Podcast- January 20, 2023

Andy Webb:
Hey, this is Andy Webb

Jay Day:
and Jay Day and the Day Home Team of Real Estate Teams with our weekly Real Estate podcast.

Andy Webb:
Jay, it's so great to be in the studio with you once again. As Thomas is off this week, I've been hearing a lot of stuff about mortgage rates in the news. Are they up, down? What's the truth?

Jay Day:
So it's really interesting because, and we talk about this a lot, national news is good in some ways, however, local is always more important. So nationally, they were also talking about inventory levels of homes being at over three months. And Tom and I have chatted on the podcast that we've been, maybe some areas we've hit just under two months, but most places here have still been one month or under. Now, interest rates, it's really, really interesting because we were seeing a little bit of a slowdown in activity and on the podcast and on our radio show, I've been talking and specifically saying there's seasonality. Everyone needs to remember we had Thanksgiving, we had Christmas, we had New Year's, and most of us get distracted by that. It's okay, I've got to get this ready. The family's coming, we have this happening, we have that happening.
So the last thing they're thinking about is adding extra stress, which would be going through a real estate transaction. But the other interesting thing that we've seen as we've rolled into 2023 is interest rates are starting to ease. What I mean by that, we saw things hit over 7% last year, and one of the lenders we work with, he's been quoting stuff just under 6% for the last maybe two weeks or so. And when that has happened, what we're seeing is there's the influx of buyers that were sitting on the fence have jumped back in. Because with that change, you have to look at affordability. So when you're buying a home, the most important thing is, and why things slow down also is your monthly payment. So your monthly payment is driven by the sale of the price of the house, and then also your interest rate.
So if interest rates were seven and a quarter and now they're 5.9%, that increases your amount that you can, your affordability for the house. So if you were paying $3,000 a month for a house last year, that same house this year may be $2,700. So we've seen a huge spike, and it was interesting, we were starting to see a slowdown in multiple offers. Again, some pockets we still had them, but I'll give you an example. Kyle and our team, he had two offers he was working on with two different clients in Pennsylvania. One of them, his offer was one of 20 and the other, it was one of 12. Wow. So we still had this limited inventory situation and supply and demand. So right now, if you've been thinking about, you know, were going to buy, and then you're waiting for prices to drop, and then all of a sudden interest rates went up and you're like, oh my god.
Now I can't do anything. Rates have started to dwindle back down. And the one thing that I do, I think, and most economists are saying, if you're thinking that the rates are going to go back down to three and a half or something like that, that's unrealistic. And there's no expectation that that is going to happen. And I mean, candidly, 5.9% is not a bad interest rate for a mortgage at all. And these things can constantly change. I mean, the world is ever evolving. If you go to the grocery store, unfortunately, we haven't seen egg prices go down or anything like that. So I still don't think we're truly out of the woods, but we're in sort of a little bit of a sweet spot right now. So

Andy Webb:
If you're going to buy a home, then maybe now's the time to start considering with the mortgage rates heading in the direction that they are.

Jay Day:
Yes. Because all it takes, and I said this in our last podcast, all it takes is something to go off and then all of a sudden the rates start skyrocketing in. And when they do, they typically do it quickly. The Fed can meet again at any time and say, or decide, Hey, we're we're starting this recession. We're trying to deal with inflation. We see things happening. And that's what, so the Fed had to increase things to slow down to slow down the economy. It was done on purpose. That's what they had to do to deal with inflation. So what happens is they do that. There's not a direct correlation to mortgages when they do the interest rate hikes. It impacts credit cards, short term loans, things like that. However, then that throws off the stock market and bond market, and that's what impacts the mortgage rates.
So I mean, think about it, and I don't talk politics on this, and this isn't a political thing, but the stuff going on in the Ukraine still, who knows, something crazy could happen there, and that could spiral things out of control. If the stock market and the bond market goes out of control, that's where mortgage rates get a little crazy. And in today's world mean I've learned in you probably too, with the whole Covid, you just expect the unexpected. You have no clue what's going to happen. For sure. So if you've been sitting on the fence as a buyer, now might be the time. We have a lot of people that we were chatting with over the last year, year and a half that decided to rent, and they've jumped back in because they see a couple more houses were out there. They see rates have come down from where they were a couple of months ago, and they're realizing, Hey, this is my sweet spot. This could be my opportunity.

Andy Webb:
If now is the time to make a move on the mortgage rate side, what does the market itself look like? How do the supply look for us here locally in our neck of the woods?

Jay Day:
Well, our supply is still a little down, but again, we're coming off of the holiday season, which a lot of people, and if you think about this personally, let's say that you are hosting Thanksgiving and Christmas at your house or one of those, do you really want to have your house on the market and have people coming in to show it? And so a lot of people say, you know what? I'm just going to, I'm take a break. I'm going to give up for the holiday seasons, then I'm going to start. But they don't do it right away for some reason. There's always this belief that I need to put my home on the market in the spring. And we tell people, you put it on the spring. That's all well and good. However, you're going to put it on when almost everybody else wants to.
And then you're going to have more competition if you're selling a home. The lower amount of competition that exists, the better your odds are of getting better terms, more money selling it quickly. But if you're home and 10 homes like yours are on the market, it makes a little harder. As opposed to you're the only, and my wife uses this. Let's say you're the only date a person available to go to the prom, right? Things can change. So some of the national news that I've seen though too, is that they say prices have dropped. We have not seen prices technically truly drop. What we've seen is over the last couple of years, we had over a 30% increase in value. So now we're seeing about a one to 3% increase in value. And that's still predicting a one to 3% increase over year over year.
So it's going to be much slower. Now again, until we have this supply issue taken care of. I really think if you're waiting for rates to hit 3% and home prices to crash, and I could be wrong, but the economists are not predicting that. No one is predicting it. I don't see it happening. And last year, the economists were wrong last year because they said that interest rates weren't going to hit even in the sevens, not even this year. And we hit it last year. And it was funny cause when I was doing one of these podcasts with Tom, I said, I'm telling you, if you're sitting on the fence, I think we're going to hit over 7%. And I gave the stats from what the National Association realtor saw with the Mortgage Association thought all these different places. And he's like, Jay, you don't agree with any of them.
And I'm like, no. And then when it happened, I was like, see, because things tend to get out of control very quickly when they start to happen. Sure. And everyone wants to sell when they're at the peak and everybody wants to buy when they're at the low. And you don't know you're there until it starts changing in the opposite direction. So I mean, any questions you guys have about real estate, just reach out to us. There's no obligation. We love educating and talking with people and finding out what their goals are and trying to help develop a plan to help them achieve that goal. Even if it's a year later, two years later, six months later now, whatever the timeframe is, we work with you. And again, I just mentioned we had people that we were working with the last year, year and a half that rented. And we stay in touch with them and say, Hey, I know last time we looked at houses, the interest rates were 7%. They're 5.9% now if you really want to do something, let us look and see what that gets you, and we can send you homes in that price range and see if you like what you see online. If so, we can get you out there again and get things rolling. You don't have to stay paws forever.

Andy Webb:
Now, normally we have a house of the week, but we're a little bit different this week.

Jay Day:
I figured. Let's mix it up. Tom's not here. He's on vacation. You and I don't get a chance to spend time together in the studio. And we also haven't had any events that we've been at. It seems like we were around each other constantly all the time. And then all of a sudden it's like, okay, same thing I see you today. I'm like, hold on. What happened to all his hair?

Andy Webb:
Cut all my hair off. Messed up my arm. Yeah, I'm completely different. So it's been too long. Yeah.

Jay Day:
Yeah, it is. So yes, I have a lot of the week it's on Kemps Mill Road in Williamsport. So right in Washington County, over a half acre. Listed at $50,000 corner lot, already cleared. So no money needed to do any clearing. You could possibly build a great house here. It's up to you. Again, $50,000 if you go to WFRE.com, look at our podcast, you'll see photos of the lot. If you like what you see and you have questions, you can click the button. It'll actually connect you with one of our agents. Or if you already have an agent, you can have your agent reach out to us. But we love to help you get this lot and build your dream home.

Andy Webb:
Tom Whalon is back next week. Until then, Jay Day, thank you so much for allowing me to hang out with you today. I'm Andy Webb.

Jay Day:
Im Jay Day of Jay Day and the Day Home Team of Real Estate Teams.