Podcast - 8/19/23

Real Estate podcast. What's up today, bud?

Alright, let's talk about how much I love to talk about forecasting of what the professionals always say they think is happening because most of the time I disagree with it.

I listen to you because listened to you forecast now for I don't know how many years and you seem to be, well, at least in our area, you are the expert. You are the expert in the four state area.

Yeah. So let's talk about what, and again, this is information that just came out. It's what they're forecasting for the rest of 2023. So let's talk about home prices, and I'm going to give you exactly home prices. As we know, they vary by all markets. We've talked about that even in the different areas we have here around us. Here is what's being put out there, Fannie Mae is expecting home prices to increase by 3.9% through the rest of the year. MBA is at zero. The National Association of Realtors is at a negative .4. So a little bit less than half a percent. Realtor.com is negative .6. When you average all those out, it's a positive. A .7, I'm going to disagree, I'm actually going to fall closer to the Fannie Mae. I do not think we're going to have depreciation. So I will say that I will disagree with NAR, Realtor.com and the MBA because I just think that they're, the Mortgage Banker Association, I think all three of them are wrong. I'm not seeing any,

You think they're wrong, Bud?

I think they're wrong.

Now is this regional or do you not see that in this area? It very well could be the situation somewhere else.

Yeah, and I mean, again, these numbers are regional. I mean this is just in general across the board.

I see. I see.

But even with the other people and friends we have, and we're talking with Fannie Mae has just under a 4% appreciation. That's probably more realistic. It's really interesting that they are a little bit on the same page as me this time. But the national, the realtor side of it, I completely disagree with.

Oh yeah, man, that's cool. That's why we're here, buddy.

Yeah. So mortgage rates. Now let's talk about mortgage rates. And this is not something that is across the board, so it's not like if you're buying a home in California, your interest rate's going to be different than Maryland. So here's what the projections are. And for 2023, we'll talk about quarter three. Fannie Mae thinks that the rates will basically stay at 6.8, the MBA at 6.6, the National Association of Realtors, 6.5. Then for quarter four of this year, Fannie Mae says 6.6, MBA says 5.9, NAR says 6.3. So in my opinion, what I'm seeing, I don't think we're getting down, to me quarter four with MBA being 5.9, I don't think we're going to see a five in front of anything without points for the remainder of this year. And again, I don't have a crystal ball. Neither do they. I think we're going to stay in between that. The best we'll probably get, in my opinion, and again I could be totally wrong, is six and a half. But I think we're going to be floating between that six and a half and seven for the remainder of the year because we've been pretty stable there. Occasionally we peak a little over seven, but I think that six and a half to seven is about where we'll stay unless something crazy happens. If there's something that happens in the world that's outside of the norm, if there's some war, something happens, things will change dramatically. But if we stay the course that we've been doing and nothing crazy changes in the economy, we don't have some pandemic or something, I see us pretty much floating in that. Again, I think the best we'll get is 6.5. So we'll see. We'll go back to this podcast and we'll see if I was right or wrong. I enjoy that.

It's no crystal ball because you're giving your educated guess on your years of experience. I mean, it's not a crystal ball. That's why people tune in this podcast. They want to hear what you got to say about it, man.

Oh, yeah. So the next thing, and this was a really interesting thing that I saw, and again, I thought it was, we keep talking about low inventory and the inventory. I saw this infographic and it was really, really interesting. This was as of August 7th, and again, this is national, all states in the US week over week, the inventory week over week was up 0.7%, so not 7%, 0.7%. So under a percent the same week this year as it was in 2022, the inventory, and by inventory it means available homes on the market that was down 10.3% and get this. And again, this was the first week of August, when comparing 2023, first week of August to the same week in 2019, we are down 49.3% of inventory for homes available.

That has been going on now for a couple of years, Jay.

Yeah, I mean, to me, that's just sort of insane. When you, and again, and I'm in this, I live it, but to say even nationally, just compared to 2019 that we're down 50% almost.

I don't know what to say. I'm a lay person. I understand what you're saying.

And the interesting thing is everyone thought interest rates are going to go up. We're going to have an issue where people aren't going to want to buy. So prices are going to drop. And that's why I disagree with some of the stuff that's in here, those predictions, because supply and demand, it's a basic thing. Unless we end up with this massive onslaught of inventory, which I don't see happening because again, I'm living and breathing this every day. The amount of people I talk to that are still in a holding pattern is unbelievable.

Are you talking about a holding pattern and hang on to their homes?

Yes. They just can't justify in their mind of why they're going to leave this house that has a payment and an interest rate that they may never see again unless they absolutely have to leave. And my job isn't to convince you. I mean, there's all types of training that agents go through when loan officers telling people why it's a smarter thing to do this. And to me, if it doesn't make sense for you financially, and there's no big reason to make the move, it's your personal choice. I'm not going to knock it. I mean, it makes rational sense to me. I'm like, if you're happy, you've got a mortgage. Let's say it's 2,500 bucks a month, but if you sell your house, your new mortgage is going to be $3,700 a month. And you're like, why in the world would I do that? I like my house. My house works for me. The location is good. And it's not too much to maintain. It's not too small. There's no reason to make the move. And again, I'm not anti-real estate, obviously, it's how I make my living, but I'm also not somebody that's going to try to convince you that you need to do something that doesn't make financial sense for you and your family. If you have a family, you got to do what's right for you.

That person wouldn't be a repeat client, I would say, down the road.

Yeah, no. And we get a ton of repeat clients.

Repeat clients. Yes. I talk about it every day, talk about it every day.

I mean, it's because you have to put your client's interest first. You can't put what you want and your needs above your clients. And we don't operate that way. And people were always surprised. I mean, I went out and met with someone recently in Fulton County, Pennsylvania and he's about a year and a half away from retiring. We went into all the details and he actually called me back last week and said, Jay, I hate to say this to you, but after you came out and talked to me, and my wife now loves our house again and realized,

That's funny.

It doesn't make sense for us to move right now, and I'm so sorry. I wasted your, I'm like, it was not a waste of time at all. I was like, you guys were curious. You were thinking, is it time to downsize? We talked about the pros and cons of listing now versus not knowing what the future is going to be. We talked about values, and you made an informed decision after having a consultation with me where we sat down, we talked about things, and he was like, I'm telling you though, as soon as I retire, you are the first call that I'm making. He goes, even you just handled this conversation just shows me that you're really, and he was like, I can sincerely hear in your voice. You're not disappointed. You're not upset, and you truly don't feel like you wasted your time. And I'm like, I didn't waste my time. I got to help you figure out what made the most sense for you and your family at this current time. And I brought up things that you might not have even thought about. I mean, I had her thinking through things like, okay, so you're concerned eventually about not having a main level master. Do either of you have any health issues right now? Okay, well, here's the downside. Here's the good side. You don't have to do anything. However, if you do end up in a situation where you can't handle stairs, you do have a set of stairs that are straight run, you could always do a chairlift. Yeah, I just gave them all the options. And once we went through it, she was like, I'm just being paranoid. And I was like, well, again, that's for you to make that decision. That's not me. That's a total you choice. And to me, it's just really important to understand what their real goals are. It's not about, and when I worked with you, I mean, we looked for a fair amount of time.

Years, at least three, four years.

And the goalpost was at one place, and then it got changed, but it was talking through what does this look like? Does this make sense? Is this going to work? Do you need this or do you need that? Okay, if you're going to give this up, we just have to think in the future something could pop up. And I don't want you to say that, hey, I didn't warn you that this could become an issue in the future, but right now it's not. And I tell people, I said, here's the reality, even your age doesn't matter. But that's typically where people get us. They're older and they're like, I'm worried about steps. I'm fine now, but I don't want to have to worry about them in the future. And I said, do you realize everybody technically can worry about that? And people were like, what do you mean? I'm like, somebody could break their legs. Somebody could be in an accident. Anything can happen.

Anything can happen. You lose your mobility.

At any age.

At any age, absolutely.

Now, if you know have a degenerative hip issue or you've got knee problems, if you know that you have things and it's just a matter of time and it's already uncomfortable to be dealing with stairs, that's a different story. But again, we don't know that until we get to talk to people and find out what their true concern is. And to me, again, that's one of the most important parts of our job, is to understand the why, and then helping them figure out what makes sense and timing is part of that. And again, there's never any rush from us to do anything quickly. We all believe, my whole team is we have to do things in the time where the time makes the most sense for you, not for me. So on that note, you ready for a house of the week?

That's a great man. Well put, buddy. I've talked for years and that guy, the guy you were talking about where they fell back in love with their home, that is exactly what I've been trying to say. That these guys aren't going to pressure you. They don't want your headaches as well.

Yeah, no, again, we love working with you and your timeframes and what makes sense.

Home of the Week,

2404 Randolph Terrace right here in Frederick, listed for 575, just hit the market. Three bedrooms, two full baths, one half bath, a corner lot over in Whittier. They have some of the highlights of the home, gleaming hardwood floors, brand new stainless steel appliances, a large master bedroom with a master bathroom and a whirlpool tub, a two car side, low garage with additional storage space, deck, large backyard. Perfect for entertaining. You're close to the community pools, the community pond, elementary school, the gym. And I didn't, and I'm embarrassed to admit this, I didn't know that there was a restaurant over in Whittier, it's called Pigs.

No, the barbecue joint.

So they were like, that is a big highlight. We like being close to Pig's restaurant.

Right by the liquor store, right by the gym,

Apparently.

I know the area well. I know the area.

I'm glad that one of us knows that a little bit better than the other. But yeah, I was looking at it and I'm like, one of their highlights, they're like, please make sure you let people know. It's basically almost walking distance to Pig's restaurant.

I've never been there, but sounds good.

Yeah. So if you want to see what this beautiful home looks like, go to wfre.com. Look up Tom and Jay's real estate podcast, and you'll see the house of week. You can click on a button to get a private tour. Thanks for listening. I'm Jay.

I'm Tom. Thanks for listening Real Estate podcast. Tell your friends all about it.