The Housing Market is a Disaster: Now What?

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Michael Zuber (0:27)

The scary headlines about the real estate and housing market just keep building. Just in the last 48 hours, I have learned that new listing activity is down 7.5%. Folks, sellers are on strike. Active listings are growing 4.9%.

Homes under contract are down 10.5%.

Yes, folks, buyers are on strike, we knew that, but now sellers are on strike also. Record cancellation is at 14%.

So what are we going to do? Folks, we know the headlines. We know it's crazy out there. But we're going to take a conversation about four different investor types, and we're going to talk about what we recommend for each investor type. And we're going to do this in reverse. We're going to start talking about the investor with 50 plus units first. Then we're going to talk about the investor with 10 to 50 We will talk about 1 to 10 And then we will close with the new investor at We spend a lot of time talking about new investors, so we will close on that concept. And folks, we're going to have this conversation with Jason Hartman, somebody who's been in the business even longer than I have, so we have 50 years combined. Jason, I don't think you can look at the housing market and say it's rock and roll. In fact, I think it is frozen, frozen, frozen. But let's talk about those investor types. Well, yeah. 50 plus.

Jason Hartman (1:45)

Michael, what you started with, which is interesting, there's no shortage of scary headlines about the housing market. But what was interesting about that is people think that means prices are going to crash. And then you said, sellers are on strike, and that means the opposite of prices are going to crash. If there's not a lot of inventory, you ain't having a crash. Okay?

The ingredient you must have is lots of the inventory. That means crash. Okay?

Michael Zuber (2:18)

I think it's even, it's more important than that. It's not only inventory, it's motivated or distressed inventory. Because what we've seen the last two or three months before the buyer strike is sellers were listing, but they were not cutting prices. They were putting out what some people would call wish pricing, and then they would just take it off the market. That is not a recipe for a price crash. So again, transaction crash, yes. In fact, tomorrow or Wednesday, we get existing home sales, and I think they're going to be a train wreck. Like 3.8 million is going to be bad.

Jason Hartman (2:49)

Right, right, right, right, right, right. But remember, the investor or the home owner occupant, they don't really care about sales volume, right? We care about that. We're in the business of, you know, transactions, right? And volume matters to us, but it does not really matter in any real way.

When you say sales volume is a train wreck, sales volume is down, the market is frozen, you're absolutely right. No question. I mean, sales volume is way down. Everybody who makes money off the transaction has been singing the blues for three years. But I do want to say on that note, this is interesting, okay?

We all probably know by now that people are more motivated by fear of loss than desire for gain, okay? And interestingly, and this is probably not a sustainable thing, I'm sad to say, but our business at Empowered Investor, which is based on transaction volume, when we had the rate hikes just a couple of months ago, volume went up. I mean, our business has been actually quite good lately. It's not the glory days. Don't get me wrong. I'm just saying it's been markedly much better in terms of volume and investors buying than it was before. Now, that could mean that investors are just kind of tired of waiting to compare to what question always comes up, like, what else are they going to do with their money? They've got money. They need to deploy it somewhere. What are they going to do? And real estate is the best alternative, even though the market is rather boring, for sure.

So those things are all in play. But I just wanted to make that very important distinction of sales volume versus sales prices, very different things. Okay, back to the question at hand. So the big investors, right? That have 50 plus units, is that what you want to address?