The Expert Podcast

Look, it's clear that there are a lot of things going on with the economy. Prices are going up, the economy is struggling, and some people are losing their jobs. In some ways, people are looking at where prices will become under pressure and start to fall. According to Market Watch, car prices are definitely going to cut down. In fact, we've already seen this happening in many of our divisions—insurance, vehicle titles, and even investigations. We're seeing car prices go down dramatically.

But that may not affect real estate, and we'll take a look at why. According to this article from Market Watch, homes and vehicles are the two biggest ticket items that most families require financing for. There's good news and bad news when looking at both assets. Forecasters expect home prices to edge up despite the doubling of mortgage rates. However, prices for used cars have already shown signs of going down. Here's the used car chart: mostly in the same range, and of course, in 2020, they spiked up. Now it's back down. Sure, it's higher than the average, but not as high as it was in 2009 or 2010. So, it's come down quite a bit.

Why are prices for single-family homes not going to go down? Goldman Sachs says the risk of a similar correction in the housing market is remote. The reason why is that people need a place to live. Cars are more elastic; vehicles are more elastic. You can live with one car in your family versus two or two versus three. There are other ways to get transportation without having a car, and you also don't need a new car—almost everybody already has a car.

Many people don't own a home. Some are renting, and the fact that rent is outside of your control—and rents are still going up even in spite of inflation—means there are still huge rent increases happening. I suspect that a few days after this video comes out, the next inflation report from the federal government will show that rental inflation is probably the highest it's ever been, even in spite of gas prices being high and interest rates being high. So, a lot more people are going to want to become homeowners and buy a house.

Sure, there was a big spike in home values, and some sellers are starting to pull back a little bit and maybe put houses on the market that were being held off because they saw prices going up. Now, some of those sellers are coming back in. That will help with inventory, bidding wars, and not having to struggle to find a house to buy. But the price point will still be at a higher level. It may not be as high as it was two or three months ago, but it's not going to go back down to what it was two years ago in 2020.

Many experts see this: housing is a lot less elastic. It's a lot harder to buy and sell a house. It's not something liquid that you can instantly buy or sell. Look, cars you can sell instantly—there are auctions that sell thousands of cars every day, and those markets can fluctuate dramatically. Home values tend to be more resilient, and there's still a shortage of homes for the number of buyers.

So, in your market, what are you seeing? Home values maybe aren't going up as much, but have they come down? And by coming down, I don't mean from the asking price, but are they lower than the actual selling prices from a year or a year and a half ago?