Dave:
We are only halfway through October and it has already been a wild one for the housing market. We’ve got a government shutdown, we’ve got signs of recession, we’ve got more sellers jumping into the market, but are buyers biting? We’ll cover this and more on today’s episode of On the Market. Hey everyone, welcome to On the Market. I’m
Dave Meyer. I am just getting my voice back after four amazing days in Vegas at BP Con 2025. Hope some of you were there because they’re all great. Every BP Con has been fun, but this one was special. There was just an amazing energy this year. I think if you were there you would know that and I was there of course, but so were the rest of our panelists. Henry did an awesome workshop on deal finding, but he also lost to me in golf just slightly, which was very fun.
Kathy participated in a pitch slam for deals and also single handedly started a 1500 person dance party at the closing party. Jane did a great session on flipping tactics and probably closed five deals while on stage and I gave a keynote about the realities of investing in 2025 and got absolutely wrecked playing craps. It was all excellent. I had the time of my life and I can’t wait for next year, which happens to be in Orlando. We announced it the last day of the conference, so if you didn’t make it this year, definitely check out next year’s conference. I promise you’ll have fun. By the way, before we get into today’s episode, I wanted to mention that we are thinking about doing more sort of small and local events for BiggerPockets in the coming year, so I would love to know in the comments if that’s something that you’re interested in and what format you’d want.
See. Do you want meetups? Do you want presentations, networking workshops? What would you value most if on the market came and visited a town or city near you? Let us know so we can plan more community events and get togethers in 2026. Alright, now let’s talk about all of this stuff that has been going on since BP Con started. There’s a lot going on of course, but today we’re going to focus on a couple things. We’ll look at new housing market data of course, and how really the market is reacting to the slightly lower mortgage rates that we’re seeing. We will also talk about how the government shutdown is actually impacting the housing market maybe more than people realize, and we’ll also talk about how there are signs that the economy in general is softening. Let’s jump in. First up, let’s talk about housing prices because we just got the case Schiller National Index for July and what it showed is that home prices nationally are up 1.7% year over year, so they’re still up, but they are showing continuous signs of softening because just in June, the month before we had them at 1.9%, and this is basically just a continuation of the trend that we’ve seen.
We’ve actually seen month over month home prices fall five consecutive months and just as a reminder, back in January, the year over year number, which is now 1.7% was at 4.2% and February is 3.9%, March 3.4, April 2.7, so it’s basically just been trending downwards closer and closer to flat throughout the year. Now, I personally have been saying this for a while now, but just as a reminder, I’ve been saying that I do think that we’re in a correction because the important thing to remember about the case Schiller index, which is the data we’re talking about today and there’s tons of different price data, they’re all kind of showing the same thing, but the thing that’s unique about the Case Schiller index is that it lags a couple of months. We’re in October, we’re talking about July data, and so if you extrapolate out this trend where we were starting the year at 4.2%, now we’re at 1.7%, we’re probably going to be very close to flat by the end of the year, and that’s not just inferring from the existing data that we already have.
Like I said, there are other data sources that you can look at that are a little bit more current and those also show just continuing signs of the housing market cooling. A new report last week came out from Redfin and showed that new listings of US homes rose 2.3% year over year, so this is just people who choose to put their property on the market. That’s up year over year and it’s not up crazy 2.3%, but it’s the biggest increase we’ve seen in over three months. Actually over the summer we saw fewer and fewer people choosing to list their home on the market. I think that’s probably because rates were still high and we’re entering this correction and sellers were just thinking, you know what? I’m not going to sell into this adverse market. I’m just going to wait it out. But now that we are in the middle of October, I’m recording this on October 10th and just a couple of weeks ago, the fed cut rates rates are about 6.35% as of today, but they did dip a little bit closer to 6.1, 6.2, and so I think what happened is a lot of sellers listed their home in September hoping that those lower rates would bring in additional buyers that weren’t really materializing over the summer, but unfortunately that’s not what’s happening.
In fact, pending sales, the number of contracts basically that have been formulated over the last couple of weeks actually fell to 1.3% from a year ago, so not crazy, but again, it’s the biggest decline in five months. We also saw that days on market, the average time it takes for a property that gets listed to sell is up to 48 days, which is a week longer than it was last year. It’s also longest it’s been since basically before the pandemic since September of 2019. And so when you look at all these things together, if you look at the case Schiller data that I started off with and you move onto this Redfin data, what you see is a market that is trending nationally towards basically a flat neutral market and it could turn into more of a buyer’s market where prices are going down on a national level.
I actually think at this point that is probably pretty likely. I haven’t yet made my predictions for 2026, but if you remember my predictions for 2025 is that we’d be pretty close to flat and it’s looking like that one’s going to be spot on. I know that can be scary for people in the industry like agents, lenders or investors, but I just want to remind everyone that this is okay. This is normal. This is part of a normal housing cycle and actually there are some benefits to this. If you are a buyer right now, it means that there’s more inventory for you to choose from and you are going to have more negotiating power when you’re talking to sellers because they’re going to be competing for a limited pool of buyers. The second thing is that things are going to be on sale. You might be able to actually get properties for cheaper than you have over the last couple of years.
And the third thing that is I think extremely important for the housing market is that affordability is actually getting better in the housing market. I know it’s not a lot better, but if you see that prices are relatively flat, they’ve been, wages are going up, they have been, and mortgage rates have come down even just a little bit, that means that we’re seeing minor improvements to affordability and we have a long way to go, do not get me wrong, but we got to stop somewhere. We got to see the tide turn and it has a little bit, and I know that’s not great for on paper when everyone’s seeing the equity value of their homes, but if you want to get back to a housing market that’s healthy, which I certainly do, I think this is actually something that’s relatively positive. Personally, I’m okay with relatively flat prices if it means that we get more affordability back into the housing market long term because that’s going to get us back to more predictable investing conditions and home buying conditions, which is really what I think we all need. So that’s the update on the housing market that we’ve had over the last couple of weeks. We got to take a quick break, but when we come back, I’m going to talk about how the government shutdown is actually impacting the housing market in ways you might not realize. We’ll be right back.
Welcome back to On the Market, Dave Meyer here talking about recent updates in the market just gave you my housing market data. Now moving on to government shut down. I know that these things happen and sometimes you’re unaffected by it and I think probably for the average American who’s not looking to make a major purchase or doesn’t work in the industry or is of course not a government employee who’s directly impacted by the shutdowns and furloughs, you might not really feel the impact of the shutdown, but there is some data that shows that the housing market is being impacted. First, I’ll just share with you a survey that Redfin just did with Ipsos, and it shows that 17% of Americans are saying that they’re delaying a major purchase like purchasing a home or a car. 7% are saying they’re straight up canceling plans to make a major purchase, and then actually 16% said that they might make a major purchase sooner than expected.
So that’s a little bit conflicting, but I just want to call out that basically 24% of Americans are saying that they’re going to cancel or they are going to delay making major purchases like buying a home, and that sort of makes sense because when you look at how the shutdown is playing out, pay has been suspended for about 2 million federal workers. There are three quarters of 1,000,700 and 50,000 who have been furloughed and the rest are expected to work without compensation. Normally, I think during previous shutdowns we’ve seen that those people will get back pay once the government reopens, but the White House has said that they’re considering not paying furloughed federal employees for the time they didn’t work during the shutdown. So all of these things have really led to a lot of uncertainty for these federal workers, and I’m sure there are other people who aren’t federal workers who are just looking at the chaos in Washington right now and are saying they don’t want to make a major purchase.
Given all this uncertainty, there’s also a ton of other Americans who work for private companies, but they don’t get paid. They don’t go to work because their work relies on government projects. So all these things are combining to impact the housing market very directly. That’s the first thing. There’s a second thing though that I’m not sure everyone has noticed, but when the government shut down on October 1st, the National Flood Insurance Program lapsed meaning that the government sponsored flood insurance is no longer issuing new policies, they are not doing renewals. If you have an existing policy that’s ongoing that is not being canceled, but no new policies, no renewals, and that is pushing people into the private market for flood insurance, which is much, much more expensive. I was just reading an article that showed a woman in Florida who had previously had a quote for $4,000 for annual flood insurance for two bedroom ranch already pretty expensive.
Now, the two quotes she got for private carriers were $9,000 and $12,000. So for one, the cheaper one more than double for the more expensive one, it was triple the government program. Because of this increased cost and uncertainty, NIR is estimating that this is going to prevent or delay 1400 closings a day across the country. Now, on a national level, of course, 1400 closing a day is probably not going to really show up in the data, but what’s interesting and unfortunate about this is that the areas of the country that are in these floodplains, and it’s actually more than you think about 8% of all properties in the US are in areas that require this kind of flood insurance from most lenders, but most of those 8% of properties are in states that are on the Gulf Coast, right? You see Florida, Alabama, Louisiana, Texas, and these are areas of the country that are already getting hit by a housing correction, and so when you combine these things together, right, when you look at the correction that’s already going on, it’s pretty bad in Florida right now in Louisiana, other places are seeing more modest corrections, but it’s definitely going to cool the market further, 1400 sales in Florida right now is actually pretty significant, and the sellers who have had their properties listed for months and are really eager to close and actually sell their homes, these delays and these cancellations are going to be particularly painful.
Hopefully, the government will reach an agreement soon and the National Flood Insurance Program will restart issuing policies and renewals, but in the meantime, it could get a little ugly there, especially if you need to get private insurance even as a stop gap for the time being while the government is shut down. Now, I was reading that in some instances it is possible for current homeowners to assign their flood insurance to a buyer. So if you’re one of these people who are in a situation where the buyer’s backing out or wanting to delay because they can’t get flood insurance, I would recommend looking into this, call your provider and see if you can assign it over because that might be a way that you can actually get through this shutdown and actually close on a property. You could do this if you’re a buyer too. If you are a buyer and you want to actually close on these properties, see if you can get the seller to assign you their insurance program.
Again, it doesn’t work in all instances, not all carriers are going to do that, but it’s worth exploring if you happen to be in this unfortunate circumstance right now. So we’ll have to just see how this plays out, but as of now, these are the two main ways the shutdown is impacting the housing market. We got to take one more quick break, but when we come back, I want to talk about just a couple of data sets I’ve been looking at recently that show more signs of economic weakness even outside of the labor data that we’re getting and what this might mean for the market. We’ll be right back.
Welcome back to On the Market. I am Dave Meyer. Now let’s just talk about a couple signs of economic weakness. Now, I fully admit the economy is totally polarized. There are signs that the economy is strong. We’re seeing the stock market near all time highs. Gold is really high, which you could argue is not a sign of economic strength, but asset prices are high. Bitcoin is near all time high too. Some people think that’s because of its hedge. Some people might say that’s economic strength, but again, there are all sorts of mixed signals in the economy right now, but a couple things came out this week, the week of October 6th that just show a couple things that I think are a little concerning in terms of the overall economy, and I just want to talk about them and how they might impact the housing market and economy in general.
The first up is car loans. Now, I’ve said on the show lots of times, and it’s still true, the average American home buyer remains in good shape. We are not seeing big upticks in foreclosures or delinquencies. They’re very minor for the most part. They’re well below pre pandemic levels. We do see some upticks in VA and FHA loans, but nothing at a concerning level right now. But when you’re looking at the strength of the economy, you often want to look at the quality of the debt that is out there because what often leads to recessions is when people can no longer service their debt, they go bankrupt, they default. That causes these ripple effects throughout the economy, so these are things that you always want to keep an eye on. The car loan data is getting just a little bit worrisome. It is not crazy or anything like now, but what we’re seeing is that the portion of auto loans that are 60 days or more overdue that are subprime hit a record of more than 6%.
That is the highest they have been in any of the data that I’ve seen going back to 2000, and that includes the financial crisis when they peaked a little bit below 5%. Now, it’s important to note that subprime auto loans are not a huge portion of the market right now, but prime loans, which is basically loans made to more qualified buyers are also going up. They’re not at all time highs, but they’re sort of back near pre pandemic levels and they’re on an upward trajectory, so both trending in that direction. We also see that an estimated 1.75 million vehicles were repossessed last year. That’s the highest total since 2009, and it looks like car dealers are actually lowering their credit standards, which is something I always worry about having come into the economy and the housing market during the great financial crisis, I never like seeing lenders lower their credit quality standards, but we’re seeing right now the percentage of new car buyers with credit scores below six 50, which is close to subprime, was nearly 14%.
That’s one in seven people. It’s the highest it’s been in nine years, and so it just shows an overall weakening of the American car owner, and I’m not super concerned about this right now because it’s still a relatively small portion of the market, but these are trends that we should watch out for when we’re evaluating the economy. But there was one stat that I had to share with you all. This is actually insane. New car prices are just, they’re wild right now. The average monthly payment in the United States, the average for all people is more than $750. That is absolutely wild. That is a crazy amount of money. That is $9,000 in post-tax money per year going towards the average car. No wonder people are struggling to make these payments that is so expensive. Maybe I’m just old and my expectations of what car payments should be is like $350, but man, that seems high and nearly 20% of loans and leases, car payments are now above a thousand dollars in monthly payments.
That just rubs me the wrong way. It just makes me a little bit concerned. Again, I’m not trying to be alarmist, but this is something I’m definitely going to keep an eye out, especially among some of the other data that we’re seeing. Student loan delinquencies are up, we’re seeing credit card delinquencies up a little bit, so this is just adding to the picture that we’re seeing across the economy right now. For the most part, American consumers, their feelings about the economy are down from a year ago, but they haven’t really changed over the last couple of months. There is this index of consumer sentiment. I talked about this a lot because it can be an indicator of where the economy is going and what it’s showing right now is that consumer sentiment was basically unchanged month over month. It actually just went down slightly from September, 2025 to October, 2025, but really big decline year over year.
So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% decrease year over year, which is down a lot. We see the index of consumer expectations of the economy dropping 31% year over year, so obviously Americans compared to a year ago feeling worse about the economy. Now, this study is actually put out by the University of Michigan, and they put out this really interesting chart that I thought was kind of fascinating and wanted to share. It shows that sentiment and expectations for people who have no stock holdings are just plummeting. Meanwhile, people who have large stock holdings are actually starting to feel better and better about the economy, so it just continues to show that in the United States right now we have sort of two different economies going on. People at the very top of the income bracket tend to be doing well.
We’ve seen data that shows that 50% of spending in the economy right now are coming from the top 20% of the market, and their expectations are fine. They’re feeling good about the economy. Meanwhile, other consumers sort of in the lower end of this socioeconomic bracket, they’re not feeling good about the economy, and that could be a sign that they are going to pull back on spending even more in the coming months. So this is another thing that we need to watch out for. Lastly, this is just quick, but I actually saw this interesting data on realtor.com that showed that 22 states, so nearly half of all states are either in a recession or in a higher risk of a recession. These are states, they’re honestly just spread out throughout the country. You see some in the northeast, like in New England, you see some in the middle of the country, Wyoming, Montana, South Dakota, Illinois, a couple in the south in Mississippi and Georgia up in the Pacific Northwest in Washington and Oregon.
They’re pretty spread throughout the country except the southwest of the country. That seems to still be a bright spot. Not all of them are growing. We see California, Nevada, Colorado, New Mexico. They’re sort of treading water. Same thing with some other states like Missouri, Tennessee, Ohio, New York, and then there are a lot of states that are continuing to grow. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All still continuing to grow, but it does again show that a lot of the country, when you see all this confusing economic data, it’s because it’s all really segmented. It depends on what state you’re living in. It depends on where on the income bracket you’re in. It depends on how much stock and gold and Bitcoin you own, so if you are feeling really disconnected from the headlines that you’re seeing, it makes sense because the headlines are broad generalizations and it’s really hard to make broad generalizations about the economy right now.
It is totally different depending on who you are, where you live, what your job is, what kind of things you invest in, and so just remember that you got to go a level deeper in the data. But I’m bringing this all up because some of this recession risk could be reflected in mortgage rates going forward. Again, as you may know, when there is risk of recession, that generally pushes down mortgage rates, which could bring back some more affordability to the housing market, but if that happens, and how much that happens will largely depend on inflation data, because if inflation data goes up, it will probably counteract this recession risk. Mortgage rates will stay the same, but if inflation starts to level out and we see more of this recession risk, obviously no one wants a recession, but the one silver lining of that might be slightly lower mortgage rates in the weeks or months to come.
That’s why I wanted to bring this up, and it’s something we’ll keep an eye out for here on the market. That’s my update for today, October 14th. Thank you all so much for listening to this episode of On The Market. Don’t forget, if you want to see more on the market events in your local area, make sure to leave us a comment either on YouTube or Spotify. We would love to hear what you would like to see out of on the market events. We’d love to see you in your local market. I think it’d be a lot of fun, but we just want to figure out what exactly that should look like. Thanks again for listening. I’m Dave Meyer. See you next time.