Debunking the 'Silent Depression' Narrative | 1-Minute Market Update w/ Martin Perdomo

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Could the whispers of a 'silent depression' circulating on TikTok hold a kernel of truth about America's economic state, or are they seeds of misinformation? We tackle this head-on, examining the U.S. real estate market's pulse with hard data on mortgage applications, home sales, and interest rates. But we don't stop there; we also scrutinize the broader economic landscape through the discerning eyes of Columbia Business School Economics Professor Brett House, challenging the gloom with a dose of historical perspective and facts. 

This episode peels back the layers of the housing market's complexities, offering insights into trends that signal stabilization and dissect the ties between interest rates, affordability, and buying activity. As we juxtapose the American real estate scenario with the tumultuous tides in China's property sector, you'll gain a rich understanding of global market influences. Join us for a nuanced narrative that cuts through the chatter, distinguishing economic fact from fiction, and shaping an informed view on where the U.S. stands today.

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Episode Transcript

Speaker 0 (00:00):
A TikTok theory claims that the US is in a
silent depression.
Let's find out in this week'sreal estate market update, but
before that, here's this week'shousing market data.
We'll start with.
Mortgage purchase applicationsare down 1% from a week earlier
and down 18% from a year earlier.

(00:21):
Google searches for homes forsale is up 8% from a month
earlier.
So this is interesting, thesetwo data points, as you have
mortgage applications down 1%from a week earlier when rates
are down.
But as rates come down, youstart to see searches for homes
right go up and, as you see here, google searches for homes for
sale are up 8% from a monthearlier.

(00:43):
And the reason is becausepeople are hearing that the
mortgage interest rates are down, so the buyers are slowly
starting to come up.
What we will see, I think, overthe next 69, the 120 days, is
that we're going to start seeingmortgage purchase applications
start to increase becauseinterest rates are down and this
is a lag indicator.
People start to look on Googlefor the house they want, they go

(01:05):
see it, they put an offer andboom, an application gets
triggered.
Median home sales price was$364,250, up 4.5% from a year
earlier, the biggest increasesince October of 22.
And prices are up, partlybecause rapidly rising mortgage
rates are hampering pricesduring this time last year and

(01:27):
the same effect we'll have nowagain as mortgage rates come
down we'll see.
I believe that prices are goingto keep going up again and
we'll also see mortgageapplications start to spike up
here soon.
The monthly mortgage payment ona median asking price was
$2,401 at a 6.67% mortgageinterest rate.

(01:50):
Pending home sales were down 4%year over year.
New listings of homes for saleare up 12.2% year over year.
Active listings dropped 3.8%from a year earlier, the
smallest decline since June.
Homes that sold were on themarket for a median of 39 days
and 25% of homes sold abovetheir final list price.

(02:14):
Again, the way I'm looking atthis data is I see that the
housing market is finallystabilizing.
Of course there's some market.
There's market to marketdependent and you're going to
see some markets like Austin,texas, for example, some places
in California, some places Imean there's going to be certain
pockets in the country that aregoing to be that are suffering

(02:35):
right now and are seeing majordeclines.
But I think that as theseinterest rates continue to go
down and affordability starts tobecome more in line with
people's income, we're going tostart to see demand and mortgage
applications jump up again andwe're going to start seeing more
buying activity here in thenear future.
Now let's get into this.
One of TikTok's latest trends,coined the silent depression,

(02:59):
aims to explain how key expensessuch as housing, transportation
and food account for anincreasing share of the average
Americans take home pay.
It's harder today to get bythan it was during the worst
economic period in thiscountry's history, according to
some TikTokers.
Hmm, that's a interestingperspective, but economists

(03:22):
strongly disagree.
Any notion from TikTok thatlife was better in 1923 than it
is now is divorced from reality,said Columbia Business School
Economics Professor Brett House.
Compared to 100 years ago,today's life expectancies are
much longer, the quality of lifeis much better, the
opportunities to realize one'spotential are much greater,

(03:45):
human rights are more widelyrespected and access to
information and education iswidely expanded.
House said and I do agree withthat the only depression the US
has ever experienced inindustrial time spanned a decade
, from the stock market crash of1929 until 1939, when the US
began mobilizing for World WarII, which is what got us out of

(04:08):
the depression.
But depression is a totallydifferent order of magnitude.
Susan Hausman, researchdirector at the W E Uppjahn
Institute for EmploymentResearch told CNBC we haven't
seen anything like it for 80 to90 years.
We know, we all know who ownsTikTok right, so let's just kind

(04:30):
of process this.
This is owned by the Chinesegovernment.
We also know that China rightnow is experiencing a major,
major real estate resection andcorrection.
They have some major problemsas it pertains to real estate.
Despite the fact that interestrates have gone up drastically
here in the US, we have not seenthe impact here in our country

(04:53):
like they have in China.
China, literally, guys, isknocking down empty apartment
buildings that they were builtduring COVID times.
These apartments were built andthey were never finished and
they were vacant and theyliterally are taking them down.
That's how bad it is.
So when we take those thingsinto consideration and we
consider who owns TikTok andwhat they're promoting, some say

(05:18):
, and some can think, that thiswhole thing here is propaganda,
that the US is in a silentdepression.
I totally disagree.
In all generations I haveexperienced this type of
expenses with housing and food.
Every generation, when you'restarting out, experiences this.
I think personally thatsomething to consider is who's

(05:41):
pushing out this narrative,who's pushing out this idea.
Do you think we're in a great?
We have a silent depression.
I like to hear what you thinkon that.
I don't think we're in a silentdepression.
Shoot, this ain't even close towhat we experienced in 2008
during the great financialcrisis, and that wasn't as bad
as 1929.
So for a TikToker to say thatwe're in a silent depression

(06:05):
smells a little funny to me.
And this has been your weeklyReal Estate Market Update.
I'll see you guys next year.
Happy New Year, guys.
Appreciate you, peace out.