Podcast - 10/20/23

I'm Tom.

I'm Jay.

Of Jay Day and the Day Home Team of Real Estate Teams with a weekly real estate podcast. Jay, it just seems like yesterday you and I were saying, hey man, preseason football, we're going to cheer for the Ravens, we're going to cheer for the Commanders. And I think we're five, six weeks in now.

Yeah, well, and the last couple podcasts we had Christina fill in for me.

Oh that's right. Yeah, we did. So we didn't talk football. That's why it seems like yesterday.

Yeah, yeah, because the last time we saw each other, I think we did end up talking about it and then we just had so much going on. I told Christina I needed her to come in and mix things up a little bit.

Oh, it's always nicer. Smells better when Christina's in here.

It should. It should. And then you have to behave yourself when she's in here.

I am. Honestly, when Christina or Diana are around, honestly, that's a governor on my behavior, man.

Yeah. When it's the two of us, you just never know.

You never know. You never know. Thank goodness we can edit things.

Yeah. So let's talk about mortgage rates.

Alright, that's a big subject right now.

Yeah. So are the higher mortgage rates here to stay is one of the questions that we get asked quite a bit. And realistically, we've almost reached the highest that we've been in 30 years. So when you go back, we were 8.64, we've been just under 8%. So getting very close. I know when we had our, I don't remember which podcast it was, but everybody was predicting that rates were going to go down. We weren't going to hit as high as we hit yet again, I think I said we were going to hit 8% probably by Q one, and we almost hit it before we even got into the end of this year. So it's really interesting because there's a lot of volatility, there's a lot of stuff going on. Now the prediction is, and again, if we look at the experts, the experts say that they're going to go down, however, there's no sign that would indicate that that would be something that's going to happen. The positive in this whole thing is we still have low inventory. We're not in a situation where we have crazy amounts of inventory and things are sitting forever. However, a lot of buyers are too concerned and they're not making the jump as quickly as they did in the past. So what that means is even though we have lower inventory, you may not be competing with as many people as you were before, and you may be able to get some closing help from the seller, or you may not have to pay over asking, which technically gets you into a position where you could be getting a better deal on the house because values have still continued to climb. What ends up making it worse is when you have values climbing, and let's say you're writing on a house and there's six other people writing on it, then you're going to be paying even more. So the reality is, when rates start to drop down again. And we don't know when that's going to happen. We're going to see more buyers come back into the market and we're going to be in that situation where you're going to be competing with 6, 10, 12 people and you're going to end up paying more for that house because the sales price is going to end up escalating up even higher. You may end up in a situation where you're waiving inspections again. So from a buyer perspective, yes, the interest rates are higher now, however, you will not be in the same position where you're battling it out with as many people and you may not need to give up as much of your inspections. And again, you may be able to get the home a little below asking price or, I mean, even getting it at asking price is not a bad thing compared to what we've been seeing with everybody having to do escalations. And remember, if you're buying as long as you can afford the mortgage payment, you can look at it and say, well, when rates come down, I can always refinance, which could be a win. You say, okay, I'm going to do this now I'm locking in at 7.8 and rates go down to 6.5. You refinance, you've got the house, you didn't have to compete with a bunch of people. So there is a win and there is a rainbow at the end of that story, that there are options that are still happening. So let's talk about, the last thing I want to talk about that sort of ties into this, is the latest expert forecast for home prices because that comes into play. If home prices were going to drop, people might say, hey, well I'm going to wait. Well, when we look at it, year end home prices, AEI is expecting a 6% increase. Zillow 5.5. Fannie Mae 3.9. HPES 3.3. MBA 1.5%, and NAR, the National Association of Realtors is thinking there's going to be a downturn of 0.4. So realistically, all of the experts are saying that they think that the home prices are going to continue to rise.

But the National Association of Realtors, they disagree.

They disagree. And I have to be very careful what I say here because I'm a member of the National Association of Realtors.

Sure, I understand.

But anyone that does any research on them right now, they have a lot of stuff going on. I'll say that.

I understand there's issues everywhere.

They have management changes, there's lawsuits happening. So there's a lot of stuff going on with the National Association of Realtors.

Okay, I won't ask any more questions.

Yeah, so I wouldn't put all my weight on that. And again, when you look at it and you've got the majority, seeing it the other way, and then it's rare that I agree with these forecasts, but I'm seeing exactly what the others are saying. The home values are not dropping, it's just that you're not having a 15% change in value. It's just a smaller chunk that's happening. We are not seeing a drop in prices. Now, one of the things that we are seeing is, and I've been talking about this on the podcast, buyers are looking for homes to be move-in ready because their cash is tight. They don't want to have to paint, they don't want to have to deal with flooring. If you put a home on the market and it's in good condition, looks modern, doesn't need updates, those are still moving very, very quickly. It's the ones that may have some wallpaper or the carpet needs to be replaced and the seller doesn't want to do anything about it. Those are taking a little bit longer to sell because again, the buyer really has to look at it. They're looking and saying, I'm paying 8% interest on this roughly, I'm going to have to put $10,000 worth of flooring in. I'm going to have to spend $8,000 on painting and where's that money coming from? Because they had to use so much money to put down payment. And then also their mortgage payments a lot larger than what they were expecting.

That's why you call the pros because for every fact that you hear there's gray areas and these guys can negotiate you through the mess.

Absolutely. You ready for the house of the week?

I see you getting ready for it. What do you got?

Alright. This one actually just hit the market yesterday. It's 1255 Brown Road in Martinsburg, West Virginia, listed for 400,000. This home is a three bedroom and there could be a fourth bedroom. Instead of the fourth bedroom, right now they have an open loft on the upper level but you could always just close that in with some walls. It wouldn't be too crazy to do. Or again, a lot of people like having that open area where they can have a play area upstairs for the kids or they can have their home office there and not feel like it's closed in. They have two full bathrooms, one half bathroom, a unfinished basement so you can finish it how you like. Rear deck, formal living and dining rooms. The family room is a two story, newer kitchen appliances, I mentioned the loft. On the upper level, there's a master suite with a large master bath. Easy access to schools, shopping, commuter routes. And actually tomorrow, Saturday, Brian on our team, Brian Mo will be doing an open house there from 11:00 AM to 1:00 PM So if you want to check it out, 1255 Brown Road, Martinsburg. Open House tomorrow, 11 to 1, that's Saturday. Or you can go to wfre.com. Look up Tom and Jay's real estate podcast and you can see all about this home. We've got photos, we've got video. If you like it, jump out there to the open house or reach out to us and we'll get you a private showing.

I'm Tom.

I'm Jay.

Jay Day and the Day Home Team of Real Estate Teams with a weekly real estate podcast. Once again, thank you for listening and tell your friends all about it.