so we're seeing 0% down mortgages now make a comeback in the US housing market more and more Builders are offering these Zer down mortgages we're even seeing more and more desperate resellers on the market turn to financing their properties these are signals that we last saw in 2006 2007 before the big bust well they're cropping up again and the builders and the investors are having to get desperate to move the inventory I just went to a home building site in Florida a couple days ago and I saw a big 0% down sign I turned off the highway when I saw it toward the Builder site do you know what I saw everyone they had 22 houses built and available for sale 22 spec homes priced around 280 to 330,000 and they can't sell the inventory so how do they get people through the door they say 0% down and these are kind of the anecdotal warning signs that I think a lot of you guys have been waiting for you know a lot of you guys are waiting to buy a house you're waiting for prices to drop you're saying when's it going to happen well these warning signs keep stacking up on top of each other and this is particularly pronounced in the Home Building Market because home builders in America now have around 500,000 homes for sale that is the highest level of home builder inventory since 2006 to 2008 and it's the second highest level ever so I want you folks to think about that outside of a 2-year period right before the last crash this is the only time we've had this many home builder homes for sale in America in history meaning that there's excess Supply building up there's inventory building up on the market and the more that inventory builds the more downward pressure there's going to be on home prices however the interesting thing is that many sellers in the US housing market aren't yet realizing this a lot of sellers are still coming to Market and listing their house high where I am right now in Chattanooga Tennessee I look around Zillow I look at the listings and a lot of them are ridiculous Chattanooga is a town where the median household income is around 75,000 and you have people pricing two-bedroom Town Homes at 450 Grand a lot of the sellers here in many other parts of America just still haven't woken up to the fact that this housing market has changed and it's as almost as if sellers are going to like pull out every stop before they just have to actually cut the price like they'll try to offer a 0% down mortgage rate they'll offer a mortgage rate buy down they'll try to rent it for a bit maybe they'll pull it off the market and renovate the house sellers are in such a state of disillusion and cognitive dissonance that they'll going to try every possible angle before uh doing what they need to do which is cutting the price and I actually pulled you guys on my channel and I asked you the question what is your budget for buying a house you know say you were to buy in the next three years what would be your max budget for a house that you really liked and the results were really interesting roughly 30% of you have a budget of 250,000 or under which you know if that's your actual budget it's going to mean you're going to be on the sidelines in this housing market right now uh because you can't really buy a house for less than 250,000 pretty much anywhere except for Oklahoma around 45% of you said that your budget was 250 to 500,000 and that's more in the price range of where we see a typical house in the US trade so around 77% of you have a budget less than 500 Grand meanwhile 23% of you have a budget more than that and roughly 8% of you have a budget a million or higher so that's a pretty good cross-section for what people can afford it makes makes me look at some of these listings and say I say to myself like are sellers even paying attention to what you know Americans are saying and you know what they can afford with where mortgage rates are with where prices are and inflation um people just simply can't afford to buy homes and it's showing up in the home sale and demand statistics now one area of the market we are starting to see some legitimate relief is on rental rates in certain parts of the country you know data from redin is showing that in certain markets rents are way down we've talked about Tampa being a market where rents are down Austin rents are down here in Chattanooga um the official statistics might say the rents are still up but I'm finding a lot of listings here in Chattanooga Tennessee which is about 2 hours north of Atlanta of huge rent Cuts we're talking two-bedroom condos that were listed for 3900 a month in rent 3 years ago that are now 1,900 a month in rent and some of those earlier rents were kind of pandemic boom boom rents but they're starting to deflate there's two bedroom uh condos around here that are going for 1,600 a month with one month free and so I am starting to see more rental affordability when I travel around the US you know there's been this big boom in rental construction apartment construction as well as you know a lot of town homes uh I'm in downtown Chattanooga right now you go to like any downtown in the US you're going to see these type of town homes pretty much everywhere these are properties that like people will buy often young couples will buy a townhouse like this and they'll live in it for 2 or 3 years and then they'll have to move into a bigger house when they have a kid and then they'll rent out the town home but the issue is now there's just like a lot of these Town Homes sitting on the market for rent and there's just not that many people who want to rent a town home or who are in the stage of life where they want to rent a town home so we're seeing some excess Supply pushing rents down which is good news for you all out there as a prospective renter or home buyer but let's talk about 0% down mortgages like are these mortgages real you know when you see that adverti from a home builder and you guys can let me know if you've seen anything like that and you're City like are they actually giving out these zero down payment mortgages and let me actually tell you all what happens is that um a lot of these Builders will leverage existing Home Mortgage programs with really low down payments like the FHA mortgage program which already has a 3% down payment and then they'll basically cover the 3% so that's how the Builder gets to no down payment it's not like they're giving you that much money they're just saying okay if you're going to buy a $400,000 house and you doing FHA loan you do 3% down that's like1 ,000 and it's like we'll cover that and I guess for certain home buyers that does help them afford to buy the house but I think we learned in the mid-2000s that it's probably a bad idea to try to give people free homes essentially the fact that the builders are now advertising those z% down mortgages it's just a warning signal it's telling you where we are in the market you know the other interesting thing actually about that Community I went to in Florida I told you about earlier with the 22 spec homes and the 0% down they told me that they were going to shift half the units that were for sale to rent to own so they told me basically yeah we have 22 homes for sale around half of them are going to become rentals which I thought was really interesting why would a builder build a home with the intention of selling it and then pull it off the market to rent it like that's not an ideal outcome and this builder in this case was LGI Homes they're a publicly traded Builder their stock price is down like 40% the last 6 months so they're struggling uh their stock price is struggling they have a lot of Supply on the market and what I think they're doing is they're doing the rentals and the rent to own so they can justify building the next phase of the development because you can't build the next phase if you still have 22 homes for sale in the first phase but if all of a sudden you were to sell three or four of those homes and then take half of them and make them rentals you have six or seven left over it's like oh we can now build the next phase because we're not crushing our prices in our inventory and so these Builders seem to be in a mindset of like let's just continue to build even if our margins are getting compressed even if we're having to give incentives lenar the second largest builder in America they just came out with a report saying that they gave their biggest incentives in the first quarter in 2025 that they have since 2009 the graph on the screen right now comes from John Burns real estate Consulting it shows basically the percentage of the sale price that lenar gave in incentives to the buyer which includes mortgage rate buy downs and closing cost coverage in the first quarter 2025 lenar gave 133% of the sales price back to the buyer and incentives that was the highest since 09 absolutely crazy meanwhile lar reported that their first quarter margins were the lowest that they've been in a decade however prices are still going up in a lot of places in America like where I am right now in Chattanooga Hamilton County Tennessee prices are up around 3% year-over-year month over month prices are flat in Chattanooga they're starting to uh go down in other parts of Tennessee like certain counties in Nashville prices are dropping in Atlanta prices are dropping everywhere in Florida so we are seeing this downturn actually happen and I want you folks to remember that because I think it can get discouraging out there if you're a buyer and you've been waiting to buy for two or three years and you know you've been waiting for this housing downturn you know it seems like it's not getting anywhere it actually is we are seeing prices drop in uh the Sun Belt in America in the Southeast it is it is happening and the inventory is really starting to explode the inventory here in Tennessee is rocketing we have the highest level of inventory in Tennessee since 2017 7 or 8 years that much Supply on the market is causing sellers to have to cut the price it's just a slow process though you know if a seller bought their house three or four years ago and got some idea about what it was worth and they're not under pressure to sell it like they're not going to just immediately cut the price 25% like it's going to take time for these sellers to get there now I'll tell you one interesting thing here about downtown Chattanooga everyone this is like my third or fourth time being here you guys should definitely visit Chattanooga actually if you haven't it is a really cool town it's this interesting mix of like it's Tennessee in the South mixed with like a dose of California in a good way uh is how I would describe it and it's really picturesque really hilly um but there's a chicken Factory downtown that's a chicken factory over there and I thought like I have a realtor friend here when I first talked to him I thought he was joking when he said there was a chicken factory but could you could smell the chicken factory like there's times when the wind blows a certain way and it literally smells horrible uh in downtown Chattanooga I think the locals here have gotten used to the chicken factory but if you're from out of town it's something that's going to slap you across the face as soon as you come here it's not like you smell it all the time but you'll just go for a walk and you'll be like what is that if you if you smell that it's like oh that's the that's the chicken factory now I want to show you guys some of these um Town Homes here again these are like very typical of what we see in urban areas in America a lot of these town homes built over the last 5 years and some of these town homes are priced around $380 $390,000 and there's a a disconnect on the prices of these town homes and the rent of these Town Homes this is a really funny situation we're seeing crop up across a lot of the US is that the prices and then the mortgage payments are often much higher than what you would have to pay to rent that property so in this case you'd have to pay around 3 for some of these two bed two bath Town Homes maybe some are three bed two bath and your monthly payment would be 2600 a month something like that 2650 2700 a month with your mortgage around 6.7% but to rent one of these if it's on the market for rent it's more like 1,900 or 1800 a month so there's literally like a 40 to 50% premium to buy than to rent and that should be a little tip off to you that there's something funky going on in the market because why would a firsttime home buyer especially purchase the same property that they could rent and pay 50% more on their monthly payment that doesn't make any intuitive sense and it's one of the reasons why home buyer demand is so low home sales in February 2025 were the lowest at they've been for February in 14 years the only other time in recent history where we've seen home buyer demand this low is 0809 2010 2011 in the midst of that last crash so the demand to buy homes is in the tank it it is still in the tank and now the supply is rising and Rising pretty fast in many parts of America inventory data on reventure app is showing that many states are at 30 40 even 50% year-over-year inventory growth I want you all to think about that 50% more inventory this year than last year you know if we had a th000 homes for sale in a County last year now we have, 1500 while the buyer demand is still declining or stagnant and this stagnant buyer demand and Rising inventory is causing a lot of real estate companies to lower their forecast for 2025 just released a video on this a couple days ago but Zillow again cut their forecast for this year Zillow is now forecasting only 0.6% home price growth over the next 12 months basically Zillow is not forecasting any home price appreciation on a national basis and that's a big deal the Zillow tends to be a bit more optimistic than some of the other prognosticators and so if Zillow who makes their money selling leads to Realtors is now getting bearish that's probably a signal that you know you should be bearish also on the housing market interestingly Zillow is now predicting prices to go down in 242 Metro areas Across America um I don't actually totally agree with all of zillow's individual forecast like they have some pretty bizarre forecasts actually they're predicting values to go up in Cape Coral Florida and Tampa Florida and some certain markets in Florida which it's like those are the markets 100% that will go down like I I don't know if there's something like wrong in zillow's individual forecast model or they're just trying to be more bullish on Florida because most of the Realtors are in Florida but like it's strange how Zilla is forecasting Florida to go up when Florida's already down by their own data and will continue to go down based on all the inventory metrics meanwhile Zilla thinks prices are going to be flat or drop in New York when it's like no way inventory in the New York Metro is really low um price cuts are really low prices will definitely keep going up in New York so I'd love actually if someone from Zillow could reach out to me uh and talk to me about how they come up with their forecast so I would love to actually have someone from Zillow on this channel so we can just have a discussion and you guys can help educate home buyers out there on on how you come up your forecast because people email me all the time and they say Nick you know you're saying one thing about your forecast but then Zillow says this I know a lot of people are curious how Zillow comes up with these figures I'm pretty open and transparent about how we at reventure app come up with our forecast it's based on five data points days on market price Cuts long-term appreciation mortgage rates and inventory those metrics are actually a really good pulse on the supply demand fundamentals in a market and they're actually available for you guys to check out for yourself at ww.
Reventure doapp if you're someone who wants to gain further insight and Clarity into the trends in your housing market and where prices could be heading this year um go to reventure app and and sign up for a Premium plan that Premium plan is $39 a month and it gets you access to our home price forecast score for nearly 30,000 zip codes so we have nearly 30,000 ZIP codes in there it's a score from 0 to 100 50 is average if you're below 50 that's more of a declining Market if you're above 50 that's more of an appreciating market and it's a 12- month forward forecast score and what's really cool is that you can actually open up the metric on the graph View and see how the forecast is trended throughout time and so you could see kind of the inversions and the changes and how the market shifts from a seller's market to a buyer Market or vice versa would love for some of you to try out that Premium plan and access that forast go to ww.
reventure doapp right now type in your zip code and let me know what that forecast is in your city.