ZILLOW: Something CRAZY is Happening in the Housing Market

And if your home's been on the market

for 30 plus days, it's not waiting for

the right buyer. It's overpriced.

Doesn't need more time on the market. It

needs to be priced correctly. It sit on

the market for more than 30 days. Is not

aging like fine wine. It's sitting like

stale bread. Buyers are looking at your

house like a bad Tinder profile. You're

simply just not going to be interested.

It's giving.

Nobody wants you, so why would I? The

housing market continues to unravel,

slowly revealing the long-awaited crash

in home prices. Now, Zillow's most

recent housing market report indicates

that 94% of metros are having nominal

home price declines with price cuts near

historic highs. And finally, we are

starting to get some some rent relief as

the report also indicates rent decline.

Now, the question I have for you is, did

you put yourself in a situation to take

advantage of more affordable homes, or

did you jump on the bandwagon like

millions of other buyers living with

regret? Now, on top of Zillow's most

recent reports, I'm also going to show

you guys the secrets on how to find a

great deal with Wedge, which means

undermarket value and cash flow by

accessing my live MLS server. Now, we're

going to do an analysis on a home I

found for sale in my market at $84 a

square foot. If you guys make it to the

end of this video, you will have the

insights on how to maneuver through the

most toxic, overpriced housing market in

history. And knowing these things are

going to help prevent you from being

like one of the many sellers who are

trapped in their homes and can't sell.

And having said that, happy Tuesday

morning. Welcome back to Real Estate

Mindset. You guys already know that this

video is going to be absolutely bonkers.

Zillow's brand new monthly housing

market report for September titled lower

mortgage rates extend housing momentum

into the fall. Few key takeaways. The

number of buyers markets have more than

doubled, raising from 6 to 15 in the

past year. showing you guys that the

housing market is although it has taken

a little bit of time because there's

been an awful lot of greed, corruption

and fraud and money printing and

inflation and lies and manipulation and

all that type of stuff. But

nevertheless, it was never ever ever

going to sustain the prices because

income didn't go up even remotely close

enough for people, regular people to

afford to buy a house. It is meant to

fail. New listings from sellers rose 3%

year-over-year, emerging from a 3%

annual decline in August. So, that's

interesting. So, that flipped. Bullet

point number three, buyers have 14% more

options to choose from compared to just

one year ago. A September dip in

mortgage rates paired with stock market

bump gave a boost to what is tradition

the start of the slow season in real

estate. Activity from sellers and buyers

is unseasonably resilient after a

lackluster August. unexpected showing of

sellers in September. Typically, new

listings drop off sharply into fall.

They've fallen an average of 9% in

September over the past 7 years, making

this year's mere 2% drop exceptional.

Buyers markets more than double as

competition eases because again, the

pendulum swing. We knew we knew beyond a

shadow of doubt that things were going

to change because they always change.

Real estate's in a cycle and hopefully

you didn't believe a lot of the nonsense

that was being spewed for years. A year

ago, six of the nation's 50 largest

metro areas were buyers markets. This

September, buyers have the edge in 15

markets. Zillow's market heat index

shows the strongest buyers markets are

in Miami. That is a huge flip. New

Orleans, Austin, Jacksonville, and

Indianapolis. That's due, according to

them, in large part to a surge of new

construction. in many of those areas in

recent years, which is exactly why I've

been traveling around the nation

reporting new construction to you guys.

The hottest markets for sellers because

the house market is bifurcated are in

Buffalo, Hartford, San Jose, San

Francisco, and New York. Taking a look

at home values. Home values climbed

month over month and only two guys only

two of the largest 50 metro areas. Okay,

which is absolutely insane which was New

York at 02 and Salt Lake City at 0.1.

Home values fell on a monthly basis in

47 of the major US metro areas. Leading

the way is Austin down 1% over one

month, Pittsburgh down8%, Dallas 6, San

Francisco 6, and Denver6 as well. Now,

that's the month over month. If we

really want to eliminate seasonality, we

also have to look at year-over-year. So,

when we look at year-over-year, home

values are up in 26 of the 50 largest

metro areas. With the gains being led in

Cleveland, up year-over-year 4.6%,

Hartford 4.1, Buffalo 3.6, 6 Milwaukee

3.5 and Chicago 3.4 as well. Now, home

values are down in 24 major metro areas.

So, it's again about half, a little less

than half. The largest drops were in

Tampa. Holy smokes, 6.4%.

Austin, 6%. Miami 5%. That's insane. I

did not know Miami was number three.

Orlando 4.7. And Dallas also on the list

down 4.1%

year-over-year. Now, the name of the

game is inventory. So, new listings

actually decreased by 2%, but that's

month over month. Again, we want to look

at year-over-year as well as month over

month and day overday to be honest with

you. Now, new listings increased by 3.3%

this month compared to last year. So, we

still have inventory growth

year-over-year, which is astonishing

because again, August that flipped. So,

it's flipped back again. Now, new

listings are 12.3% lower than

prepandemic levels. I highlighted that

because although it's still under

prepandemic levels, 12.3% is not that

far off. And I'm bringing that up

because what that's showing us is the

golden handcuff effect is wearing off.

Once we hit that 12.3%, once we're above

that, we have a normal amount of new

listings coming onto the market. Again,

further demonstrating the golden

handcuff effect is almost over.

Inventory levels are still 18.2% lower

than prepandemic levels. And that's on a

nationwide scale. Obviously, housing

markets like in Texas, Florida, even

places in California, we have more

inventory than preandemic. But other

places like New Jersey is in a world of

hurt when it comes to historical amounts

of inventory. Price cuts. 26.2% of

listings in September had a price cut.

That's compared to 25.8% 8% of listings

in August and year-over-year it was

24.9. So, it is up as well

year-over-year. People want to sell

their house. They're starting to realize

the only way to do that, as you guys are

about to see here, is by dropping the

price. That's literally the only thing

you can do. Now, new pending sales, new

pending sales listings increase, and I

highlighted that because what increase

6.4% year-over-year? That sounds like

demand is coming back. and it might, but

those need to turn into closed

transactions. Pending really doesn't

mean anything. It just means someone was

interested. There's probably a contract.

There's probably earnest money, but it's

not yet closed. Now, take a look at the

rental market. Rents are now up still,

unfortunately, 2.3% from last year. But

this is the interesting thing. Rents did

fall on a monthly basis in 26 of the top

50 metro areas. That was crazy. The

largest monthly, not even yearly drop is

Austin down 08, Denver 7, Las Vegas.5,

San Antonio.5, and Boston.5. And I'm

going to take you guys up here and we're

going to look at the concession map. If

you guys come back here, take a look at

some of the concessions. Like in Austin,

60% of rental listings had a price cut.

This is abs. Look at this, guys. This is

crazy. Look at share of rental listings

offering a concession. This is crazy.

Absolutely insane. Nashville, Tennessee,

61.7%. you may want to watch out for

Nashville, but come back here and look

at what's going on in the rental market

because that's a really big deal,

especially because we have even more

speculation in our housing market right

now than we did during the global

financial crisis. Listen to three

different videos of people that cannot

sell their house and they're trying to

figure out what can they do to sell

their house. And you guys that have been

watching probably know exactly what they

can do. It's day 105 of trying to sell

my home and my realtor suggests another

open house. GH after 100 plus days on

market and another open house is not the

answer because who wanders in your house

during an open house? Nosy neighbors,

people who are just looking for snacks

and unserious buyers who have not yet

been preapproved. We don't even know if

they're qualified to buy the home. That

house has been available to the public

for over 100 days. So why would somebody

h if they were serious not have already

seen the house? They're not just going

to roam in from the street. They would

have, if they were serious and already

looking for a home, they would have

already been to your house. Is it

possible for someone to buy a home

through an open house? Yeah, sure. But

is it likely? No. The National

Association Realtors state that only 5%

of homes are sold because of open

houses, which also means that 95% of

homes are sold without open houses. Not

saying they can't work. I'm saying it is

not how most homes are sold. And to give

you a little insider secret, the agents

that love open houses are the ones who

get their business from open houses.

Meaning that they're not really there to

sell your home as a seller, but they're

there to get their next buyer client.

So, help the buyer find another home.

The market is just being so silly goofy

right now. This awesome house that I've

been holding open for the past um almost

3 months still hasn't sold for

absolutely no reason. It's literally a

gorgeous home. Let Let me show you. So,

my favorite part about this house is

that it backs up to a green belt. So,

there's literally no one behind you. The

yard is the perfect size for like your

dog, but you also don't have to worry

about too much landscaping cuz who wants

to worry about that? Not me.

Also, new paint, cleaned travertine, new

knobs, new range, new lights, new fans,

new new carpet. Not to mention, it's in

a super nice neighborhood with super

nice amenities, less than 10 minutes to

the beach. So, anyway, we had a price

reduction. Someone, you better hop on

this.

>> Had this house on the market almost 6

months and just haven't been able to

sell it. uh started at 390 and went down

to 350. This house is in one of the

better communities in our area. And I'm

just shocked that I have not been able

to sell it. So, we did not finish the

basement um when we did the rehab

because of the stairs going into the

basement. However, I pulled it off the

market the last couple weeks and we're

going to go ahead and refinish it. It's

going to be a narrow stairwell going

into that area, but I think it's

probably my best move. So, pull it off

the market, put an additional 10 grand

into it, and then probably going to come

back listing it at 370. So, now I'll let

you guys see what we're doing down in

the basement.

So, this is the dining room and your

stairs going upstairs, which is the

master bedroom up here.

So, you know, I'm working with that

underneath of me obviously already. Um,

and couldn't really cut into this space

to create more headroom

um or to reconfigure the stairs without

really destroying this room.

>> I'm going to help these people out right

now. Nobody cares about that tiny

backyard and your staircase that has to

step up and a door in front of it. They

care about the price. And if you don't

believe me, then list your home for $1

and see how long it takes to sell. It's

the price. And unfortunately, what

people are going to start realizing that

are sellers is not only are there homes

listed for too high, they're listed for

way, way too high. We already see

massive price decline going on with new

homes. And again, that just shows you

that the fundamentals just are not there

to continue to support the prices and

affordability in the housing market. And

having said that, now let's take a whole

bunch of data, about a 100,000 listings,

and let's condense it down to about

1,900. And I'm going to show you guys

how to just use the math to find the

deal. And it's important to understand

that all you got to do is use the math.

You don't have to use your emotion.

Although, every single agent is going to

try to get you to use your emotion and

is not going to try to help you figure

out the math. So, let me show you. So,

you guys should be familiar by now. This

is my multiple listing service through

Harris County. I have about a hundred

over 100,000 listings that I can search

from, but I don't want to look at

100,000 listings. I only want to look at

houses that are under market value. So,

the way I start this search, as you guys

are familiar, is I just look by price

per square foot. In my market, I go

between 80 and 100 price per square

foot. Now, I have 1,900. So, I've taken

over a 100,000 listings and I've

condensed that down to about 1,900. Now,

the way you guys need to do this is go

to my website right here. You can go to

the homepage and download this form that

I made for you titled subdivision

analysis form because that's what we're

going to fill out right now. Now, if you

need to learn how to use that form and

you didn't figure it out in this video,

then take this class right here, which

is how to do a market analysis. And you

guys, that's 100% free. But this is what

the form looks like. We're going to get

is obviously the address. We're going to

do a one-year comp review. We're going

to get the purchase price, the size, and

the taxes. and then we're going to work

this form up. I've kept us in this small

little box of Kingwood so that I can

continue to teach you in the same

housing market and I can't really switch

narratives. So, we're going to look at

this house right here which is for sale

for $265,000.

Now, right away you're going to

immediately notice that the price per

square foot here is less than $85 a

square foot. There is a recent price cut

of $30,000 and this home has been on the

market for 88 days. The first thing I'm

doing, I'm looking at the condition of

the house because remember, we're we're

working with gross numbers. After

expenses and stuff of that nature, then

it becomes a net. But this house may be

a little bit of renovation. I'm going to

note the size of the house, which is

3,120.

I'm going to notate the purchase price,

which is 265,000.

And then I only want to look at

comparable data or sold homes in the

subject property subdivision. Now, I

also want to make sure to get the

property taxes. And again, this is

Houston, so you know, we have a massive

problem out here in Houston. So, when I

go to the property taxes, you guys will

notice, again, this is for sale for

265,000, but it's being taxed as if it

was worth $340,000 or 339,000. Now, the

total amount of taxes on this property,

shockingly, is almost $8,000.

So, that's all of the data that I'm

going to take. I come back to this

subdivision analysis form. I put the

subdivision, which is Woodpring Forest.

I'm going to do a one-year comp review.

If I'm going to buy the house, I'm doing

it 5 years. I'm going to do as much data

review as possible. Put the subject

properties address. I put the purchase

price of 265, the size of the house,

which is going to be important, and I

put the property tax here, which is

going to be important because we're also

going to figure out cash flow today.

Once I have the market value of price

per square foot for homes for sale and

for rent, then I'm done. I can just do

the math and figure out whether or not

this is a good deal. In order to do

that, I have to review homes that have

already sold in that subdivision over

the last one year. So, I remove active

status on listings. I switch to sold.

I'm going to go 365 days, which is 1

year. And then I'm going to slide down

here. I'm going to lock this down to the

subdivision, which is right here. So,

now I'm only going to be looking at

homes that sold inside that subdivision

to try to get an idea of what homes are

selling for over the last year. I look

at the results right here, but I'm not

going to take every single home as a

comparable. I'm only going to use the

homes that are fairly close to the size

of the septic property, which is about

3200 ft². So, what I'm going to do is

I'm going to take number 8 9 10 11 12 13

and 14. Now, if I didn't have this

server, what I would do is I would

essentially just add all of the price

per square foot together and then I

would divide that by seven. But because

I have this service and I pay the

subscription, I can just have the system

automatically calculate price per square

foot for us, which is 104.96. So that's

really important to know that because

now I can start figuring out wedge. I

have the market value or at least over

the last year because remember, is it

really the market value if the market's

going down? So you got to put things in

perspective. But what we can say is over

the last year, homes that are similar

size as this home in this neighborhood

sold for an average of $104.96.

But now I need to figure out what is the

rent price per square foot. And the way

I do that is the exact same way that I

showed you guys sold homes, but instead

of sold homes, it's rented homes. I'm

accessing the rental section of the

service now, and I'm going again to

sold. I'm removing active. I'm looking

at the last year, 365 days. I'm locking

it down to the subdivision. And then

we're going to see how many homes

actually rented over the last year in

that subdivision, which as you can see

on the bottom left is actually 17. When

I go to the results, I'm going to again

categorize this by size cuz I only want

to select homes that are within about

500 square ft. So, it's pretty much the

bottom four. So, I'm going to select all

four of those homes. I'm going to see

what the average is now by going

tabular, which gives us 84 cents per

square foot. So, I have almost all the

information I need now to start doing

the math. So, I put 84 cents a square

foot there. Let's calculate what the

gross wedge is now because I have all

the information I need for that part.

And then we're going to figure out what

the cash flow is. So all I do guys is I

take the size of the house 3,120

times the market price per square foot

which is 104.96

gives me 327475.

Then I subtract the sales price which is

265 which is going to give me my gross

wedge which is $62,000.

I divide that into the market value

which is 327ish

gives me 19% in wedge. So, I go down

here and I put 19% wedge at 62K. And I'm

going to tell you guys right now, I need

25 minimum in wedge. Minimum 25. This

one has 19. Let's figure out what the

cash flow might be. We have one box

missing, which is the estimated payment.

And I'm going to show you guys exactly

how to do that. All I have to do is go

to a mortgage calculator. I use this one

on calculator.net. I put in the home

price of 265,000. You see that here? I

put a 10% down payment over 30 years. I

got today's interest rates at 6.22%

because that's what it says interest

rates are today. We already got the

property taxes. Do you see there's a

method to the madness? So, I put the

property taxes, which by the way, real

quick, once I purchase this house, if I

were to purchase this house, I will

eventually be able to get property tax

down because I'll show them, hey, I

bought it for 265. It's not worth 335.

Okay, that process is going to probably

take about a year for my escrow and my

mortgage to be impacted. So, I'm going

to use the raw amount and I put

homeowners insurance about $2,800. PMI,

I got 0.55, which gives me a total

monthly payment of $2,481.

I come back to the form. I put $2,481.

Once again, I take three the size of the

property, $3,120 times the price per

square foot to rent out, which is 84

cents a square foot, gives me gross rent

of 2,620.

So now I reduce the mortgage payment

that we just figured out, which is, by

the way, it's an estimate and it's not

for you, okay? Not a financial adviser,

but this gives me gross cash flow of

$139.

And I want you to comment below and tell

me whether or not this deal is good

enough for you. It does have a little

bit of cash flow, right? Less than 10%.

It does have a little bit of wedge, less

than 20%. Tell me what market you're in

and tell me if these types of stats that

you see on your screen something that

you're looking for. So, I really want to

know. Comment below and then also let me

know whether or not everything that I

just showed you was helpful. In

conclusion, I want you guys to go back

to my website and I want you to take

this class right here, home buying

master class. I made that for you. If

you take that class, you're going to be

better than 99% of realtors and loan

officers. I am both a loan officer and a

realtor and an instructor in real

estate. I put all of my soul into that

course. it is free for you because I

want you guys to do extremely well out

there. And other than that, guys, don't

forget to like this video, share the

video, and comment on the video. And

happy Tuesday. I hope you guys do well

today and throughout the remaining part

of the week. I love you. You're

important. Never let go of hope. And if

you're out there investing in real

estate, you guys already know we wish

you luck and we hope you win.