LIVE 02_25_26 - Mortgage Rates HIT The Lowest Level In Nearly 4 Years

1
00:00:03,080 --> 00:00:07,160
Happy hump day.
It's that time educated home

2
00:00:07,160 --> 00:00:10,400
buyer, live with Josh myself to
educate you, guide you through

3
00:00:10,400 --> 00:00:13,160
the home buying world while we
talk about real estate mortgage.

4
00:00:13,520 --> 00:00:16,960
Answer your questions live Josh.
Happy Wednesday.

5
00:00:17,080 --> 00:00:20,120
I'm not sure, but when I heard
happy I thought we're getting an

6
00:00:20,120 --> 00:00:23,160
early happy happy day.
We were going to go have green

7
00:00:23,160 --> 00:00:27,360
beer, some corned beef and
cabbage, all the good stuff.

8
00:00:27,480 --> 00:00:29,720
You know, Josh, that's not that
far away.

9
00:00:29,720 --> 00:00:31,920
That's I.
Know it's already in my head.

10
00:00:31,960 --> 00:00:35,160
Three weeks, 3 weeks away, Josh.
My dog already got her Saint

11
00:00:35,160 --> 00:00:36,240
Patrick's Day.
Call her out.

12
00:00:36,240 --> 00:00:38,200
She hasn't worn it yet, but it's
out, it's ready.

13
00:00:38,200 --> 00:00:39,600
It's ready to go.
There you go, ready to go.

14
00:00:39,640 --> 00:00:42,840
You should put it on now.
Is it shamrocks or leprechauns?

15
00:00:42,840 --> 00:00:44,040
I think you can rock that
anytime.

16
00:00:44,040 --> 00:00:46,480
It's shamrocks and beers my dog
loves.

17
00:00:46,640 --> 00:00:48,320
Beer.
Fantastic.

18
00:00:49,080 --> 00:00:52,040
So guys, it's big news, great
news.

19
00:00:52,320 --> 00:00:57,240
Interest rates this past week
had dropped below 6%, I think

20
00:00:57,240 --> 00:01:01,920
for the first time since what a
August of 2022, I believe is

21
00:01:01,920 --> 00:01:05,360
what it was a 3 1/2, just over 3
1/2 years.

22
00:01:05,720 --> 00:01:08,280
So great time to be in the
market.

23
00:01:08,280 --> 00:01:10,920
If you're in the market, if
you're out there refinancing

24
00:01:10,920 --> 00:01:14,400
high of a higher rate, now is a
good time to to start looking at

25
00:01:14,400 --> 00:01:16,480
that once again.
Because again, we have A5 handle

26
00:01:16,480 --> 00:01:19,160
on rates, which is something I
didn't think we would see this

27
00:01:19,160 --> 00:01:21,160
early in the year, Josh, but it
is good news.

28
00:01:21,760 --> 00:01:23,920
So we're going to talk about
that a little bit more in

29
00:01:24,040 --> 00:01:25,360
detail.
We're going to talk about what's

30
00:01:25,360 --> 00:01:28,920
happening in the economy.
But as we always ask, if you

31
00:01:28,920 --> 00:01:31,320
have questions about real
estate, about mortgage, about

32
00:01:32,040 --> 00:01:34,640
home buying in general, now's a
good time to put them in the

33
00:01:34,640 --> 00:01:37,520
comments.
And as we come out of the charts

34
00:01:37,520 --> 00:01:41,760
and kind of going over what's
happening economically, we can

35
00:01:41,800 --> 00:01:45,120
answer those questions and just,
you know, give you what you came

36
00:01:45,120 --> 00:01:46,120
for.
Jeb what?

37
00:01:46,120 --> 00:01:48,800
What if they just have questions
about life in general?

38
00:01:48,800 --> 00:01:52,160
Life advice Can we life?
Advice I you know, I feel like.

39
00:01:52,240 --> 00:01:54,880
Life advice as well.
That you and I could give really

40
00:01:54,880 --> 00:01:55,640
good life.
Advice.

41
00:01:55,640 --> 00:01:58,960
I think we should if you guys if
you need any help, just don't

42
00:01:58,960 --> 00:02:00,600
limit yourself to mortgage and
real estate.

43
00:02:00,600 --> 00:02:02,560
We're here for all life advice
tonight.

44
00:02:02,600 --> 00:02:06,000
If you I mean, in fact, maybe we
should just change what we do.

45
00:02:06,800 --> 00:02:09,320
Like this is like psychology
without a degree.

46
00:02:10,880 --> 00:02:13,000
You guys like I'll be a
psychologist.

47
00:02:13,000 --> 00:02:17,280
You could be a psychiatrist so
you can actually prescribe

48
00:02:17,280 --> 00:02:19,920
medication.
I won't prescribe anything.

49
00:02:20,040 --> 00:02:22,760
I, I'll just stay, you know, out
here and then we'll just give

50
00:02:22,760 --> 00:02:27,040
people advice on, on life.
I'm going to answer to them the

51
00:02:27,040 --> 00:02:29,400
way my dog looks at me.
She looked at me like I know

52
00:02:29,400 --> 00:02:31,600
everything.
I'm just going to answer like I

53
00:02:31,640 --> 00:02:32,920
everything I know.
Everything.

54
00:02:32,920 --> 00:02:35,520
Well, I'll look at, I'll look at
them like my kids look at me

55
00:02:35,520 --> 00:02:39,200
like I know nothing.
So we can, we'll have both sides

56
00:02:39,200 --> 00:02:42,080
of it covered, OK.
But anyway, we appreciate you

57
00:02:42,080 --> 00:02:44,640
guys being here as always.
We do this every Wednesday at

58
00:02:44,640 --> 00:02:48,240
5:00 PM Pacific Standard Time,
have been for the last four plus

59
00:02:48,280 --> 00:02:50,560
years.
We actually have a podcast as

60
00:02:50,560 --> 00:02:52,000
well.
If you're not aware, it's on

61
00:02:52,400 --> 00:02:55,000
Spotify, it's on Apple, it's on
YouTube.

62
00:02:55,400 --> 00:02:57,640
You can go catch us.
We're almost at 10,000 Subs on

63
00:02:57,640 --> 00:03:00,440
that, that Channel.
So appreciate you being there.

64
00:03:00,440 --> 00:03:03,120
If you're watching on the main
channel, Jeb Smith, appreciate

65
00:03:03,120 --> 00:03:04,960
that as well.
But Josh, people didn't come

66
00:03:04,960 --> 00:03:07,840
here to listen to his chat.
They came here to see what's

67
00:03:07,840 --> 00:03:10,480
happening in the world of real
estate and mortgage.

68
00:03:10,520 --> 00:03:15,240
And we do that by talking about
supply and demand.

69
00:03:15,240 --> 00:03:18,080
To start, inventory is what
drives markets.

70
00:03:18,800 --> 00:03:22,920
That imbalance sometimes is what
drives prices up and the

71
00:03:22,920 --> 00:03:25,760
imbalance can drive prices down.
At the moment, what we're seeing

72
00:03:25,760 --> 00:03:30,760
is inventory increase.
So we saw a 10,000 home increase

73
00:03:30,920 --> 00:03:33,880
in single family homes
nationwide over the past week,

74
00:03:33,880 --> 00:03:38,280
went from 690,000 homes, just a
700,000, which again is

75
00:03:38,280 --> 00:03:40,440
progress.
You know, I think that number

76
00:03:40,440 --> 00:03:43,360
was somewhat subdued because of
weather and some other things.

77
00:03:43,360 --> 00:03:48,160
But right now 9.38% more
inventory than we had this time

78
00:03:48,160 --> 00:03:50,280
last year.
We're starting to kind of this

79
00:03:50,280 --> 00:03:52,960
is about the time, Josh, within
the next two weeks that we start

80
00:03:52,960 --> 00:03:56,160
to see some real inventory come
into the market as we hit kind

81
00:03:56,160 --> 00:03:58,640
of those March numbers.
And you can see it based on, you

82
00:03:58,640 --> 00:04:02,000
know, previous years there, how
that uptick really starts to

83
00:04:02,000 --> 00:04:03,360
pick up here in the next couple
of weeks.

84
00:04:03,360 --> 00:04:07,280
So we'll find out, we'll find
out if, if, if, if lower rates

85
00:04:07,280 --> 00:04:11,640
drives more sellers out there in
the in the market and what

86
00:04:11,640 --> 00:04:13,920
happens with buyer demand as
that that takes place.

87
00:04:13,920 --> 00:04:19,320
So another chart here, same
chart again, I like to throw

88
00:04:19,320 --> 00:04:21,480
this in there just because it
has a little bit more context

89
00:04:22,000 --> 00:04:25,160
because it shows what was
happening prior to the pandemic

90
00:04:25,160 --> 00:04:26,920
as well.
And you can see kind of middle

91
00:04:26,920 --> 00:04:30,560
of the road right now.
Inventory is, is, you know,

92
00:04:30,640 --> 00:04:33,720
nicely picking up.
It's not back to those 2019

93
00:04:33,720 --> 00:04:38,400
levels nationwide, but you know,
it's, it's a lot better than we

94
00:04:38,400 --> 00:04:43,520
were in, in 21, which is that
that light green bar at the bar?

95
00:04:43,520 --> 00:04:46,120
Is that turquoise bluish color
at the bottom there?

96
00:04:46,840 --> 00:04:49,320
But we always take a look here
at Orange County in Huntington

97
00:04:49,320 --> 00:04:51,200
Beach as well because that's
where we're located.

98
00:04:51,880 --> 00:04:55,560
Orange County is the top chart
3440 homes on the market.

99
00:04:55,560 --> 00:04:58,400
I told this to someone the other
day and they go, OK, so that's

100
00:04:58,400 --> 00:05:01,040
single family homes.
No, that's single family homes.

101
00:05:01,040 --> 00:05:04,160
That's condos, that's townhomes,
That's everything.

102
00:05:04,240 --> 00:05:08,640
Senior homes, luxury property,
everything is included in that

103
00:05:08,640 --> 00:05:11,800
number.
It it tracking really closely to

104
00:05:11,800 --> 00:05:17,240
last year, Josh, just slightly
above 1.74% increase week over

105
00:05:17,240 --> 00:05:20,680
week.
Hunting Huntington Beach, 209

106
00:05:20,680 --> 00:05:23,160
properties on the market again
includes everything.

107
00:05:23,360 --> 00:05:25,640
We're still below those numbers
from last year, but we did see

108
00:05:25,640 --> 00:05:28,800
an increase 1.44% week over
week.

109
00:05:28,800 --> 00:05:31,960
So again, progress in both
areas, which I like to see.

110
00:05:32,360 --> 00:05:33,600
I like to see more property,
Josh.

111
00:05:33,600 --> 00:05:35,960
I have buyers that are looking
and we can't find it.

112
00:05:36,080 --> 00:05:39,280
And we could talk about the
competitive nature of the market

113
00:05:39,280 --> 00:05:40,840
here after we finish the charts
as well.

114
00:05:41,040 --> 00:05:43,160
Yeah, let's talk about how it's
a little different.

115
00:05:43,160 --> 00:05:46,320
I was on a live with a real
welter and two agents from

116
00:05:46,320 --> 00:05:48,440
different parts of the country
and all having very different

117
00:05:48,440 --> 00:05:49,920
experiences depending on where
they're at.

118
00:05:50,280 --> 00:05:53,000
Well, I would love to hear that
advice as well because it's

119
00:05:53,000 --> 00:05:54,600
different than I thought it
would be.

120
00:05:54,600 --> 00:05:56,640
And, and we'll talk about what,
what that actually means.

121
00:05:56,640 --> 00:05:59,800
So new listings, what happened
when new listings, we actually

122
00:05:59,800 --> 00:06:03,480
saw a little bit of a, well
actually a decent increase year

123
00:06:03,480 --> 00:06:07,560
over year 60,000 versus 53,000.
That's a positive thing.

124
00:06:07,960 --> 00:06:10,880
The last couple of weeks, again
somewhat subdued weather

125
00:06:10,880 --> 00:06:12,560
related.
So now I think those properties

126
00:06:12,560 --> 00:06:15,120
that were probably being held
off or we're going to list

127
00:06:15,120 --> 00:06:17,000
because of weather are now
starting to pop on the market.

128
00:06:17,000 --> 00:06:22,520
So that's a nice increase.
Pending home sales, 59,000

129
00:06:22,520 --> 00:06:27,920
versus 56,000 last year.
Again, more buyer demand, lower

130
00:06:27,920 --> 00:06:33,360
rates, all things that we we
would expect to see it in this

131
00:06:33,360 --> 00:06:35,160
environment.
Properties with price

132
00:06:35,160 --> 00:06:38,560
reductions, again, not something
I really care so much about,

133
00:06:38,560 --> 00:06:43,240
especially this time of year,
but 31.9% compared to last year

134
00:06:43,240 --> 00:06:46,200
at 33%.
And I, I expect that number to

135
00:06:46,200 --> 00:06:50,880
continue to dwindle as we move
through the spring buying

136
00:06:50,880 --> 00:06:53,560
season.
So housing markets where home

137
00:06:53,560 --> 00:06:55,160
prices are falling year over
year.

138
00:06:55,160 --> 00:06:58,280
So a lot of you guys are like,
hey, my market's not doing what

139
00:06:58,280 --> 00:07:00,200
you say it's doing in your
market, Jeb.

140
00:07:00,200 --> 00:07:02,480
And, and we talk about this
often, real estate's local,

141
00:07:02,480 --> 00:07:03,480
right?
So what's happening here in

142
00:07:03,480 --> 00:07:07,480
Southern California might not be
happening in Punta Gorda or in,

143
00:07:07,760 --> 00:07:11,160
you know, Fort Myers or some of
these other markets out there.

144
00:07:11,160 --> 00:07:14,640
And as you kind of look at this,
you know, a lot of these these

145
00:07:14,640 --> 00:07:16,640
areas here are in Florida and
Texas.

146
00:07:16,640 --> 00:07:19,240
Now there's some other markets
that are included in there, but

147
00:07:19,920 --> 00:07:22,120
these are the markets where
we've seen the most inventory

148
00:07:22,120 --> 00:07:24,120
come to the market.
They're also the markets that

149
00:07:24,120 --> 00:07:26,880
saw the biggest increases during
the pandemic.

150
00:07:26,880 --> 00:07:29,760
And so, you know, people were
moving from all these states to

151
00:07:29,760 --> 00:07:34,000
warmer areas and blue to red
and, and all of these things

152
00:07:34,440 --> 00:07:36,760
were factored in there and
prices shot up because there was

153
00:07:36,760 --> 00:07:39,040
a lack of supply, more buyer
demand, all the things we talk

154
00:07:39,040 --> 00:07:41,840
about.
And now you've got insurance

155
00:07:41,840 --> 00:07:46,400
issues, you've got HOA issues,
you've got all tax issues in

156
00:07:46,400 --> 00:07:48,560
some of these areas.
And people are like, yeah, I'm

157
00:07:48,560 --> 00:07:50,960
going to pause a little bit.
Demand is pulled back a little

158
00:07:50,960 --> 00:07:52,520
bit and now things are sitting
so.

159
00:07:53,560 --> 00:07:55,680
Two important questions I have
on this chart, Jed.

160
00:07:56,040 --> 00:07:57,920
So did we I'm.
Jeb, but not Jed.

161
00:07:58,120 --> 00:08:00,600
But he's five, yeah.
Listen, I bat.

162
00:08:00,760 --> 00:08:03,480
I bat 1000.
I always call him Jeb and I

163
00:08:03,480 --> 00:08:05,880
always call you Jed.
So I need to kick one of you out

164
00:08:05,880 --> 00:08:08,160
of my life so I can get names.
Kick me, please.

165
00:08:08,280 --> 00:08:10,200
I want to be the one I want to
be.

166
00:08:10,320 --> 00:08:12,560
I vote me.
You win, you're out.

167
00:08:12,840 --> 00:08:15,480
Perfect.
So did we conclude as you kind

168
00:08:15,480 --> 00:08:17,160
of tipped your hand?
Did we conclude it as Punta

169
00:08:17,160 --> 00:08:19,040
Gorda?
That's what I'm going with.

170
00:08:19,120 --> 00:08:21,840
Okay, we'll go with Punta Gorda.
But now second question, and

171
00:08:21,840 --> 00:08:23,720
this is for you, the audience at
home.

172
00:08:24,600 --> 00:08:28,400
Would you rather be in Punta
Gorda or Boca Raton?

173
00:08:28,400 --> 00:08:31,080
Which if you had to go to
Florida, which is the the better

174
00:08:31,080 --> 00:08:33,400
location and why?
I think Boca is the better

175
00:08:33,400 --> 00:08:34,760
location.
I don't know.

176
00:08:35,080 --> 00:08:36,480
I don't know.
I mean, we're going to find,

177
00:08:36,480 --> 00:08:38,400
we're going to find out and I
might be wrong, I might get

178
00:08:38,400 --> 00:08:40,280
yelled at here.
But anyhow, those are the

179
00:08:40,280 --> 00:08:43,240
markets that aren't doing quite
as well as some other markets.

180
00:08:43,760 --> 00:08:46,320
There's also, you know, some
data that's come out, there's

181
00:08:46,320 --> 00:08:52,560
the recent stat today that
there's 600,000 more buyers then

182
00:08:52,560 --> 00:08:54,880
there are sellers and whatever
else.

183
00:08:54,880 --> 00:08:57,160
But this is another one that
that came out and it's like, you

184
00:08:57,160 --> 00:09:00,760
know, the people with negative
equity is, you know, I forget

185
00:09:00,760 --> 00:09:04,360
what the actual headline was,
but it's 2.1% of outstanding US

186
00:09:04,360 --> 00:09:07,120
mortgages are quote UN quote
underwater.

187
00:09:08,360 --> 00:09:10,400
And so you can see where these
are located.

188
00:09:10,400 --> 00:09:13,440
A lot of them are in the areas
that we just saw on that

189
00:09:13,440 --> 00:09:15,440
previous chart that have pulled
back the most.

190
00:09:15,440 --> 00:09:18,720
So I throw this in there just
because people talk about it,

191
00:09:18,720 --> 00:09:21,560
but you can see, you know, for
the majority of the United

192
00:09:21,560 --> 00:09:24,640
States out there, it's it's not
really a problem.

193
00:09:25,000 --> 00:09:28,600
To to get in the weeds, Jeb with
with the two charts that you

194
00:09:28,600 --> 00:09:32,560
just so, so the last just chart
showed home prices falling and

195
00:09:32,560 --> 00:09:35,960
we're talking most of these
markets are less than 2% and the

196
00:09:35,960 --> 00:09:38,600
average down payment, median
down payment, I believe the

197
00:09:38,600 --> 00:09:43,360
number is like 7-8 percent.
So it's like, how are any of

198
00:09:43,360 --> 00:09:47,880
these markets like I always look
at this, even at the the height

199
00:09:47,880 --> 00:09:50,800
of COVID mania when prices were
going bonkers, you would hear

200
00:09:50,800 --> 00:09:53,840
this and say 1.3% of homes in
the US are underwater.

201
00:09:53,840 --> 00:09:56,320
And like how, how did that
person ever get underwater?

202
00:09:56,640 --> 00:09:58,960
I need to dig into the
methodology 'cause I I still.

203
00:09:59,320 --> 00:10:02,360
Even I, I think, I think some of
them now, right, some people

204
00:10:02,360 --> 00:10:07,120
that bought in, in parts of 22
and we're still paying high

205
00:10:07,120 --> 00:10:09,080
prices.
Those markets have pulled back,

206
00:10:09,080 --> 00:10:11,880
you know, like Texas, like we
had a listener of the show here

207
00:10:11,880 --> 00:10:14,640
that was having trouble selling
his property because you know,

208
00:10:14,640 --> 00:10:18,920
he had bought it for I think 450
and he was ended up selling it

209
00:10:18,920 --> 00:10:22,520
for 425 or whatever the number
was because just couldn't get

210
00:10:22,520 --> 00:10:23,640
rid of it.
There was there was so much

211
00:10:23,640 --> 00:10:26,360
competition out there in the
market with new construction and

212
00:10:26,360 --> 00:10:28,640
some other things that he just
couldn't get the price that he

213
00:10:28,640 --> 00:10:32,000
had originally paid.
So it definitely it happens, but

214
00:10:32,000 --> 00:10:35,920
it's not nearly as common as the
market wants you to believe it

215
00:10:35,920 --> 00:10:37,880
is.
But again, kind of going back to

216
00:10:37,880 --> 00:10:42,600
the 100 major metros here that
the ones that are, you know,

217
00:10:42,600 --> 00:10:46,720
having the highest percentages
of, of market, I mean, of

218
00:10:46,720 --> 00:10:49,840
mortgages that are underwater
here just kind of throws them

219
00:10:49,840 --> 00:10:51,160
out in order.
They're not going to list them.

220
00:10:51,160 --> 00:10:53,920
You can take a look at it if it
applies to you or if you're, you

221
00:10:53,920 --> 00:10:57,040
know, curious.
But again, Texas and Florida are

222
00:10:57,040 --> 00:11:00,080
and Louisiana are kind of
running the show there.

223
00:11:00,200 --> 00:11:03,240
Colorado Springs kind of dips
its, you know, toes in there a

224
00:11:03,240 --> 00:11:05,440
little bit kind of in the middle
of the the pack.

225
00:11:05,440 --> 00:11:10,200
But for the most part it's, it's
all that that S you know, East

226
00:11:10,320 --> 00:11:14,040
market, I guess Texas is in
Southeast, but kind of throwing

227
00:11:14,040 --> 00:11:16,600
it in there so.
Anyway, what I've what I've

228
00:11:16,600 --> 00:11:19,800
learned about my question about
Boca Raton and Punta Gorda is

229
00:11:19,800 --> 00:11:22,840
that either our audience is not
Florida experts or they don't

230
00:11:22,840 --> 00:11:24,240
care about my questions.
One of the.

231
00:11:24,320 --> 00:11:26,120
I think it's probably the second
part.

232
00:11:26,520 --> 00:11:27,920
Probably both.
Yeah, it's.

233
00:11:27,920 --> 00:11:31,360
Probably the second part.
Nominal home prices, Josh, Why?

234
00:11:31,360 --> 00:11:35,480
What are nominal home prices,
First off, and why is this

235
00:11:35,480 --> 00:11:37,760
important?
So unadjusted for inflation,

236
00:11:37,760 --> 00:11:39,080
this is what home prices have
done.

237
00:11:39,080 --> 00:11:41,600
So we would expect they would
get more expensive over time

238
00:11:41,600 --> 00:11:44,120
because we know with inflation
everything gets more expensive

239
00:11:44,120 --> 00:11:46,160
with time.
People like to point to this

240
00:11:46,160 --> 00:11:48,360
chart and go over to the right
and go, this is we're at a peak,

241
00:11:48,360 --> 00:11:51,480
we are at an all time high.
They have to crash, they have to

242
00:11:51,480 --> 00:11:53,880
come down.
So the next three charts here

243
00:11:53,880 --> 00:11:57,800
kind of do a good job of walking
us through how we've been saying

244
00:11:57,800 --> 00:12:00,760
they're going to normalize
without a home crash.

245
00:12:01,080 --> 00:12:03,240
So I put the the yellow arrow
line in there.

246
00:12:03,240 --> 00:12:06,320
This is from Calculated risk.
Golden Bride does a good job of

247
00:12:06,320 --> 00:12:09,200
tracking this stuff.
This is using Case Shiller as

248
00:12:09,200 --> 00:12:13,160
the red line and the the red.
The red line is Case Shiller, A

249
00:12:13,400 --> 00:12:17,000
composite 20 city index, and the
blue is the the national index

250
00:12:17,040 --> 00:12:18,440
that they track pretty
similarly.

251
00:12:18,880 --> 00:12:21,840
But if we look, really what we
need to be looking at is that

252
00:12:21,840 --> 00:12:25,400
yellow line is kind of where
they track over time.

253
00:12:25,400 --> 00:12:27,640
So there's a gap, right.
There's a gap with where home

254
00:12:27,640 --> 00:12:30,520
prices are where we kind of are
above trend where we would

255
00:12:30,520 --> 00:12:34,880
expect to be at a moment in time
with that long term uptrend.

256
00:12:34,880 --> 00:12:39,120
So we can adjust for this a
little bit by looking at real

257
00:12:39,120 --> 00:12:41,880
house prices.
So now real house prices adjust

258
00:12:41,880 --> 00:12:44,600
for inflation.
So if home prices just kept pace

259
00:12:44,600 --> 00:12:48,280
with inflation, we would think
in terms of this being just a

260
00:12:48,280 --> 00:12:52,040
flat line.
Yet we still see it a little bit

261
00:12:52,040 --> 00:12:54,600
more fluctuation over time up
and down.

262
00:12:54,880 --> 00:12:58,760
But that blue or Teeley line I
put in there shows us that it

263
00:12:58,760 --> 00:13:03,000
also even real home prices trend
upwards over time and again, we

264
00:13:03,000 --> 00:13:06,320
still have a gap.
Those little red and green lines

265
00:13:06,320 --> 00:13:08,360
that I put in there that I
wanted to show you is is that

266
00:13:08,360 --> 00:13:10,680
trend over time.
When we look at technical

267
00:13:10,680 --> 00:13:12,320
analysis, we were looking at a
chart.

268
00:13:12,600 --> 00:13:16,040
You can tell something is in an
uptrend or moving upwards when

269
00:13:16,040 --> 00:13:19,000
we have higher lows and higher
highs.

270
00:13:19,000 --> 00:13:22,240
So every time we hit a peak it
it ends up higher and then we

271
00:13:22,240 --> 00:13:24,120
don't go back to where the lows
were.

272
00:13:24,280 --> 00:13:27,680
We go back to a higher low from
there.

273
00:13:28,000 --> 00:13:32,320
So what you can see is over time
over what this is really showing

274
00:13:32,320 --> 00:13:35,080
since 2023, we've really gone
sideways a little bit of a

275
00:13:35,080 --> 00:13:42,960
correction and over time that
teal line there, the Aqua line

276
00:13:42,960 --> 00:13:46,400
will will catch up and that's
most likely what we're seeing in

277
00:13:46,400 --> 00:13:50,120
real prices.
So home prices can go up one 2%

278
00:13:50,120 --> 00:13:53,120
a year and you have two 3%
inflation and we're trading

279
00:13:53,120 --> 00:13:57,200
sideways in real home prices.
But that trend over the long

280
00:13:57,200 --> 00:14:01,120
haul to what's normal goes up.
So again, in terms of of

281
00:14:01,120 --> 00:14:04,480
thinking in terms of what normal
is built through another chart

282
00:14:04,480 --> 00:14:08,800
in here that's interesting.
The price to rent ratio, so from

283
00:14:08,880 --> 00:14:12,200
this was originally got tracked
what does it look like, 83, so

284
00:14:12,200 --> 00:14:16,520
83 through 89.
The ratio of rents to home

285
00:14:16,520 --> 00:14:18,960
prices was was pretty consistent
and then it's been very

286
00:14:18,960 --> 00:14:21,240
volatile, but a pretty solid
uptrend.

287
00:14:21,760 --> 00:14:24,840
This has corrected.
Home prices have come up more

288
00:14:24,840 --> 00:14:27,360
than rents have stopped going
up.

289
00:14:27,680 --> 00:14:31,240
So that ratio is correcting.
And again, I do expect this is

290
00:14:31,240 --> 00:14:34,960
something that it will get more
expensive over time to own

291
00:14:34,960 --> 00:14:37,640
versus renting.
But this has normalized and will

292
00:14:37,640 --> 00:14:40,640
continue to normalize until the
the red and the green line there

293
00:14:40,920 --> 00:14:45,240
come back into contact with the
Aqua Aero line there.

294
00:14:46,080 --> 00:14:48,240
Just going through, we didn't
have a lot of data this week,

295
00:14:48,240 --> 00:14:52,560
Jeb, So I don't have a lot of
good newsy charts, but this here

296
00:14:53,160 --> 00:14:55,840
showing the price of goods
sensitive to tariffs.

297
00:14:56,160 --> 00:15:00,320
This line over here on the right
where it shows Liberation Day.

298
00:15:00,320 --> 00:15:02,000
What's happened since Liberation
Day?

299
00:15:02,320 --> 00:15:04,400
So this is clothing and
footwear, furnishings and

300
00:15:04,400 --> 00:15:07,200
durable goods, sports and
recreational vehicles and new

301
00:15:07,200 --> 00:15:09,240
auto vehicles.
All those are very sensitive to

302
00:15:09,240 --> 00:15:14,480
tariffs and during COVID we had
seen those all kind of spike and

303
00:15:14,480 --> 00:15:21,640
go upwards in prices and they
had begun crept up a little bit.

304
00:15:21,640 --> 00:15:25,040
It's it's nothing like that
spike during COVID, but

305
00:15:25,040 --> 00:15:28,880
definitely trending upwards
along the same lines.

306
00:15:28,880 --> 00:15:32,480
This one was interesting to me,
Jeb, maybe someone can explain

307
00:15:32,480 --> 00:15:35,720
this to, to us at the very top.
These are all things that have

308
00:15:35,720 --> 00:15:38,200
been heavily influenced by
inflation.

309
00:15:38,200 --> 00:15:41,240
What's risen the most in the US
from 2019 to 2025?

310
00:15:41,240 --> 00:15:43,720
Well, the top of the list, kind
of the least health insurance,

311
00:15:44,000 --> 00:15:46,680
your health insurance.
And we, I'm sure we have that on

312
00:15:46,680 --> 00:15:49,880
here somewhere.
But the very top one is new cars

313
00:15:49,880 --> 00:15:52,960
and trucks.
But then at the bottom, the two

314
00:15:52,960 --> 00:15:55,120
that have gone up the most, two
of the three that have gone up

315
00:15:55,120 --> 00:15:58,280
the most, car maintenance and
repair and car insurance.

316
00:15:58,280 --> 00:16:00,680
And people always say, well the
car insurance cost more to

317
00:16:00,680 --> 00:16:03,560
maintain and repair.
Well, if the car itself has only

318
00:16:03,560 --> 00:16:07,040
gone up 20%, I would love if one
of you geniuses can explain to

319
00:16:07,040 --> 00:16:10,280
me, because it's way above my
pay grade why car maintenance

320
00:16:10,280 --> 00:16:14,920
and repair and car insurance
have been much, much higher than

321
00:16:14,920 --> 00:16:16,560
that.
But you can just see it's, it's

322
00:16:16,560 --> 00:16:19,560
pretty consistent and these are
all things that that we need

323
00:16:19,560 --> 00:16:21,560
and, and use on a day-to-day
basis.

324
00:16:21,880 --> 00:16:25,720
And it hasn't been super helpful
with that inflation.

325
00:16:27,040 --> 00:16:30,400
This chart here is the ratio of
debt to GDP.

326
00:16:30,400 --> 00:16:33,760
And you can see from 1997
through about 2010, pretty

327
00:16:33,760 --> 00:16:38,960
consistent where that's SAT.
And then a heavy move upwards.

328
00:16:38,960 --> 00:16:42,520
And definitely during that COVID
period, what we had seen about a

329
00:16:42,520 --> 00:16:45,960
two year period where the US
gross national debt, the total

330
00:16:45,960 --> 00:16:48,880
national debt had had been
decreasing relative to GDP.

331
00:16:49,080 --> 00:16:51,960
But that yellow arrow that I
threw in there on the right, we

332
00:16:51,960 --> 00:16:54,680
don't want to see that.
Like this really needs to be

333
00:16:54,680 --> 00:16:57,760
normalizing overtime.
And it's not because our

334
00:16:57,760 --> 00:17:01,400
politicians don't seem to care,
no matter which party they're

335
00:17:01,400 --> 00:17:03,120
in.
They like spending more than

336
00:17:03,120 --> 00:17:06,839
they like moderating that
spending and getting debt to GDP

337
00:17:06,839 --> 00:17:10,200
under control.
Always like to look at at true

338
00:17:10,200 --> 00:17:12,319
inflation.
So it hit a really really low

339
00:17:12,319 --> 00:17:14,440
level a few weeks ago.
It's a .94.

340
00:17:14,680 --> 00:17:16,920
That's still much much lower
than what the government is

341
00:17:16,920 --> 00:17:21,000
reporting at 2.4.
This will be in interesting to

342
00:17:21,000 --> 00:17:22,800
watch overtime.
The Feds preferred measure is

343
00:17:22,800 --> 00:17:25,599
PCE.
These guys also track that and

344
00:17:25,599 --> 00:17:28,680
that's at 1.66.
But both of them showing well

345
00:17:28,680 --> 00:17:31,200
below 2%.
But this is a volatile data data

346
00:17:31,200 --> 00:17:33,400
series.
We need to see it stay there for

347
00:17:33,400 --> 00:17:37,080
a period of time.
But it does appear that

348
00:17:37,120 --> 00:17:39,760
inflation is moving in the right
direction.

349
00:17:39,760 --> 00:17:42,520
Just takes time to see it.
I wanted to throw this in here,

350
00:17:42,520 --> 00:17:45,000
Jeb.
We're the 98% chance of nothing

351
00:17:45,000 --> 00:17:47,440
happening at the March meeting
of the Fed is.

352
00:17:47,440 --> 00:17:49,440
This an old chart or did you
just pull this today?

353
00:17:50,040 --> 00:17:53,480
Today.
Oh wow, because yeah, for a

354
00:17:53,480 --> 00:17:56,280
while it was looking like July
was going to be the cut, and now

355
00:17:56,280 --> 00:17:59,680
it's showing June again.
Well, 51%.

356
00:18:00,000 --> 00:18:01,560
Yeah.
But I mean, it was, it wasn't

357
00:18:01,560 --> 00:18:03,120
even in there.
It was, it was all the way to

358
00:18:03,120 --> 00:18:05,200
June, I mean July.
But yeah, anyway.

359
00:18:05,240 --> 00:18:08,960
Yeah, no, I grabbed this today.
So 98% chance for next month's

360
00:18:08,960 --> 00:18:12,400
meeting, 83 chance of nothing at
the meeting after that.

361
00:18:12,640 --> 00:18:14,880
And then it's basically a coin
toss for June.

362
00:18:15,160 --> 00:18:17,440
So the market's basically
expecting somewhere between June

363
00:18:17,440 --> 00:18:19,560
and September, we'll get a
quarter point cut.

364
00:18:19,600 --> 00:18:22,000
And then somewhere between
October and December, the last

365
00:18:22,000 --> 00:18:24,240
two meetings of the year,
another quarter point cut.

366
00:18:24,560 --> 00:18:27,720
But that data is going to tell
us what happened.

367
00:18:27,720 --> 00:18:30,720
So as we get news, unlike weeks
like this where we've had no

368
00:18:30,720 --> 00:18:33,880
news, we'll be here to, to break
it down for you guys.

369
00:18:34,160 --> 00:18:37,960
So the two Violet lines, we were
in an uptrend there from October

370
00:18:37,960 --> 00:18:42,520
basically through about 3 weeks
ago, 4 weeks ago when we finally

371
00:18:42,520 --> 00:18:45,240
kind of kind of got back in.
And even this, this entire range

372
00:18:45,240 --> 00:18:48,760
from this chart is from like 4%
up to 4.3.

373
00:18:48,760 --> 00:18:52,200
And that 4.2 to 4.3 was only
about 10 days we were up there.

374
00:18:52,880 --> 00:18:56,600
But the green chart there, the
green channel there shows a

375
00:18:56,600 --> 00:18:59,920
pretty rapid drop in in 10 year
yields.

376
00:19:00,360 --> 00:19:04,080
What I would say is, again, this
is a narrow range in total.

377
00:19:04,320 --> 00:19:08,680
So it's not telling us a lot and
until we break below 4%, we're

378
00:19:08,720 --> 00:19:11,680
we're kind of range bound.
You you saw from the chart and

379
00:19:11,680 --> 00:19:13,960
here we can, we can look here
with Mortgage News Daily,

380
00:19:14,920 --> 00:19:17,000
everything in the headlines is a
little bit delayed.

381
00:19:17,000 --> 00:19:19,400
So you're seeing things, hey,
we're below 6%.

382
00:19:19,400 --> 00:19:21,800
We got A5 handle on it.
Mortgage News Daily yesterday

383
00:19:21,800 --> 00:19:24,560
was a 5.99 and it's a point O
one over there.

384
00:19:24,560 --> 00:19:28,160
It's right there at 6%.
So it's this slow little grind

385
00:19:28,160 --> 00:19:31,480
downwards as the market becomes
convinced that inflation is

386
00:19:31,480 --> 00:19:34,560
moderating and that the jobs
market is a little bit weaker

387
00:19:34,840 --> 00:19:38,000
than people consider.
But 30 year fix for most folks

388
00:19:38,000 --> 00:19:40,720
would be right in that range of
of 6%, especially if you have

389
00:19:40,720 --> 00:19:43,320
better credit, bigger down
payments, FHA and VA about

390
00:19:43,320 --> 00:19:46,920
5.625, somewhat better with
better scores, somewhat worse

391
00:19:47,200 --> 00:19:48,960
with worse.
But anyway, you cut it, there's

392
00:19:48,960 --> 00:19:51,880
definitely opportunity there.
And there's a lot of folks with

393
00:19:51,880 --> 00:19:55,760
rates in the the high sixes, low
sevens that should be taking a

394
00:19:55,760 --> 00:20:00,040
look at it and and running
through the numbers to see what

395
00:20:00,040 --> 00:20:05,800
they can do.
All right, guys, it is that time

396
00:20:06,760 --> 00:20:11,280
I'm answering some questions.
So let's see here if I can get

397
00:20:11,280 --> 00:20:14,600
this to to work without me
having to to finagle too much.

398
00:20:14,600 --> 00:20:18,200
Josh, you're like the size of an
Ant over here on my screen.

399
00:20:18,520 --> 00:20:22,200
What is this, a school for ants?
I know, but it's actually

400
00:20:22,200 --> 00:20:23,000
prefer.
Yeah.

401
00:20:23,000 --> 00:20:24,840
You know, there we go, Josh.
I'm just going to leave it.

402
00:20:24,840 --> 00:20:27,000
I'm going to leave you like an
Ant because you know, it's, it's

403
00:20:28,640 --> 00:20:32,120
you're more tolerable that way,
you know, but anyhow, let's

404
00:20:32,120 --> 00:20:34,360
let's do this.
So we've kind of mentioned I

405
00:20:34,360 --> 00:20:37,480
kind of started kind of broke it
in there earlier when we were

406
00:20:37,480 --> 00:20:38,880
talking about what's happening
in the market.

407
00:20:38,880 --> 00:20:41,360
So let's talk about what's
happening here in Southern

408
00:20:41,360 --> 00:20:43,160
California or what I've
experienced here in Southern

409
00:20:43,160 --> 00:20:46,200
California.
So expectation for me, Josh, was

410
00:20:46,920 --> 00:20:50,200
home prices kind of moving
sideways starting the year, a

411
00:20:50,200 --> 00:20:53,960
little bit more inventory, buyer
demand picking up all of the

412
00:20:53,960 --> 00:20:58,400
things that we've kind of seen.
The one surprise for me so far

413
00:20:58,400 --> 00:21:01,800
has been the number of offers on
properties.

414
00:21:02,080 --> 00:21:04,240
I realize there's still a lack
of inventory out there.

415
00:21:04,240 --> 00:21:06,960
It's early in the year, right?
Inventory hasn't really started

416
00:21:06,960 --> 00:21:11,080
to pick up and it typically
doesn't until, I mean about now

417
00:21:11,080 --> 00:21:13,280
through May, June, right?
That's when we see the most

418
00:21:13,280 --> 00:21:16,520
inventory.
But I am surprised by the homes

419
00:21:16,520 --> 00:21:20,200
that my clients are interested
in and how much activity is on

420
00:21:20,200 --> 00:21:22,560
these properties with regards to
showings, with regards to

421
00:21:22,560 --> 00:21:24,960
offers, open houses, the whole
thing.

422
00:21:24,960 --> 00:21:28,120
I mean, so just for context, and
this is anecdotal, right?

423
00:21:28,120 --> 00:21:31,200
This is me, my experience, my
clients here Orange County and

424
00:21:31,200 --> 00:21:32,320
this isn't just Huntington
Beach.

425
00:21:32,320 --> 00:21:35,200
So I have some clients looking
in South Orange County, some

426
00:21:35,200 --> 00:21:39,840
clients looking in Downey
Norwalk area.

427
00:21:39,840 --> 00:21:43,040
So a little bit of LA County.
Everything has multiple offers.

428
00:21:44,240 --> 00:21:47,000
Three out of the four offers I
wrote this week, one got

429
00:21:47,000 --> 00:21:52,240
accepted so can happy for them.
The other and that was quite a

430
00:21:52,240 --> 00:21:54,240
bit over the asking price.
My clients really wanted that

431
00:21:54,240 --> 00:21:56,440
property.
They went very aggressive and

432
00:21:56,440 --> 00:22:01,320
got it other property, Josh, we
got answer back on one today.

433
00:22:01,320 --> 00:22:04,160
My clients went it was 1,000,005
purchase.

434
00:22:04,680 --> 00:22:07,920
To be completely honest looking
on paper, the price to me looked

435
00:22:07,920 --> 00:22:10,320
a little bit high and not I
didn't see a lot of comps to

436
00:22:10,320 --> 00:22:14,280
even justify 15, but thought hey
it's a nice house, great area,

437
00:22:14,280 --> 00:22:17,880
so on and so forth.
Clients wanted to write at 155

438
00:22:18,720 --> 00:22:21,880
for the counter offer.
We shorten contingencies 21

439
00:22:21,880 --> 00:22:23,520
days.
I mean, I'm sorry, shorten

440
00:22:23,520 --> 00:22:27,880
escrow to 21 days per their
request in the counter offer and

441
00:22:27,880 --> 00:22:31,360
a 10 days on contingencies.
We didn't get it.

442
00:22:31,960 --> 00:22:35,800
We didn't get accepted.
Surprising to me just how

443
00:22:35,800 --> 00:22:39,880
aggressive some of these price
points are right now this early

444
00:22:39,880 --> 00:22:41,440
on.
Now does that mean home prices

445
00:22:41,440 --> 00:22:45,040
are going to shoot up?
No, but there is buyers out

446
00:22:45,040 --> 00:22:48,560
there that have been pin up and
or want certain things and I'm

447
00:22:48,560 --> 00:22:51,000
seeing it right now and it's
it's not fun.

448
00:22:51,160 --> 00:22:52,720
So I've got I've got two
thoughts here.

449
00:22:52,720 --> 00:22:56,440
Cosign and and Counterpoint have
a client looking in.

450
00:22:56,440 --> 00:22:59,120
It is actually represented by an
agent who who found us through

451
00:22:59,120 --> 00:23:01,760
the show.
They're looking in San Marcos

452
00:23:01,800 --> 00:23:04,800
about 1.2 million, the exact
same experience you were talking

453
00:23:04,800 --> 00:23:06,760
about.
They are asking for some seller

454
00:23:06,760 --> 00:23:08,120
concessions, which makes it
harder.

455
00:23:08,600 --> 00:23:11,240
If you look at Redfin where it
says the little thing says San

456
00:23:11,240 --> 00:23:15,600
Marcos is, is a tight market,
homes are selling within 14 days

457
00:23:15,600 --> 00:23:18,000
or some number like that.
That's what we're seeing.

458
00:23:18,040 --> 00:23:19,880
The things that are coming on
the market that are nice, that

459
00:23:19,880 --> 00:23:22,920
they like, that are priced
reasonably, all selling quickly

460
00:23:22,920 --> 00:23:24,320
and they're having a hard time
getting these what?

461
00:23:24,320 --> 00:23:25,320
Market, was that again?
I'm sorry.

462
00:23:25,560 --> 00:23:27,000
San Marcos, CA.
Got it.

463
00:23:27,000 --> 00:23:28,840
OK, San Diego.
Yep, Yep.

464
00:23:28,960 --> 00:23:33,760
And that's at 1.2, have another
buyer at 1.5 to 1.7, the

465
00:23:33,760 --> 00:23:35,680
different things they've been
looking at in Cardiff by the

466
00:23:35,680 --> 00:23:38,760
sea, also down San Diego.
And these things just come and

467
00:23:38,760 --> 00:23:40,680
go and they're getting, they're
not getting 20 offers, but

468
00:23:40,680 --> 00:23:43,400
they're getting 3 or 4.
So what are the agents doing?

469
00:23:43,400 --> 00:23:46,160
They're playing all three of
those four of those off of each

470
00:23:46,160 --> 00:23:47,800
other and someone's getting
aggressive.

471
00:23:47,800 --> 00:23:51,360
So we've missed out with on
multiple properties with both of

472
00:23:51,360 --> 00:23:53,320
them.
And the flip side, vetted VA

473
00:23:53,320 --> 00:23:58,920
live last night, a realtor in
DFW, a lender in Salina, Texas,

474
00:23:58,920 --> 00:24:02,160
which I think is a couple hours
outside of Dallas and then

475
00:24:02,720 --> 00:24:07,360
another one in Colorado Springs.
They're saying basically DFW go

476
00:24:07,360 --> 00:24:10,720
in and ask for 3% concessions on
everything and you're probably

477
00:24:10,720 --> 00:24:12,520
going to get it.
Or you can aggressively cut

478
00:24:12,520 --> 00:24:18,040
price or the, the the loan
officer in Salina is basically

479
00:24:18,040 --> 00:24:21,560
saying he lost four pre approved
buyers this month because they

480
00:24:21,560 --> 00:24:23,960
went out and got such an
aggressive offer from a builder.

481
00:24:23,960 --> 00:24:26,440
And even local builders, not big
national builders with big local

482
00:24:26,440 --> 00:24:30,320
builders are competing with that
and saying we will give you the

483
00:24:30,320 --> 00:24:32,240
the world if you'll use our
lender.

484
00:24:32,240 --> 00:24:35,920
He lost four buyers over in
Colorado Springs, not quite to

485
00:24:35,920 --> 00:24:37,880
that point, but they're saying,
yeah, we're definitely we're

486
00:24:37,920 --> 00:24:41,040
we're getting concessions pretty
reasonable for you to be able to

487
00:24:41,040 --> 00:24:43,480
get a home.
But even that, in both of those

488
00:24:43,480 --> 00:24:46,560
markets, if you get something
beautiful, turnkey, HGTV ready

489
00:24:46,560 --> 00:24:48,960
that everyone likes, it's going
to get two or three offers and

490
00:24:48,960 --> 00:24:51,400
it's going to sell that price
pretty quickly.

491
00:24:51,720 --> 00:24:53,160
And that's essentially what I'm
seeing.

492
00:24:53,160 --> 00:24:57,720
It's, it's the nice pretty fixed
up stuff that is moving fairly

493
00:24:57,720 --> 00:24:59,160
quickly.
So if you're out there, you're

494
00:24:59,160 --> 00:25:01,400
looking at that stuff, just
know, I mean, it, it's not the

495
00:25:01,400 --> 00:25:03,280
same.
Find what's going on in your

496
00:25:03,280 --> 00:25:04,800
market.
Remember real estate's local and

497
00:25:04,800 --> 00:25:08,160
just kind of, you know, and, and
base it off what's happening in

498
00:25:08,160 --> 00:25:13,000
those environments.
And it's, it's, it sucks because

499
00:25:13,000 --> 00:25:16,000
you know, you have clients that,
that, that are, you know, being

500
00:25:16,000 --> 00:25:19,040
aggressive and doing all the
right things, but unfortunately,

501
00:25:19,040 --> 00:25:21,280
you know, you just don't know
what somebody else is willing to

502
00:25:21,280 --> 00:25:22,960
do.
And it's hard to compete

503
00:25:22,960 --> 00:25:25,440
sometimes.
So just know activity is, is out

504
00:25:25,440 --> 00:25:28,160
there, especially in, in certain
markets.

505
00:25:28,160 --> 00:25:31,000
So, but if you have questions,
now's a good time to put them

506
00:25:31,000 --> 00:25:33,720
in.
So to answer this question,

507
00:25:33,720 --> 00:25:36,040
somebody said, would would you
say it's a buyer's market or a

508
00:25:36,040 --> 00:25:37,880
seller's market?
I would say it depends, right?

509
00:25:37,880 --> 00:25:40,880
We just went over a couple
different markets and I wouldn't

510
00:25:40,880 --> 00:25:43,320
say Huntington Beach is
necessarily a seller's market,

511
00:25:44,960 --> 00:25:48,720
but I would say sellers have
still somewhat of an advantage

512
00:25:48,800 --> 00:25:52,920
on certain properties, right?
I think it's geared more towards

513
00:25:52,920 --> 00:25:54,760
sellers than it is buyers for
sure.

514
00:25:55,640 --> 00:25:57,920
But it, there's some balance, a
little bit of balance.

515
00:25:58,880 --> 00:26:03,280
But this, this scale's tilted
slightly towards sellers I think

516
00:26:03,280 --> 00:26:06,080
at the moment, especially in
certain price points, whereas

517
00:26:06,480 --> 00:26:08,640
other markets, like you said,
Josh, parts of Texas, parts of

518
00:26:08,640 --> 00:26:11,320
these markets, it's definitely
in favor of buyers.

519
00:26:11,320 --> 00:26:14,560
So it it's definitely local, so,
so make sure you're paying

520
00:26:14,560 --> 00:26:16,000
attention to to what's happening
there.

521
00:26:16,560 --> 00:26:19,320
And make sure that your realtor.
That's why I like to say make

522
00:26:19,320 --> 00:26:22,160
sure your realtor is good with
the data and doesn't just give

523
00:26:22,160 --> 00:26:24,480
you their opinion.
Shows you the numbers.

524
00:26:24,480 --> 00:26:26,800
What?
Jeb has 15 different charts we

525
00:26:26,800 --> 00:26:29,920
just went through and not
national charts, charts local to

526
00:26:29,920 --> 00:26:32,920
neighborhoods to Zips.
Everyone has good data.

527
00:26:32,960 --> 00:26:34,640
Or they should.
If they're just telling you all

528
00:26:34,640 --> 00:26:37,360
this is what I'm seeing, take
that stuff with a grain of salt.

529
00:26:37,360 --> 00:26:39,800
Yeah, anecdotal information of
what they're seeing in the

530
00:26:39,800 --> 00:26:41,840
market is important.
But they should be able to show

531
00:26:41,840 --> 00:26:44,920
you the data of why homes in
this neighborhood, how long

532
00:26:44,920 --> 00:26:47,920
they're on the market, what they
sell, average of list price,

533
00:26:48,240 --> 00:26:51,000
anything else that they should
be looking for from their real

534
00:26:51,000 --> 00:26:53,040
estate professional, Jeb.
Well, I mean, Josh, like you

535
00:26:53,040 --> 00:26:55,120
need people that understand
neighborhoods and markets and

536
00:26:55,120 --> 00:26:58,080
why homes, some sell at a higher
price per square foot versus

537
00:26:58,080 --> 00:27:01,560
others and why, you know, for
example, I've got a property

538
00:27:01,560 --> 00:27:04,480
listed in Huntington Beach here
that it, when you look at it,

539
00:27:04,480 --> 00:27:07,400
it, it needs to be remodeled.
It's a, it's a, it's a remodeled

540
00:27:07,400 --> 00:27:09,080
property.
We get a lot of investor

541
00:27:09,080 --> 00:27:11,200
activity on it because they see
a flip opportunity.

542
00:27:11,200 --> 00:27:13,120
So they're coming at a price
that's stupid.

543
00:27:13,800 --> 00:27:17,320
What they don't understand is
that community, there's a lot of

544
00:27:17,320 --> 00:27:20,360
older demographic that is
looking for a single level floor

545
00:27:20,360 --> 00:27:23,840
plan and not necessarily that
they want a project, but they're

546
00:27:23,840 --> 00:27:27,400
OK with a project and based on
where it's priced and them doing

547
00:27:27,400 --> 00:27:30,320
the work with their contractor,
they'll still have equity in

548
00:27:30,320 --> 00:27:32,280
that property.
So this isn't geared for that.

549
00:27:32,280 --> 00:27:34,440
And I think you need an agent
that understands that,

550
00:27:34,560 --> 00:27:37,280
especially from a seller side,
so that they're not just

551
00:27:37,440 --> 00:27:39,680
pressing on you saying, hey,
listen, these are the only

552
00:27:39,680 --> 00:27:41,960
offers we're getting.
This must be what it's worth

553
00:27:41,960 --> 00:27:45,400
because if that were the case,
we could, you know, I would told

554
00:27:45,400 --> 00:27:49,960
my seller to, to sell this for,
you know, 100,100 and $50,000

555
00:27:49,960 --> 00:27:53,680
less in some cases than this.
And so that's not the buyer,

556
00:27:53,720 --> 00:27:55,560
right?
And so for me, it's telling my

557
00:27:55,560 --> 00:27:57,160
client, hold on, we're going to
get it.

558
00:27:57,600 --> 00:27:59,880
You know, it, it might not be
the exact price, but we're going

559
00:27:59,880 --> 00:28:01,560
to get a lot closer to it than
some of these offers.

560
00:28:01,560 --> 00:28:03,520
And so I think you need to have
that agent that understands

561
00:28:03,520 --> 00:28:05,080
that.
And from a buyer's side, you

562
00:28:05,080 --> 00:28:07,720
kind of need that same agent as
well, because, you know, they

563
00:28:07,960 --> 00:28:11,120
help provide some context as to
why things are the way they are.

564
00:28:12,200 --> 00:28:15,760
Josh, is it better to do a
refinance or recast?

565
00:28:15,760 --> 00:28:21,480
And when should you do either?
Current rate 6.875, purchase

566
00:28:21,480 --> 00:28:25,640
price was 257.
It doesn't really matter.

567
00:28:25,800 --> 00:28:27,760
The loan amount's 198, none of
that matters.

568
00:28:27,760 --> 00:28:30,360
So when should you refinance
versus recast Well.

569
00:28:30,600 --> 00:28:32,840
The loan amount doesn't matter
and in Palm Bay matters.

570
00:28:32,840 --> 00:28:35,600
In Palm Bay, FL was there
another Palm Bay?

571
00:28:36,400 --> 00:28:39,320
Just in Palm Bay, FL, but I'm
saying like just, I mean like

572
00:28:39,320 --> 00:28:41,040
the question, right?
That, but the reason why it

573
00:28:41,040 --> 00:28:43,160
matters.
In California, maybe you have

574
00:28:43,160 --> 00:28:45,840
$3000 of closing costs.
In Florida you have an

575
00:28:45,840 --> 00:28:49,000
intangible tax on the mortgage,
higher title insurance.

576
00:28:49,000 --> 00:28:52,120
So maybe it's forty $505,000 of
closing costs.

577
00:28:52,520 --> 00:28:56,000
So can we get you a better rate
than 6.875 with good credit?

578
00:28:56,000 --> 00:28:59,720
Absolutely.
So it probably makes sense there

579
00:28:59,720 --> 00:29:04,040
in terms of of the, the delta.
But what when does a recast make

580
00:29:04,040 --> 00:29:06,160
sense?
Well, if if you bought during

581
00:29:06,160 --> 00:29:09,720
COVID and you have $1,000,000
loan at 3%, you're not going to

582
00:29:09,720 --> 00:29:13,080
refinance it because you could
want to put $300,000 down and

583
00:29:13,080 --> 00:29:16,280
get a, a $300,000 lower loan.
You're going to say, hey,

584
00:29:16,440 --> 00:29:19,280
lender, I want to pay a $300,000
principal reduction.

585
00:29:19,440 --> 00:29:23,480
Will you do a recast and adjust
my payment to to extend over the

586
00:29:23,480 --> 00:29:26,720
remaining term of my loan if you
have an opportunity to do the

587
00:29:26,720 --> 00:29:28,640
lower?
The reason why recasts were not

588
00:29:28,640 --> 00:29:31,920
a thing for 40 years is every
2-3 years rates would dip and

589
00:29:31,920 --> 00:29:33,800
people would just do it.
When they had the opportunity to

590
00:29:33,800 --> 00:29:35,840
do both.
They'd be cash in refinance.

591
00:29:35,840 --> 00:29:38,720
But explain what a recast is for
those listening to have no idea

592
00:29:38,720 --> 00:29:40,880
what that means.
So recast is if you want to pay

593
00:29:40,880 --> 00:29:44,680
a large portion down in your
loan like $25,000 or more down

594
00:29:44,680 --> 00:29:48,240
on your loan.
What happens is that decreases

595
00:29:48,240 --> 00:29:51,320
the term of your loan on a fixed
rate loan because it doesn't

596
00:29:51,320 --> 00:29:53,520
change your payment.
You did the note that you agreed

597
00:29:53,520 --> 00:29:55,720
to repay says I'm going to pay
this much every month.

598
00:29:56,080 --> 00:29:58,080
But that was with your original
loan balance.

599
00:29:58,080 --> 00:30:01,080
It takes 30 years to amortize.
If you make a large principal

600
00:30:01,080 --> 00:30:02,760
reduction, it's going to pay it
off sooner.

601
00:30:02,920 --> 00:30:05,000
Some people don't want that.
They they want to make the

602
00:30:05,000 --> 00:30:07,800
principal reduction so that they
get a lower monthly payment.

603
00:30:08,000 --> 00:30:10,240
So you need to check with your
servicer and make sure, hey, if

604
00:30:10,240 --> 00:30:14,760
I pay 2550100200, $1000 down,
can I recast this?

605
00:30:14,760 --> 00:30:17,400
And that is truly Jeb, a loan
modification.

606
00:30:17,400 --> 00:30:19,120
So there's going to be some cost
with that.

607
00:30:19,280 --> 00:30:22,040
It'll be massively cheaper than
a refund refinance, but they

608
00:30:22,040 --> 00:30:24,080
have to prepare some documents,
they have to record some

609
00:30:24,080 --> 00:30:26,600
documents.
So they're they're just expect

610
00:30:26,600 --> 00:30:29,960
you'll have some costs.
Off off here, a question on

611
00:30:29,960 --> 00:30:34,440
Instagram got somebody that's on
a VA loan at six and an eighth.

612
00:30:35,120 --> 00:30:38,560
Excuse me, I'm wondering when do
you think is a good time to

613
00:30:38,560 --> 00:30:39,840
refinance?
So what?

614
00:30:39,840 --> 00:30:42,200
What is the typical answer to
that, Josh?

615
00:30:42,800 --> 00:30:44,760
So generally when they're saying
they have Ava, it means they

616
00:30:44,760 --> 00:30:46,760
want to do an, an Earl, an
interest rate reduction

617
00:30:46,760 --> 00:30:49,200
refinance loan where you don't
have to provide income

618
00:30:49,200 --> 00:30:52,760
documentation, you don't have to
get a, an appraisal.

619
00:30:52,960 --> 00:30:56,280
It's faster, cheaper, easier.
So to be eligible for that, you

620
00:30:56,280 --> 00:30:57,840
have to drop the rate of half of
a percent.

621
00:30:57,840 --> 00:31:00,840
You have to have 210 days from
your first payment on the last

622
00:31:00,840 --> 00:31:02,720
loan.
And then you have to recoup the

623
00:31:02,720 --> 00:31:05,320
cost of the loan with the
monthly savings within 36

624
00:31:05,320 --> 00:31:08,720
months.
So if the loan cost 3600 bucks,

625
00:31:08,720 --> 00:31:11,440
you have to save more than $100
a month to be eligible.

626
00:31:11,680 --> 00:31:14,080
So depending on that loan size
and depending on the cost of the

627
00:31:14,080 --> 00:31:17,400
loan, definitely should be able
to save a half percent right now

628
00:31:17,400 --> 00:31:22,440
somewhere in that 5.55.625 with
a lender credit to cover your

629
00:31:22,440 --> 00:31:24,720
your closing cost.
We got several people in that

630
00:31:24,720 --> 00:31:28,560
range doing them, no cost and
what you'll see every veteran,

631
00:31:28,640 --> 00:31:31,520
everyone with an FHA loan, they
get recorded with a case number

632
00:31:32,240 --> 00:31:34,400
on there.
And so they get bombarded with

633
00:31:34,720 --> 00:31:36,600
Flyers.
And so the thing we get is, hey,

634
00:31:36,600 --> 00:31:39,360
I just saw this in my mailbox.
I can refinance to 4.99.

635
00:31:39,440 --> 00:31:42,360
Yes, 100% you can refinance to
4.99.

636
00:31:42,440 --> 00:31:43,880
It's going to cost you a couple
points.

637
00:31:44,080 --> 00:31:46,760
Nobody wants to do that, but
that's the only way the clowns

638
00:31:46,760 --> 00:31:49,400
with the call center that need
people to call them can get you

639
00:31:49,400 --> 00:31:52,120
to calls by putting an ultra low
interest rate on there.

640
00:31:52,120 --> 00:31:55,560
So everything is possible, but
for the most part when we're

641
00:31:55,560 --> 00:31:58,960
looking at streamlines and
definitely streamlines, but VA

642
00:31:58,960 --> 00:32:01,760
Earls, most people want to do
them close to no cost so that if

643
00:32:01,760 --> 00:32:04,920
rates drop 1/2 percent next
year, a year on down the line,

644
00:32:05,080 --> 00:32:07,240
that we can just do it again and
keep rolling them down.

645
00:32:07,680 --> 00:32:09,000
Yeah.
And so if you have questions

646
00:32:09,000 --> 00:32:11,000
about that, regardless of
whether you're, you know, the

647
00:32:11,000 --> 00:32:13,160
person to ask that question or
someone else, there's a link

648
00:32:13,160 --> 00:32:17,960
scrolling Jeb smith.net/start.
We'll get you in touch with the

649
00:32:17,960 --> 00:32:19,840
team.
We can guide you through that

650
00:32:19,840 --> 00:32:22,320
process, answer the questions
and help you determine whether

651
00:32:22,320 --> 00:32:25,600
it makes sense or it doesn't.
And that way you know, and it,

652
00:32:25,800 --> 00:32:27,720
you know, doesn't cost you
anything, just a just a

653
00:32:27,720 --> 00:32:31,400
conversation.
So Josh, someone has a question

654
00:32:31,400 --> 00:32:36,120
here says, does it look bad if I
do a small pledge loan and it

655
00:32:36,120 --> 00:32:39,920
doesn't show 3K?
Would there be a number you

656
00:32:39,920 --> 00:32:43,760
would recommend that would not
look pretty a petty to a lender?

657
00:32:43,920 --> 00:32:45,400
So I'm not even sure what this
means.

658
00:32:46,080 --> 00:32:48,720
So a pledge loan is just a loan
where you're borrowing against

659
00:32:48,720 --> 00:32:49,960
your own assets.
So for.

660
00:32:49,960 --> 00:32:51,280
The most part UK have to do with
it.

661
00:32:51,920 --> 00:32:54,680
Yeah, look, petty to a loan.
I needed $3000.

662
00:32:54,680 --> 00:32:56,840
I didn't know where to get it.
They really don't care.

663
00:32:56,840 --> 00:32:58,800
It's your assets if you want to
borrow against it.

664
00:32:58,800 --> 00:33:01,440
And most times we don't have to
count the payment against you

665
00:33:01,760 --> 00:33:04,080
because if you default, who'd
you default against yourself?

666
00:33:04,080 --> 00:33:06,640
It's like a four O 1K loan.
But we have to see it.

667
00:33:07,440 --> 00:33:09,200
Is it, is it going to be a deal
breaker?

668
00:33:09,200 --> 00:33:11,880
Probably not.
All right, there you go.

669
00:33:12,760 --> 00:33:17,440
Mr. Lewis, can you talk about
self-employment loan?

670
00:33:17,920 --> 00:33:20,640
I think we did for 1/2 hour just
last week, Jeb.

671
00:33:21,200 --> 00:33:22,800
We did.
And where did we talk about

672
00:33:22,800 --> 00:33:24,080
that, Josh, maybe you can
direct.

673
00:33:24,080 --> 00:33:27,040
On the Educated Home Buyer
podcast, Jeb and something

674
00:33:27,040 --> 00:33:28,760
really important, you mentioned
this earlier in the show.

675
00:33:29,000 --> 00:33:30,920
We have an opportunity for you
guys.

676
00:33:30,920 --> 00:33:35,800
We are 122 visitors away from
10,000 Subs.

677
00:33:35,800 --> 00:33:39,080
So if all of you rush out there
and subscribe and you have not

678
00:33:39,080 --> 00:33:41,880
yet subscribed or you subscribe
your children, your spouse, your

679
00:33:41,880 --> 00:33:43,600
kids.
We could hit and do that.

680
00:33:43,800 --> 00:33:45,000
Always subscribe if you're going
to watch.

681
00:33:45,040 --> 00:33:47,080
Yeah, You know, if you care
about the content, I'll just

682
00:33:47,080 --> 00:33:50,080
subscribe to subscribe.
But on the on the podcast, we go

683
00:33:50,080 --> 00:33:52,240
through topics every week and
this is actually a big one that

684
00:33:52,240 --> 00:33:55,520
we get fairly regularly.
And so we went back, we covered

685
00:33:55,520 --> 00:33:59,800
the most common option for
self-employed borrowers if they

686
00:33:59,800 --> 00:34:02,680
don't show enough on their tax
returns to qualify, which is the

687
00:34:02,680 --> 00:34:04,600
bank statement loan.
We went through it in great

688
00:34:04,600 --> 00:34:07,600
detail.
So if you're interested in it,

689
00:34:07,600 --> 00:34:10,199
start there.
And if it doesn't quite match up

690
00:34:10,199 --> 00:34:13,239
to what you're asking, just
reach out link, you'll get

691
00:34:13,239 --> 00:34:16,880
connected with us.
In fact, we've done a podcast on

692
00:34:16,880 --> 00:34:20,280
being self-employed as well and
how lenders underwrite

693
00:34:20,560 --> 00:34:22,719
self-employed tax returns and
that sort of thing.

694
00:34:22,719 --> 00:34:25,760
So if you go to the educated
home buyer podcast and search

695
00:34:25,760 --> 00:34:27,400
self-employed, that will show up
as well.

696
00:34:27,400 --> 00:34:30,239
I believe so.
But either way, you can message

697
00:34:30,239 --> 00:34:32,280
us, you can e-mail us and we can
send you the links for them if

698
00:34:32,280 --> 00:34:34,560
you can't find them.
But that's in detail versus it

699
00:34:34,560 --> 00:34:38,639
would take a lot longer to cover
that here and people would be

700
00:34:38,639 --> 00:34:40,400
bored and leave and all that
good stuff.

701
00:34:40,400 --> 00:34:44,280
So that's the easiest way.
So check it out and let us know

702
00:34:44,280 --> 00:34:48,080
if you have any questions.
So now is a good time, Josh, for

703
00:34:48,080 --> 00:34:52,000
people to throw questions in
because there's not a lot of

704
00:34:52,000 --> 00:34:55,199
questions at the moment.
So for that reason, I'm just

705
00:34:55,199 --> 00:34:57,240
going to put some nice comments
that people have written, they

706
00:34:57,240 --> 00:34:58,720
said.
And remember, we're open for

707
00:34:58,720 --> 00:35:01,840
life advice also so.
Life advice is, yeah, we'll

708
00:35:01,840 --> 00:35:03,240
just, we'll give you whatever we
got.

709
00:35:03,800 --> 00:35:06,200
So this one was, I appreciate
you and your team.

710
00:35:06,200 --> 00:35:08,520
Actually seen your video, got in
touch with someone from your

711
00:35:08,520 --> 00:35:09,240
team today.
So good.

712
00:35:09,760 --> 00:35:14,200
Someone reached out there.
Let's see, what do we have?

713
00:35:16,560 --> 00:35:18,160
We have an answer.
Jen, well, here, here a

714
00:35:18,200 --> 00:35:19,560
question.
Well, go ahead.

715
00:35:19,800 --> 00:35:22,680
You you got an.
Answer tone is more popular

716
00:35:23,080 --> 00:35:27,280
since it's closer to Miami.
Punta Gorda is on the Gulf side,

717
00:35:27,280 --> 00:35:29,960
right?
So Boca is on the the Miami side

718
00:35:29,960 --> 00:35:31,600
the the Atlantic side.
Is that how it works?

719
00:35:34,000 --> 00:35:37,600
Boca's on the East Coast.
So the Atlantic side.

720
00:35:38,240 --> 00:35:40,960
Yes, the Atlantic.
Side Punta Gorda is over.

721
00:35:41,160 --> 00:35:43,760
On the Gulf, well, I guess I
think it's kind of at the bottom

722
00:35:43,840 --> 00:35:48,160
like isn't it at the tip on the
kind of both, like you get both

723
00:35:48,160 --> 00:35:50,160
you get the Atlantic and the the
Caribbean?

724
00:35:50,680 --> 00:35:52,560
The Caribbean.
Whatever, Florida expert.

725
00:35:52,600 --> 00:35:54,560
You know, I don't know I.
Don't as as I have.

726
00:35:54,560 --> 00:35:57,520
Demonstrated tonight.
This question came in earlier.

727
00:35:57,520 --> 00:36:00,360
Josh kind of missed it.
Says Keller, TX is overvalued by

728
00:36:00,360 --> 00:36:02,480
20%.
We are putting offers on homes

729
00:36:02,480 --> 00:36:04,680
in May.
Are we getting screwed by buying

730
00:36:04,680 --> 00:36:07,280
a home that's overvalued that
much?

731
00:36:07,280 --> 00:36:09,200
So why?
Who's saying who?

732
00:36:09,200 --> 00:36:10,280
Who?
Who told you this?

733
00:36:10,280 --> 00:36:12,160
Who has?
Who has their Abacus that tells

734
00:36:12,160 --> 00:36:14,640
them exactly where everything is
at?

735
00:36:14,680 --> 00:36:17,880
Yeah, who who's saying it's
overvalued by 20%?

736
00:36:17,920 --> 00:36:21,840
And if it is, then you should be
making offers at whatever the

737
00:36:21,840 --> 00:36:26,080
cops support, not 20% overvalue.
So I wouldn't say you're getting

738
00:36:26,080 --> 00:36:29,240
screwed if you, if you pay and
it truly is overvalued at that

739
00:36:29,240 --> 00:36:31,760
number and it because in that
case it wouldn't appraise and

740
00:36:31,760 --> 00:36:33,600
you would be paying more and so
on and so forth.

741
00:36:33,600 --> 00:36:36,920
So, but typically when I see
these statements, it's somebody

742
00:36:36,920 --> 00:36:40,000
read a headline that our
market's overvalued by 20% and

743
00:36:40,280 --> 00:36:43,560
therefore this is happening.
And my experience tells me that

744
00:36:43,560 --> 00:36:47,120
that's probably not the case.
Are there properties that could

745
00:36:47,120 --> 00:36:49,760
be?
Sure, but I think as a whole,

746
00:36:50,360 --> 00:36:54,240
you know, probably not.
But even if it is, the value

747
00:36:54,240 --> 00:36:56,480
should have corrected on paper
and.

748
00:36:57,400 --> 00:37:01,200
Let's look at this U.S. news and
World Report, which is used to

749
00:37:01,200 --> 00:37:04,320
be an actual journalism, a
source of journalism.

750
00:37:04,680 --> 00:37:07,680
It's it's not so they, they have
figured out that people will

751
00:37:07,680 --> 00:37:10,240
click on this.
And just so you know where I was

752
00:37:10,240 --> 00:37:13,520
just telling you, San Marcos,
CA, which is in the San Diego

753
00:37:13,520 --> 00:37:18,080
metro, it's 66.3% overvalued
relative to them.

754
00:37:18,080 --> 00:37:20,560
Yet our client can't get an
offer accepted.

755
00:37:20,560 --> 00:37:23,440
So 20% sounds like it's really
good.

756
00:37:23,680 --> 00:37:26,840
Los Angeles, Long Beach,
Anaheim, 66% overvalued.

757
00:37:26,840 --> 00:37:30,200
Riverside, San Bernardino, 67%
overvalued.

758
00:37:30,680 --> 00:37:34,280
So again, these like when
something is overvalued, you're

759
00:37:34,280 --> 00:37:36,000
saying that what is there an
intrinsic value?

760
00:37:36,280 --> 00:37:39,240
The the cost of a home, the cost
to rebuild is, is way less than

761
00:37:39,240 --> 00:37:42,040
what it's worth in areas where
the land value is high.

762
00:37:42,400 --> 00:37:45,520
So again, these are these are
click bait articles.

763
00:37:45,520 --> 00:37:47,400
They're not serious.
They're not there to educate,

764
00:37:47,400 --> 00:37:52,800
they're not there to help again.
And even you know, you look at

765
00:37:52,800 --> 00:37:56,200
the numbers that that Redfin
keeps putting out others 900,000

766
00:37:56,200 --> 00:37:58,120
more sellers than there are
buyers.

767
00:37:58,400 --> 00:38:01,480
And yet you talk to a buyer in
most markets, are you able to

768
00:38:01,480 --> 00:38:02,720
just walk in and name your
price?

769
00:38:02,720 --> 00:38:04,880
You're able to get the best
house, the lowest price.

770
00:38:05,360 --> 00:38:07,280
It's just not meshing.
Let me help you.

771
00:38:07,280 --> 00:38:13,720
The answer's no question here.
Will Finsen reporting add time

772
00:38:13,720 --> 00:38:17,000
to escrow timelines, Josh?
You know what, I, an article

773
00:38:17,000 --> 00:38:20,400
just popped up and I, I read
like the bullet points, the,

774
00:38:20,440 --> 00:38:24,440
the, the headlines and didn't
really dig into it for the most

775
00:38:24,440 --> 00:38:26,160
part.
I think it's, it's related to

776
00:38:26,160 --> 00:38:29,200
cash transactions because
they're, they're worried again,

777
00:38:29,200 --> 00:38:31,560
about people money laundering
through real estate

778
00:38:31,560 --> 00:38:33,760
transactions.
If you're getting a mortgage,

779
00:38:33,840 --> 00:38:36,360
most of our first time buyers
here getting a mortgage probably

780
00:38:36,360 --> 00:38:43,200
not going to impact you.
Well, let's you know, so this

781
00:38:43,200 --> 00:38:46,360
explains everything that I
needed to hear about your, your,

782
00:38:46,640 --> 00:38:51,960
your 20% overvalued.
Nick Gurley is a clown and has

783
00:38:51,960 --> 00:38:54,800
been wrong consistently for five
years.

784
00:38:55,640 --> 00:39:01,720
So that's all you need to know.
Yeah, that that's the simplest

785
00:39:02,160 --> 00:39:05,600
explanation there.
So yeah, I wouldn't say if he's

786
00:39:05,600 --> 00:39:09,240
saying it's 20% overvalued that
it's it's probably undervalued

787
00:39:09,440 --> 00:39:10,880
is what I would say.
That's how.

788
00:39:10,920 --> 00:39:14,800
That's how wrong the guy is.
It's just, it's, it's insanity

789
00:39:14,800 --> 00:39:17,160
when literally you can go back
and start watching.

790
00:39:17,160 --> 00:39:19,520
When did you start making videos
2018-2019?

791
00:39:19,600 --> 00:39:21,960
They're probably all deleted.
He was deleting for a while.

792
00:39:22,320 --> 00:39:24,360
That would be smart.
I would delete them too.

793
00:39:24,520 --> 00:39:27,240
I would say I never said that.
I never told you not to buy when

794
00:39:27,240 --> 00:39:29,320
home prices were spiking and
rates were 2%.

795
00:39:30,120 --> 00:39:32,640
Too good.
Let's see here.

796
00:39:32,640 --> 00:39:36,240
There was another question,
Josh, and it was related to, I

797
00:39:36,240 --> 00:39:40,920
do not see it.
Oh, oh, someone asking, is there

798
00:39:40,920 --> 00:39:42,960
a chance of rates dropping to
the mid 5?

799
00:39:42,960 --> 00:39:45,280
So our forecast for the
beginning of the year, which we

800
00:39:45,280 --> 00:39:48,800
do every year, we kind of agreed
that we thought rates would

801
00:39:48,800 --> 00:39:53,080
trade between a range of like
5.75 and 6 1/2, somewhere in

802
00:39:53,080 --> 00:39:55,720
that ballpark.
I think I could speak for me,

803
00:39:55,720 --> 00:39:58,440
can't speak for you.
Rates are lower right now than I

804
00:39:58,440 --> 00:40:00,120
thought they would be this early
in the year.

805
00:40:01,840 --> 00:40:03,960
I thought we would kind of be
right where we started the year

806
00:40:03,960 --> 00:40:05,520
to be completely honest, I
didn't think we'd see much

807
00:40:05,520 --> 00:40:09,280
movement already.
So is there a chance that you

808
00:40:09,280 --> 00:40:11,920
see 5 1/2?
Do you think mid fives is, is,

809
00:40:12,200 --> 00:40:15,520
is a possibility?
Has your has your range changed?

810
00:40:15,760 --> 00:40:18,280
The so the headlines are not
click bait in the sense that

811
00:40:18,280 --> 00:40:20,920
they are true week after week
for the last three or four weeks

812
00:40:20,920 --> 00:40:23,320
we've been setting new lows and
you can say, hey, it's the

813
00:40:23,320 --> 00:40:25,960
lowest rates in 2 1/2 years,
That's true.

814
00:40:25,960 --> 00:40:29,120
It's not, it's not a lie.
But we are inching down.

815
00:40:29,120 --> 00:40:31,800
So I mean year to date, where do
we down an eighth of a percent

816
00:40:31,800 --> 00:40:33,280
in rates?
It's not like we've dropped a

817
00:40:33,280 --> 00:40:35,640
half percent and you go, oh,
we're way, way off.

818
00:40:36,840 --> 00:40:40,040
I tend to believe that inflation
is going to moderate more than

819
00:40:40,040 --> 00:40:43,960
expected mid year.
I think that the jobs market is

820
00:40:43,960 --> 00:40:47,320
not collapsing, but I think it's
a little bit weaker than than

821
00:40:47,320 --> 00:40:50,720
some of some of the Fed members
and some of the market people in

822
00:40:50,720 --> 00:40:53,920
the markets are expecting.
So if you tell me 5 1/2, tell me

823
00:40:53,920 --> 00:40:56,520
5 and a quarter.
Yeah, absolutely good.

824
00:40:57,200 --> 00:41:01,640
At the same time, would I be
making any decisions based off

825
00:41:01,640 --> 00:41:03,640
of that saying I'm going to wait
for that?

826
00:41:03,840 --> 00:41:05,200
It's not a tremendous
difference.

827
00:41:05,200 --> 00:41:09,520
You know, a lot of people at
6.75 won't refinance at 6.25.

828
00:41:09,760 --> 00:41:13,400
So would I not buy at at six
because I'm, I'm hoping or

829
00:41:13,400 --> 00:41:17,200
thinking things are going to get
to 5 1/2 do do what's right and

830
00:41:17,200 --> 00:41:18,680
see what happens because we
don't know.

831
00:41:18,840 --> 00:41:21,240
Could we see that?
I think we absolutely could see

832
00:41:21,240 --> 00:41:22,960
that.
Am I ready to predict it yet?

833
00:41:23,440 --> 00:41:26,360
Don't think so.
Well, there you go.

834
00:41:28,680 --> 00:41:31,440
Let's see, Josh.
Another kind of question here

835
00:41:31,440 --> 00:41:36,360
related to rates are are we
noticing an uptick in buyer

836
00:41:36,360 --> 00:41:40,400
activity with rates under 6?
I would say activity is

837
00:41:40,400 --> 00:41:42,920
definitely out there.
Have I noticed an uptick?

838
00:41:42,920 --> 00:41:46,360
I think it's kind of hard to
judge because two things.

839
00:41:46,640 --> 00:41:49,720
One, more normal market than
we've had the last couple of

840
00:41:49,720 --> 00:41:53,040
years.
So that's First off. 2nd, it's

841
00:41:53,080 --> 00:41:56,040
that time of year when things
are starting to pick up and

842
00:41:56,040 --> 00:41:57,840
buyer activity is starting to
pick up.

843
00:41:58,040 --> 00:42:01,200
So it's kind of naturally
happening either way.

844
00:42:02,560 --> 00:42:06,120
I mentioned a couple, you know
what, 20-30 minutes ago when we

845
00:42:06,120 --> 00:42:07,680
were trying to talk about what's
happening in the market.

846
00:42:07,680 --> 00:42:11,640
I'm seeing a lot of activity in,
in the market in general is that

847
00:42:11,680 --> 00:42:14,720
more is in an uptick.
I don't, I mean it's definitely

848
00:42:14,720 --> 00:42:19,360
an uptick because of of timing
and and just seasonal nature,

849
00:42:20,040 --> 00:42:22,280
but it's doing about what you
would expect with rates

850
00:42:22,600 --> 00:42:24,160
dropping.
I think, I mean I don't think

851
00:42:24,160 --> 00:42:28,800
it's overwhelming, but it is
that time of year and I think

852
00:42:28,800 --> 00:42:33,960
it's going to continue to go up.
Buyer demand will increase over

853
00:42:33,960 --> 00:42:36,120
the next couple of months.
Look at look at your charts from

854
00:42:36,120 --> 00:42:39,120
the beginning of the show, Jeb,
the one that goes lines from the

855
00:42:39,120 --> 00:42:41,920
last 10 years and they're kind
of all over the place.

856
00:42:42,160 --> 00:42:45,200
There's a relative to last year,
it's much better probably have

857
00:42:45,200 --> 00:42:48,760
twice as many homes under
contract for purchases that are

858
00:42:48,760 --> 00:42:51,320
going to close in March of this
year versus March of last year.

859
00:42:51,680 --> 00:42:55,680
And then if we go back in time
to 2021, it's probably half as

860
00:42:55,680 --> 00:42:59,400
many as what we had in 2020.
So it's all relative, definitely

861
00:42:59,400 --> 00:43:03,320
a pick up in activity, more
people comfortable and able to

862
00:43:03,320 --> 00:43:05,080
do things right now.
And especially it, it's funny,

863
00:43:05,080 --> 00:43:08,560
there's, there's sort of people
there, there's Peace of Mind to

864
00:43:08,560 --> 00:43:12,000
people that when they go to make
an offer and like we're talking

865
00:43:12,000 --> 00:43:13,520
about and there's three other
offers on the home.

866
00:43:13,640 --> 00:43:15,480
So I'm not an idiot.
There's three other people that

867
00:43:15,480 --> 00:43:17,920
also want this.
And then the flip side, the

868
00:43:17,920 --> 00:43:19,520
person who's saying, hey, I'm in
the market that that's

869
00:43:19,520 --> 00:43:23,640
overvalued 3 homes and they've
been in the market for 100 days.

870
00:43:24,000 --> 00:43:26,440
And the folks I was talking to
last night, like we don't, we

871
00:43:26,440 --> 00:43:28,720
don't even start the
conversation with anything other

872
00:43:28,720 --> 00:43:32,240
than cut the price $10,000 and
ask for a 3% concession.

873
00:43:32,720 --> 00:43:35,400
People get nervous like that
makes them worried like why are,

874
00:43:35,400 --> 00:43:37,520
why are they giving this to me?
If she's going out on a date

875
00:43:37,520 --> 00:43:39,800
with me?
What has to be wrong with this

876
00:43:39,800 --> 00:43:41,880
poor girl that she would go out
on a date with me?

877
00:43:41,880 --> 00:43:44,560
That's the weird psychology that
people have.

878
00:43:45,000 --> 00:43:48,560
So strangely, in the stronger
markets, it's where I've seen

879
00:43:48,560 --> 00:43:51,120
more of a pickup in the activity
and more people comfortable.

880
00:43:51,320 --> 00:43:54,320
That being said, we'll close,
you know, a bunch in Texas and a

881
00:43:54,320 --> 00:43:56,840
bunch in Florida right now just
get the affordability is so much

882
00:43:56,840 --> 00:44:00,360
higher and almost all of those
people are negotiating cuts to

883
00:44:00,360 --> 00:44:04,320
price concessions.
Well, actually, congratulations,

884
00:44:04,480 --> 00:44:07,560
Jose and Brooke, listeners to
the show closed their loan today

885
00:44:07,560 --> 00:44:10,280
in like 2 1/2 weeks.
They were very well qualified.

886
00:44:10,280 --> 00:44:13,360
They were on it, put it together
and the sellers agreed to close.

887
00:44:13,600 --> 00:44:16,440
That was a deal in Florida.
I think they told me what

888
00:44:16,440 --> 00:44:17,920
they're offering.
I'm like, if you can get it,

889
00:44:17,920 --> 00:44:20,120
this is fantastic.
I don't see a seller accepting

890
00:44:20,120 --> 00:44:23,000
that they cut the price on the
$325,000 house.

891
00:44:23,000 --> 00:44:25,600
I believe they cut it to like
300 and they got a 6% seller

892
00:44:25,600 --> 00:44:28,320
concession.
So they put their 20% down.

893
00:44:28,320 --> 00:44:30,320
Everything paid for, bought the
rate down.

894
00:44:30,320 --> 00:44:33,480
I think we ended up with them
5.3 something like that on their

895
00:44:33,480 --> 00:44:35,560
interest rate.
So does it happen?

896
00:44:35,560 --> 00:44:39,600
Yeah, it it happens.
And it's like we always say

897
00:44:39,800 --> 00:44:42,360
they're not sitting there going,
oh, is this overpriced or what's

898
00:44:42,360 --> 00:44:44,920
going to happen in the market?
They're like we're at a point in

899
00:44:44,920 --> 00:44:47,960
our life with our kids and our
family that we want to own our

900
00:44:47,960 --> 00:44:51,000
home and we are very comfortable
with this monthly payment and

901
00:44:51,000 --> 00:44:52,600
that transaction that we're
putting together.

902
00:44:53,120 --> 00:44:54,320
Yeah.
And kind of going back to the,

903
00:44:54,440 --> 00:44:57,000
you know, seeing the, you know,
three houses there or 4 houses

904
00:44:57,000 --> 00:44:59,800
that you're looking at that are
all over 100 days, I, I think,

905
00:44:59,840 --> 00:45:01,400
you know, that's something to
note.

906
00:45:02,640 --> 00:45:05,360
You know, if, if all of that,
the houses that you're looking

907
00:45:05,360 --> 00:45:08,160
at in a similar price point are
all sitting on the market and

908
00:45:08,160 --> 00:45:11,640
they're all kind of equal in
condition and all of that, then

909
00:45:12,240 --> 00:45:13,880
probably they're all overpriced,
right?

910
00:45:13,880 --> 00:45:17,040
I mean, to some degree.
But if, if there are things in

911
00:45:17,040 --> 00:45:21,360
that price point in that area
that are moving, then it's it's

912
00:45:21,360 --> 00:45:26,720
probably not as overpriced as
maybe you're thinking on paper

913
00:45:27,240 --> 00:45:30,960
for maybe other reasons, right?
It's not just price always.

914
00:45:30,960 --> 00:45:33,000
There's some other factors that
can be thrown in there.

915
00:45:33,240 --> 00:45:35,800
So what I would say is like kind
of look at the market as a

916
00:45:35,800 --> 00:45:37,120
whole.
What is selling?

917
00:45:37,120 --> 00:45:39,960
What is moving in those markets?
Like what is going under

918
00:45:39,960 --> 00:45:42,040
contract?
Is it a different price point

919
00:45:42,040 --> 00:45:43,960
that's that's selling?
Is it a lesser price point?

920
00:45:43,960 --> 00:45:47,720
Is it a higher price point?
Is it, you know, single families

921
00:45:47,720 --> 00:45:50,440
versus condos and townhomes?
Because all of that stuff

922
00:45:50,440 --> 00:45:53,600
matters because you have to
remember with insurance and, and

923
00:45:53,640 --> 00:45:56,280
Hoas and all of these things,
there's additional costs that

924
00:45:56,280 --> 00:45:59,880
are involved and it's, you know,
all real property isn't the

925
00:45:59,880 --> 00:46:01,320
same.
And so you got to kind of

926
00:46:01,320 --> 00:46:04,160
extrapolate some of the stuff
and kind of back your way into

927
00:46:04,360 --> 00:46:07,240
what's actually happening.
But I think, you know, if you're

928
00:46:07,240 --> 00:46:10,960
think seeing things sitting and
continuing to sit, then make

929
00:46:10,960 --> 00:46:13,760
offers it and see what kind of
response you get on these

930
00:46:13,760 --> 00:46:16,440
properties.
Are sellers willing to negotiate

931
00:46:16,440 --> 00:46:19,520
or are they stuck?
And if they're stuck, try to

932
00:46:19,520 --> 00:46:20,760
talk to the agent on the other
side.

933
00:46:20,760 --> 00:46:23,200
But like, I, you know, I see
this home is sitting on the

934
00:46:23,200 --> 00:46:25,560
market.
You know, I'm looking at comps.

935
00:46:25,760 --> 00:46:29,800
I don't see where the you guys
are comping this at based on the

936
00:46:29,800 --> 00:46:32,680
number that you have it listed.
Can you help me understand it?

937
00:46:32,840 --> 00:46:37,160
Not go in, Hey, your home is
super overpriced and like kind

938
00:46:37,160 --> 00:46:39,920
of play along and say, help
educate me with this.

939
00:46:40,360 --> 00:46:43,160
And that way you can understand
where that's coming from and and

940
00:46:43,160 --> 00:46:47,000
maybe get some guidance on on
how to to move forward if that's

941
00:46:47,000 --> 00:46:49,160
what you want to do.
And if you want to wait, then it

942
00:46:49,160 --> 00:46:51,960
sounds like waiting is probably
OK in that environment because

943
00:46:51,960 --> 00:46:54,480
home prices aren't shooting
through the roof, it sounds

944
00:46:54,480 --> 00:46:57,640
like.
But anyway, you going to jump in

945
00:46:57,640 --> 00:47:01,720
Josh or no, No, OK.
What are you noticing with

946
00:47:01,720 --> 00:47:04,040
inventory level?
So inventory is increasing

947
00:47:04,040 --> 00:47:05,360
nationwide.
We kind of showed it at the

948
00:47:05,360 --> 00:47:08,720
beginning of the show.
It will continue to to this is

949
00:47:08,720 --> 00:47:10,160
the time of year where things
start to increase.

950
00:47:10,160 --> 00:47:13,920
So I think kind of at the early
stages of seeing week over week

951
00:47:14,520 --> 00:47:16,720
noticeable increases in most
markets out there.

952
00:47:16,800 --> 00:47:19,880
We showed here in Orange County
where we are more homes than the

953
00:47:19,880 --> 00:47:22,160
same time last year.
Huntington Beach, where I am a

954
00:47:22,160 --> 00:47:24,760
city in that county, actually
less homes on the market than

955
00:47:24,760 --> 00:47:27,160
that time last year.
So each market's a little bit

956
00:47:27,160 --> 00:47:28,840
different.
Know your market, all that good

957
00:47:28,840 --> 00:47:33,080
stuff.
Don't understand what that

958
00:47:33,080 --> 00:47:37,680
means, but saving oh saving.
I thought it said solving saving

959
00:47:37,680 --> 00:47:41,040
for emergency fund.
So understand now's a good time.

960
00:47:41,040 --> 00:47:43,240
If you have questions to throw
them in.

961
00:47:43,240 --> 00:47:47,720
Couple people watching here on
Instagram with a banner over my

962
00:47:47,720 --> 00:47:49,360
face.
That's always good.

963
00:47:49,520 --> 00:47:52,520
I got to figure that piece out.
You got to figure that piece

964
00:47:52,520 --> 00:47:53,880
out.
Allow you to drag it.

965
00:47:54,080 --> 00:47:56,760
You know they should.
Between the two faces.

966
00:47:56,760 --> 00:47:59,600
That would be ideal, but they
don't do that, so we just have

967
00:47:59,600 --> 00:48:02,160
it over, which is fine.
You don't need to see my face.

968
00:48:03,160 --> 00:48:05,680
Question here, what do you
expect?

969
00:48:06,920 --> 00:48:10,040
When, what, what do you expect
the oh, sorry, what do you

970
00:48:10,040 --> 00:48:13,360
expect the appreciation rate to
be in South OC, Laguna Niguel

971
00:48:13,360 --> 00:48:15,320
and Dana Point over the next 20
years?

972
00:48:15,960 --> 00:48:18,160
Assuming no major wildfires?
Do you think it's a good

973
00:48:18,160 --> 00:48:20,920
property to hold long term?
All property is good property to

974
00:48:20,920 --> 00:48:22,760
hold long term.
Let's be very clear.

975
00:48:23,600 --> 00:48:26,280
What do I expect in appreciation
over the next 20 years?

976
00:48:26,280 --> 00:48:28,760
It's too hard to forecast.
I what I would say is it's not

977
00:48:28,760 --> 00:48:32,080
going to be what it has been
over the last 20 in my opinion.

978
00:48:32,640 --> 00:48:36,000
But if I had to guess, I think
most, you know average probably

979
00:48:36,000 --> 00:48:39,120
over the next five years or so
is probably somewhere between

980
00:48:39,800 --> 00:48:43,680
2:00 to 3% a year I think is
reasonable and that's over a

981
00:48:43,680 --> 00:48:46,760
five year period of time.
So I think home prices are going

982
00:48:46,760 --> 00:48:50,680
to move sideways here to allow
that, that chart that we showed

983
00:48:50,680 --> 00:48:53,440
earlier Josh with, with real
home prices, nominal home

984
00:48:53,440 --> 00:48:57,120
prices, whichever to catch up a
little bit with that long term

985
00:48:57,120 --> 00:48:59,800
trend.
And I think with that, we just

986
00:48:59,800 --> 00:49:03,080
know inflation over time is
going to cause home prices to go

987
00:49:03,080 --> 00:49:05,720
up.
So that in and of itself means

988
00:49:05,720 --> 00:49:06,880
homes are going to be more
expensive.

989
00:49:06,880 --> 00:49:08,920
It's just how much more
expensive, right?

990
00:49:08,960 --> 00:49:11,360
I, I think, you know, if you're
sitting in a million and a half

991
00:49:11,360 --> 00:49:14,080
dollar property right now, if
you told me that million and a

992
00:49:14,080 --> 00:49:15,800
half dollar property was going
to be worth 2 and a half,

993
00:49:15,800 --> 00:49:18,440
$1,000,000 in 20 years, I would
probably agree with you.

994
00:49:18,440 --> 00:49:22,200
I don't think that's crazy, but
if you told me it's going to

995
00:49:22,200 --> 00:49:25,760
triple, I would say, you know,
I, I don't know, I, I, I, I

996
00:49:25,760 --> 00:49:27,200
think you need to look at that
so.

997
00:49:27,400 --> 00:49:30,080
You know, Jeb, I don't know if
you remember, and I don't know,

998
00:49:30,080 --> 00:49:33,600
I think I one of the coolest
things about GPT when you're

999
00:49:33,600 --> 00:49:37,160
trying to say what are things
going to look like 20 years from

1000
00:49:37,160 --> 00:49:39,800
now, No one knows.
But a Monte Carlo simulation is

1001
00:49:39,800 --> 00:49:42,280
one of the best ways to do it.
And you used to have to be

1002
00:49:42,280 --> 00:49:44,160
really, really smart to figure
out how to do a Monte Carlo

1003
00:49:44,160 --> 00:49:47,520
simulation.
Now GPT will do it for you in

1004
00:49:47,520 --> 00:49:50,000
very short order and it's going
to ask you some parameters and

1005
00:49:50,000 --> 00:49:52,040
some inputs.
And depending on what you tell

1006
00:49:52,040 --> 00:49:54,800
it, you can get very different
answers.

1007
00:49:55,080 --> 00:49:58,840
But my home, we've talked about
it before somewhere, 1718 is

1008
00:49:58,840 --> 00:50:00,840
probably its current value.
I said, what's my home going to

1009
00:50:00,840 --> 00:50:04,040
be worth in 20 years based off
of a appreciation over the last

1010
00:50:04,040 --> 00:50:05,600
few years.
I gave it some inputs of what I

1011
00:50:05,600 --> 00:50:08,000
thought and what my beliefs were
and it came back.

1012
00:50:08,000 --> 00:50:10,040
At first it came back with a a
crazy number.

1013
00:50:10,160 --> 00:50:13,600
And I'm like, I think you're
leaning too much into the

1014
00:50:13,600 --> 00:50:18,040
historical data versus why that
is higher than what Jeb you and

1015
00:50:18,040 --> 00:50:20,480
I expect over the next 20 years,
why it's going to be a little

1016
00:50:20,480 --> 00:50:22,280
bit lower.
And it came back and it said

1017
00:50:22,560 --> 00:50:26,400
worst case scenario in 20 years,
my home was worth like $300,000

1018
00:50:26,400 --> 00:50:29,520
less than it is today 1.4.
And that was like a 2% chance,

1019
00:50:30,080 --> 00:50:34,480
like a 2% chance.
And the best case was like 4 and

1020
00:50:34,480 --> 00:50:37,040
a half million dollars.
Maybe it was even more like

1021
00:50:37,080 --> 00:50:39,280
$5,000,000.
I'm like, who's going to pay

1022
00:50:39,280 --> 00:50:41,400
$5,000,000 for my house?
That's insanity.

1023
00:50:42,240 --> 00:50:48,720
But is it most likely was like
2.22 point 4% appreciation and

1024
00:50:48,720 --> 00:50:51,320
you look and it's real money,
like the house is significantly

1025
00:50:51,320 --> 00:50:53,320
more expensive in 15 or 20
years.

1026
00:50:53,800 --> 00:50:57,360
So when when you look at it,
this is this is unique.

1027
00:50:57,560 --> 00:50:59,800
And if you put that Monte Carlo
on Allison and you say, hey,

1028
00:51:00,000 --> 00:51:03,280
looking at national figures in
the US, what are national median

1029
00:51:03,280 --> 00:51:05,400
home prices likely to do this be
very, very different.

1030
00:51:05,920 --> 00:51:08,200
Asked about two specific
markets, Dana Point and Laguna

1031
00:51:08,200 --> 00:51:10,480
Niguel, those are both
completely built out.

1032
00:51:10,600 --> 00:51:13,400
There's no real room other than
some little infield developments

1033
00:51:13,400 --> 00:51:16,080
to build.
They're both coastal, very nice

1034
00:51:16,080 --> 00:51:19,160
areas, talked about assuming no
major wildfire, wildfire could

1035
00:51:19,160 --> 00:51:20,880
throw things off.
But what happened to Pacific

1036
00:51:20,880 --> 00:51:23,160
Palisades?
People are like paying through

1037
00:51:23,160 --> 00:51:25,880
the nose to get their hands on
those lots to build back in this

1038
00:51:25,880 --> 00:51:29,080
fire infested area that's going
to have really, really high

1039
00:51:29,080 --> 00:51:32,080
insurance premiums going forward
and require you to build a very

1040
00:51:32,080 --> 00:51:35,320
fire resistant home.
So all of these things when

1041
00:51:35,320 --> 00:51:38,040
you're looking coastal real
estate, I'm bullish on it.

1042
00:51:38,040 --> 00:51:40,480
You know, we could look back
over the last 50 years, it's

1043
00:51:40,480 --> 00:51:44,120
probably 8% appreciation.
Do I think we're getting 8%?

1044
00:51:44,120 --> 00:51:45,160
No.
But do I think we're going to

1045
00:51:45,160 --> 00:51:49,040
get 123 percent above overall
inflation?

1046
00:51:49,120 --> 00:51:50,800
I I do.
They're just going to continue

1047
00:51:50,800 --> 00:51:53,800
to get more expensive in areas
with limited supply and high

1048
00:51:53,800 --> 00:51:56,640
demand.
Yeah, and, and a lot of these

1049
00:51:56,640 --> 00:51:59,560
areas now are, you know, again,
like you said, they're built

1050
00:51:59,560 --> 00:52:02,320
out.
There's not places to build.

1051
00:52:02,960 --> 00:52:05,800
Orange County is not getting any
smaller with regards to

1052
00:52:05,800 --> 00:52:10,560
population size.
I, I just, yeah, I, I think

1053
00:52:10,560 --> 00:52:13,920
you're, you're, you've got all
of the things, you know, kind of

1054
00:52:13,920 --> 00:52:15,560
leaning your direction.
So to go back to your question,

1055
00:52:15,560 --> 00:52:17,200
should you hold real estate?
Yes.

1056
00:52:17,200 --> 00:52:20,600
I, I don't know that I've ever
talked to anyone who has owned

1057
00:52:20,600 --> 00:52:23,000
real estate long term that's
regretted it, that it's actually

1058
00:52:23,000 --> 00:52:25,000
the opposite.
It's everybody that doesn't own

1059
00:52:25,000 --> 00:52:27,080
real estate talks about all the
times, all the properties they

1060
00:52:27,080 --> 00:52:29,560
should have helped so.
Jeb has to regularly hear me

1061
00:52:29,560 --> 00:52:32,800
cry.
I flipped from 2008 to 20/12/20

1062
00:52:32,880 --> 00:52:37,520
like 40 houses and I sit back
and just bawl my eyes out when I

1063
00:52:37,520 --> 00:52:40,400
look at all the stupid houses
that we should have kept, homes

1064
00:52:40,400 --> 00:52:43,920
that we sold for 600,000 that
are now worth $1.7 million,

1065
00:52:44,160 --> 00:52:48,120
Homes that we sold for $400,000
are now worth $950,000.

1066
00:52:48,360 --> 00:52:50,040
And no one really could have
predicted that.

1067
00:52:50,040 --> 00:52:51,680
So I don't beat myself up too
bad.

1068
00:52:51,880 --> 00:52:54,480
But there were a few of them
where we knew we're like this,

1069
00:52:54,520 --> 00:52:57,120
we should keep this house.
But when you're doing something

1070
00:52:57,240 --> 00:53:00,160
as a job, and that was my income
at that point in time, it's,

1071
00:53:00,160 --> 00:53:02,720
it's a little harder than just
saying, hey, this is a wonderful

1072
00:53:02,720 --> 00:53:05,080
investment.
Yeah, So here's a good question.

1073
00:53:05,080 --> 00:53:07,800
It says why would the next 20 be
different than the last 20?

1074
00:53:07,800 --> 00:53:10,360
Do you think we'll build lots
more houses?

1075
00:53:10,360 --> 00:53:14,400
No, no, no, I mean housing isn't
isn't going to change

1076
00:53:15,200 --> 00:53:18,200
substantially, especially here
in in Orange County.

1077
00:53:18,200 --> 00:53:22,600
I mean, yes, it'll increase, but
it demand will continue to keep

1078
00:53:22,600 --> 00:53:25,520
pace and so on and so forth.
What what happens is you have

1079
00:53:25,520 --> 00:53:29,120
artificial artificially low
interest rates.

1080
00:53:29,440 --> 00:53:31,920
You had, you had all of these
factors, right?

1081
00:53:31,920 --> 00:53:36,600
And so if you take out the last
five years and, and you're also

1082
00:53:36,600 --> 00:53:39,160
coming from a time when home
prices and affordability was so

1083
00:53:39,160 --> 00:53:40,600
cheap coming out of the
pandemic, right?

1084
00:53:40,600 --> 00:53:44,800
So you had so many factors
pointing towards bullish home

1085
00:53:44,800 --> 00:53:47,160
prices that you don't have right
now.

1086
00:53:48,120 --> 00:53:50,600
You've got, you know, higher
interest rates than you had

1087
00:53:50,600 --> 00:53:53,200
during the pandemic.
You've got much higher home

1088
00:53:53,200 --> 00:53:57,200
prices, affordability's at, you
know, some of the lowest levels

1089
00:53:57,480 --> 00:54:00,120
of, of where it's been.
So all of these factors will

1090
00:54:00,120 --> 00:54:05,000
limit where home prices can go
over the next 20 years just from

1091
00:54:05,000 --> 00:54:07,920
an affordability standpoint.
So the the pandemic is an

1092
00:54:07,920 --> 00:54:11,480
obvious aberration, but even if
you go back to 2019 through 2019

1093
00:54:11,480 --> 00:54:15,000
after the GFC, if you look for
us locally, the number was

1094
00:54:15,000 --> 00:54:17,720
almost 7% appreciation over like
40 something years.

1095
00:54:17,720 --> 00:54:21,440
Nationally, it was 4 and change.
So it went up and it's come back

1096
00:54:21,440 --> 00:54:24,880
down a little bit on this side
of it, but you have two things

1097
00:54:24,880 --> 00:54:27,120
that are never, ever, ever going
to happen again.

1098
00:54:27,320 --> 00:54:31,400
In the 70s and early 80s, most
households went from 80 to 90%

1099
00:54:31,400 --> 00:54:34,160
being single income households
to dual income households.

1100
00:54:34,720 --> 00:54:37,760
People affordability is one
thing Just what does a monthly

1101
00:54:37,760 --> 00:54:41,960
payment look like but payment
relative to household income 70s

1102
00:54:41,960 --> 00:54:44,640
and 80s, most of the home price
appreciation was driven by

1103
00:54:44,720 --> 00:54:46,960
household income went up because
mom went to work.

1104
00:54:47,240 --> 00:54:51,720
OK, then from 1982 to 2022 you
had a 40 year bull market, not

1105
00:54:51,720 --> 00:54:54,840
artificially low interest rates,
artificially high interest rates

1106
00:54:55,080 --> 00:54:57,320
to normalizing to somewhat
artificially low.

1107
00:54:57,640 --> 00:54:59,680
But we're you can't have that
tailwind.

1108
00:54:59,680 --> 00:55:02,240
You can't go from 18% to 3%
again.

1109
00:55:02,520 --> 00:55:07,040
Even if we went back to 2% from
from here, from six to two, it's

1110
00:55:07,120 --> 00:55:10,360
pales in comparison to the
tailwind of 18 to 3.

1111
00:55:11,040 --> 00:55:13,000
So you're you're not going to
get that tailwind back.

1112
00:55:13,000 --> 00:55:16,320
We don't have extra unless
everyone goes into thruples and

1113
00:55:16,400 --> 00:55:19,720
gets another mom in the
household to go to work.

1114
00:55:19,720 --> 00:55:21,400
We don't have additional
household income.

1115
00:55:21,640 --> 00:55:24,280
So those tailwinds are never,
ever coming back.

1116
00:55:24,520 --> 00:55:27,760
All of the things that make
housing desirable and likely to

1117
00:55:27,760 --> 00:55:30,880
outpace inflation, the general
rate of inflation in home price

1118
00:55:31,880 --> 00:55:34,240
appreciation are absolutely
going to happen.

1119
00:55:34,560 --> 00:55:37,320
It just will be very moderate
relative to what we saw over the

1120
00:55:37,320 --> 00:55:40,320
last 50 years.
So a question from Instagram,

1121
00:55:40,320 --> 00:55:43,320
how do you decide between an FHA
Streamline Josh and a

1122
00:55:43,320 --> 00:55:47,480
conventional refinance?
What's the total cost and what's

1123
00:55:47,480 --> 00:55:50,880
the payment?
So unfortunately with the FHA

1124
00:55:50,880 --> 00:55:55,040
streamline, you're going to get
a prorated refund of that 1.75%

1125
00:55:55,040 --> 00:55:56,320
upfront mortgage insurance
premium.

1126
00:55:56,320 --> 00:55:57,800
Then they're going to put a new
one on there.

1127
00:55:58,200 --> 00:56:01,320
So after two years, you're not
getting much of it back and

1128
00:56:01,320 --> 00:56:02,680
you're putting a new one on
there.

1129
00:56:03,040 --> 00:56:06,280
So if we look at that additional
upfront mortgage insurance

1130
00:56:06,280 --> 00:56:09,520
premium going alone as points,
we could look at going over to a

1131
00:56:09,520 --> 00:56:11,960
conventional.
So the easy step or the first

1132
00:56:11,960 --> 00:56:14,200
step that most people go is
let's compare payments.

1133
00:56:14,560 --> 00:56:16,720
Conventionals have a higher
interest rate for a well

1134
00:56:16,720 --> 00:56:18,640
qualified borrower with high
credit scores that can have a

1135
00:56:18,640 --> 00:56:21,720
lower mortgage insurance rate,
but still the payments likely to

1136
00:56:21,720 --> 00:56:25,320
be higher, loan amount is likely
to be lower and give you more

1137
00:56:25,320 --> 00:56:27,440
and better flexibility over the
long haul.

1138
00:56:27,640 --> 00:56:30,480
So if they're close and even a
slightly higher payment with the

1139
00:56:30,480 --> 00:56:32,640
conventional, I lean towards the
conventional.

1140
00:56:32,960 --> 00:56:34,880
But there's not a hard and fast
answer.

1141
00:56:34,880 --> 00:56:36,560
The numbers never lie.
Get a pencil amount.

1142
00:56:36,560 --> 00:56:39,720
Look at them side by side.
There's a link scrolling Jeb

1143
00:56:39,720 --> 00:56:43,840
smith.net forward slash start.
You can get in touch with Josh,

1144
00:56:43,840 --> 00:56:45,480
the team here.
We can help guide you through

1145
00:56:45,480 --> 00:56:48,040
that process.
So Josh, we got someone here

1146
00:56:48,040 --> 00:56:50,440
saying I'm not convinced that
home ownership really is that

1147
00:56:50,440 --> 00:56:53,040
great of an investment.
Sure, coastal homes are good,

1148
00:56:53,040 --> 00:56:55,520
but everywhere else I'm I'm not
convinced.

1149
00:56:55,520 --> 00:57:02,160
Homes cost a lot of money to
maintain and no one wants old, I

1150
00:57:02,160 --> 00:57:05,440
guess old.
So Josh, what do you say to to

1151
00:57:05,880 --> 00:57:08,000
to that?
Homeowners.

1152
00:57:08,480 --> 00:57:12,520
Homeowners have 44 times greater
net worth than renters.

1153
00:57:12,520 --> 00:57:16,000
And hold my beer.
Before you say correlation does

1154
00:57:16,000 --> 00:57:18,280
not equal causation, you are
100% correct.

1155
00:57:18,520 --> 00:57:22,000
Homeowners tend to be older,
higher earning, better credit

1156
00:57:22,000 --> 00:57:26,600
scores, more educated, number of
things that also lead to higher

1157
00:57:26,600 --> 00:57:29,920
levels of net worth.
But about 50% of the net worth

1158
00:57:29,920 --> 00:57:33,000
is in home equity.
So the things you're saying,

1159
00:57:33,000 --> 00:57:37,040
there's partial truths in there,
but the reality is most of us

1160
00:57:37,040 --> 00:57:40,000
are not disciplined.
A home is enforced discipline.

1161
00:57:40,360 --> 00:57:42,400
As you pay it down, it's a
little there.

1162
00:57:42,400 --> 00:57:45,240
There's there's friction.
It is hard to get money back out

1163
00:57:45,240 --> 00:57:47,480
of it.
So most people take that debt

1164
00:57:47,480 --> 00:57:50,160
on.
It fixes their housing cost, at

1165
00:57:50,160 --> 00:57:52,280
least the majority of it with a
30 year fixed.

1166
00:57:52,320 --> 00:57:56,040
Yes, taxes and insurance can
increase, but rents, the whole

1167
00:57:56,040 --> 00:57:58,400
of it are going to go up over
time.

1168
00:57:58,680 --> 00:58:02,840
People are shocked to hear that
homeowners have a much lower

1169
00:58:02,840 --> 00:58:05,440
housing cost than renters do in
the United States.

1170
00:58:05,480 --> 00:58:07,760
That's insane.
Cost me a lot more to rent than

1171
00:58:07,760 --> 00:58:10,040
it would to own.
That is 100% correct.

1172
00:58:10,240 --> 00:58:13,120
But you didn't buy 10 years ago,
20 years ago, 30 years ago.

1173
00:58:13,120 --> 00:58:16,320
You're not your grandparents
with no mortgage payment, so you

1174
00:58:16,320 --> 00:58:20,360
probably don't have the
discipline to save and invest to

1175
00:58:20,360 --> 00:58:23,600
such a degree that as rents
continue to go up over the long

1176
00:58:23,600 --> 00:58:28,520
haul, you can continue to live a
similar lifestyle or rent A home

1177
00:58:28,520 --> 00:58:30,480
equivalent to what you could buy
today.

1178
00:58:30,760 --> 00:58:33,640
So it's taking some short term
pain in terms of a higher

1179
00:58:33,640 --> 00:58:36,160
payment, in terms of having to
put a roof on the House to

1180
00:58:36,200 --> 00:58:39,920
replace a water heater, to clean
the pool, cut the grass, any

1181
00:58:39,920 --> 00:58:41,480
number of things.
Those are all true.

1182
00:58:41,480 --> 00:58:43,080
They're real money.
But guess what?

1183
00:58:43,080 --> 00:58:45,880
When you buy a house, you find a
way to make it happen.

1184
00:58:46,200 --> 00:58:48,920
And over 1020, thirty years, you
wake up and you're much

1185
00:58:48,920 --> 00:58:51,600
wealthier than the guy who
rented and laughed at you

1186
00:58:51,600 --> 00:58:54,320
because his rent is half of what
your mortgage payment is.

1187
00:58:54,560 --> 00:58:58,080
And then he goes to Vegas, goes
through a couple of wives, does

1188
00:58:58,080 --> 00:59:00,760
any number of things where he
blows all the money that the

1189
00:59:00,760 --> 00:59:03,240
homeowner doesn't have a choice
because they want a roof over

1190
00:59:03,240 --> 00:59:04,720
their head.
They have to make that mortgage

1191
00:59:04,720 --> 00:59:06,280
payment.
This isn't hard.

1192
00:59:06,320 --> 00:59:09,120
It's truly not hard.
You have to do some serious

1193
00:59:09,120 --> 00:59:12,840
mental gymnastics to break out a
spreadsheet and go, here's how I

1194
00:59:12,840 --> 00:59:15,440
could do it.
And I assure you, I am the

1195
00:59:15,440 --> 00:59:18,600
person that is disciplined and
straightforward and will follow

1196
00:59:18,600 --> 00:59:20,560
this this spreadsheet for the
next 30 years.

1197
00:59:21,200 --> 00:59:23,440
Well, Josh, I think that's a
good place to wrap up.

1198
00:59:23,440 --> 00:59:25,320
So if you found any value
tonight, make sure you hit the

1199
00:59:25,320 --> 00:59:26,800
thumbs up.
Consider subscribing to the

1200
00:59:26,800 --> 00:59:29,000
channel.
I sell real estate, believe it

1201
00:59:29,000 --> 00:59:30,880
or not, Josh does loans.
If you'd like to get in touch

1202
00:59:30,880 --> 00:59:32,480
with us, there's a link scroll
in the bottom there.

1203
00:59:32,480 --> 00:59:36,440
Jeb smith.net/start.
But until next week, buy right,

1204
00:59:36,600 --> 00:59:38,520
borrow smart, build wealth.
Adios.

1205
00:59:38,920 --> 00:59:39,720
Amigos.