Will the Housing Bubble Burst? 

The video never answers the question "will the housing bubble bursts" it does a good job explaining WHY there is a housing bubble though.

Welcome to Seattle. Where single family homes cost $1,000,000 and the owners complain about the homeless camps, many of whom actually have jobs but can't find a place to rent that they can afford

The way America is going about housing seems unsustainable to say the least. Housing prices are outpacing wage increases and the housing market is driving up rental prices as well. Something has to give eventually.

You didn’t mention the impact of investors buying up houses to rent.

I bought my house in suburban Atlanta in 1997 for just under 100K. By 2008, I was receiving offers for $300K to sell and by 2010 it was down to $50K. I had some fool call to offer me $400K to sell just today...pretty sure there's another bust coming and it's gonna be a doozy.

Why did I expect that this video would make me feel better...

I'm anticipating a housing crisis in order to buy cheaply after selling a few residences in 2022. I've been considering buying stocks as a fallback. What suggestions do you have for the ideal buying period? On the one hand, I keep reading about and witnessing weekly trading earnings of over $500,000. The market is allegedly out of control and having a dead cat bounce, on the other hand, according to what I keep hearing. What causes this to occur?

Very informative video! However guys this seems to be more of a collection of info explaining how the bubble formed and not will or when it will burst or even “what to do” while it’s here. Still, very reasonable and collected argument.

The video was informative but the title does not seem to fit the content..

What about investment firms buying homes over asking price as soon as they become for sale for their portfolios? We can’t compete with them to buy at a realistic level.

I'm surprised you guys didn't mention how Giants like black rock are also outbidding the regular folks left and right.

I finally reached a salary where I have disposable income and now the things I thought I would be buying at my age like a nice car and/or motorcycle are unaffordable at my level of disposable income. I know that's an incredibly privileged thing to say but, damn, my mid-life crisis is really gonna be uneventful.

I applied for so many plumbing jobs and I got only a few calls back and they weren't overly interested. American trade workers/companies don't want to teach the younger generation.

"There just isn't enough housing to good around." Incorrect! There's lots of housing to go around, but they're all "luxury homes/apartments" that cost $3k/month to rent.

"Hey, there's a bubble" "How do you know?" "Trust me. Call Vennett. Buy 50 million in swaps on the MBS."

I never thought those two would even have a drop of INK on them lol.

The housing market is out of control because houses are an investment and not just a place to live. Do an episode on how Switzerland controlled its housing prices by giving renters rights, controlling rents and not encouraging everyone to buy real estate to get rich!

As a Canadian looking at America's housing market, I'd say you guys are way better off than us

Yeah the market is crazy right now. Our family was looking for houses in the 350k range and to even be considered you had to be at least 20k over. One house we went to was listed as 350k and sold for 440k!! Apparently they had a sizeable portion of cash (possibly 50% or more) for that house. We did eventually get a house luckily, but its been rough.

According to the U.S. Census Bureau, there are 16 million vacant housing units as of 2019. How do you square this with your assertion that we need "more housing"? More housing does not equate affordable, nor will it solve issues surrounding mass migration into areas that are economically and environmentally unsuited to sustain such influx.

I’m giving up on Austin and moving elsewhere. I started making good money right as prices shot up. Luckily I have a skilled trade and can work somewhere houses don’t start at 600k.

I noticed theyve left out the role of the massive volume of capital from hedge funds and other types of investment groups that has been poured into the market to create and expand rental conglomerates, which seems odd considering the focus they gave to cities that have been the most impacted by it...

This labor shortage stems from the student loan crisis. If everyone and their mom wasn’t constantly told they needed to take out student loans and get a 4 year degree to be successful then maybe more people would consider the trades.

I think some of the issues with housing is also people use it as their savings and primary investment. If it's a building wealth for the homeowner then it's making it unaffordable for the buyer or affordable to the buyer and no savings for the homeowner. It's a tough situation to manage

Thank you for pointing out the zoning laws issue. I appreciate that you don't mix the concept of zoning laws with the concept of building codes. One is what can go where, the other is how to make them safe.

I tried working from home as a Janitor but just ended up cleaning my own house.

Great video! Would love you guys exploring the cost of urban sprawl explored by Strong Towns. It's crazy how expensive stuff gets when it's not walkable.

I wonder how the housing bubble extends to the renting market… anyone seeing their rents go up?

You forgot to address the fact that alot of homes have been purchased by Investment firms and hedge funds. They do not take care of properties. Also, the ridiculous tax breaks and corporate welfare they get that distorts and disadvantages most people.

California signed bills to remove zoning laws and allow for duplexes

this gives out strong towns / not just bikes vibes, and i’m here for it.

You answered that as a politician As in that you did not answer the question.

As always this was incredibly informative and helpful! However the question in the title was not answered. I would recommend changing the title from “Will the Housing Bubble Burst?” to something more in line with the discussion of the video, like “What’s the Solution to the Housing Shortage?”

Thanks for this upload. I keep getting unsolicited calls from investors asking to buy my house. There’s no way I’m going to let go of my house because, even if I sell for over my asking price, I’d then have to compete with these same investors on my next house. Companies like BlackRock and Zillow are screwing up the housing market for working-class Americans.

We have a ton of new high density grossly overpriced apartment buildings going up on the San Francisco peninsula. All the town's along El Camino Real are getting developed. Grossly overpriced rent is the problem. $3600 and up for studio apartment

Wow, lots of research went into this. Didn't realize all the moving cog of this issue. In Canadian cities, it's more the opposite of zoning laws in the USA. They keep paving over farmland for higher density dwellings or knocking down buildings to make condos. Problem is, still unaffordable for so many and no low-cost units are being put on the market or available for rental. There's even a wave of renovation by landlords who buy whole buildings, kick everyone out, renovate to only allow rich people to move back in. Kudos for not being afraid to mention it's mostly white people in charge.

My friend recently bought a home in an LA suburb for almost $600k for a 3 bedroom amongst 5 cosigners. The market is crazy

thank you for discussing zoning laws!! being a frustrated millennial trying to buy a house has fully radicalized me as a YIMBY.

The shortage of houses along with bidding wars is a sad case of supply and demand. Interesting to see the logic on trade workers retiring and not enough new employees entering the field. Trades make great money so it’s sad to see these positions be left empty.

Great video! Would’ve loved if you touched on corporations and institutional investors that are buying up properties and driving up prices.

Waiting for someone to say "why don't we tax land values?"

In the city I live in, they are working on a “missing middle” project. If it goes through then it will be the same zoning laws for single family homes, building “granny suites”, corner suite town homes and duplexes/triplexes.

and save the downpayment. There is NO bubble that could not to burst. Bubbles meant to be burst. That's why we call it a bubble.

As soon as interest rates go up, the buyers will exit the market. Won't help with the tight supply of housing, but will certainly put the brakes on demand. Oh, and this isn't a bubble Two Cents!! Bubble was 2008, this is a mismatch between supply and demand.

House hunting sucks! We spend all weekend every weekend for the past 7 months touring houses and put in well over 35 offers, often 100k over asking, 60% down, appraisal waivers, with months of rent back and still get out-bid by full cash offers - probably from Californians.

So as a single-family homeowner, who just paid absurdly high prices to get it, I do not think you have to be a racist (as implied multiple times through the video) to care about the value of this 300-500K asset which is typically the single largest investment a family has in their portfolio. In a few years, I think you may find these new homeowners will react the same way as everyone else did when some government wants to take an action, (i.e allow homeless camps across the street from your house, allow a multi-story building with 40 cars into a 'quaint' little quiet neighborhood) which will cost you a significant % of your investment. You will react with your best financial interests in mind.

Is there a distinction between there 'not being enough houses to go around' and 'there are not enough houses on the market'? I've heard people claim that there are enough houses that are privately owned but allowed to stay unoccupied and dormant to house everyone in the US.

i remember seeing zillow house listings where it would claim, house has been reduced by $50,000. pretty hilarious

That infrastructure issue is happening right now in Orlando. The city wants to build a rail system from the airport to Disney World, but the rich snobs in Hunter's Creek are jamming it up because they don't want a train near their precious, high value property, and are trying to claim that they give a rat's about the "wildlife" it would disrupt in the nearby creek... 🙄 People are so pathetic.

@TwoCents, You should have mentioned the large amount of Private Equity investment in single-family homes recently. These firms are buying over ask like crazy (reducing the available housing supply increasing the price) in certain markets and plan to gain returns through renting the property. It is my fear that when the rent becomes too high and they have difficulty renting the properties (because Millennials want to buy homes, not rent as you mentioned), they will have to cut their losses and liquidate their properties. This would increase the supply of homes on the market, and therefore drop the value of all homes (a crash). [Would love to see a video of you breaking this down].

FED and its printing money is the problem, not plandemics

I don't know what the deal was with blaming white people about halfway through the video

I know I'm not the only goofball that saw the thumbnail and thought of the *Marvel VS Capcom 2* character select screen.

This video was fine until it brought in multi-family units in residential areas zoned for single-family homes. If Philip and Julia lived in a home where both sides had five-story apartments they probably wouldn't be so positive about the idea. They act like congestion shouldn't be an issue. Part of the reason people spend hundreds of thousands of dollars on homes is to get away from the congestion. What about parking as an issue for people who live in those neighborhoods? Do you think an apartment building built on a lot originally intended for a single house is going to have its own parking structure? No, they'll have to park on the street - in front of other people's homes. Do they seriously think building multi-unit houses (AKA apartments) will fix the homeless crisis? The rent on those apartments could be anywhere from $800 - $2000 a month (or more) plus utilities and often renter's insurance. Does the average homeless person have $3000 lying around? Most homeless people are homeless because they want the freedom to do drugs without consequences or they're mentally ill, or they're criminals. A subset is homeless for just financial reasons, and those homeless people would still need incomes. Moreover, covid isn't the primary reason for the joblessness, it's government mandates that shut down businesses and put them out of business. Mandates that terminate the jobs of people who for their own reasons have issues with the vaccines. It's increasing minimum wages and environmental extremism. I should have expected only half the story from anything to do with PBS.

Gee, it's almost like discouraging trade school and encouraging college at all cost was a bad idea...

What about hot zones, where the bidding wars and overstock has surged? Are those bubbles going to pop when sellers realize the home has been listed for too long?

Not in my backyard movement is a problem. When my state was recovering from was recovering from the financial crisis. A very large company in my area wanted to build a warehouse that would have created hundreds if not thousands of jobs. However the large Boomer demographic that lived in the area voted against it. We are holding ourselves back as a country.

Lets go Brandon!

I think a lot of the arguments in the video are honestly pretty off. It basically tries to say that the problem is 100% zoning when in reality, it's mostly other problems. You can look at other places that aren't suburbs to crush the zoning argument. Why is New York so expensive? Even though most of it is apartment buildings? Zoning isn't the actual major problem, the major problem is that there isn't enough housing being made so since demand is high, it increases prices. One thing that The zoning argument totally glosses over is that most wanted form of housing, is a single family home, not an apartment building or a row home, or a condo. Another problem now is the ability to work from home so you can live anywhere. Thus causing places that weren't as expensive to cost more as people from other places that are expensive to live like New York or LA can now move to other places and they can afford to overbid since it'll still be SIGNIFICANTLY cheaper to live there. A perfect example of this is what happened earlier in Canada. Toronto Condo prices dropped by a good amount because people were moving far away since they didn't need to worry about going downtown to work and could live in places that were a lot cheaper. Housing prices all across Ontario and the rest of Canada started to increase by a decent amount because of the aforementioned ability to buy new homes wherever. And since people didn't want to pay the high prices in the city when they couldn't do anything, people were doing a lot of leaving. The places other people moved to was places that had single family homes for the most part. Most people aren't looking to buy an apartment in a condo, or a row/town house. They're looking to have their own home separated from neighbors but they'll settle for what they can get to a certain point. Most people are going to rent a condo or apartment rather than own one. Zoning doesn't cause these problems and looking at it from that perspective is not the smartest. And yes, people don't want apartment buildings next to them, it's what makes North America North America. We have massive wide open areas and big sprawling suburbs because we can afford to do that. We don't need to make metropolises everywhere, and we'll try to avoid it. The average home buyer is most likely not going to be happy to live right beside an apartment building for a ton of reasons including the price of their home will go down, it is now in the way of their view of whatever was there before, most likely nature, it'll also bring more noise and congestion and people. I honestly very much dislike the "it's just old white people" when in reality, it's what most people would do.

So when affluent neighborhoods in Cali need to be repurposed for more people reactions are nimbyism. But in a place like Detroit where govts try to repurpose minority neighborhoods it’s gentrification and generally discouraged? What are we trying to preserve and which one is worth preserving ? Neither? Both?

Interesting! This is the first video I found myself disagreeing with you on. In spite of that, you presented everything well and made very good points.

so whats the answer to the question..... will it burst?

Me and my wife was going to buy a second house this year (we bought our first one in 2020) but since prices are so high now I'm just going to expand it with a big laundry room and an extra bathroom. There's no way I'll buy a house for 25% that I would have paid last year.

It's an ownership problem, not an affordability problem. Corporate landlords will often own more than 1000 homes to rent to the public. This doesn't make living cheaper, it makes ownership more scarce, increasing the price, as with any hording tactic. As long as you can't buy, you must rent, driving up rent prices too. If the ownership problem was fixed those 1000+ living spaces each corporation owns become up for grabs dropping the price back to affordable levels. The vast majority of people already live in a home, they just don't own it.

Just bought my house last month. Mortgage company was okay with RU-vid income as my primary source. I've been glad to see lackluster home prices start to go up in my area. Certainly hope the bubble doesn't pop right after purchase lol

It's not about race everyone wants a Villa with a garden and maybe a pool Villas are simply healthier and comfortable since people have the need to be connected to the earth. Local government don't approve new expansion since they have to pay for what taxpayers actually want ( infrastructure ) and they have to actually do their job That's why they push the narrative of " re-zoning" Re-zone is not necessary if you can expand horizontally -Architectural engineer from Saudi Arabia

It's worth noting that houses aren't anywhere near that expensive everywhere. If you want to live in a trendy city or directly outside of one, or in an immaculately manicured suburb, sure. House prices are nuts. If you're willing to move somewhere a bit more rural, or with a 30/40 minute commute, prices are far more reasonable. People complain that the cities are where the best paying jobs are, but if you have to spend 2/3 of your income on housing, are you really making more at the end of the day? If you have to work two jobs are you really able to enjoy the amenities the city has to offer? I get why people want to move to trendier areas, but you know how a lot of those areas got trendy? People moved there and started something cool.

I'll add a few more things. Everyone wants dream home,I used to work construction in the 90's and a small home was around 100k new but they didn't sell as well as large homes in the 240-300k range. Home loans are really strict on "fixer uppers" so even a person was willing to put in the work on an older home. They wouldn't get financed. Leaving the affordable homes empty or to become investments.

There's a ton of empty space, Why do cities have to be so dense?

Wow, those new tattoos were very distracting. They look terrible imho. Just my two cents….

i've also heard about the leftover homes that are unoccupied and not being used so is it only that we just dont have enough houses? I just thought it was intresting how you guys mentioned that when i've heard about that

Density of homes affect sewer, rubbish pickup, schools, police. A strain on the system is expensive too. NIMBY is a valid concern and city leaders should do more to address the issue and clearly communicate concerns to their constituents

Not everything is racism, and I wish people would stop perverting the topic to argue that it is.... If you worked very hard to build yourself a nice home, and then the government surrounded your home with 100 unit subsidized housing with no trees and huge parking lots, you wouldnt be too happy about it. Please keep a reasonable perspective.

Greeting from the Golden Banana State. Love your videos. Could you do a video on how CA is now allowing granny flats in CA backyards now

All homeowners' rights should be stripped of any say that goes on more than 50ft from their property.

I'm still confused if now is a good time to buy or if the economy will collapse.

Either one of two things needs to happen. More smaller, affordable homes built near cities. Or more money and training given to struggling school districts, which will redistribute ppl to lower priced areas.

I think the moral of the story is that nothing will change anytime soon.

1. No two bubbles are the same. 2. Housing is now more commoditized than ever. So don't allow emotions to take over on when to buy or sell. Unlike stocks or other investments, there is utility associated with housing which we tend to make emotional decisions from. 3. NO ONE KNOWS WHEN THE BUBBLE WILL BURST......there is always something or cracks that wont get exposed until it actually bursts. There is an inverse relationship between rates and prices. So this low rate environment has everyone guessing what may or may not happen. Demand is coming from every angle (home buyers, flippers, I-buyers, foreign cash, etc). Who knows when demand will dampen. Unfortunately the best bet is to stick to your budget. And if it forces you to move? You'll have to. Or to rent in the area you can't afford to buy in? No two situations are the same, and people have to adapt to this new environment. If you can't afford Los Angeles anymore? What's wrong with San Diego or San Jose? Manhattan out of the question? If Austin has priced you out? The suburbs it is.....it's that or never buying anything at all. This market won't last forever. Until then, weigh and calculate your opportunity cost. Moving to a lower COL area, as hard as it is to accept, will probably be the only option.

My mom bought a house between an affluent area and a not so great area in California. 20 years ago she bought it for under $350k… why? The school system was crap and it was parked against a trailer park. For years, developers tried to build transition housing and the neighborhood fought against it and won… good for them as the residents were trying to clean up the neighborhood and keep it clean and quiet. Recently, zoning laws turned over allowing many condo buildings to go up in 4 corners of a block radius. My mom then had to fight against them trying to open up her cul-de-sac. So yeah, she’s of the “not-in-my-backyard” but for good reason. Those condos are selling at the starting price of $950k. That’s price gouging. She’d never be able to afford to buy one even if she sold her house because of the tax. Everyday she gets phone calls of developers asking her to sell her house. She feels offended and trespassed against that these people would try to take her home. And all this economics BS is an excuse to try to explain why the rich and our governments can build and price gouge.

My great grandparents’ house is still standing in the Bronx, but now, with all of the buildings surrounding it, it’s pretty dark & gloomy. It’s worth a fortune, because developers would tear it down to build another ugly building. People should be able to have a house, but they should also live in a place they enjoy.

incredibly insightful. The title doesn't aptly capture how much I got out of this lol

Population is not growing .50mil of people over 65year old in the US.There are no housing shortages. But it should be 1 house for 1 person.Houses should be for living in only.

When they talked about fighting to buy a new home and now they LOVE it I was like, "Oh did they just move to Austin"? Because Im from there, I never buy that, 'people are moving away from cities' schtick, if anything theyre only moving to the suburbs, or exurbs that are maybe 30-45 minutes out of the city but still in the area, or close to a highway. Hell ALL of Texas' boomtown growth is along I-35 and the "Texas Triangle" mostly in the hill country because that's probably the most beautiful part of Texas. I dont see places like Abilene being a place of growth, or even like Lubbock, if people are fleeing the cities theyre moving from big city to smaller city, but Im not sure that growth is even going to last, and truly smaller towns and rural areas arent really seeing it outside of rising prices with not much demand (outside of investment firms looking to scoop up and bet on it)

This turned racial really quick

New residential construction in the U.S. is so cheap and flimsy... Even if we ramp up production, I feel like we're just pushing disaster down the road. I live in a 1960s-era apartment building and just visited friends who live in a building that's probably less than 20 years old. The difference was palpable. Building codes are getting more and more advanced, but compliance seems to actually be going down. Old homes are not "up to code", but neither are new ones.

I've definitely heard the "character of the neighborhood" argument a lot, especially from my own family! Maybe this is a sign that we need to rethink the ways condos and apartment buildings are built, and integrate them better with the surrounding area. Instead of gigantic buildings with lots of open space around them, consider smaller buildings that house 3-4 families like what we see in the San Francisco, CA Mission District and Brooklyn, NY. Of course, the permitting process will have to get cheaper to allow developers to do this.

American housing makes no sense to me (as an American). We sacrifice hundreds of acres of perfectly good farmland to oversized, impossible-to-navigate subdivisions full of oversized houses with oversized yards (which people waste water on to ensure they require constant mowing) that cost more than older houses of better quality. AND we build them too far from anything to make walking, biking, or mass transit a viable option, making car ownership a virtual necessity, which carries with it the costs of maintenance, fueling, and insurance.

So regulations and government interference are to blame again. *shocked Pikachu face*

Given the current market structure, the only way the bubble collapses right now is if boomers die off suddenly en masse or if the private equity that’s buying up 20-30% of houses for some reason decides to sell en masse versus sitting on them medium term until prices produce a good return for them.

The 2022 bubble has burst especially in the Austin area. That bubble is looking like a 30-40% drop is happening right now over the next year IMHO. There is a lot of data to support this. Inventory is climbing fast with the homes that were never finished during the pandemic, investors are selling their investment homes as the bubble is deflating. 6.2% 30 yr fixed mortgages are pricing out new buyers. Inflation adjusted prices are at all time highs. Everything is pointing to a BIG drop. IMHO

With a shortage of houses that means the price for a house will increase not bust

There’s nothing wrong with a group of people trying to stop their communities from changing in a direction they don’t like. If you increase the density of a neighborhood what are the second and third order of effects to this. Such as higher traffic, noise levels, overcrowding of schools. Third order of effect would be like maintenance on roads and pavements would have a higher frequency. It would be nice to have the option of building a duplex or apartment, but don’t chastise people because they don’t want their community to change.

Sorry to break the news guys but there is no "Housing Bubble". The video gives a very good picture of the current situation and why housing prices are where they are now, and with all these factors there's no reason to call it a "Bubble". Demand is very strong and very real, and supply is still very short of where it needs to be to tame price growth. If anything, sometime down the line we'll probably see price growth flatten if interest rates rise a lot, but there's no reason at all for prices to decline. Don't fall into thinking prices should decline because reality is there is no reason they will and may only continue getting much higher. Don't try to play the market.

Can you redo a video on this subject, now that interest rates are rising.

There's no labor shortage in the skilled trades that does commercial work, for example labor unions in high paying cities like Seattle are pretty competitive to get into (seriously, it can take years to become a plumber) it's more of a pay shortage. Nobody wants to work to build houses they'll never afford.

Not once did they mention that Americans want to live in their own. In many other countries and cultures, sharing a household with more roommates, more family, etc is not just tolerated, it's expected. Imagine the reduction in "social anxiety" and similar mental health challenges, political extremism, etc. if people lived together instead of in isolation.

Hi guys! big fan from Chile here :) your videos have been so helpful to me. Because of that, sometimes I've wanted to share them with my family, but they don't speak English... Is there a way I can collaborate with your Spanish subtitles? :D

Now when did filip get a tattoo on his left hand 🤔😳🥴😏

It is interesting how the cities that are the most left leaning (San Fran, NY and Seattle) are the ones with the strictest zoning laws.