Show - 2/5/24

Jay Day:

Good morning, WFMD listeners. I'm Jay Day.

Christina Day:

And Christina Day.

Jay Day:

with Real Talk Real Estate. We're here and important times we're in the election year. We also had the Fed just had their meeting. You want to talk about what type of impact that could have? I mean, it's still sort of fresh, but go for it.

Christina Day:

Yeah, so basically they were saying they were not going to make any change to the Federal Reserve interest rate, which is how the cost of borrowing money goes. So it's not every, we talk about this every time. It's not that if they change the rate, there's a direct correlation to the percentage rate that changes on your mortgage, but what it does affect is the cost of borrowing money between the institutions and then of course that gets passed on to the consumer. But with interest rates as it relates to mortgages, it's really impacted more by how the market responds and the market being the investors on Wall Street with the stocks and the bonds and where they're putting their money. And so that's what truly affects your interest rate on your mortgage. The Fed said that they believe that inflation has eased, but it's still up. So depending on where you're looking at that data from, if we're looking at just data, maybe there's facts there, but if you're the consumer who's living on the front end, we have seen costs go down a little bit and certain things, you go to the grocery store, maybe it's a little less painful, you go to the pump, it's a little less painful. But let's not forget, we are still up dramatically from where we were. When I go to the grocery store, I mean, you said to me the other day we had five bags of groceries in the car and he is like, good lord, what'd you pay for this?

Jay Day:

Yeah, and I mean, rates aren't going to come down until as much as they say the inflation, all of these things. Realistically, they have to keep the rates up to try to make people spend less money.

Christina Day:

Right.

Jay Day:

Bottom line. That's the most basic simple way to look at it. And as long as things are still expensive and they're trying to keep people from spending a lot of money, they are not going to make this decrease. Now, last year they teased and said they were going to, I think everyone sort of expected this last one to sort of stay on par. What shocked me was the comments that were made there where they actually hinted that, well, one, they said they most likely won't be changing them in March either, and they could potentially increase. So that was pretty interesting because if they feel like they need to increase, then obviously there's not stating the words that they're concerned of inflation still, but that's basically what that means.

Christina Day:

The sentiment.

Jay Day:

Yes, yes.

Christina Day:

And so they did say that their unemployment was still low, that there were job gains last year, but they've kind of moderated. And I think that there's this also a skewed sense of what those numbers look like because there was, I mean, the employment rate was also dramatically affected by the Covid policies. And so now we're coming back into a more normalized life where you actually have to go to work if you want to pay your bills. It's kind of a crazy thing, right? But when we look at the interest rates themselves, they are predicting that they could get down into the lower fives this year by the end of the year. Right now, maybe that's what, if that's a prediction, but that's

Jay Day:

A election year.

Christina Day:

Yes. But in looking at the research and in looking at the predictions from the mortgage watch and places like that housing wire, they are saying that they're thinking that the rates are going to come down to the low fives, which would of course for us in real estate really help move things. Now buyers, that sounds real appealing and it's really exciting to hear that you might be able to get a five-ish percent interest rate, but here's what's going to happen when that happens. Everybody's coming back out of the woodwork and they're all going to want to buy houses, and we're going to start to see some crazy activity. And in our little section of the show Tales from the Street, we're going to tell you about what we're seeing right now with the activity that's been driven by the interest rates coming down. Because early in January and coming out of December, we were up in the eight range, and then we saw it drop down to, currently at the beginning of the week, we were at about 6.125 on a conventional and 5.75 on a government loan. And we've been seeing this for about a month now.

Jay Day:

Yeah, it's teetering back and forth. The government one is just a little below six, and then it goes just a little above six. It's been sort of balancing back and forth in there.

Christina Day:

Well, yeah. I mean, they said that this is actually the lowest it's been since May of 23, and we peaked around 8% in October. So we're seeing this rush of people, and we actually have seen that in our listings and our buyers competing.

Jay Day:

They're starting to acknowledge that this may be as good as it gets or the new normal. They're learning that two and a half, three, three and a half is not normal, and if they're going to wait, they could be waiting. I think it's one of the ads we have where there's a skeleton sitting there just waiting for things to change. And if things do drop that dramatically, you could always do a refinance assuming that you still, the values don't drop and there's still no indication of values dropping on what homes are worth.

Christina Day:

No, there's definitely not. And that's part of the challenge is there's all these mixed messages out there in the media. You hear, oh, there's going to be a foreclosure crisis. Yes, foreclosures are up compared to what they were during Covid.

Jay Day:

They stopped them.

Christina Day:

Because they put a moratorium on 'em. Right. So they said you cannot foreclose. So of course the foreclosure numbers went down because they weren't allowing them.

Jay Day:

Yeah. It's like you see headlines foreclosures up 200%. Well, if there was zero, it's not really hard to get those numbers because it's always a story that the media wants to paint. So you look at it and they can either give, they don't say, oh, there was 5 foreclosures in this month and now this year there was 15. They have to use the percentages to make it seem scarier than what it really is.

Christina Day:

Oh, yeah, absolutely. And we do foreclosure work as well. There's none really out there that's not a source of option for people to purchase, and it's not been on our end. We see very few coming out and around, and it really is stuff that has been in the pipeline for years.

Jay Day:

And even there was one that was coming up in the area and that we were possibly going to be working with and the bank, with all the changes that have happened with the foreclosure process, they are still trying to work with buyers to reinstate and to try to fix it.

Christina Day:

You mean with owners?

Jay Day:

With owners? Yeah, I'm sorry. Yeah, it's definitely they're not pressing as hard as they have in the past because I think the regulations and all of the different hoops that you have to jump through being a bank to do a foreclosure, they just want to make sure the person truly can't afford it, or if the house is vacant, it's a different story.

Christina Day:

If you've left.

Jay Day:

If somebody's living in a house and they want to try to make it work, it's a long process.

Christina Day:

And I think that there's a lot of programs out there now that do accommodate people, and they're reworking of things financially to make it work that currently though, the numbers are actually, there's still only 60% of the foreclosures we had pre covid that's low because even pre covid, we had very few foreclosures. Nothing like back in what, 2012 to 2014 ish.

Jay Day:

Right after, during the bust when we were doing, I don't know, I felt like we did a hundred. It was probably not that many in a year, but we did.

Christina Day:

I would say it was at least there was times where I was carrying 50 a year, so that was a lot.

Jay Day:

It was a big part of the business.

Christina Day:

And that was just us, and we were just a small little cog in the wheel.

Jay Day:

And just one bank.

Christina Day:

Yeah, so don't worry. Don't foresee this foreclosure thing being a big deal. But that is something that the media does bring out and talk about, and that goes into the mixed messages and the confusion for buyers and sellers as to what's going to happen. So talking about activity and the things that we're actually seeing happening, we've had multiple listings in this last month that have had multiple offers, lots of showings, very busy open houses. We're seeing offers come back that are competing, that are going above asking, that are going back to having appraisal guarantees that are going back to waiving inspections. And we're seeing that more and more. And we're not only seeing it on our listings, but we're seeing it when our buyers are writing on other properties. And when we find out we didn't get it for whatever reason, these are the contributing factors.

Jay Day:

The appraisal gaps were almost non-existent except in small pockets. And I would say it was if we had four offers on a house, maybe one of them didn't ask for inspections, where now it's sort of flip flopped. We're not getting all of them with no inspections, but the people that are putting the inspections in are typically the ones not getting the houses in a multiple offer situation. Enough people that are foregoing their inspections, which again, we can never recommend because you never know. But at the same time, if you really want the house, there are risk factors you have to weigh and see what makes the most sense for you.

Christina Day:

And we're seeing, I actually had on one where they do what's called a pre-inspection. So they bring an inspector in for basically like a showing, and the inspector does a quick inspection, not a full inspection, but they do a quick inspection of some of the major aspects and components, and then they can give them a good idea as to if this is going to be a red flag house or not. And that way they can write with a little more confidence. And the inspectors that we've seen doing that, they charge a lesser amount because it's a lesser intense inspection as far as time and thoroughness goes. But I,

Jay Day:

They're hitting the big components, HVAC, electrical, roof.

Christina Day:

As an agent working with a buyer, I cannot in good faith tell a buyer waive inspections. This is one of the biggest purchases of your life. This is a huge financial investment, and at the very least, I would recommend that you try to do at least the mini pre-inspection if the seller is agreeable to it, because you need to go in with your eyes wide open. There's been a lot of people who bought a lot of things with doing no inspections, and then they got a lot of big surprises.

Jay Day:

Well, yeah. I mean, even

Christina Day:

Shortly after buying,

Jay Day:

Yeah, even earlier this year when we had almost every offer having inspections, we had lots of people canceling and us reselling homes because it's a combination of things, and I've said this before, I don't think that everyone, owning a home is not for everybody. If you're on an extremely tight budget, and if your water heater goes, if your heat goes out, if you are a paycheck to paycheck, it is going to be extremely hard to be a homeowner because life happens, stuff happens. I mean, even if it's covered by insurance, you still have deductibles. You still have,

Christina Day:

Oh, we had that leak in our house. What was that? Around Thanksgiving, there was a pinhole or a small hole in a pipe that had been there for a while, probably over a year. And it wasn't until there was a small backup in the plumbing that caused it to reveal itself. And we had a massive leak, and we take great care of our house. We're very thorough with maintenance, something completely out of the blue beyond our control. We had a massive eight foot by five foot section of drywall out molding out. ServPro had to come in and dry out the house. And so that just to go through insurance was going to cost us over a thousand dollars for a deductible.

Jay Day:

And then they wouldn't have covered the plumbing side of it because

Christina Day:

It was an issue with the plumbing.

Jay Day:

And we had our roof leak. We had to fight with the insurance company on that, and that was an active leak. And we had a tarp on our roof for it felt like months before

Christina Day:

It was months. We went through that with the insurance company for months.

Jay Day:

But if it wasn't through insurance, the roof cost was like 30 grand. Yeah, I mean, that's not a small thing. And the same thing with, I'm still always shocked when I see offers come over when people have well in septic and they don't do septic inspections because it is so costly to replace septic, a septic system. And there's so many parts where things can go wrong, whether it's drain fields, whether it's the small things, the tank, the baffles. There's so many different pieces to it. And then sometimes you have to have it re-perc'd. I mean,

Christina Day:

Yeah, if you have a failure, you are having it. If the drain fields have failed, you definitely are re-perc'ing. And that can be problematic in the area too. So guys, the point is, if you're buying just because the interest rates are at six-ish and you hear they might go down to five-ish, if it were me and I were you, I would get out there and I would get looking. And there are things to see. I actually have a client who's relocating from out of the area. When we were together, 13 homes, we looked at within about a hundred thousand dollars window of pricing, which sounds big, but it's really not.

Jay Day:

And that was just in one day.

Christina Day:

That was in one day. And now a week later, we're looking at 12 of them.

Jay Day:

And 12 new ones.

Christina Day:

12 different ones, yes. Not revisits. So there are things out there to see, and if you really want to talk about inventory, like Frederick County's inventory, which is what we always focus on, we are low for inventory still overall, but the inventory is ticking up. Guess how many coming soons, we had coming into February and out of January? Just take a guess.

Jay Day:

I have no idea. 20.

Christina Day:

41 coming soons.

Jay Day:

Wow, wow.

Christina Day:

And the median price on that was 550. Actives, when we came out of January, I pulled the numbers fresh as we entered into February. We had 136 actives with a median price of 509,000, median days on market 28. Now, those days on market are a lot higher than what we saw a year and a half, two years ago. So for you buyers, there's a good sign there. There's inventory coming, there's a little bit of inventory there, but the inventory is definitely coming and the days on market is still kind of hanging out there. Now, what I did notice when I was evaluating the numbers, the days on market for those that are active was 28, or the median price was 509. Those that were under contract were 13 days on the market, and the median price was 475.

Jay Day:

So they're selling in two weeks or so, which is still not bad because before you were spending 20 minutes in a house spending half a million dollars. Now, and I don't know if you've noticed it on yours, I've noticed on some of my listings that were seen people come back for second showings.

Christina Day:

Yes, sometimes third and fourth.

Jay Day:

And that's not a bad thing. I mean, that's really when you look at how much money people are spending, whether you're spending 200,000, 500,000, 800,000, it's all relative. And most of the people that are buying, it's a percentage of what their income is. So it's all the same. It impacts all of the people in the same way, no matter what the sales price is. It's basically the biggest purchase, like you said. So to not feel rushed. Now, again, there are some that we've had quite a few that sell in the first weekend.

Christina Day:

Yeah, we've been seeing a lot more of that again, which is great for our sellers. A message to you sellers is you definitely want to think about getting your house on the market before there is a large influx of spring listings. And when we talk about what is spring, right? So if you go into home goods or where was I yesterday? I was in Michael's craft store. Spring has sprung. There's peonies everywhere. But the reality is spring market starts pretty early around here, and that's where I think you're seeing this 41 coming soon in Frederick County alone.

Jay Day:

Normally though, I would say we expect it, we start seeing it in March. So the fact that we're seeing coming soon, you can only be in coming soon for 21 days. So those are going to be hitting in February. And there were a lot of people that took their homes off the market around the holidays where we encouraged our people go on the market, we're going to get 'em sold because if people really need to buy, those are our more motivated buyers. Maybe I could find something. And I mean, I know you had one that just closed this past week, and I think those people went through that house multiple times.

Christina Day:

They did.

Jay Day:

Like I said, the interesting part is now is not the time to be dealing with people on the novice side. You want to deal with people that can help you educate you, inform you, and say, I know I've heard people saying, oh, well, the market slowed down, so maybe I can get it for under asking. And we're like, the house has been on the market for two days. So part of the thing is doing the educational piece of, okay, here's your price point. Here's the area you're looking in. These are the neighborhoods. Here's what the data is over the last 45 days, here's what it was. If you would've done something 90 days ago and 90 days ago, you may have been able to negotiate a little more. So it's your agent's job to be able to give you that education. And I don't mean it in a negative way when I say you don't want to deal with a novice, but if they haven't had as many transactions, if they haven't had as many negotiations, they are just not going to know what's really going on.

Christina Day:

And the same thing when you're representing a seller, if not even more, right? Because sellers are really hoping we have a crystal ball and that we can predict the future. And I tell my sellers, now, I know what I know today. I can't tell you what's going to happen next week. I can tell you what I think might happen next week, but there are any number of things that could negatively impact that or positively impact that. So we're really monitoring our sellers who are in the prepping their home stage or in coming soon. We're really monitoring the activity in the area, rechecking, what's our competition, rechecking, what is our price point? And trying to get them the best idea of what to expect going forward.

Jay Day:

Especially when we've got sellers that are doing updates to the home. We tell them when we meet with them. So as of right now, here's what we think the price would be of what it would sell for. And then we go back and we re-look at that. We re-pull comps before it hits coming soon, and then we re-look at comps again before it goes live. That's part of the job because we don't want any money being left on the table. But we also don't want to overshoot and be in a situation where the home sits on the market for too long, especially if every client has a different focus. Some of them just want things to happen very quickly. Others are like, and again, we give them multiple strategies we had, whether it's a price knit right at where we think it would be or just a tad under to try and drive in multiple offers or those that have a little more time. We give them the pros and the cons of testing the market. It's been, and again, it's changed. Testing the market a year ago was a no brainer. Testing the market a couple months ago, you were really pushing your luck.

Christina Day:

And it comes down, I just had this conversation with somebody. Patience or price, right? Yeah. Those are your choices. Patience or price, and sometimes the patience pays off. I mean, you've had clients, I've had clients where patience paid off and it got them where they needed to be, but you can't get mad about the timing when you're going the patience route, right? Yeah. Because when you go the patience route, you're hoping for that one right person who's going to come along and see the value in what you have when that person shows up is completely out of our hands. All we can keep doing is marketing, marketing, marketing, so that when that person does show up, they know that you exist. The other factor there is with the patience plan, you're waiting for that one right person, but you're also waiting for your inventory levels and your competition to shift, and that you have that opportune window where there isn't somebody else out there who's better than you or capturing your person's attention. And there becomes a point where you go, okay, there's been X amount of showings, there's been this feedback. This is where I need to evaluate my positioning, and I either need to be okay with writing it out, or I need to bring my price down so that I attract a wider variety of people.

Jay Day:

I always use it as the funnel. If you work at the wider part of the funnel, you're going to have more options. If you're tightening the funnel, you obviously have less, and it may take a little bit longer. And you're right, we've had some clients that have waited it out and it's taken three months, four months, and we got the number that they wanted because there was no rush factor. And the interesting part is sometimes you just have a unique property. Sometimes you have something that's only going to appeal to a small percentage of people. And in those cases, as long as your agent is being upfront and honest with you and saying, hey, here's the deal. This is unique. Here's what our competition is. And it might not be like a apples to apples competition, but let's say you have a townhouse that's like a big townhouse. It's 2,600 square feet and you're competing with new town homes, and those new town homes are only 1800. And then with the basement, it brings it up a little bit. You have to tell 'em, hey, even though you're not this type, and that's a little different, that is going to be your competition. Because people are going to look and say, wow, I can have brand new, yeah, it's a little smaller, but everything is brand new. And part of that is we're in this unique market where people that are not in our area always say to us, why are you licensed in all these different states? And it's because our buyers are okay with being a 30 mile radius from work. And that can take them into not just multiple counties, but multiple states. So you can't just say, hey, not everybody is going to say, I need to be in the school district.

Christina Day:

Well, and I think with the limited inventory that we've been experiencing, that people are much more geared towards shopping in their price point, not shopping for a particular type of house. So unless you have, the one I just had closed that you were talking about was a farmette, they have very specific needs. They want a barn, they want a pasture that's a very specific buyer,

Jay Day:

And that's a very narrow part of the funnel.

Christina Day:

That is a very narrow part of the funnel. And aside from that though, if you look at, okay, let's say we're talking about somebody coming into the area. They've got a budget that's 400 ish. We're going to look down to 350, maybe. We look a little above and we're going to look at singles. We're going to look at towns. We're going to look at a multitude of things because we don't have the luxury of having 20 single families around 400, and we're going to look in a 30, 40 mile radius because we don't have the luxury of looking in one isolated area. That's just what the market's dictated.

Jay Day:

Yeah. The only time we have that, and that's when we have a conversation when someone is, I don't want my kids to change school districts. I want them to stay in the school. And that's when we say, hey, come in the office. Let me show you what has sold in this school district, and maybe you can buy, or we might tell you it's just not possible. So either you're going to be comfortable changing school districts or you're going to have to rent.

Christina Day:

Good luck finding those.

Jay Day:

Yeah, I was saying the rental side not been easy either. I mean, what all this means is the real estate market is a very interesting place to navigate. You definitely want to have a professional in your corner. Not to toot our own horns, but we've been doing this. You've been involved in real estate from the mortgage and real estate side for what, 30,

Christina Day:

Almost 30 years?

Jay Day:

Almost 30 years.

Christina Day:

1996.

Jay Day:

Yeah, that's before me. I've been in it 20 years. We've seen lots of ups and downs. We've seen lots of different markets. The neat thing is, again, with the amount of business we do, we're not the high pressure person. We're not the, you walk on the car lot and we're trying to close you or we come into your living room like the carpet salespeople and say, if you sign today,

Christina Day:

If you sign today,

Jay Day:

This is the price I'll give you. If anything, we're like, typically we're like, all right, now we're going to leave. This is a lot of information we gave you. We want you guys to talk it over, make sure you're comfortable, and then we can reconvene if it makes the most sense, and come up with a game plan that makes sense for your situation. So if you have any questions at all, don't hesitate to reach out to us. You can visit our website dayhometeam.com. D-A-Y-H-O-M-E-T-E-A-M. That's dayhometeam.com. You can call us, 866-702-9038. Again, 866-702-9038. I'm Jay Day.

Christina Day:

and Christina Day.

Jay Day:

with Real Talk Real Estate. Thanks for tuning in and we'll be back with you in March.

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