Why Lawrence Yun Says Home Prices Could Buckle | TN Housing Update
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- Опубліковано 9 лют 2025
- Tennessee Housing Update. Knoxville, Memphis, Sevierville, Nashville. Lawrence Yun Chief Economist warns Home Prices could drop.
This is a Data centric Analytical approach to the Nashville Tn Housing Market. We look at trends in active listings, median price, mortgage rates, contracts, rent rates
Ethan Flynn
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The money that is coming to TN doesn't want to live in Davidson. It is larger money, larger incomes, and they want to live in Williamson et al. That is the main reason inventory/listings are down in Willaimson.
Makes sense
@@EthanFlynn Thoroughly enjoy your show.
I don’t think “percent decrease in last crash” adequately captures the risk in Nashville. Last time, it was Phoenix and Vegas that were the hot / bubble markets and they fell 55-65% peak-to-trough. Nashville was a sleeper in 2006 so it didn’t have as far to fall. This time, the hot markets were Austin and Nashville (among a few others), so there’s a lot more downside risk.
This is a great point. How much hotter is it today vs last “bubble”. I need to refresh my income to pmt historical chart.
@@EthanFlynn I don’t know exactly (no one can) but house prices doubled in Westhaven in 12mo. That’s 23.5 YEARS worth of appreciation at the long run average of 3%. Unlikely prices will be flat for 23.5 years while we wait for incomes to catch up. 🤷♂️
@@samharris82I think rents are the best benchmark IMO. But even rents could get soft there depending on demand.
@@EthanFlynn I do think rents are a decent proxy for income to payment ratios. It’s hard to know with people having remote jobs what the real incomes are but their willingness to pay a given rent is a good clue.
100% agree
So Ethan, my wife, and I moved here from Washington State almost a year ago and have been looking in Williamson County to buy a home for nearly 2-years now! Watching things float along with no significant changes is grueling, to say the least. We had a house that popped off Split-log Road about 45 minutes after we signed a contract to buy a home, which ended up having issues, and we had to back out. Once we did, the house already had an offer from a different buyer. We made a backup offer and waited. Needless to say, the first offer successfully closed escrow, and we were left looking again. Ugh. Jackson Hole will not bring the news everyone thinks they will regarding lowering interest rates.
Consider the evolution of the Nashville home market over the past 40-50 years. Age of home and finish level are having an outsized impact on the housing market right now in Nashville. We experienced a very large boomer boom in the 80's and 90's and a disproportionate number of those houses are coming to market right now with aged finishes that are difficult to sell given fundamentals on purchasing/renovating (construction prices, interest rates).
There is a clear stalemate at play in the Middle TN market. Two points I’m considering while advising my buyers & sellers:
1. Yes, there is an all-time high price bubble WHILE there is ample inventory on the market. This has GOT to eventually provide downward pressure on prices. Timeline depends on neighborhood.
2. 70% of US mortgages have a 5% interest rate or less. Most sellers have massive equity in their homes and have to be incredibly motivated to forfeit that opportunity. That percentage will obviously shrink over time- just be ready to capitalize.
IMO- the winning formula in this market is having an agent that can analyze economic data, while asking the correct questions to other parties involved in a transaction. The DATA comes first, then your advice to clientele.
Thank you so much, Ethan!! Looking forward to next week 🚀
Thanks! It is a stalemate.
Things revert to the mean. They should go lower than 2019 because of the over shoot.
You think prices drop below 2019? Can you clarify? Interested in your perspective.
@@EthanFlynn Prices in 2019 were already over valued and starting to rollover. Things tend to revert to the mean. If 2019 is the mean, as it reverts it will overshoot. To the down side. The further above the mean we are now the further past the mean we will go. Just like a pendulum. You can look at 2008 GFC, homes prices to income grew 2x leading up to it. It reverted to the mean after. 2006 inventory started building. 2008 price declines 2010 peek foreclosure. I suspect we are in 2007. I also think we may see the rapture in Oct so I’m a crazy person. What do I know?
I was told that in 2010 and 2011 and no, prices did not overshoot the mean. In fact, they only dropped about 90-95% of where many doomers thought they were going. None of them predicted how powerful and effective the Fed's QE would he at arresting the fall and reigniting the rocket engines. Maybe this time it will overshoot, but you have to very careful with that line of thinking. Houses aren't stocks (and even stocks no longer revert to the mean as they once did).
@@EthanFlynn also something to consider, 2008 GFC was a usa centered housing problem. So you had foreign capital poor into the USA to buy cheap real estate. This time around this real estate bust is just about everywhere. If people are hurting everywhere. Whose capital is going to come to support prices?
What is the source of your active inventory map. Is it something I can have access to?
Yes. Shoot me an email. Contact in description.
Data is realtor.com. I made the html chart.
People this administration printed 40% of all USD money supply….. homes are up 100% well that’s because our purchasing power was cut in half….. homes are only 20% or so overpriced. TN will continue to be a shelter for people like myself fleeing blue states and their insane policies.
So lower purchasing power mixed with low supply mixed with a steady trickle of blue state people who work remote= nothing
Prices will stay roughly the same outside of Nashville which has already fallen 20%
It seems that this retirement neighborhood is too niche for it to be used as an indicator for the general real estate market.
@@007_pewpew i would agree. RE is hyper local.
It’s very different than what’s happening in most neighborhoods.
It’s a condo neighborhood. There’s not many. It’s a retirement community, I think that’s a big difference.
Sounds right. For the sake of the average American I hope prices come down. Just glad I bought in 2020 to absorb the price decrease. Was thinking about moving but will be waiting this out.
🌴🌴🌴 Thank you Ethan for another great video today. You always bring your a game to these videos. Blessings,Carlos ✝️🙏❤️😊🇺🇸
Greed and unrealistic returns keep the prices inflated..this is driven by ignorant agents who don’t know the data and who want to maximize their return off their client.
prices will be flat in 4-5 years, separated by a pretty deep valley in price reductions and eventual reversal. and then in 7 years we'll be up meaningfully from where we are today. this is my nashville prediction, i don't pay too close attention to the rest of the market. it seems like the north east and midwest will do pretty fine compared to other areas.
Very possible scenario. One big question is the gov intervention and how it impacts the path.
@@EthanFlynn thats a valid point for sure and the upcoming administration could or could not heavily influence it. thanks for continually providing great information and breakdowns of relevant data.
Good theory. I’m from the area of Nashville. Grew up there. Was a kid whose parents lost our home back in 2008. What I see now is that salaries are in no way shape or form catching up to prices of homes. If home ran flat for 5 years at this level and then go UP around year 7, there NO way salaries will keep up.
99% of everyone I know in that area makes the average single wage of 55-60k. And households make around 90k. They can’t even afford homes no more in that area. They’re getting pushed out to the Antioch and Smyrna area lol. Before long, they’ll have to live in Murfreesboro 😂😂😂.
But again, if you already have a home with a good interest rate, with a solid job, your point makes great sense! Best of luck to you.
Lots already living in Murfreesboro near 24 exit
Prices hanging on makes no sense. I guess some normalcy bias or something.
Makes no sense. Curious if you are seeing this too anecdotally?
I am watching so many places, even in inventory-less California, where prices are most definitely down, yet all the headline data says the opposite. It has to be the mix-shift effect plus some serious lags in the reporting.
I will bet prices will drop to 2019 pricing. The crash will happen after the election. First the stock market then the homes.
What kind of government intervention do you see happening? Don’t you think that would stop prices dropping that far?