Jason Hartman is one of the most preeminent residential real estate experts in the arena.
He’s fearless, willing to debate anyone, and he’s chock-full of facts.
And he recently posted a short video that crushes the “crash bros” who continue to predict residential real estate Armageddon: DOOMERS are Like Broken Clocks- They’re Right Twice A Day.
Agents and lenders alike should be sharing Jason’s videos as much as possible, as there are hundreds of thousands of buyers on the sidelines because they are unduly influenced by the “crash bros.”
As a reminder, I stole the “crash bros” moniker from the other fact-laden housing “realist” I cite often, Logan Mohtashami (whose X posts are also well worth sharing as often as possible).
SIDEBAR: TODAY IS “FED DAY.” The Fed will announce a cut to the Fed Funds Rate today at 2 PM Eastern. It will likely be 0.25%, and today’s rates already reflect that cut (so analysts do not expect mortgage rates to change).
Summary of Hartman’s Points
I will summarize some of Hartman’s key points, but I again suggest watching the short video at 2x speed (and sharing it). Point #V below is by far the most important!
I. We still have a housing shortage!
Hartman reminds us that we still have a 4.5 million home deficit, relative to our population and housing needs.
II. Housing inventory remains ridiculously low!
The below chart from the video shows inventory back to 1980 – and it is not adjusted for population. It also shows that we’re not even close to 2008 levels, and we’re still way below early 1980s levels when the U.S. population was 100 million less!
III. Real estate beats the heck out of the stock market!
This is a point Hartman makes repeatedly in his videos. He shows a powerful chart that proves that stock market gains are strictly a function of inflation, and little else. In sharp contrast, though, investment real estate allows for far higher gains via leverage, tax advantages, and income streams (the video has a great illustration).
IV. It’s the guys who miss the boat who become “crash bros.”
Hartman likes to remind us that it is the sour grapes guys who missed the last real estate runups who always seem to become “crash bros.” Bitterness and jealousy seem to define their position.
V. Home prices are still up on average across the U.S.
The median home price is actually up slightly this year (across the country) – despite the affordability crisis and rising inventory.
VI. Need millions of distressed sellers to foster a “crash” – and we’re not even close!
Over 6% of mortgages were delinquent in 2007, before the 2008 crash. On average, 4.35% of mortgages are delinquent. Today, only 3.27% of mortgages are delinquent.
VII. Lower Rates Bring Buyers Back Into The Market. This is the factor we all should be driving home!
- If rates drop 1/2%, 2.7 million more buyers can afford a home.
- If rates drop 1%, 5 million more buyers can afford a home.
- If rates drop 1.5%, 8 million more buyers can afford a home.
This, once again, is why housing always does well during recessions – when interest rates drop. Lower rates bring buyers back into the market in droves every time. 2008 was an anomaly because of the millions of distressed sellers and excess inventory.
