In a recent video by real estate expert Michael Bordenaro, he dives into the current frustrations of home buyers facing skyrocketing housing costs. Let’s explore his insights and see what he had to comment on the situation.

The Current State of the Housing Market

The Current State of the Housing Market
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Michael Bordenaro begins by highlighting the growing frustration among potential home buyers over exorbitant housing prices. “A lot of people are getting completely fed up with how expensive housing is,” Bordenaro states, pointing out that 2024 is shaping up to be one of the worst home selling seasons in 30 years. I believe that this sentiment resonates widely, as many people feel priced out of the market.

Local Market Trends
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Bordenaro, reporting from Rockford, Illinois, notes that despite its reputation as a hot housing market with significant year-over-year price increases, the median home price there is still relatively low at $192,000 compared to the national median of $400,000. This disparity explains why prices continue to rise in Rockford – it’s still more affordable than many other places.

Inventory and Price Adjustments

Inventory and Price Adjustments
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Despite the affordability, homeowners in Rockford and elsewhere are overestimating what buyers are willing to pay, leading to a spike in price reductions. According to Redfin, the number of listings with price drops rose to 6.12% in June, the highest since 2022. Bordenaro mentions that many sellers, unable to get their desired prices, are pulling their homes off the market entirely.

Buyer Boycotts and Market Stagnation

Buyer Boycotts and Market Stagnation
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Bordenaro observes that many buyers are boycotting the market due to high prices and interest rates. This buyer strike is evident in the data, with home sales down 2.9% from a year ago, while inventory is up 8.8%. This combination of lower sales and higher inventory suggests that prices will eventually have to come down to meet the market’s new reality.

Real-World Examples

Real World Examples
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During a walk through a Rockford neighborhood, Bordenaro highlights two houses for sale. One, sold in 2017 for $174,000, had a property tax bill of almost $6,000 annually, illustrating Illinois’s high property taxes. The other house, listed for $299,000, was bought for $260,000 in 1988, showing minimal appreciation over 36 years. My conclusion is simple – these examples debunk the myth that homeownership always yields significant financial returns.

Affordability and Maintenance Challenges

Affordability and Maintenance Challenges
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Bordenaro points out that the cost of maintaining a home, including skyrocketing property insurance, is a significant burden. He shares an example where insurance premiums for a Midwest house increased by 80% from February to June 2024. I think that this substantial rise in costs can make homeownership less appealing and financially viable for many.

Regional Variations and Population Trends
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While housing prices in Illinois continue to rise, the state’s population has been declining for over a decade. This paradox highlights the complexity of local housing markets, where even declining populations do not necessarily lead to lower home prices. In Rockford, the year-over-year growth in home values is 7.3%, indicating continued demand despite fewer residents.

Impact of Subsidized Housing

Impact of Subsidized Housing
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In the video, Bordenaro and his father discuss the impact of subsidized housing on the market. In Illinois, the state is buying homes and converting them into Section 8 rentals, often using taxpayer money. This influx of subsidized housing can distort the market, making it harder for average buyers to compete.

“Primary Residence Should Be Tax-Free”

Primary Residence Should Be Tax Free
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People in the comments had a lot to say: “I will say it again: Primary residence and your primary shelter should be tax free. 0 property taxes!”

Another commenter added: “Owning property isn’t always about profit.  It’s nice to have a home.”

One commenter had this to say: “Rockford has the highest property tax percentage in the country.  When including taxes, it makes houses unaffordable and reduces appreciation.  The worst of both worlds.”

Future Outlook

Future Outlook 1
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The video concludes with Bordenaro expressing skepticism about the future of the housing market. He suggests that unless significant changes occur, such as reduced interest rates or substantial price corrections, the current frustrations of home buyers are likely to persist. The data supports his view, with falling sales and rising inventories indicating a market in flux.

Current Housing Policies

Current Housing Policies
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What are your thoughts? How do you think current housing policies are affecting market affordability and accessibility? What strategies can home buyers use to navigate the high costs of purchasing and maintaining a home? How might the continued decline in population in areas like Illinois impact the housing market in the long term?

For an in-depth look, view the complete video on Michael Bordenaro’s YouTube channel here.