Here’s a quick breakdown, which all started with a Tweet by David Sacks updating an April post on commercial real estate:
Elon Musk jumped in on the conversation to add his thoughts on both the commercial and residential real estate markets:
Commercial real estate is melting down fast. Home values next.— Elon Musk (@elonmusk) May 29, 2023
Elsewhere in the Twitterverse, Lance Lambert offered some historical context for Elon’s Tweet before re-posting it.
Byron agreed with Elon’s assessment on commercial real estate but, regarding residential, he asked Nicole, “What do you consider a housing value meltdown?” Assuming Elon meant the same degree of value loss for the residential sector, neither Byron nor Nicole could imagine home values decreasing to that extent.
In the 2000s, home values went up over 80%. Then when the Great Financial Crisis happened, everybody hears about the 40% drop. So, they did melt down from a peak that was unsustainable…but the state of the current U.S. housing market is something I look at every single day…you can’t compare this to the Great Financial Crisis. And the argument people would make, Nicole, is that home prices are getting so high, they’re unsustainable—that people can’t afford them…But the current state of the market, and I quote-Tweeted Elon just to bring into perspective these points that are happening in the market right now…
Aside from home values, as Byron pointed out, we’re also “trending toward the all-time low in new listings.” We’re not bringing nearly enough new listings to the market, and we have a severe shortage of affordable new construction.
So, for a 20% drop in home values to happen, we’d need to see either another Great Depression or a catastrophic number of layoffs—something where people would no longer be able to afford what they can afford now.
Tune in to hear their full reaction to Elon’s Tweet.
Next, Byron and Nicole covered a HousingWire article addressing a question on the minds of many real estate agents: Will inventory levels ever return to normal?
They wrap up with a Tom Ferry YouTube Short where he discusses how AI will impact the industry and the role of the real estate professional. Byron and Nicole describe the kind of agent who will thrive in this environment versus those who will probably end up leaving the industry.
Click on any of the timestamps below to watch:
Click here to watch the full episode.