Is the real estate market about to break? 🫠

Inflation is too high, gas prices are above $4, consumer confidence is near all-time lows, the Fed is expected to hike rates at the next meeting, and mortgage rates just hit 7%.

It's like Christmas came early for the doomers as they rush to record their YouTube videos to capitalize on the fear in the market.

Honestly, I get angry just thinking about it.

You know why?

Because this has real implications for real people just trying to figure out what to do.

And looking at the comments on some of these videos, you see real hopelessness from regular people trying to buy a house.

It's a shame.

These creators might believe their doing the public a service by raising the alarm, but there should be far more caution used before believing everything they're saying.

Their content isn't credible analysis.

It's alarm over accuracy.

It's self-promotion designed to get views, sell books, and generate leads of homeowners who are scared and want to cash out before a "crash" occurs.

In fact, there's a central claim in many of the videos that we need to get the facts on.

Will higher rates crash the housing market? 🏘️💥

YouTube doesn't lend itself to truly credible analysis because 95% of viewers won't pay attention to or understand it.  

Further, most people can't refute bold claims about the market because it's easy to make a claim and hard to prove it wrong.

In the first 30 seconds of the most recent video I watched, this claim was made: "The #1 thing that influences the price of real estate in the momentum of real estate prices and demand are mortgage rates."

So according to this, if rates are rising, the housing market is going to break.

But here's the truth: mortgage rates matter to the market, but they aren't even close to the #1 factor impacting home prices.

Want proof? Take a look at the numbers:

To be able to say that rising rates would cause home prices to drop, we should be able to look back in time and see examples of that happening.

The data shows the opposite...

The chart above shows a dot for every quarter since the start of 1988 and whether rates and home prices were rising or falling.

You can see home prices rising while rates are both rising and falling.

The main period where home prices fell was the 2008 Great Financial Crisis. 

You might not realize it, but rates actually fell during that period.

Since 1988, rising rates and falling home prices have only happened in 2 out of the 154 quarters on record.

On top of that, the price decline was minimal.

Bottom Line: Your people need your (expert) advice more than ever. 🙋‍♀️🙋‍♂️

It's not hard to see how the public can easily be misled by talking heads making bold claims. 

The videos feel like valid arguments when you watch them (sometimes), but rarely hold up to much scrutiny. 

And as the noise cranks up in the market, it's not a sign that you should shrink in fear of an impending crash.

Instead, it's the opposite.

As it gets harder and harder to figure out what's happening in the market and what move to make, your people need you to step up and offer clarity.

Are you ready?

Reach out. Have the conversations. Listen to their questions. Seek answers from reliable sources.

And if you're looking for help beyond your brokerage, you might consider becoming a Market Insider.

Dr. Alex Stewart
Founder