"Crash Pricing" Setting In As Distressed Home Sellers Capitulate | Nick Gerli, Reventure

**Nick Gerli** (0:00)
The housing market correction started four years ago when home sales and buyer demand collapsed to the lowest level on record, and we're still in that home buyer demand collapse. Actually, it's a depression of sorts in terms of home buyer demand. Whether you look at existing home sales, pending home sales, builder supply, or you look at mortgage applications, we're literally still at 2008, 2009 lows in terms of demand. Now, the demand was low there for a while, and prices weren't budging because sellers were just saying, well, I don't care if the demand is low, I'm not gonna cut the price. The shift I've seen in the last year, but particularly in the last six months, is that more and more sellers are starting to run into distress, and I'm starting to find properties in some of these states that are down 100, 150,000 from what they sold for just a couple years ago. Literally, crash pricing is now starting to set in on certain listings.

**Adam Taggart** (1:04)
Welcome to Thoughtful Money, I'm Thoughtful Money Founder and your host, Adam Taggart. Very excited to be sitting down with real estate analyst, Nick Gerli, to get the latest on the housing market. And it's quite an interesting time. I'm gonna let Nick go through all the details, but we're at the process where there's a lot that's still correcting and probably a lot of more room for the correction to run.
But there are pockets of opportunity beginning to spring up in the housing market, and if time allows, which it should, we'll do a case study with a property that Nick himself has basically found at valuations that we haven't seen for years. So Nick, how are you doing?

**Nick Gerli** (1:43)
Doing great, Adam. Great to be here with you.

**Adam Taggart** (1:45)
All right. Well, look, thanks so much for coming on.
Did I summarize things here correctly? In other words, that the corrective forces are still finding their way through the national housing market, but we're starting to see in some early pockets, areas of opportunity?

**Nick Gerli** (2:03)
That's exactly right. So the housing market correction started four years ago when home sales and buyer demand collapsed to the lowest level on record, and we're still in that home buyer demand collapse. Actually, it's a depression of sorts in terms of home buyer demand. Whether you look at existing home sales, pending home sales, builder supply, or you look at mortgage applications, we're literally still at 2008-2009 lows in terms of demand. Now, the demand was low there for a while, and prices weren't budging, because sellers were just saying, well, I don't care if the demand is low, I'm not going to cut the price. The shift I've seen in the last year, but particularly in the last six months, is that more and more sellers are starting to run into distress, and I'm starting to find properties in some of these states that are down 100, 150,000 from what they sold for just a couple of years ago. Literally, crash pricing is now starting to set in on certain listings.

**Adam Taggart** (3:03)
All right.
I'm very excited about this because I've been interviewing you for years, Nick, and a lot of the outlook during that time has been pretty negative, and I don't want to sugarcoat the fact that I think there's still a lot of negativity ahead on average for the national housing market. But we have been saying, man, we can't wait to get to the point here where we start to see some opportunity for people in the housing market. Again, it sounds like maybe we're in inning one, but it sounds like you're starting to see some of that opportunity.

**Nick Gerli** (3:32)
Yeah. I mean, if you're in a state like Florida, Texas, Tennessee, Georgia, Arizona, Colorado, as well as some other states, there's now the most supply on the market that we've seen since 2012 at the end of the last housing downturn. And in every single one of these states, almost every day, I find a new listing with a seller taking a big loss, which you could construe as negative, but I would actually construe that as positive for buyers who have been waiting and saving money. Now, the thing to understand is that we are still in a bifurcated market, right? So while the states I just rattled off are seeing declining prices, lots of inventory and opportunity to buy at huge discounts, in some cases, other states are still seeing home prices go up, other states actually still have a perpetual housing shortage. And so this is quite literally the most bifurcated the housing market has ever been.