Summary of 3 Reasons Home Prices Will Fall By 50%...Or More

00:00:00 - 00:20:00

The presenter argues that home prices will fall by 50% or more due to low demand, inflation, and the global dollar shortage.

• 00:00:00 The presenter discusses three reasons home prices will fall by 50%. First, stocks are getting crushed. Second, inflation is going up, and most Baby Boomers are retiring but have a lot of home equity. Third, if home prices are flatlining or come down, homeowners are forced to sell.
• 00:05:00 The three reasons home prices will fall by 50% or more are: mortgage rates going up, a potential buyer coming in for a neighbor's home, and inflation. The realtor drops the price by 100,000 dollars, and Grandpa Joe gets a buyer immediately. However, this does not help the other two homes in the neighborhood. Appraiser April is hired by the bank to appraise the home's value before issuing a loan. She looks at the most recent comps and finds that the home is only worth 400,000 dollars. The bank goes back to the buyer and says no we're not giving you the loan for 500,000 because the home is only worth 400,000. This is how home prices can come down very quickly, especially when you adjust for inflation.
• 00:10:00 The video argues that interest rates will go higher, which will lead to a decline in home prices. The reason is that the Federal Reserve has many tools it can use to combat inflation, and these tools are only temporary. Additionally, the Fed doesn't have complete control over mortgage rates, which means that the front end of the housing market is also vulnerable.
• 00:15:00 The three main reasons home prices will fall by 50% or more are low demand, inflation, and the global dollar shortage.
• 00:20:00 The presenter argues that prices for homes will fall by 50% or more due to low demand, high rates of unemployment, and the distortion of the U.S. Treasury market.