"People Are Waking Up" And Becoming Motivated Home Sellers | Melody Wright

The housing market has reached an inflection point

On Wednesday I had a private conversation with housing analyst Melody Wright.

In it, she revealed how shocked she is by the latest stats that show how the housing market is starting to unravel.

Record-low transactions during what is normally the business time of the year for home sales. Inventory up nearly 30% year over year nationally. And of ever greater concern, spiking delinquencies -- in some cases, at rates worse than seen during the 2008 Global Financial Crisis.

Not that you'd know it by looking at the median existing home price, which just hit another all-time high…

Is the country really sleepwalking into another housing crisis?

We'll find out now, as Melody kindly accepted my ask for her to join me today for an impromptu discussion on this important topic.

In Melody's words this is the turning point and "winter is coming" for the housing market.

To find out why, click here or on the video below:

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Adam’s Notes: Melody Wright (recorded 7.25.24)

EXECUTIVE SUMMARY

• The housing market peaked in 2022 and has been on a slow decline since then. She points out that rising costs for insurance and taxes are leading more homeowners to become motivated sellers as they receive notices showing significant increases in their payments.

• The combined issues of rising costs for current homeowners and overbuilding by developers are leading to a broad, nationwide housing market downturn characterized by both increasing supply and decreasing demand.

• Motivated selling has already begun in places like Florida and Texas. She explained that the real estate market's true state is often hidden because demographic data on transactions is hard to obtain and MLS listings are not fully transparent. Melody warned against being misled by brief upticks in activity or price, which can create false optimism. She stressed that the signs of motivated selling are present, but by the time they are widely recognized, it might be too late for sellers to avoid significant losses.

• Melody expresses shock at how quickly the housing market is unraveling, with low transactions during the peak season and rising inventory. Spiking delinquencies are a significant concern, with some areas experiencing rates worse than those during the 2008 financial crisis.

• Recent data from Black Knight shows a 19% month-over-month increase in 30+ day delinquencies, the highest since the COVID crisis in 2020. All delinquency tiers increased by 13.6% overall, indicating severe financial strain among homeowners. The shift from being under 30-day delinquent to over 30-day delinquent signifies a critical point where homeowners realize they can't manage their mortgage payments, leading to further financial distress and potential foreclosure.

• Inventory is up nearly 30% year over year, with new listings contributing over 35% in some areas. Sales are down significantly, with June 2024 showing the lowest sales figures in 25 years, indicating a broad national slowdown.
  Institutional sellers and the short-term rental market (e.g., Airbnb) are contributing to increased inventory. Institutions are offloading properties, often at a discount, exacerbating price declines. Many short-term rental investors are also struggling, adding to the inventory glut.

• Foreign buyer activity has decreased significantly, reflecting broader global economic issues. This reduction in foreign investment further strains the housing market and could signal deeper economic problems that might lead to job losses and recession.

• Melody argues that unless the Fed resumes buying mortgage-backed securities, rate cuts alone won't significantly lower mortgage rates. She emphasizes that