Thankful for a Healthy Real Estate Market

The real estate market continues with its sales reverting to pre-COVID lower levels, pricing adjusting down slightly, and overall no crash in sight.

The real estate news industry, however, cannot make a living without some drama. Headlines with housing price crashes and prices blowing up create more clicks and ad sales, but are not reality.

This week, we have 2 examples of the industry attempting to create some excitement where none really exists.

For some reason, Fortune magazine amplified a Mortgage Stanley article all over the internet with the creaming headline "Morgan Stanley slashes its US Housing Market Outlook."

Hat time to Mark Shmagin.

Interestingly, this article is behind Fortune's paywall, meaning if you want to read the article you have to subscribe to Fortune. I am immediately suspicious, as to why would Morgan Stanley limit their insight on the housing market to behind a paywall.

So, slashes it says. How much does Morgan Stanley slash its analysis? You can go behind the paywall for free via Business News and see that they are estimating a drop from the peak in June 2022 to 2024 of 10%. That is after an increase of 38% in the prior year and a half, so after a historic record rise of 38% it's giving back about one-quarter. Is that a slash or an adjustment? That still leaves prices higher by 28% over the 2.5-year period, which is still a near-historic pace.

My friend Alex Olivares showed me an even worse example, from regular real estate misinformation expert Yahoo! Finance. 

There the headline, something right out of Holloween, screams "Buckle in for a brutal free-fall in home prices and US housing is in a massive bubble, experts say.." I always love the "experts say," as if Yahoo! is saying "we're not saying this nonsense, we're just reporting it."

When we look for details, however, we don't see much. One ominous-sounding quote is " "I think we're gonna have the second-biggest housing price decline since post-WWII period over the next 12 months." However, the market has only declined 1 time since WWII, that was the 2008 housing crisis, so to say it will be the 2nd worse is to say it's only the 2nd time. But this 10% drop immediately after the 38% rise in prices could best be understood as a correction to that rise. Most importantly, he offers no data to support the claim, just a flag in the space that he will repeat if he is correct and will ignore if wrong.
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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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