estate markets but the craziness didn't stop there in 2021 the insanity continued prices jumped another 19 percent by the summer of 2022 the market in Miami was the poster child of the post-2020 bubble nobody could believe what had occurred according to the ref Vendetta the median price had increased from 360 000 in January of 2020 to 565 000 in May of 2022 in about 30 months the average home buyer went from paying 2 200 a month to 4060. that's nearly two times more with values jumping over 57 percent to put that into perspective it took the Cleveland Market more than 20 years to come complete a return of 57 that's from 2002 to 2022 the Miami Market did that in two years or 10 times faster everyone was screaming that a crash was coming and for good reason the Euphoria greed and speculation was on a different level so when things finally took a turn in June of 2022 every bearish analyst on the internet took notice was this finally the relief buyers were looking for values took a turn for the worst but in the Miami Market this turn didn't last for too long in fact zooming in on December you can really see where prices bottomed out in this mini crash from the top to the bottom medium prices fell seven percent or 3.5 percent seasonally adjusted this isn't much but considering the alarming Pace at which they were falling there was a lot of reasons to panic if you were an investor or seller but just as we rang in the New Year everything began to reverse once again seasonally adjusted median sale prices began growing from January 2023 till April 1st prices Rose 3.5 percent nearly erasing the strong winter decline in backed as it stands today Miami prices are just four hundred dollars from the top that we recorded in September of 2022 and my guess is that with a fresh report from Redfin we will break the record next month now enough about Miami let's zoom out and look at the situation overall this at the end of the day is a widespread development happening throughout Florida I took the major metros of the state and came up with this graph which proves what I had suspected across the state we're seeing a pause in declines while Miami might be the only metro area that's seeing a seasonally adjusted uptake other cities are staying mostly flat refusing to budge despite the national average coming down in a recent months so why is this the case and is it just another dead cat bounce a small rally that you typically see happen just as we're entering a strong decline after all this is a well understood phenomenon that happens during every single Market cycle for example during the Great Depression stocks rallied 46 percent from late 1929 to Spring 1930. after this massive rise they went on to drop up over 80 percent and while this is the most extreme example it's something that's observed in every Market on Earth to some degree now many are classifying this 2023 recovery as exactly this a last-minute dose of Hope before the final crash sets in and there is reason to believe this side of the story if we head back to the retvin data center we can see why so many are skeptical in buying in on this most recent rally there's evidence that the cliff is right in front of us but before we go over this please take a moment to hit that like And subscribe button if you're enjoying the content in my last few uploads you guys were kind enough to give me over 4 000 likes and I was hoping we could hit that elusive 5000 number this time around now back to the evidence you see if we look at some demand indicators we can see that Miami isn't the same as it was in Summer's past for example the percentage of homes sold above their list price is actually 16 percent lower than last year and it's quickly Rising this shows that the shift in power is moving away from sellers to buyers you can see that reflected in the percentage of homes that experience a price drop during those Super Bubble days this number was as low as 8.2 percent meaning that nearly every listing in the area was incredibly competitive today one in five will be forced to reduce the list price in order to sell there is no better way to spot this reversal of demand than by looking at the median days on Market stat this number records how long a typical home will sit on the market before selling at one point it was 46 nearly two times less than what we see today in fact today's numbers are actually in line what we saw before 2020 so your next question might be how is it possible that with such terrible demand figures prices continue to stay strong well in my opinion it mostly has to do with inventory I believe that regular people have already given up on the Florida Market the only buyers left are investors speculators and mostly out of state people who have enough money to buy at any price you can see this by looking at the number of homes sold which actually just came off record lows in fact in January of 2023 there were only 105 55 single-family home transactions for the entire metro area 45 percent lower than the year before it wouldn't be unfair to say that the Miami Market along with dozens of other smaller markets in Florida essentially locked up earlier this year it was completely a liquid meaning that very few transactions created the illusion of strong prices it's well understood in economics that illiquid markets create bizarre outcomes for values the lack of ready buyers leads to large discrepancies between the asking price set by the seller and the bid price submitted by the buyer this means that for an example in January when 155 homes were sold a big buyer or institution can move the median price immensely by overpaying on just a couple of dozen homes so with just a few transactions you can make the entire Miami Market appear resilient liquidity at the end of the day introduces volatility and risk so in the opposite direction when prices begin falling sellers have a much harder time finding buyers which leads to the same effect to the downside just as we saw prices jump 3 point five percent in two months we can see prices fall ten percent if we get any sort of catalyst we are already seeing homes sitting on the market for longer and longer and as Banks reduce landing and Powell tightens the economy the little power buyers have left will become harder and harder to maintain the truth is once the downturn in Florida begins that will likely Mark the end of the bull market for the rest of the country as well we saw that happen in 2008 and it wouldn't surprise me to see history repeat itself once more so in summary yes Florida and specifically Miami did experience a dip in prices earlier last year but with the new year we saw a recovery occur this has caused many to jump back into the market believing that the worst is over but there is plenty of evidence to suggest that this may just be a balanced induced by illiquidity and speculation as we enter the summer this year we will likely get our long-awaited answer is this the start of a long bear Market or have we entered a new world one where real estate continues its unprecedented Pace upwards thank you guys for watching as always please make sure you hit that like And subscribe subscribe button if you enjoyed it and don't forget to drop a comment below if you're trying to buy in the Florida markets this year

Channel: MHFIN

Views: 81,333

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Id: VmSHF30qU3o

Length: 9min 6sec (546 seconds)

Published: Tue Apr 25 2023