Show - 03/04/24

Jay Day:

Good morning, WFMD listeners, this is Jay Day.

Christina Day:

and Christina Day.

Jay Day:

With Real Talk Real Estate. Hard to believe. We're already in March getting closer. As we always joke, you say we're in spring, and I like to remind you that spring is not March as much as I would love it to be. But let's talk about what happened in the real estate market. But let's talk about what happened in the real estate market in February.

Christina Day:

So interesting numbers, I was looking at the February statistics for Frederick County. I always like to look at Frederick County because Frederick County is where we're based out of, but Frederick County is also one of the more, I would say, more urbanized areas that we service if we're looking at this kind of Western Maryland pan handle grouping of areas. So we expect that the numbers in Frederick are going to be a little bit better, higher sales prices and more unit counts of homes that have actually moved, been put on the market. That sort of thing.

Jay Day:

Become a little more transient.

Christina Day:

Yes. So yes, exactly. So it's a good way to look at what is the, I would say the most likely to have the most activity. So our most optimistic view maybe. So closing out February, we actually had on the 28th when I looked at the numbers, we had 158 active units. Now that was 158.

Jay Day:

As I said before, let's stop talking in terms of real estate talk,

Christina Day:

158 units, which would be homes. So that was up from the month before, the month before, we were in January at 136. Now, the real interesting thing I thought was that in our feet on the ground experience, we're seeing a lot of activity happening, but the average, well, the median days on market for those actives was 56. That's a long time.

Jay Day:

We haven't really been experiencing that on ours. It might be the people that are sort of pressing the envelope on price. I've noticed when I'm looking at comparables and the actives that are out there, most of them are homes that need some cosmetic work, not enough work to be appealing to an investor they're trying to sell. But also now with a buyer having these higher interest rates, enough cosmetic work that it makes it almost not worth it to them to have to spend the money to update the flooring, get rid of the wall paper, update the kitchen, things like that.

Christina Day:

Yeah, I think there's a couple contributing factors. I think one is that there's been more stuff coming on the market and we are seeing more sellers start to get off the fence and make a decision to sell. I think there's also, like you were saying, condition, people not having their homes really truly ready and looking their best to capitalize on a buyer. And I also think people are pushing the envelope because last month in, well the month before in January, the median price was 509 and the median days on market was 28. For February it was 512, and the days on market had really increased. So as we keep pushing the envelope on pricing, what happens?

Jay Day:

Well, and I think that also ties then to when we talked about it towards the end of last year, the interest rates started dipping, which created that activity that sort of showed up in December and January and then rates have hit,

Christina Day:

Back. Yeah, we're back up there.

Jay Day:

Which is going to have an impact, especially like I said, the homes that need work because the mortgage payment goes up and what some people don't think of on the investing side, if an investors buying it, they're carrying costs of increase too with these interest rate changes. So it's all little pieces to the puzzle that make it the big picture to explain what's really going on.

Christina Day:

Exactly. So we did have a fair amount of coming soons as we approach the tail end of February, there were 60 that were waiting to come on the market. Usually we see there's additional inventory that doesn't show up in that coming soon that will pop on as active, but that was up from 41 in January. So that is a third more.

Jay Day:

And again, something that would be expected as we're getting into what Christina calls March is spring. But it's true, typically there's less homes available in the earlier part of the year, and then it starts to increase into the spring and then it starts to decrease again as schools start opening. And it just the natural ebb and flow of real estate.

Christina Day:

Right. So contract activity, we had interesting numbers there too. So the homes that did go under contract, there were eight days on market and there was a median price of 463. So previously in January it was 13 days on market and the median price was 475. So it looks like those that moved were just a hair less, but they did move quicker when they did move. So that was good. Nice to see those numbers. And then for sold, this was actually really impressive. So like I said, I pulled these numbers just as we were rounding out the end of February. So there were some that hadn't posted. I did see a number of listings that hadn't been updated yet, but it looks like our actual numbers going to be somewhere around 170 to 180 once everybody gets all their stuff updated. And that compared to January's closings, which were 125, that's a big difference in the number of homes that actually sold. So that's why I said I think that there's just more stuff moving through the pipeline. So even though we're sitting on an extremely low inventory, the inventory has come up a little bit, but we're also seeing a lot more choices out there for buyers.

Jay Day:

And again, it's that sweet spot. We had a time where nobody was doing inspections, inspections came back, we're starting to see inspections get waived. Then we started seeing them coming back again and listening to that. So when you talk about what sold, those are things that went under contract, obviously in January.

Christina Day:

In January especially. Yeah.

Jay Day:

And then the ones under contract are the ones that went under contract most likely, maybe end of January, but in February where the rates had increased.

Christina Day:

Yes.

Jay Day:

So I think it might've been a little bit of a spark too, of, oh my gosh, these rates can go back up to a much higher point of where they were. We better blank or get off the pocket.

Christina Day:

I think you can say poo on the radio.I give you permission, you can say poo, go ahead. I'll say it for you. So looking at the inventory and the dynamics of the inventory is also something I like to do. So if we're looking at what is a good median expectation of price for Frederick County, I like to think that depending on your preferences, we see a good volume of things coming in and around the 450 range. And I was actually talking with Redfin, a manager at Redfin, and they were saying the largest amount of inquiries that they get are on properties in that approximate 450 range in Frederick County. And I thought, well that's pretty interesting because I think that's about where the average works out. Yeah, it is totally is because a more universally appealing price point for most people. So for the bulk of the people now, for our current inventories and what is available, as we were closing out February that 300 to 400, there was 27 properties listed active. 400, nope, 400 to 500. There were 18. Now, I mean, guys, that's not enough to feed the appetite of the buyers that are out there. And in our tales from the street portion of the show, when we talk about things that we've recently dealt with, one of the things I can tell you, I had a buyer who was looking in that 350, 400 ballpark in January, early February. And we literally, in two weeks, we were able to see over 20 homes that fell within that price range looking between Frederick County and Washington County. That was a lot of homes to be able to show somebody in a very short period of time, it was actually quite refreshing to have choices. Yes.

Jay Day:

When something comes up, up, then we got to get out there right away.

Christina Day:

Yeah,

Jay Day:

You had a marathon over, what was it? Just two days.

Christina Day:

Three days? We did three days. And on the one day I think we looked at probably 16 homes, and then the other two days was another 15 homes. So it was every bit of 20 to 30 homes that we got into. Some of them did go under contract, so we weren't able to do anything with those because as we're scheduling other people were acting upon them. They had already seen it. But it was an interesting experience to be looking in that price point across the two counties. And the interesting thing was the varying degree of condition. I mean, we looked at town homes, we looked at single families. We weren't picky with regard to was it attached, was it detached? But the varying degrees of finishes, maintenance, improvements, it was pretty wild to see what was out there. And I can tell you the ones that she didn't want were the ones that needed the most work. What she actually ended up buying was something that had been completely renovated and beautifully done.

Jay Day:

And again, it boils down to what is the mortgage payment going to be and does that allow you to have extra money to put into the house? And with the rates being where they are and the prices being where they are, we have to put that combo together because the same where people were, oh, my interest rate was 10% or 12%, and that's what real estate salespeople, lenders will throw out there to you. But the reality is homes were a hundred thousand dollars. So let's be real on that. When I see agents say that or type that out and put it on, it drives me nuts.

Christina Day:

Well, but I mean in just a slight disagreement with you on that, the income levels were vastly different.

Jay Day:

But compared to right now, I would say the income levels are definitely not keeping up with the pace of the highest sales prices we've seen and the higher interest rates. I think we're still over that threshold of where what would be considered normal. Most people, I mean even think about it, we talk to our sellers and they find out what people are paying for their mortgages. They're in shock. They're like, I wouldn't pay that amount of money a month for this house. Because if they want to do a post settlement occupancy, sometimes they have to pay it. And one of the interesting trends that I've seen, and I don't know if you've seen it as much with your clients. Well, the one thing is a ton of our people when they're selling, they're leaving Maryland point blank. They're going down south, they're getting out of Dodge. The other thing that's been really interesting, and it's been enough clients that it's sort of like a little trend that I've been surprised with is they're actually not picking where they're going. They're getting RVs and sort of going that route. They're like, I'm capitalizing on the real estate market right now. I'm going to make as much as I can on my house, and I'm not going to buy anything because I just want to see how everything shakes out. I'm just going to have an RV and we're going to RV it. And I mean, some of these RVs are super sweet. I mean, some of our clients, I've seen the stuff that they bought, they've got their fireplaces, they've got pretty extravagant looking RVs, but they're like, I don't know where I want to be and I don't know if I want to commit to a mortgage not knowing where I really want to be and what's going to happen.

Christina Day:

Yeah, I can think of a good handful of people we've had that have gone that route even just in the last year. And it's funny, I actually think I follow up with all of our people. Usually if you're a client of ours, we build a good relationship and it extends past the sale. And when I check in, a lot of them have found properties pretty quick that they ended up liking somewhere else, and then they're back into having a house again. But I do want to go back to our conversation about the median income real quick because I actually happen to have stats on that readily available because that was one of the things that I was looking through for the show. And one of the things that I found was, so according to the National Association of Realtors, the median household income for a first time buyer, now this is nationwide, these are national statistics, is 71,000. Okay? Now household income, is everybody in the house who's making money that would contribute towards the purchase of this house?

Jay Day:

Lets look at that if that's the average. And again, you can't afford,

Christina Day:

No, but that's national. So hold up. So hold up before you go. Getting all excited that you think you're right. The median household income of a repeat buyer nationally is 96,000

Jay Day:

Still.

Christina Day:

And then the median household income in Frederick County is just over a hundred thousand. So we live in a high income area, and if you took a hundred thousand and you used the 33% front end housing ratio, so that would be $8,000 a month of income times 0.33 is a $2,750 a month payment for your median.

Jay Day:

Okay. Because the example I give and we look at have a lot of, one of the hot spots in Frederick County is New Market.

Christina Day:

Yes.

Jay Day:

A town home that is 10 years or younger is over $500,000 that if you're making, I disagree.

Christina Day:

And okay, folks, this is how married people who work together talk to each other.

Jay Day:

And for those listening, we do a small outline of what we're going to do for the show, but we don't talk about it.

Christina Day:

No, this is totally unscripted.

Jay Day:

Yeah, unscripted. But again, I just feel like if you're the average person and I saw what the payment would be, so you're the mathematician with this, what do you think roughly a payment is for? And again, we have to deal with taxes, insurance, all of that $500,000 at 6%. Is that easy enough to figure out?

Christina Day:

Well, no, because not a lender, but I would say that you're probably, if you're at 500 and you're around 6%, depending on if you're in the city limits and all of that kind of good stuff. It is. So I just had one close and she had locked in a couple of weeks ago. She locked in at 6.25, but it did cost her, because actually when I was reviewing her closing statement, I was like, are you sure this is right? Did you mean to pay this many points? It was like two and a half points to get to that 6.25. And I mean, I was kind of shocked. And she said, yeah, I want the lower interest rate for the long haul. It's worth it to me to pay it. So yes, I do understand what you're saying, but I am saying that when you have an $8,000 a month gross income that you're using to qualify that your housing payment is going to fall somewhere in that $3,000 range, you might be able to get away with a little bit more depending on your credit and your other debt load.

Jay Day:

2700.

Christina Day:

Yeah, that's around 3000. Yeah. Moving on. Anyway. So that 500 to 700, I actually think from a, like you were saying, if you're looking in certain areas like New Market or if you're looking for a single family detached, two story colonial, four bedroom, two and a half bath type property, you're definitely looking more in a 500 to 700 range closer to the upper end of that to find what you're looking for. Now, here was an interesting stat for that. For the 500 to 700 range, there was actually 42 properties out there. So I think that is kind of indicative that that is a big part of our market, which is that kind of 500 to 700 range, seven hundred,

Jay Day:

Repeat buyers.

Christina Day:

Oh yeah.

Jay Day:

The difference is, and the advantage is they're selling their home. Hopefully most of them have equity and they pulled a bunch of money out of the house and that allows them, that their net mortgage ends up being,

Christina Day:

It's going to be less.

Jay Day:

That hit where you're talking about,

Christina Day:

Absolutely.

Jay Day:

Without that, it would be extremely difficult.

Christina Day:

Yes, you need to come to the party with some money. We're not talking about doing a hundred thousand income second purchase with an FHA three and a half percent download. That's not what we're doing here. And actually the one that I had this past week where I happened to be privy to the payment because it was a buyer's side situation and the interest rate and that sort of thing, that was something that we were very careful about was what was her monthly payment going to be and was she truly going to be comfortable with carrying that payment for the long haul? So it is important when you are shopping guys, if you're a buyer and you're thinking, what can I afford? It is so important that you get with your lender about your comfort payment. It doesn't matter what you can actually afford. What matters is what you're comfortable paying

Jay Day:

And hey, I forgot that I actually had some note. Oh, so 450,000 if we're at a six and a half % interest rate, just the principal and interest not including the taxes and insurance is just under $2,900. It's 2831.

Christina Day:

There you go.

Jay Day:

At 7%, it's 2993. At 6%, it's 2697. So when you add taxes and insurance, none of them fall on that 2750.

Christina Day:

But you didn't account for down payment. So anyway, so that 700 to 800,000, there was only seven. 800 to a million, there was only two. And over a million get this. Okay. I'm going to have you guess, how many homes do you think are in Frederick County resale that are over a million as we closed out 28. Now give me a guess on what you think the days on market.

Jay Day:

180.

Christina Day:

No, 86.

Jay Day:

This is real unscripted.

Christina Day:

Yes.

Jay Day:

Now she had to find a way to be right.

Christina Day:

So the interesting thing is though, and I think that this is really important because we deal with a lot of over million dollar sellers or people who are thinking about selling their home. They're in that over million dollar price point. And the thing I think that it's really important for you over 1 million sellers to keep in mind is it is not as fast moving of a demographic. Now, I have seen some that have moved very quickly and it's you have,

Jay Day:

Thats waterfront and Lake Linganore. If you have 200 acres.

Christina Day:

Or if you have something really cool downtown, Frederick, Baker Park, those kinds of properties, right? We've seen certain neighborhoods that have really high draw that those do move quicker. And some I look at and I'm like, holy cow, I can't believe somebody paid that for that house and it went that quick. But hey, for whatever reason, the right person, right time,

Jay Day:

Haitian location,

Christina Day:

The magic happened. But you guys, with the million pluses, you do need to understand that is a very specific qualification. You just heard us talking about what income was necessary for a $450,000 mortgage, right? Well, they're likely not coming in getting a $450,000 mortgage if they're buying your million dollar house. Now, I did get another interesting statistic, and that was

Jay Day:

Did cheat and saw this one about how many people were

Christina Day:

Paying cash. Now, I did not believe that that might be a nationwide statistic, but I did not necessarily feel like we see it that way on the front line. And I want to say it was like 32%.

Jay Day:

But remember institutional buyers, we had them here locally. We've sold some of our listings to them. However, when you go out to Colorado and other areas,

Christina Day:

It's very common.

Jay Day:

It's very common. So we, and I don't remember the statistic, I wish I would've known we were going to talk about that. I would've pulled those numbers, but I was shocked at how high the number was of institutional buyers that, well, not buyers anymore because they own, but what percentage of homes were owned by companies or institutions

Christina Day:

And we're not talking about Joe Smo, LLC, I own a half a dozen rentals, and that's my retirement plan. We're talking about companies like BlackRock, we're talking about big corporations and hedge funds that are making it their business to own vast amounts of residential real estate properties. So when you see these ads, guys just keeping it real, and this is Frederick County, we're very culturally geared towards protecting farmland and the American dream of people owning a home and building a life, right? Building net worth. The greatest way to build net worth is by owning a home. Always has been, always will be. Unless you're some financial guru and you know exactly how to play the market with the stocks and things like that. For the average person owning a home is going to get you the best amount of wealth and set yourself up for the long term. So when we look at these companies that are buying this up, the problem is when you see an ad for an open door or Zillow buying houses or what were some of the other companies that were out there doing it, you see these ads on tv, we'll buy your home. You don't even need to put it on the market. The reality is they are getting your home and they are turning it into very likely a rental, and they are taking that opportunity away from somebody to own a home or they're going to hold it and then flip it and get the profit that you probably should have gotten.

Jay Day:

Like she said, we're not talking about the small investor. Nope. I mean, even small investors might have a portfolio of 40 homes or something. Yeah, we're talking massive amounts. And the interesting part is, and again, we don't get into politics, but we're on wfmd, so I'm going to throw something else in there. If you have wealth management and you're dealing with Vanguard or places like that, you'd be shocked. Look at where certain money comes into and who's funding Zillow and Opendoor and BlackRock. You may want to look at that. If like what Christina said matters to you of, if you believe in that American dream, you think people should own homes and you don't think that people should just be renters and it, there's a whole lot of stuff under the, as they say, getting into the weeds. When you start moving things out of the way and you see what's really happening, it can be a little interesting. I'll leave it at that.

Christina Day:

And I am a big proponent, obviously it's been my career for almost 30 years that I want to see people own a home. If owning a home is right for them, I want to see them strategically build wealth and live a life. That is one, there's the stability of owning a home stability financially that comes with owning a home. It is a saleable asset. So yes, if you're transient and you're moving every year, that might not be the best plan for you. But if you're transient and you're moving on a frequent basis and you play it right, you could be building a portfolio of rental properties yourself.

Jay Day:

I was going to say, one of the properties that I just sold was working for the, it was my seller client, the buyer that bought it. They were pilots and they have homes. When I was talking to the agent, they own homes, and I think he said four different states, but it's where their main hubs are, and they just wanted to be able to have a place that they can build wealth. They know it's theirs. They don't have to stay in hotels all the time.

Christina Day:

Oh, and have you checked rental prices in Frederick? We don't handle rentals, but I will tell you, the rental prices in Frederick, you talk about the median income necessary for a mortgage, the median income you'd have necessary for a rental is worse because the prices on rentals here are ridiculous and they are building apartments left and right. But the reality is it's not cheap.

Jay Day:

I know the apartments over and by Oakdale High School, we had a couple clients that actually moved in there in between

Christina Day:

While they were waiting to find a house.

Jay Day:

I was shocked.

Christina Day:

Oh yeah.

Jay Day:

Yeah. They're like, wow. I sold my single family and I moved into while I found my other place, and they were like, it was nice, but not that type of

Christina Day:

Yeah,

Jay Day:

So any other stats that are really important that you wanted to make sure we got out there?

Christina Day:

One of the things that I was thinking about with as we come into spring, it's going to be really important for you guys to just be keeping a close eye on the market with your agent or with us. That's what we do. But it's important to really keep a close eye on it and stay well-informed. We have tools on our website that you are welcome to use that will give you an estimated value. It's not entirely accurate, but it's pretty accurate. But there is no harm in having us come out and give you a good idea as to where your home would be priced and really talk through, does it make sense or doesn't it make sense for you and give you a baseline to keep track of that on.

Jay Day:

Yeah. So if you're interested in that, our website is dayhometeam.com, D-A-Y-H-O-M-E-T-E-A-M. com. Again, dayhometeam.com. You can reach us by dialing 866-702-9038. Again, 8 6 6 7 0 2 9 0 3 8. We are local. Our office is actually right over by the Frederick Airport. We're here to assist and we've been around. We'll be around as long as we can. And I thank you for tuning in. I'm Jay Day.

Christina Day:

And Christina Day,

Jay Day:

And thanks for tuning in for Real Talk Real Estate.

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