All Data Now Points To A Housing Recession | Nick Gerli

Nick Gerli · Reventure Consulting / Reventure App

US housing demand is at its worst level in history, below 2008 levels, and still worsening.

Gerli says the housing market is in its fourth year of a demand depression, with sales and mortgage applications below 2008-2009 levels. Unemployment is in the low 4% range versus 10% in 2009, yet demand is lower, so he argues that adjusting for population and housing stock this is the worst demand period in US history, combining the size of the sales drop with its duration. He says it is getting worse in late 2026: higher mortgage rates over the prior couple of months and still-high prices are cutting demand further. Mortgage purchase applications are down about 15% year over year through mid-October.

“this is actually the the worst period we've ever had for demand in US history when you combine how much the sales have dropped and now how long it's lasted.”at 3:30

Nick Gerli · Reventure Consulting / Reventure App

Housing supply is rising sharply in Sunbelt and Western markets, weighing on prices.

Gerli argues the 'locked-up' housing market is over. National supply is almost back to pre-pandemic levels, and in the South and West it is at a ten-year high. Colorado inventory has almost tripled in five years, to 34,000 homes for sale in September versus a normal 22,000, about 50% above average, while sales volume is at a twelve-year low. Within the national figure, inventory is within 5% of 2019 levels. He says the rise in supply coincides with falling demand, which means prices must adjust.

“Supply on The US housing market is almost back to pre pandemic levels nationally. And in the South and West in The US, it's at a ten year high.”at 4:07

Nick Gerli · Reventure Consulting / Reventure App

Home values are falling in many US markets, with declines spreading beyond the national average.

Gerli argues that national averages hide the decline. Zillow shows national prices roughly flat year over year (about +1%), but in roughly half the US prices are falling. He cites four-year peak-to-current declines: Austin -27%, Punta Gorda -22%, Cape Coral-Fort Myers -17%, North Port-Sarasota -15%, New Orleans -12%, Phoenix -11%, and Denver, San Antonio, Boulder, Naples, Stockton around -9%, with Boise, Dallas, Sacramento, Tampa, Seattle and Las Vegas also falling. He says he is finding houses down $100,000-$200,000 from peak in Vegas, Dallas and Florida, with sellers taking six-figure losses. He expects the aggregate statistics to worsen as those markets decline further.

“I just want your audience to understand that home values are dropping and will continue to drop in many markets in The US which is good news if you are a buyer and investor.”at 7:44

Nick Gerli · Reventure Consulting / Reventure App

Housing affordability remains poor in Denver, so prices must still fall to clear the market.

Gerli argues that falling inventory is not a sign of low supply, and that demand is low because prices are still too high. Denver median income is $117,000, which is strong, but prices have only dropped 9% over four years. Mortgage payment, taxes and insurance still consume about 40% of gross income, versus a long-term average of 33% and about 23% after the last crash. He says the affordability gap shows prices still need to come down, and that the mainstream narrative that low supply is depressing demand is wrong.

“Mortgage payment, still 40% of gross income in Denver. The long term average is 33%.”at 14:54

Nick Gerli · Reventure Consulting / Reventure App

A recession plus a stock market correction would quickly force sellers to accept lower prices.

Gerli says that without a recession, the market will slowly grind down. Sellers in the same neighborhoods are listing at prices 80,000-100,000 above comparable homes that have already sold 100,000 lower, and many are still anchored to four-year-old prices. A recession and stock market correction would break that delusion quickly. Without one, the only force that grinds sellers down is months of days on market and contingent buyers dropping out, so the price adjustment will be gradual.

“That will pierce the delusion very quickly in a lot of these sellers' minds.”at 18:51

Nick Gerli · Reventure Consulting / Reventure App

Mortgage rate lock-in is unwinding, so more existing owners will sell and weaken prices.

Gerli uses Fannie Mae data. In March 2022, 25% of mortgage holders had a sub-3% rate versus 7% with 6% or higher. By Q2 2026 that flipped: 6%-plus rate holders now outnumber sub-3% holders. He says this will accelerate as rates rise, with the 30-year fixed at about 7.4-7.5%. Existing owners with high rates are more willing to sell and trade into current rates, so sellers with sub-3% mortgages lose leverage over time and the market moves toward market-clearing prices. Lock-in is strongest in Florida, Tennessee and Texas, which have far fewer sub-3% holders, and weakest in California, which has been slower to correct because its lock-in is more entrenched.

“The longer this lasts, the more of existing owners will trade in to the higher mortgage rate.”at 23:37

Nick Gerli · Reventure Consulting / Reventure App

ReVenture's base case projects home prices falling in most Sunbelt and Western markets through 2027.

Gerli presents ReVenture's 2027 price forecast, built from supply, inventory, days on market, price-cut rates and home price momentum sourced from Zillow and Realtor.com. The base case assumes no recession. Washington is the weakest market, forecast down 6-7% over the next twelve months, with Seattle inventory 'through the roof'. Colorado is next at about -6%. Tennessee is forecast at -5.9%, Utah -4.9%, Arizona -4.6%, Texas -4.3%, and Florida -3%. Gerli says his base case still projects values to fall, with a slow grind down as sellers anchored to pandemic-era prices gradually capitulate. Those sellers are the ones with 3% mortgages; sellers who bought at 6-7% rates are more willing to list. A recession and stock market correction would accelerate the decline.

“But I think even in my base case, we're still projecting values to drop.”at 24:16

Nick Gerli · Reventure Consulting / Reventure App

Northeast housing is resilient, with positive forecasts for New York, New Jersey and Connecticut.

Gerli says the resilience in the market is in the Northeast, where housing supply is short. His forecasts for the next twelve months are Connecticut +5.9%, Illinois +5.3%, New Jersey +3.4% and New York +3.1%. Around New York City, suburban county forecasts are six to 7%. In the Northeast and Midwest, national averages are held up by shortages, which is why the broad national average has not fallen. Westchester County and Fairfield County are already up close to double digits, and San Francisco County is up 15% year over year.

“The resilience in the market's really in the Northeast.”at 24:59

Nick Gerli · Reventure Consulting / Reventure App

Chicago and Illinois housing will rise, given a severe shortage and improved migration.

Gerli is bullish on Illinois, a market he calls one of the few with a real shortage. Chicago-area listings have fallen from about 40,000 in September 2019 to about 16,000, and the North Side of Chicago has seen prices rise 12.5% over the past twelve months. Cook County is forecast up 6.1% and Lake County up 7.4%. Illinois' domestic out-migration fell to about 40,000 in 2025, the best performance in 35 years, which is nearly back to even. Building permits are about 0.33% of the housing stock, among the lowest in the country, so supply stays tight. He describes this as a cocktail of little construction, improving migration and general inflation feeding into local housing, so Illinois is not overvalued (3.9% overvalued on his measure).

“Cook County, Chicago, up 6.1% is our forecast in the next twelve months.”at 27:21

Nick Gerli · Reventure Consulting / Reventure App

Legacy big-city metros are the only hot US housing markets, drawing demand back from Sunbelt states.

Gerli says the migration to Texas, Florida and Tennessee from the pandemic and 2010s is over. People are now being drawn back to legacy tier-one metros (New York, Chicago, San Francisco) and their suburbs, which have universities, Fortune 500 headquarters and highly educated workforces. He argues that AI is forcing people to reinvent their work in tech, finance and marketing, so being near other skilled workers in person is valuable. San Francisco metro apartment rents are up 14% year over year, San Jose 9%, New York 4%, Chicago 2.8%. New York still has 49 Fortune 500 headquarters, Chicago 30, versus fewer in Sunbelt metros. Adam Taggart notes that this reverses the pandemic-era predictions of city decline.

“Those are the only real like hot housing markets in The US right now, the metro areas around those areas.”at 31:25

Nick Gerli · Reventure Consulting / Reventure App

Apartment rents are falling in Sunbelt pandemic-boom towns like Austin, Phoenix and Dallas.

Gerli uses apartment rent growth as a real-time indicator, since it is less affected by seller denial than home prices. Rents are falling in San Antonio, Denver, Charlotte, Tampa, Houston, Phoenix, Nashville, Fort Worth, Dallas and Austin, all pandemic remote-work towns. He notes these markets are also still building large amounts of new supply, which combines with their weaker relative advantage compared with the pandemic period. Rent declines are the opposite of the rent gains in legacy metros.

“Rents are dropping in all of those pandemic remote work towns.”at 36:45

Nick Gerli · Reventure Consulting / Reventure App

Manhattan is undervalued and may be near a boom; he would buy there over other US cities.

Gerli calls Manhattan the best value in the US and the market he would buy in. Manhattan prices are down about 10% from 2016 to 2026 but remain around $1.2-1.3M for a typical condo or townhouse. He argues the multiples are absurd: the Manhattan-to-US home value multiple is 3.41, half its 2010s level and the lowest since 2000. Co-op and condo rental yields reach 10-11% gross and 6%+ cap rates, which he says are rare in the US. Hotel rates are very high, which he takes as demand evidence, and office leasing data agrees. Inventory is low, and there are many Fortune 500 and tech companies. He says New York could boom for 15+ years, and he would not be surprised if Manhattan booms over the next couple years. He acknowledges political risk from the city's policies.

“I would not be surprised if we could be on the precipice of a boom in Manhattan over the next couple years.”at 42:08

Nick Gerli · Reventure Consulting / Reventure App

Deaths will outnumber births by about 2034, cutting housing demand while supply rises.

Gerli argues the demographic cliff has already started and cannot be reversed for about 20 years. Organic population growth is at its lowest ever, with births falling for two decades on fertility decline and aging. Reventure forecasts deaths will exceed births around 2033-2034, and he says the Mortgage Bankers Association puts it at 2030. The 75+ population is growing sharply and will be about 12% of the population by 2035, and mortality rises steeply after 75 and 80. Homes bought between 2000 and 2020 will age out between 2025 and 2040, adding supply. Gen X is about 20% smaller than the boomers, so early-to-mid-retirement buyers fall about 20% over the next 10-15 years, creating a demand collapse alongside the supply wave. He says the 25-44 renter-to-75+ owner ratio has fallen from 2.2 in 2013 to 1.7 nationally, so the pool of younger buyers absorbing this supply is shrinking.

“Our organic population growth is slowing to the lowest level we've ever seen. By 2033, 2034, we at Reventure are forecasting there will be more deaths than births in The US.”at 51:00

Nick Gerli · Reventure Consulting / Reventure App

Florida's retirement-destination housing faces a demographic squeeze; he is bearish on the state.

Gerli is bearish on Florida because the 75+ homeowner share is rising sharply. 18.7% of Florida homeowners are 75+, up from 15.3% twenty years ago; Naples is at 29%, and Northport, Sarasota, Port St. Lucie and Sebastian are also high. He compares 75+ owners with 25-44 renter households. Florida's ratio is 1.14, down from 1.5 in 2015, meaning almost as many 75+ owners as young renters. Naples is at 0.35, down from 0.85 in 2005, so it has about 65% fewer young renters than 75+ owners. He says Florida's retirement areas will see more supply and fewer retiree buyers over the next 15 years, and he sees no way Florida escapes this demographic freight train, despite the initial correction already under way.

“It's one reason why I'm bearish on Florida. Like I, there's the initial correction happening, but I don't see how Florida Dodges, particularly these retirement destinations in Florida, dodge this demographic freight train.”at 58:54

Nick Gerli · Reventure Consulting / Reventure App

Austin and Texas should be insulated from the demographic slowdown thanks to young-renter surplus.

Gerli says Texas is better placed to absorb the demographic slowdown because it has a larger surplus of would-be buyers. Texas's ratio of 25-44 renter households to 75+ homeowners is 2.7. Austin's is 4.7, meaning it has 4.7 times as many young renters as 75+ owners, so he does not expect Austin to feel the slowdown. California, at 2.5, also looks okay, though lower than before. He says the ratio is becoming a key metric in real estate and that it must be weighed against the number of Gen Z and millennial renters who would buy.

“Austin. I don't think it's going to feel at all this demographic slowdown because there's such a surplus of younger people and young people, right?”at 1:01:38

Nick Gerli · Reventure Consulting / Reventure App

Home prices are a bubble unsupported by inflation, incomes or rents; housing is not a good investment.

Gerli argues US home prices are a bubble disconnected from fundamentals. Real home prices, going back to 1890, were flat until the late 1990s, tracking inflation only. He says prices are now unsupported by inflation, income or rent. Bulls who point to gold as a metric are wrong, because no one buys a house with gold; they buy with wages or rents. Mortgage rates at 7% are normal, not the cause of weakness. Homeowner equity is $35 trillion, two and a half times the 2006 peak of $14 trillion and above US GDP of about $30 trillion. He says that equity is what props up the illusion, held up by sellers' stubbornness. The only thing that could save housing is 1970s-style double-digit inflation with a wage-price spiral, and wages are only growing about 3% and decelerating.

“we are in a completely disconnected housing market right now where prices are not supported by anything. They are not supported by inflation. They're not supported by income. They're not supported by rent.”at 1:05:22

Nick Gerli · Reventure Consulting / Reventure App

US housing is in a national downturn; prices must fall 20-30% in real terms to clear.

Gerli says nearly every housing data point signals a housing recession or depression, though national prices have not yet broken. Evidence: September existing sales fell 2.2% year over year; sales under $1M fell sharply (sub-$100K down 8%, $100K-250K down 7%) while only $1M+ sales rose 4%, which he says inflates median prices; homebuilder sentiment hit a 14-year low; 43% of builders cut prices in October, the highest share since 2020; two-thirds used incentives; buyer traffic fell to 18, near 2008 levels; and sellers have listings sitting six-plus months. He argues the excess is sellers clinging to unrealistic prices, and that if normal sales and buyer demand returned, prices would be 20-30% lower. He expects the downturn to play out over five to seven years, with a recession hastening it. He notes some high-appreciation counties in Tennessee, Utah, Upstate New York, Indiana and Washington face more downside.

“pretty much every data point is supporting the notion of a housing recession or depression.”at 1:12:34

Nick Gerli · Reventure Consulting / Reventure App

Sunbelt metros with heavy unsold supply are a good buyer's market right now.

Gerli says buyers should move now in Sunbelt metros such as Nashville, Tampa, Orlando, Las Vegas, Phoenix and Denver, and in Seattle. His reason is heavy supply, with many sellers sitting on the market for six or more months. Sellers are unable to get their asking prices, so buyers have leverage. He recommends making offers now if you are going to buy.

“I think like now's a great time. If you live in some of these Sunbelt states to get out there and make offers”at 1:13:06

Nick Gerli · Reventure Consulting / Reventure App

Seattle has an oversupply of homes, with many sellers on market six-plus months and cutting prices.

Nick points to heavy supply in Seattle, with many sellers sitting on the market for six or more months. He treats sellers who have been listed four to six months and already cut prices as motivated to transact. He advises buyers to target those sellers in markets with heavy supply and downward forecasts. The argument rests on the supply overhang and seller behavior, not on a forecast number.

“Seattle. I mean, there's so much supply, a lot of sellers sitting in the market six plus months.”at 1:13:19

Nick Gerli · Reventure Consulting / Reventure App

Dallas home prices falling almost everywhere, except Highland Park and University Park; Mesquite set to decline.

Nick's data-platform forecasts show Dallas prices dropping almost everywhere, with minus 8% to minus 9% forecasts in southern, eastern and western Dallas. The exception is a northern pocket, Highland Park and University Park, where prices are forecast to rise because shortage and demand persist, so buyers there should expect bidding wars. Mesquite, about 10 to 15 miles east, is expected to fall over the next twelve months, so buyers there should offer below list.

“it's dropping almost everywhere. ... We have minus eight, minus 9% forecasts in Southern, Eastern, Western Dallas. ... if you're trying to buy in Mesquite, about 10, 15 miles East, you better offer below list because that market's going to go down over the next twelve month, twelve months.”at 1:15:26

Nick Gerli · Reventure Consulting / Reventure App

US home prices remain very overvalued versus long-term norms, though valuations have improved in many markets.

Nick uses his platform's over/undervaluation metric, which compares current prices with long-term norms. He says valuations have improved in many markets but remain very overvalued. Some areas are slightly undervalued, depending on whether a correction has already happened. This is a broad read on US home prices, based on his data.

“They've improved in a lot of markets, but still very overvalued.”at 1:16:13

Nick Gerli · Reventure Consulting / Reventure App

AI can do many singular remote white-collar jobs, pushing workers back to big-city offices.

Gerli argues that AI is the counterweight to remote work. Pandemic-era remote work pulled finance, tech, marketing and HR workers out of big cities. Now AI tools can do many of those jobs, especially singular roles such as software developer, copywriter, graphic designer or financial analyst. To stay competitive and get a foot in the door in tech, finance and marketing, workers have to be in major cities. He says this lower remote-work demand is changing housing flows, and he notes he is not saying remote work is gone, only that the flows have changed.

“AI can do a lot of those jobs.”at 32:44