The Housing Market - What You Need To Know

[@EPBResearch]

We just launched our first course! epbresearch.com/courses/ This course is a high-level overview of the EPB Economic Framework. This course breaks down how I think about long-term and short-term trends in the economy's "engine" of economic growth. Check it out, and please share your thoughts and feedback! We appreciate your support.

[@HolyEyeWasHere]

Q: Why are homes so expensive? A: Low supply, high demand, ie: improper ratio of immigration to new construction. Any other reasoning offered is a deflection.

[@alpinismutilitar3886]

i like to see on your video real estate and stock market in gold ratio! Is the best predictor of finanical crash!

[@CVSBobby]

Wow you are doing a great job, love your channel and vibe. Very professional, feels very unbiased and factual. If you could in the future could you please read aloud the questions? A lot of us use you tube almost as podcasts or I like to listen to informative videos' like these as podcasts. Keep up the great work and thanks for the quality content!

[@GrumpierByTheDay]

+1 vote on this.

[@iankuklenski5970]

I came here to give this compliment

[@anthonystevens1818]

Yeah Eric is good, also RJ Talks channel and Nick from Reventure's channel are both really good channels they actually know what they're talking about (rare for youtube).

[@CriscoJack]

I really think you're onto something with this channel man, and I hope you keep on truckin'. You've got a very kind demeanor about you, along with an ability to deliver an incredibly educated yet pleasantly distilled market analysis that I've frankly yet to see elsewhere. I know producing this level of content isn't easy, but just know that your efforts are very much appreciated and many of us are excited to see you strike it big!

[@mikedavis4194]

I absolutely LOVE this Q&A. You should do more. Thanks for the consistently high quality and informative videos.

[@catliath5384]

Agreed

[@user-mv3cg7hi7g]

holy smokes! your content just keeps getting to be higher and higher quality. its so amazing watch this channel explode into one of the best economic channels on youtube within a few months. really amazing job!

[@VicLabs]

Great production value. Couple tips, your side angle is cropped a little tight and underexposed. Also your font sizes are great for a computer screen but tiny for people watching on phones. Otherwise, this looks great and paired with the content, this is too good for youtube.

[@gregorydaggett7444]

could you please narrate the questions? I'm listening and would appreciate hearing the questions. Thanks

[@julioalmeida4645]

When you release a video, the schedule of my day changes. True story

[@zb3645]

hard same

[@edubmf]

Housing assets absolutely do not track productivity over time. If they did regular people would still be able to buy a home on one income. Housing prices are set by credit availability. Two big changes: 1. they moved from lending against single income to joint income, forcing both parents to work for the same housing one income got 2. lower interest rates decreased the cost of carry on the debt, allowing people to borrow far more "credit", detaching prices from wages.

[@life_of_riley88]

Hey now Henry, you take that logic and facts stuff somewhere else! This is for the "housing always goes up" crowd.

[@nashsteve25]

Your research, analysis and explanation are excellent. You really should do more videos.

[@lukerees281]

the production quality is insane. Nicely done

[@shotelco]

As a EPB Research subscriber since you had 5K subs, Eric, you are killin' it with _Beyond Broadcast Quality_ informative content now! My only two humble ask are: A.) Only use YT shorts as teasers for your presentations like this B.) Is there anyway I can convince you to add International Investing to your quiver of presentations? It's selfish of me, but I do not invest domestically for exactly the reasons you oft cite regarding age/population demographics. SE Asia, Africa, and the Middle East (The Global South) have demonstrated 29 of the 30 fastest growing economies in the World over the past 10 years due to the age/population demographic component.

[@artempak3055]

Great video, very professional and informative - keep up the good work! P.S. I can't read the questions on my phone, they are too small - would recommend either zooming them in, or reading questions aloud, or both

[@SwaptakDas]

Eric please read the questions. Sometimes your graphs and writing are too small to read while watching on a cell phone. Keep up the great work. I am an early Subscriber.

[@aptpupil]

Love your videos. If you could make the questions have larger text it would be better for mobile viewing

[@ryanchadderton2655]

Great channel, keep up the great work, Eric!

[@vacho8182]

This guy is the most solid guy I have seen so far in the RE space on KZbin

[@patrickshanghai2064]

interesting point on rate of change. it's important, no doubt. BUT if last year i needed 30 years salary to buy a house. and now i need 29 years. i am indeed still screwed! haha. great video. thx for the hard work.

[@zackeryhardy9504]

I mean his point was that taken in the borader economy, but the point of the comment is looking at the market from a first time buyers perspective who needs a place to live. With an average sized house being completely unaffordably by someone making an average wadge then the market is not real. I mean we got lots of sales, but many of those "sales" turned into forclosures which are now just starting to hit in CA because the people buying those houses could not afford them. For example the mean salery in sacramento is 81k a year. About 30% higher than the average market. But the cost of living is more than that and housing is extremely expensive. I literally know people making 30k a year in Arkansas with a bigger house and some left over for savings when someone in sacramento making 70k a year is literally living in a super dangerous apartment and is barely able to pay the rent. Now life choices and good investment, saving, and lifestyle do factor in and I really cannot compare them completely, but I think point is made where money is not equal to itself and you really have to dig deeper. Essentially very few areas in CA are affordable for anyone making the area's average wadge. In same cases they are worse off than someone making below the localized average in a different part of the country.

[@erickillian313]

Hi Eric, love the video as usual. I usually only hear of expected housing price declines discussed in nominal prices. Why arent nominal declines factored into talks of decreasing home values? We discuss real wages often enough. And more importantly, how do we factor inflation into an expected housing decrease? In other words, home values in terms of nominal dollars. So if inflation has been 8-10% and home values on average have decreased 10% in nominal terms, haven't we then seen a decrease of 20% in real terms? Is there any historical guidance here? My thesis is that home values stay relatively flat from here and that existing and future inflation erodes housing in real terms. What will future inflation be? It's anyone's guess and it's coming down, but I don't think we'll get back to 2% annually. In any case, relative to my life: if I have mortgage locked in, inflation stays a bit higher than normal, then home values stay the same, and I get to pay my mortgage down with nominal income that has gone up with inflation thereby decreasing my mortgage payment in real terms. Would love to hear you talk about housing in real/nominal terms during a period of inflation and any historical cases to look at.

[@catliath5384]

Excellent, thanks. For someone who cannot afford to get on some of these good info channel gurus(like Eric). I am very happy to get the next best on KZbin! Thanks again 😊

[@DangeresqueIV]

Great video! If you do another could you read the questions out loud? I tend to listen to videos like this like a podcast with another window open haha.

[@THEweelaful]

Next video i'd appreciate you reading the question too 🙏 thanks for good content, your channel is my new favourite.

[@THEweelaful]

....out loud i mean 🙈

[@peachezprogramming]

Haven't watched the video yet but I hope you bring up how the government made if illegal to build homes we can afford with single family residential zoning being forced upon us

[@samueljrichardson2499]

you should have read the questions outloud instead of posting them, i cant read them. otherwise great video keep it up i LOVE the videos!

[@mrj9881]

So no talk about monetary debasement...how about you break things down into hours of work and why it takes so much more time to buy a house...that's the real problem

[@life_of_riley88]

Homes have NEVER been this unaffordable in recorded human history. Put that in your pipe and smoke it.

[@jamesstrawn6087]

Interest rates are the single biggest absolute in price increases. This rule is practically Newtonian. Essentially no one pays cash & the vast majority of the loans are 30 year fixed rates. A very small (proportional) drop in rates absolutely pumps financial juice into the prices bid on properties. There is a lag in actual sales and in new building, however, so what we see presently is the outcome of the situation months, even years ago in the case of large projects/develpments.

[@USBCABLEGUY]

Thanks for including other places other than the US in your research and answers, I'm from Europe :)

[@PLuffy-ke7ho]

I really like your videos! They are really well put together and very informative

[@norcalsrt1214]

The market was flooded with cheap money ie low interest rates that drove individuals to buy and more importantly it drove massive investment from corp groups into the marker thus creating a feeding frenzy and the insane price jumps. Last year I could buy a 700k house for the same monthly payment as a 350k house now, this just shows the massive loss of buying power to the general public will undoubtedly drive the market down as these once 200k homes shot up to 500k or more, will no longer have the public fighting for them. Thus these overpriced homes will correct over the next few years back down to normal levels.

[@life_of_riley88]

👍

[@Hawki777]

Thanks Eric, excellent answers.

[@gomesdiogo]

I'm a simple man Eric uploads, I come to watch the amazing content and drop a like

[@NickW1997]

Love you videos. I have a possible topic: are recessions necessary? I.e., is it possible for a government and the private sector to engineer periods of sustained, moderate growth that don’t result in an overheating and downturn? I tend to think no because if it was possible you’d think authoritarian regimes would do it (plus global trade dynamics make it ven more difficult), but curious to hear your thoughts and the data

[@liljewupinnyc]

really love your videos? can you share your process and team/software for creating?

[@LukeyPoo65]

Hey you listened! This video is longer and came out so quick haha keep up the great work my friend. Are there any other channels you’d recommend to your viewers?

[@McCarthaayy]

Production quality 🆙

[@everydaybodybuilding2282]

How much do you think tech workers have affected Midwestern states via remote work?

[@abcrofoot]

Your videos are awesome - thanks for the great content

[@ncalcamper]

I like seeing you vs old approach of a pic. Charts are good but previous charts had better connection. Assume this is a tech issue. Use of questions didn’t work. Too small on screen and your summary is what is important. I’m a fan keep improving 👏

[@Xellos357]

Misspoke at 8:07 ‐ counties or cities, not country's Excellent content by the way, just wanted to point that out in case you want to add an annotation to the video for clarification

[@clarklowe5632]

I would like to see a chart comparing monthly payment vs home price vs inflation. When I look at these the prices increased from '70 to mid '90 with no change in monthly payments because interest rates went down. This gave a 25 year period where home prices always went up . This gave a impression that prices always go up. Once interest rates bottomed out finally monthly payments went up along with home prices. Allowing monthly payments to get up to the old inflation adjusted payment but then went beyond that. giving an additional 10 years of idea prices always go up. Creating a 35 year period that made it appear that home prices increases will always beat inflation. This idea can't last forever though eventually there isn't enough money.

[@arkzyFn8]

I’m new to your channel, so if the information has been discussed somewhere else will someone let me know. I don’t understand why investors are not talked about more. IBuyers, boutique mom and pop investors (less than 10 homes, but seems there are a lot more people trying to do it these days, bigger small investors, flippers, wholesalers, STR, multi family, and big Wall Street. I haven’t seen anyone discuss the cumulative total impact and what’s being done to thwart it. That’s a ton of people who are buying homes holding prices hostage to the average American family.

[@mprobison]

I love the breakdowns, the videos are great, this new format is awesome. Q: As an economist what do you think drives the sentimentality of home buyers? Follow up: as a guy roughly my age... what do you personally think drives sentimentality of the same? To drill down more: why is there a difference between leading indicators and trailing indicators as at all!? This information is available to all, why are home prices so damn speculative. Sorry if this is outside of your scope.

[@tpfrk8977]

One thing that you didn’t mention is that home prices in areas with lower property taxes are more sensitive to changes in interest rates. California would be a good example here

[@videogarage9221]

Excellent presentation, arguments, and data presentation.

[@rkghawgs]

Brilliant video. Would love to see you do a deep-dive into what industries are being most affected by inflation and high interest rates. We obviously know tech is one of them - because they leverage high amounts of debt... but that obviously doesn't tell the whole story. Why do tech companies leverage high debt? And all sorts of additional questions arise with these initial questions. Would love to see your economic analysis of all of this.

[@Jaigarful]

Because a lot of tech isn't sustainable but instead relies on investors dumping money into it to stay afloat. For example, a lot of the gig-work companies like Uber have an unsustainable business model that relies on investors while they try to corner as much of the market as possible. Then a few years down the line, they'll try to capitalize on that and raise rates substantially.

[@craigmcpherson1455]

Amazon is likely to survive because they got in very early and had enough time to corner all the markets. If Amazon had the same "privileges" as a small business when it comes to loans, they would have been bankrupt a long time ago.

[@willmurrin9344]

Hey, I really appreciate your research. I have a question that I would be interested in learning more about. You have covered data showing that housing prices are decreasing, but I haven't seen you mention that interest rates are rising. Interest rates in 2020 were below 3%, but today they are over 6%. Even though the prices of homes have fallen 20-30%, it seems a person would still have been better off overpaying for their house and locking in the 3% interest rate than paying for the house at fair value with a 6% interest rate. Is there a way to adjust home valuations which includes average interest rates to give a better picture of what the market might look like as a new home buyer? Thank you.

[@jamesstrawn6087]

As a theoretical matter it is the interest rate that drives the prices higher. (Opportunity would be amazing if one were shopping just as interest rates came down four points. You would get price and terms both.) But over time these balance out precisely because one is lent money on the capacity to make a payment. The proportion of principal to interest in the payment drives the price that is able to be bid in each case. This then functions over the whole market. Meaning? If you bought when rates had been low for 11 years and interest rates rose 5 points, you would probably be stuck with few buyers at your price level/building and need to drop the price.

[@corpsman]

Eric, your production quality, wow!

[@peachypietro9980]

Hi there, Eric - quick response to the part about pop growth: the problem with pop growth in the US is that it's all based on immigration and not birth rate (since US birth rate is 1.7+/-), and immigrants don't contribute to consumption as much as naturalized or natural born citizens - at least for some time: most immigrants have crappy paying jobs that don't allow them to purchase new or even decent used vehicles, houses, or other durables or high prices goods. Thus, I don't see it contributing to econ growth as much as you might think.

[@mcopanzan]

Any thought on effect of dirty money on the housing. As an ex. looking at our neighbours in Vancouver and Toronto, where a lot of drug money and laundered money was parked into the housing through various layered schemes by a variety of local and foreign players. Vancouver in particular investigated this trend and saw large amounts coming in, but the state investigation was shot down by the feds. We have different laws like RICO obviously, but I doubt we are immune to the same effects, by the same players.

[@bgbusiness_]

Holy shit. This video is a banger.

[@terrencewells2131]

Great video Eric.

[@ZelenaZmija]

I wonder if falling populations in Europe and Asia won't tempt more Americans to just move overseas. The cost of living is so low in plenty of nice places in Europe & Asia it almost seems silly to be grinding super hard stateside as opposed to just taking some relatively lax remote job and working out of Dubrovnik or Porto or somewhere like that.

[@Jaigarful]

My concern is that falling populations in Europe and Asia encourages more foreign investing into the US, buying out real estate here and jacking up the prices.

[@ZelenaZmija]

​ @Nick That's a fair concern, but I think its a little too hard to project. I think the US government would step in if foreign money is making real estate too unaffordable for citizens.

[@mcarlkv53]

If the American people allow private banks to control the issue of money, first by inflation, and then by deflation, the banks and corporations that grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” - Thomas Jefferson.

[@11111drew]

top tier content

[@mikef8069]

Tech: sales and sales forecast dropping sharply. QQQ: +4%

[@mlc7million]

What about profit margin of these companies and statements regarding supply chain? Isn’t this conflicting?

[@logicman7028]

Houses are expensive because they are the worst, most poorly designed products ever. This is mainly due to incompetence in the architectural profession. Their lack of creativity and problem solving is astounding. Thery create stick boxes in tornado zones that turn inro ruble due to their flimsy design. Their construction is incredibly expensive due to the labor-intensive way they are built, the cost of their materials and city regulations. Compare the improvements in housing to electronics. In the 1960s our neighbor had a new 4-bedroom suburban house that cost $25,000. He paid $400 for a color TV, an astounding luxury at that time. Today, that same house is 60 years older and costs $500,000. Today you can get a vastly superior TV for less than $400. I wonder if this is due to the fact that there is no foreign competition in housing.

[@Zachary-Daiquiri]

I think the modern monetary systems will breakdown under slower population growth. Slower growth in production is not going to mix well with continued increases in money supply. Japan and their inflation is a good example. Currency needs to be allowed to deflate and correct in the face of changing conditions.

[@bansheezs]

you should make the questions bigger so people can actually read them in your video and leave them up for a little longer.

[@themagstory3373]

I have no doubt when a recession happens, you’ll be the first video that pops up on my feed.

[@jasonpowell584]

What goes up, must come down

[@asdfgoogle]

Does your channel name include "research" in order to get some kind of tax incentives or rebates or something?

[@TheRedPheniox]

Eric, one recommendation on the close up shots in this video, don't zoom in so much that you cut off your forehead. The shot is a bit awkward. xD

[@PredTrades]

Thank you sir 🤙🏽

[@necromoni]

That population growth rate chart is so misleading and wrong. Take two seconds to google population growth in the US.

[@shamitkishore]

🔥🔥🔥🔥

[@Tigornable]

Great video, but hard to see, it's a little to dark. 👍

[@TheArb6]

US allows immigration which will keep population growth healthy

[@drsmith2757]

A lot of adverts in this one.

[@rkghawgs]

Another comment because this video fascinates me - As we start creeping towards a demographic crisis with declining population in prime years as you say, I'll be interested to see two things... 1. People assume that houses, if held for a long time, will almost always generate a profit. In countries that are experiencing a demographic crisis, that will NOT be the case. We will see an abundant supply of homes and not enough people to fill them, thus tanking the value of homes. Who knows when that will be (will be decades and decades from now), but it'll be interesting to see how it's handled. 2. With the demographic crisis, the government will have no choice but to incentivize people to have more kids. Whether this will be done with an additional tax credit, or something else, this will also be incredibly interesting to see how the government tries to prevent a disaster in our economy in the decades to come.

[@federalbureauofnvestigatio6401]

Im from Greece, our demographics are collapsing yet house prices and rent are higher than ever. Even in countries like Bulgaria, which is losing almost 1% of its population annually there is a housing boom. There is something else at play here.

[@HolyEyeWasHere]

Why are homes so expensive? Low supply, high demand, ie: improper ratio of immigration to construction. Any other reasoning offered is a deflection.

[@GTJW22409]

This is utter bs, homes are so expensive because they created fake housing crises by letting corporations buy up houses way over market value. Guess what's going to happen when these houses are seen as a liability and no longer an investment? All it takes is one house sold undervalue in a community to lower all the houses in the area.

[@HolyEyeWasHere]

@@GTJW22409 It's not "utter BS". It's basic supply and demand. "Letting corporations buy up housing"? So you want there to be laws against businesses owning property?

[@GTJW22409]

@@HolyEyeWasHere hahaha

[@dougdimmadomeownerofthedim5376]

@@HolyEyeWasHere "Do you want laws against businesses owning property" Yes. Absolutely yes. Giant corporations should not be able to buy residential property meant for people to live in.

[@HolyEyeWasHere]

@@dougdimmadomeownerofthedim5376 define "giant" corporation. Can I own multiple rentals?

[@jasongrig]

I know more about Eric's nose than his doctor after watching his video

[@jdel2151]

Lol

[@edlcdmc]

Why you being nosy?

[@martintheguitarist]

Demographics are nearly irrelevant to housing. For hundreds of years home prices were stable. There are especially very long term studies about the London housing market that spans several hundreds of years. What changed in the last 50 years is inflation and credit expansion. Money is devaluing since there is no gold peg, credit expanded because of mortgages and lowering of credit requirements. Population growth in the 19th century was enormous. What you had in the past 50 years is nothing compared to then. Look at it on a log scale.

[@thebestlutz]

Why are houses too expensive? Not to be captain obvious, but I’m going to go ahead and go with money printing.

[@life_of_riley88]

"And behind door number one. . . .we have. . .Money Printing!!" Correct.

[@Annihilated481]

I literally cannot read these questions, I'm on a 2K monitor.

[@cjenkins79]

Quick point regarding long term growth. While population growth is slowing this is only one side of the equation (demand). On the supply side we are going to be constrained. If you look at the most desirable cities we simply cannot add single family homes at an affordable price point as most these markets have matured and land is scarce. We will begin to move toward multi family housing most of nations which means owning an actual single family home will become more of a luxury.

[@ProfessionalBirdWatcher]

Handsome man 😘

[@hill2750]

Is anyone else having a hard time reading the questions he's showing?

[@josephwojtkowiak8551]

We are already in a recession...

[@DKB268]

Too bad you didn't write the questions large enough to read.

[@EPBResearch]

Will fix it in the next Q&A!

[@KC-zz4jb]

You should read out the question! Hard to follow if you are only listening :(

[@isaacpalmquist9202]

Housing going to be shit for decade maybe longer

[@cameroncastel8370]

Eric. You have no clue.

[@recluseauhermitticus2033]

Real estate has always been a tool of class division simple and plain. Wish everybody would stop pretending otherwise