Podcast - 9/22/23

I'm Tom.

I'm Jay.

Jay Day and the Day Home Team of Real Estate Teams with our weekly real estate podcast. Look, we got to touch on a little bit of the National Football League. Our Baltimore Ravens are now two and 0, I'm not quite sure if I'm a total believer, but two and 0, I'll take it.

Yeah, yeah. I don't know if I'm a total believer either. I actually haven't even been able to sit down and watch any of the games. I've been going pretty hard. One thing that's caught my eye with the news stories was the college football with Deion.

Deion.

Yeah. His two boys.

Unbelievable. Yeah, I know. He's dominating the scene. He truly is. I haven't been able to watch, I haven't been able to watch these games on a Sunday yet either. I'm going to have to wait for the bad weather. But reading about 'em, I'm still all in with the Ravens. I think they got a good chance.

Yeah. Yeah. They do have a pretty good team. It seems like their draft pick was pretty good too. Zay Flowers. Now, if they can just keep that injury stuff under control.

Everybody's waiting for Lamar to go down for the season. They say that it always happens and that they're just waiting for him. I have no idea if that will happen.

Yeah, it'll be interesting to see how things shake out.

And good for the Commanders fans because they've now got a team. They got a new owner and they're two and 0, and they're sold out this Sunday at FedEx against a Buffalo Bills.

Wow, I didn't know that.

Yeah, I just found that out. That's a big stadium. Now, I don't know if it's Bill's fans, but the Commanders, they may have turned a corner.

I think people just realize there's finally a chance for some serious change over there.

And good for them because it means that, man, when these people, when you're a fan of these teams, it controls how your week is going to be, whether you win or lose these games.

Oh yeah, you know that in your house.

Yeah. Oh, I know that in my house. Alright, so we're talking football. That means it's fall. That means we're getting ready to turn over into October. Three months left almost.

Yeah. Yeah. Well, and that's one of the things I wanted to chat about today was a common question that we end up running into. And you see this in the headlines and yeah, I think about it like the people even, and again, not thinking in the real estate world, there's conversations, there's lingo that we use that not everybody knows. And you keep hearing about all this home equity. Equity, equity. What does that mean?

That's a good question. I have sort of an idea what it means. Tell us.

Yeah, so I mean basically it's the portion of your home. So let's say you have a mortgage. Your mortgage is, you owe 300,000 on your home. Your home is worth, and for simplicity reasons, 600,000. So you have $300,000 in equity. It's basically the difference between what's owed on your mortgage and what the value of your home is

Something we all strive for.

Yes, yes. So I mean, one of the big things that we've run into with people is if I sell my house, should I sell my house, with them buying something with the prices being up, with interest rates being up, what does that end up turning into? And I mean, one of the interesting things that I found when looking at a little bit of research is, and again, this isn't for our local area, but the average US homeowner has $290,000 in equity. That's according to CoreLogic. That's a fair amount of money.

That's a fair amount of money. That's a fair amount of money.

And what's caused that was all these home prices skyrocketing recently. And one of the other interesting things that I saw was, and this is according to the Federal Housing Finance Agency, what nearly two thirds, so almost 69% of homeowners either have fully paid off their mortgages or have at least 50% equity in their house. So that's a huge number. I mean, 69, almost 69% of homeowners have either paid off their house or they owe less than half of what it's worth.

Less than half of what it's worth.

Yeah. I mean, that's a big number. So one of the other interesting things that I saw, when you really get into it, and you look one of the smallest, so 30% of people, well actually the lower number, 8.6% of the people only have, they're in a situation where they have 10 to 30% equity. 20.8% of people have 30 to 50% equity. So people are in a pretty good situation. But again, equity is, it's not really money until you do something. For example, if you don't sell your house, it's just sitting there, it's unused and it's like monopoly money. It's fake. You can't really touch it. So one of the things that we've been finding with our sellers is those that have had a whole lot of equity, and then when they decide to sell, if they're moving forward with purchasing, what we found is a lot of them are just using the cash and they're basically selling the house using cash to buy something new so that they're not impacted by the interest rates. The advantage with doing something like that is, you know, don't have a mortgage payment. Your only expenses that you're going to have as far as it relates to real estate are your real estate taxes and your utilities.

By using cash, you mean just paying in its entirety?

Yes.

In one sitting, no mortgage.

Yes.

You're seeing this more.

We are, we we're seeing it more and more, and I think it's because so many people are sitting on this equity and it gives them an opportunity to not have to worry about a mortgage, not care about interest rates, because if you don't have a mortgage and you're not thinking about selling your house, the interest rates don't really matter,

I understand.

who cares what's going on with mortgage rates. I mean, it's the same thing. You see it in the car industry too, where interest rates are prepped up there even more so. And having no debt is a wonderful place to be. I mean, look at credit card interest rates 24-28%. Sure. I know. I mean, it's insane. And I think the challenge is that a lot of people, the banks and all these lenders push for people to, oh, take money out of your house, take money out of your house and pay off your credit cards. And people have given themselves mortgages over the years that really didn't need to have one. And again, if you can get to that point of being debt free, and again, I'm not a huge Dave Ramsey person. I don't agree with everything that his stuff is about, but there is something rewarding knowing that you truly do own the house. There's no mortgage company involved, and all you have to do is to continue to pay your real estate taxes and whatever your utilities happen to be. It's a way to control things a little bit. So that's just something to think of. If you're out there and you're like, oh my God, I don't want to have to pay a 7.25 interest rate, why would I buy a house and borrow money at that much? Well, you don't have to. If you have the equity and you want to purchase something cash, there's nothing stopping you from doing that. Where when the interest rates were low, it was more tempting for people to get a mortgage because if you could borrow the money at two and a half percent and then you could use your cash and do investments and get a 5 to 9% return on your investment, you are making money now that the interest rates are higher, it's a tougher decision to make. So we're finding more people are going the cash route because they don't want to pay 7% if they have the availability and the funds to do so. If that makes sense.

It does make sense, Jay. And if you're listening to the podcast, thank you for listening, but for each and every person who calls the day home team, they'll break all this down for you because it is a lot.

It is.

And every case is unique. Nothing is locked in stone. None of these rules are hard. That's why you need the negotiator, the pro in your corner Jay and his team.

Yeah, we're here. You can call us anytime. You can reach out to us via our website dayhometeam.com. And the phone number is (866)702-9038. We're here to be consultants to you, to give you advice, to give you all of your options so that you can make the best informed decision for you, yourself and or your family. So you ready for the house of the week?

Yeah, well said. By the way, house of the week, what do we got?

5000 Robin Court in Frederick, Maryland in the low fives. Three bedroom, three full bathrooms. This home is freshly painted, has brand new appliances including the washer and dryer. There's a fully finished basement with a wood-burning fireplace. The main level has a master suite. So if let's for example, you're not wanting to deal with the stairs, you don't need to, you've got a nice master bedroom with vaulted ceilings, you have a nice master bathroom walk-in closet. And then in the living room, you actually have vaulted ceilings too that open up to the upper level where the two, other two bedrooms and the one full bath is, the other full bath is down in the basement. There's a large trex deck. It's a fully fenced backyard with a six foot privacy fence. This community that it's in has a community pool. It's close to schools, restaurants, downtown Frederick and major commuter routes, and it's detached home in the low fives. A lot of townhomes are selling in the fives now, in Frederick.

I've seen it.

So go to wfre.com, look up Tom and Jay's real Estate podcast, check out the house of the week. If you like what you see, let us know and we'll get you in for a private tour.

I'm Tom.

I'm Jay.

Jay Day and the Day Home Team of Real Estate Teams with our weekly real estate podcast. We'll be back again next Friday. Thank you for listening and tell your friends all about it.