america's largest home builder just launched a massive recession warning volley towards the US economy Dr horton they're reporting a massive collapse in sales and they're cutting their 2025 revenue forecast on weak demand for homes now this is a huge deal everyone because Dr horton is the number one home builder in America they deliver over 80,000 homes a year and they're telling you that the market is weakening and I think this is yet another signal of how home prices will drop in America in 2025 we're going to see continued declines in values in about half the country as the year goes on in fact you can already see these declines occurring in the states in blue on this map from Reenture app these are the areas where month-over-month price growth is now in contraction and the fundamental issue here everyone is two principal things number one is that home buyers are still boycotting the housing market they cannot afford homes prices are still really really expensive and mortgage rates are still near 7% so the demand is still down but the demand is down now while the inventory and supply is skyrocketing and that's a combination that is now starting to resemble what we saw in 2006 2007 right before that last housing downturn in particular folks I want to walk you through what's going on with Dr horton and what they just reported because it's a huge deal and you need to understand the data behind it so they're saying that we had lower revenue this year they're forecasting lower revenue in the future but the real reason why is sales orders their sales order volume has plummeted over the last year by 15% so they had 15% fewer sales orders in the first quarter of 2025 compared to the first quarter of 2024 but this was especially true in two regions the Southeast and the Southwest where sales declined by 20 to 25% year-over-year and a 20 to 25% decline in sales is huge that is absolutely massive and is telling you that there's something going on in this market and I know a lot of people out there are still resistant to the idea that there's a housing downturn you know I talk to people here in Florida i look at people in the comments section on YouTube and Instagram and a lot of people still say "Hey Nick there's no housing downturn prices are still expensive." Uh and they think that values are going to keep going up in the future but the more that we see these reports from companies like Dr horton and the more that we see the data come in showing declining values the more you can feel confident as a home buyer and investor that things are going to continue to get cheaper and more affordable for you as the year goes on and I just want to spend some time on this map which measures home price declines month over month from February to March so this is data from Zillow available on Reventure app which shows the seasonally adjusted change in values from February to March 2025 and if your states in blue that means values dropped and what's alarming here everyone is that values dropped in about half the states in the US in total it was 24 states where values declined you can see Colorado had the biggest monthly decline i've been ringing the alarm bell on Colorado now for the last month or two we're now starting to see the values drop interestingly California had the second largest decline month overmonth then we had Florida at number three so Colorado California and Florida these are three markets where prices dropped the most monthly 0.44% which annualizes to about minus 5% over a full year in addition values dropped in DC Arizona Georgia Vermont Washington Oregon and Texas as far as the biggest declines and then we also saw declines in a lot of other sunbelt and mountain markets and those value declines measure values across the entire market so that's new builds and resales values are dropping in half of the country right now which is good news for you everyone like I want to make sure you all understand that you know the quote unquote negative reporting that I'm doing on the housing market is actually positive reporting for you as a prospective home buyer investor because I know a lot of you have been waiting for lower prices is a lot of you've been waiting for this moment where the market is starting to trend into more affordable levels and and it is happening it is happening right now now one interesting thing actually about Dr horton is what's going on with their stock price so over the last 6 months Dr horton's stock price is down by 37% and so you know the stock market they thought a year ago that the builders were going to boom so you can see the builder stock prices were in a huge bubble right and then since that bubble they've just continued to deflate and you know you have to be careful looking at stock prices right because the stock market's kind of crazy it's doing crazy things in the last couple months it's doing crazy things since the pandemic but I think it's interesting how so many people missed this right like back in October so many people were thinking that the builders were about to boom and then their revenue collapsed and their orders collapsed and ultimately this is something that I saw coming everyone I've been telling you on this channel for the last two to three years about what's coming in the housing market and the fact that the market was already slowing and that there would be a correction and a lot of people chose not to believe it you know a lot of people chose to believe the mainstream narratives i took a lot of flak from a lot of people from my predictions but literally like right now the market downturn is developing in pretty much the exact way I said it would happen in the exact states and cities that I said it would start in and uh that's not to pat myself on the back but that's just to let you guys know that if you try to understand the housing market from a fundamental perspective and look at data you can see into the future and have greater clarity about what's going to happen more than the mainstream now and I want to show you something here folks i want to show you my home price forecast score here at Reenture App now this is a score that I've told you guys about before but I want to show you kind of how predictive it's been over the last year so our score right now is showing that we forecast prices to drop in quite a few different states over the next year so they're dropping on a monthly basis already but we want to see not just monthly declines we want to see yearly decline and so right now we're saying yearly declines are going to happen in about half the states now a year ago our forecast was more optimistic a year ago you can see most of these states were above a 50 out of 100 on our forecast indicating we had stable to upward prices the only states where we really thought values were going to drop were Texas Florida as well as Colorado and Utah and maybe Arizona now fast forward a year and you can see the year-over-year growth that resulted was pretty much spot-on there's three main states in the US where values are dropping on a year-over-year basis florida Texas and Arizona very soon Colorado will be in negative year-over-year territory as well as Utah Idaho and Oregon if you looked at the reventure score a year ago you would have known exactly the states where prices would have slown or contracted and you would have known also that prices would continue to go up in the Northeast and Midwest so I just want to clarify that for you all how accurate this score has been over the last year so now that we look into the future we can see declining prices are coming for a lot of the US and this is something that you know you all need to prepare for because I know a lot of you have been waiting to buy a house for a while and a lot of you want prices to drop and they are now starting to drop so now that they are starting to drop how do you mentally uh take that in and how do you frame your home search so you can find the right house at the right price well the first thing to understand so you can find the right house at the right price well it's really a function of two different things everyone where our price is heading in the next 12 months number one but then number two how fundamentally over or undervalued are prices today like how much could prices theoretically drop in the ultimate downside scenario where uh not only does inventory keep rising not only do home builders start to have issues but say there's a recession right and say this housing downturn continues over multiple years how much could prices actually fundamentally drop in your area and to answer this question we look at overvaluation rate on Reventure Rap what are the most overvalued states in America to buy a house and how much are they overvalued by and I just want to start with Florida so Florida home prices are 20% overvalued today and you can see this is still reminiscent of a housing bubble in Florida so you know there's potentially 19% price downside just to get back to the long-term norm and if we have like a big recession where there's lots of job losses maybe something could happen like what happened in 089 where values contract well below average but at the very least 19% overvalued from normal before I would feel comfortable saying Florida is a fairly valued market another interesting one is Texas so home prices in Texas are 18% overvalued today you can see they were 30% overvalued 3 years ago so the valuation metrics have improved prices have gone down a bit incomes have gone up but we're still at a very historically overvalued level for Texas's housing market same thing in California in California prices are about 15% overvalued and they've stayed in this 15% overvalued range now for about four years indicating that there is price downside and so if there is price downside via higher overvaluation that means you should exercise caution as a home buyer and understand that if you were to buy a house in that environment unlikely you're going to see much future appreciation and more likely that you're going to see depreciation and one market I actually really want to show you guys that's gotten much more affordable is Austin Texas so in Austin prices were 46% overvalued in March 2022 now they're only 8% overvalued so in Austin the market's corrected by more than 20% the incomes have gone up and so now we're almost back to this long-term fairly valued level um by the end of 2025 I think Austin will be fairly valued on the reventure model and it will be one of the first markets that I actually give a buy signal on and so in terms of when I'm going to start telling you guys hey it's a good time to buy a house I'm going to be looking at that overvaluation metric right and when it crosses the threshold into fairly valued or undervalued territory that's when you're going to know that the market fundamentals uh suggest that if you buy you're at least getting a decent deal compared to the long-term multi-deade norms of course just because a market becomes fairly or undervalued doesn't mean that prices will stop going down in the short term that's where you have to look at the Reventure price forecast score in Austin we have a 32 out of 100 indicating continued downward price pressure in Austin over the next year the reason we think prices in Austin are going to continue to drop is due to inventory continuing to rise and so this is kind of the the balance right of looking at the fundamental indicator overvaluation combining it with the real time 12-month indicator home price forecast so you know where prices are fundamentally and where they're heading in the next year now what's interesting is that certain pockets of America's housing market are actually still performing really well and I want to be clear about this this isn't really a national housing market downturn at this point home prices are dropping in half the US on a monthly basis and we're forecasting at Reenture half the US to have price drops over the next year but there's still 25 other states where prices are going up so if you're a home buyer or a real estate investor you have to understand you know what are these areas where prices are going to continue to increase and if you live in one of these areas what do you do with that information so on a monthly basis from February to March we can see prices went up in these states in red so prices are going up in Illinois Ohio Pennsylvania New York Michigan Wisconsin Kentucky Nebraska Wyoming North Dakota Mississippi as well as New Jersey and New York and if we see a rank list of the states with the best appreciation you could see it's Kentucky is actually number one by far kentucky doubled Wisconsin in second place values in Kentucky are up 7% year-over-year so that's where home prices are going up the most in America right now but in general it's a mix of I would say rust belt markets where uh values are going up the most as well as markets in the northeast and this also showed up this fact showed up in Dr horton's earnings report because Dr horton they reported a 15% decline in sales orders year-over-year on a national basis but that decline in sales orders was mostly concentrated in the Southeast and Southwest if we look at this data again we could see that sales orders only declined 5% in the east and were flat in the north for Dr horton and so the homebuilder sales figures are aligning actually with the overall narrative uh and the data on home price growth showing that the Northeast and Midwest are doing better and I you have to understand folks that this is not just a supply situation it's a demand situation so demand in the Southeast which is mainly Florida is down 26% year-over-year but it's flat in the north which is states like Indiana and Pennsylvania and Ohio and I just want to make that so clear for you because I keep hearing people say down here in Florida that the demand is strong the demand is so good all the people are moving down here people still say that and that is fundamentally wrong to say at this point it is not true anymore if you want to have an accurate perspective on what's going on in the housing market you're going to have to adopt a new mental model of where the housing market is going the next 5 years and that mental model is outperformance in demand in the Northeast and Midwest like not just that prices will do better in those markets but it's that demand will be better in those markets right there's a reversion in migration there's a reversion in economic might there's an reversion and return return to work that is kind of taking away some of the advantages the south south and sunb belt had during the pandemic and placing them back in the legacy cities in the northeast and if you just want kind of a human example of this just think about someone who moved to Florida during the pandemic right and worked a remote job in Florida they moved there because there was no lockdown they moved there because you know it was open which was great but now maybe they work for JP Morgan and they're getting called back into the office in New York City or now maybe they worked in tech and got laid off from their remote job and have no professional connections in Florida and are in a job market where they can't really find a job so they have to move back to California where the tech jobs are located in person or you know third you know there's people who maybe moved to Florida or Texas and ended up missing their family and then moved back to where their family is from i think just a combination of all those things is happening right now which is causing you know the issues for the home builders and the declines in home value and just the reason I'm harping on this so much is so you understand that this is a fundamental structural trend and that this is not just some like aberration this is not something that's just going to quickly revert where all of a sudden we're going to see demand flock back down Florida Texas and Arizona Nevada like that's unlikely to happen we're more likely in a new short-term era over the next several years where demand in these states is going to be lower and prices are going to drop now I asked you guys a pretty interesting question on my channel a couple days ago because I was really curious to understand if you guys were owners or renters who watch my channel and then what you think about where prices are heading in the future and this was really really interesting i asked you guys the question what best describes your current living situation and your perspective towards home prices now 32% of you say "I own and want home prices to drop." So that's interesting a third of you own a house but you want prices to drop which is very fascinating now 53% of you rent and want prices to drop that makes more intuitive sense overall 85% of you want home prices to drop who watch my channel 10,000 of you voted this is a good sample but what I think is even more interesting we go further down this list 13% of you own and want prices to go up so overall 45% of you are homeowners around 54 to 55% of you are renters and funny enough 1% of you rent and want prices to go up maybe uh some people just were trying to be funny with that response but overall I kind of took two different things from this poll one is uh it's a roughly even split between owners and renters kind of who watch this channel but the bigger thing is that everyone wants home prices to decline and I think that's a difference in this housing cycle that I don't think we've seen really in US history before where a large segment of the population a vast majority of the population is fed up with how expensive it is to buy including those who own and I actually think there's a consensus and common wisdom now in America where people just want cheaper home prices and the population would prefer cheaper home prices rather than prices going up and that's an important point to just consider because it marks a shift it marks a big shift in how Americans view the housing market no longer are Americans just like blindly believing that home ownership is the American dream and you have to buy a house because values are always going to go up people don't really believe that anymore and it's showing up like that thought is showing up in the struggles that the housing market and Dr horton and so I think this is like a big moment actually here in 2025 for where the housing market is heading in the future and what I'm really excited about everyone is to see where these values head state by state city by city going forward in terms of the cities where values dropped the most over the last month we got some interesting ones puntaorta Florida Cape Coral Florida san Jose California everyone the Bay Area number three northport Sarasota number four naples number five austin number six denver number seven deltona Florida number eight la los Angeles number nine port St lucy number 10 all these markets had a 0.5% or higher monthly decline which again annualizes from anywhere from 6 to up to uh 10 to 11% decline year-over-year if these declines were to continue and remember these are seasonally adjusted drops everyone this data comes from Sil Zillow is seasonally adjusted it's available under home value growth month overmonth on Reventure app here under home prices and affordability this is a premium data point and what I would encourage you guys to do sign up for that premium plan and look at these month- over-month declines by zip code because there's some big differences by zip code like here in uh St petersburg you actually downtown St pete went up ever so slightly um in the last month while like everywhere else tanked and you can see there's also certain parts of like Tampa Hide Park and Tampa edged out a little increase while everywhere else went down so you got to understand this data by your zip code and you could do that by going to ww.reventure reventure.app signing up for the premium plan and accessing home value growth month over month to see what the areas in your region are doing and then you can also open up this data and look at the month-over-month growth historically as well