The Housing Market *JUST* CRASHED | Zillow.

oh hey everyone i thought i was done

filming for today and you know i may

have just had a shower and gotten

totally blindsided by this report from

zillow and you know things might still

be a little unhinged around here but

holy crap bloomberg just had the

following

of from zillow

and uh in a headline piece here we got

to talk about it a little bit

oh boy here we go all right here it is

dang quote the market is softening the

housing market that is see zillow does

homes full stop says the ceo of zillow

in an interview he says quote i think

the toughest macro lens is that

inventories continue to plummet

flat transactions would be good this

year and i don't know if we will get

there okay this is challenging so we

gotta talk about this and we get a

little bit more color from this excerpt

by going to the earnings call not the

interview the earnings call

so let's jump on over there and try to

understand what zillow's seeing because

it's a good heads up for the housing

market remember zillow is a company that

has a lot of data on us as as individual

searchers from for homes and obviously

one of the first things to get hit uh

you would expect at least

if the housing market was beginning to

slow down would be individuals

willingness or interest in searching for

homes

so let's jump over to the uh earnings

call and see kind of what they've got

compared to expectations now first it's

worth noting that our expectations are

that when

interest rates shoot up four percent

that we would have potentially a 40 drag

down

in purchasing power but of course if you

have excess demand in the amount of 40

you might not actually see home prices

go down at all so that's sort of like

the backdrop of what our expectations

are going in that maybe zillow would

tell us they're starting to see some

forms of uh cracks i mean obviously when

they already say the market is stopping

full s

or softening full stop that's already a

problem and they're talking about tough

macro right so let's jump into the

earnings call here and let's just snoop

around a little bit in the earnings call

so they talk about how inventory is

still in march was down 23 year over

year and remember the last year is uh is

essentially a year that gave us 20 plus

percent across the entire united states

in increased prices which is incredible

however even though inventory levels and

this is one of the big things that

people keep talking about they keep

saying oh well housing prices can't go

down because inventory levels are down

that's true year over year you know if

this right here is march of 21 then you

know maybe over here

i should actually draw it kind of like

this maybe over here is march of 2022.

now now why did i actually draw it with

that little inflection point up ah

that's because take a look at this

new for sale listings were less strained

in march up 36

from feb levels but still down nine

percent year over year so actually we're

probably doing a little bit more like

that trying to get back uh just nine

percent down essentially here from those

march of 2021 levels okay interesting so

kind of seeing a little bit of an

inflection point where maybe inventories

are starting to move up but then again

that could be seasonal right i mean who

lists their home in february that's lame

you sell in march right it could be

entirely seasonal so what else can we

see here transaction value growth trends

are meaningfully softening and even the

most respected prognosticators

have and this is a i think just typo

here i think distinct or dis you know

maybe different views

in terms of what will happen next in

other words you've got people like me

who think prices will probably come down

10 to 20 percent and you got a lot of

people saying well there's just still

not enough inventory so we'll probably

just have a soft landing which is kind

of exactly what we were told in 2006

when then fed chair ben bernanke says

well we've never had home prices come

down across the board so i probably

won't have that happen now oops oh wait

oh

damn didn't see that one coming okay

anyway then zillow talks a little bit

about how they're getting out of

obviously the i buyer business which is

where they buy homes and flip them they

only have 100 homes left to go they've

almost completely gotten out and if the

market kind of tanks after this they got

out at the perfect time and they got a

lot of hate for what they did the last

you know a couple earnings reports ago

but honestly it could end up having been

a pretty uh smart uh smart move they

talk about how more people save homes on

zillow when they have 3d tours this in

my opinion is kind of obvious though

because you're more likely to go back to

the listing more often when there's a 3d

tour duh

then they talk about right here they

still have high occupancy rates in

rentals and that makes it harder for

them to make money from landlords who

want to re-rent properties because they

offer a rental service and credit

screening services

but here they talk about affordability

challenges with higher mortgage rates

and we're starting to see early signs

not only what we heard earlier of

inventories going up but also earlier

signs of low rental vacancy issues

subsiding that would mean we're starting

to get more properties potentially

opening up and that could potentially

for one reason or another helps

stabilize those rents from continuing to

just skyrocket and they also talk about

this deceleration in the real estate

industry's growth so they they kind of

stop short of saying like hey we're

heading towards a crash here

but they do say that we anticipate

market headwinds and then they say hey

you know if

if there's some terrible storm and the

market grinds to a halt for a long long

time you know we could change our views

but hey um let's just talk about 2025.

okay

so what do we what do we glean from this

well in my opinion what we glean from

this is really what they didn't tell us

in relation to what they did tell us hey

we're starting to see some softening and

rentals which when you see softening and

rentals that means you generally get

less landlords who want to get into the

rental business because it gets tougher

right then potentially you get landlords

who want to get out of the rental

business which could mean more for sale

inventory people who want to take

advantage of a top we're already seeing

housing inventory trend up we don't know

if that's seasonal yet so we'll have to

wait for a little confirmation on that

but we're still down compared to last

year so it's still time and then when

they're basically asked hey like are we

gonna have a market crash you're like

well

you know if there's a terrible storm uh

we're focused on 2025 uh but yeah yeah

yeah things are softening but uh hey

don't worry

folks

i think it's obvious

you should be a little bit concerned

about the real estate market going

forward you know my thoughts you know

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talk to you soon