Biggest mortgage collapse in US History just got worse."

we are witnessing the biggest drop in

home buyer demand in US history right

now with mortgage applications to buy a

house plummeting by 63% from their

pandemic Peak this collapsing buyer

demand suggests that the spring housing

market this year is going to see a lot

of empty open houses and a lot of price

Cuts in fact we're already seeing these

price Cuts take hold right now as the

median list price for houses Across

America is down year-over-year in about

50 % of States however even with these

initial declines in prices we're seeing

in certain States the overall price

levels for houses are still in the

biggest bubble of all time so I want you

folks to take a look at what this very

alarming graph is showing the annual

income needed by Americans to buy a

house and what do you see is the massive

spike in income required to buy a house

over the last 5 to 10 years Americans

now need to earn 110 ,000 just to even

qualify for most mortgages that's a cost

level that we have simply never seen

before in US history and we've actually

never seen this lack of affordability

sustained but the first thing I want to

touch upon before that is how the FED

got this situation so wrong because we

were told heading into the end of 2024

entering 2025 that the Fed was going to

cut interest rates and mortgage rates

were going to get cheaper and then

housing was going to get more affordable

due to these rate Cuts but that hasn't

happened something very interesting has

happened everyone since the FED started

cutting interest rates which was right

around midt that's when the FED started

cutting interest rates right around

September 16th you could see mortgage

rates at this point bottomed around 6.1%

in mid-september and then very quickly

after that mortgage rat shot back up and

are now all the way to a level of

7.26% that's where the 30-year fixed

mortgage rate is right now according to

mortgage News Daily so we're actually at

one of the highest mortgage rates that

we've seen in the last 2 years since the

rate started going up even with the FED

cutting interest rates and this is

what's particularly scary because it's

almost as if the FED has lost control of

the economy and of interest rates in the

econom you know this shouldn't happen

where the FED just is seemingly impotent

in terms of their ability to drive

demand and drive interest rates and

instead the bond market is taking over

the bond market and buyers and sellers

of 10 and 30e us treasuries are taking

over and they're saying hey we think

actually fed you might actually have to

increase interest rates in the in the

future and that's frustrating for home

buyers out there because it doesn't seem

like there's going to be mortgage rate

relief in the near term and that's

causing the buyer demand to just

completely fall off the table through

the first week of January the Mortgage

Bankers Association reported a mortgage

app index of 128 so this is an index

benchmarked to show how many people are

applying for mortgages to purchase a

home that index through the first week

of January was down 14% from the same

week in 2024 20% from the same week in

2023 54% lower than the same week in

2022 60% lower than the same week in

2021 and 52% lower than the same week in

2020 so we literally have 52% fewer

buyers applying for mortgages now than

we did right before the pandemic and

this of course is now starting to have

consequences in the housing market for

sellers in particular one of the biggest

consequences we're seeing is that the

days on market for houses is going up by

a lot when a seller lists a house often

you know they're still listing at a

price that's unrealistic and it's just

sitting on the market for days and days

and no one is buying and this is

especially true in a market like Florida

for instance you can see in Florida that

the days on the market is now 79 days

this Doom is the highest that we have

seen in the last decade just for

perspective in 2021 during the peak boom

that Doom went down to 55 days that's

part of the reason how you knew there

was a tight market and that prices would

go up well now we're at 79 so with this

Doom so high in Florida as well as some

other parts of America that's now going

to mean more downward pressure on prices

and that's now caus causing price growth

to slow and many markets and it's even

causing price growth to go negative

year-over-year and where I think prices

are going to go negative are the areas

in blue particularly dark blue on this

map this is uh these are areas with the

lowest reventure app Price Forecast

score I'm going to get into this in a

little more detail in this video too

explaining to you guys what this Price

Forecast means and how accurate it is at

predicting the future of price growth in

your Market but first let's talk about

some projections for mortgage rates in

2025 where are mortgage rates going to

go to by the end of the year and this is

a tough question everyone and I kind of

say this to myself like predicting

mortgage rates the last three years has

been a Fool's erant in the housing

market there's been numerous times I

thought rates would start to go down and

then the FED reverse course or inflation

expectations reared their head again and

rates ended up going up but I think at

this point it feels like a pretty solid

bet that by the end of

2025 mortgage rates are still probably

going to be above

65% unless we see some type of big

economic downturn uh if we see some type

of big economic downturn that could push

rates lower and bond yields lower but

absent that rates are probably going to

stay the range of 6.5 to 7.5% so maybe

we'll see rates drop a bit from their

current level of

7.2 uh into the high sixes as the year

goes on but I I wouldn't bet as a home

buyer that you're going to see

significantly lower mortgage rates than

you are right now and this is something

I think a lot of you guys intuitively

understand because I actually pulled you

about a month ago here on my channel and

I asked the question do you think it's a

good or bad time to buy a house heading

into 2025 now 14% of you said good time

to buy 66% of you said bad time to buy

20% of you said not sure so really uh a

vast majority of you think it's either a

bad time to buy or you're not totally

sure and that negative sentiment on the

housing market is also echoed in The

Fanny May housing survey each month

Fanny May issues a survey on the US

housing market asking Americans what

they think about the housing market in

the most recent month 78% of Americans

said they thought it was a bad time to

buy where 22% thought it was a good time

to buy so pretty similar results to how

I pulled you guys on my channel Fanny

May is finding something similar and you

can see historically it's actually quite

the opposite normally Americans think

it's a good time to buy a house like if

you go back to 2010 even during the last

crash in 2010 72% of Americans thought

it was a good time to buy more broadly

speaking Americans are pretty optimistic

about buying to the housing market

however not anymore they're very

pessimistic and the reason they're

pessimistic is because prices are too

high it's the price levels that are the

main reason why so many buyers are on

the Seline it's not mortgage rates you

know mortgage rates are an issue but

really A 7% mortgage rate is not not

historically unprecedented a 7% mortgage

rate is actually historically normal

rather what's unprecedented is how

expensive prices are today in the

housing market and you can get a sense

of just how historically expensive

houses are today by looking at this

graph which measures inflation adjusted

home prices over the last 134 years in

America and what inflation adjustments

do everyone is it takes the home value

growth and adjusts it downward for the

level of inflation

and we put these home prices here in $

2022 so basically this is telling you

over the last 134 years how much a house

would have cost at 2022 inflation and

price levels what you can see is that

the long-term average going back to 1890

is

$169,000 for a house priced in

2022 doar and what you could see is that

from 1890 all the way to 1997 1998 home

prices didn't grow adjusted for

inflation they stayed the same but then

starting in the early 2000s we had this

big spike in housing bubble one then we

had a crash and now we had another big

spike in housing bubble two where prices

adjusted for inflation are at their

highest level ever they're more than

almost 80% above the long-term inflation

adjusted norm and what's important to

understand is that when we look at

mortgage rates which is now the Orange

Line we can see that today's mortgage

rate levels Nearing 7% those mortgage

rates are basically at a normal level

they're a bit above where they were from

1890 to 1964 and they're below where

they were during the great inflation of

the 70s and 80s kind of back to where

they were in the early 2000s and I think

when you look at this graph a high 6%

mortgage rate makes some intuitive sense

uh as being a normal mortgage rate but

what doesn't make sense is home prices

this expensive and so that's where the

relief is going to have to come on the

house in Market if we are going to see

relief it's going to have to come on

home prices because income and wages

they'll probably grow at 4% maybe 5% in

2025 there'll be some improvement of

affordability on income and wages but

it's not going to be nearly enough uh

for most buyers so if we are going to

see an improvement in affordability in

2025 it's going to have to come through

lower prices and it's going to have to

come in certain States first because

there's certain areas of America where

prices are now dropping and will

probably continue to drop in 2025 if we

go back to this reventure app home price

forecast score by state let's talk about

my forecast for the different states and

where I think prices are heading and

let's lead off with Florida everyone

because Florida actually has the lowest

price forecast of any state a 38 out of

100 and when you see this forecast below

50 that means downward uh projection on

prices you could see a year ago in

Florida we were at a 48 we were kind of

at a neutral Market we were starting to

predict the Slowdown well now we're

saying into 2025 at reveng trap that

Florida is really going to slow due to

the supply and demand fundamentals

really shifting in favor of buyers Texas

also has a pretty low price forecast 39

out of 100 you could see in Texas that

this is now two years in a row where the

market has incrementally shifted shifted

more to a buyer's market in Texas the

big issue is inventory you can see we

now have

108,000 homes on the market in Texas at

the end of 2020 4 uh by far the highest

level for the month of December going

back at least 7even years you can also

see that we're starting to see weakness

in the mountain states Colorado in

particular this is a sneaky Market a

sneaky downturn Market where we're

forecasting prices are going to drop you

could see we went from a sellers Market

a score of 70 in Colorado down to a 46

the last two years which is kind of

neutral to slightly declining well now

we're forecasting real declines heading

into 2025 in Colorado and I'm getting

into some more of these states in a

second however I want to issue a caveat

and a warning here uh and just urge some

caution using this Price Forecast so

while you can use it at the state level

and the Metro level and it's interesting

to see how prices are forecast to go in

your state in your city you really have

to dig down to the neighborhood level in

your ZIP code to get a more accurate

reading on the direction of your Market

because the one thing I'm seeing is that

there's often big differences within a

state within a Within a city in terms of

how home prices are heading and

projecting for instance if we zoom in on

New York and look at Manhattan you can

see the prices in Manhattan are forecast

to be down or maybe uh stable with a

slight negative tilt over the next year

while if you go over the river into New

Jersey the prices are forecast to go up

by quite a bit meanwhile prices in Long

Island are forecast to go up uh and

these are all in the same Metro Everyone

so uh if you were to look at the Metro

forecast for New York you wouldn't

really get um the accurate neighborhood

level you would have to go to look at

the zip codes we're also seeing this big

time in Los Angeles so in Los Angeles

and we'll see actually how these fires

and the unfortunate things going on

there are going to change this but

already in La we were having downward

forecasts in the center of Los Angeles

County as well as to the northwest of

Los Angeles County while we were having

upward forecasts in Orange County so

look at this almost like a dividing line

here between upward forecast growing

prices downward forast

decreasing prices in La seeing much the

same in Miami in Miami to the north of

the downtown we have uh downward

pressure on prices but if we go to the

southwest and some of these nicer

suburbs we still have stable to positive

forecast on prices now one thing I'm

really excited to reveal is that the

reventure app Price Forecast score

performed very well at predicting prices

in 2024 we actually just ran the numbers

on this here at reventure app and we

found that among large Metro areas our

reventure app Price Forecast score

predicted where prices were heading at a

74 correlation coefficient a 74%

correlation coefficient which is very

strong you can see that represented on

this graph where we're tracking what the

reventure app score was in 2023 for all

the different large metros in America

versus what the home price growth

actually was in 2024 you could see a

really strong positive correlation so

our score was very good in 2024

predicting prices and the reason it's

good is because we actually look at the

fundamentals driving prices in each

market we look at the inventory we look

at the price Cut Rate we look at the

days on market and the recent

appreciation Trends and if you

understand those metrics for your city

and zip code you have a pretty good read

on what's going on with prices and where

they could head in the future and so

what I would suggest you guys do is head

to ww. reventure doapp and look at the

price forecast score for your state

metro area County and zip code now we

have two pricing plans here at reventure

app everyone for that premium data on

the forecast Score first option is the

monthly pass which is $39 a month it

unlocks those scores as well as 40 other

premium data points to help you as a

buyer gain understanding about your

local housing market and where prices

could be heading however what a lot of

people are doing recently is signing up

for the annual pass which comes at a 15%

discount so it knocks down the monthly

rate to 33 a month that allows you to

track the data month in and month out

over the next year as you you prepare

yourself for your home buying or

investment purchase decision so sign up

for that annual pass so you can see what

the reventure price forecast score is

for your area and understand its

components if the score is below a 50

with a downward arrow that suggests we

think prices are going to go down in the

next year if it's above a 50 with an

upward arrow in red that means we think

prices are stable or going to go uW