S2E11 – What Is Really Going On In The 2023 Housing Market?

The 2023 Housing Market Is On Fire AGAIN but will it last? Should you Buy Now or Wait for Housing Affordability To Improve? Is there a change we will see a housing crash in 2023? Why are some markets selling above the asking price will others sellers are having to lower their house prices? In this episode, we discuss the current state of the real estate market with regards to housing inventory, buyer demand and how that’s affecting house prices to help you become The Educated HomeBuyer in 2023

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Connect with me 👇 Jeb Smith (huntington beach Realtor/orange county real estate) DRE 01407449 Coldwell Banker Realty ➡I N S T A G R A M ➳ https://www.instagram.com/jebsmith ➡Y O U T U B E ➳https://www.youtube.com/c/JebSmith

Connect with me 👇 Josh Lewis (Huntington Beach Certified Mortgage Expert) DRE 01209148 Buywise Mortgage M:714-916-5727 E: josh@buywisemortgage.com ➡I N S T A G R A M ➳ https://www.instagram.com/borrowsmartjosh ➡Y O U T U B E ➳https://www.youtube.com/c/buywiseborrowsmart

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👕 – Merch – https://jebsmith.myspreadshop.com/

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For Show Notes, See Below 👇

[00:00:00] Jeb Smith, Huntington Beach Realtor: What’s actually happening in the 2023 housing market? That’s what we’re gonna talk about today in a little bit more detail. We’re gonna get off the script of specific home buyer education and talk more about what I’m seeing as a real estate agent, what Josh is seeing as a mortgage broker, a mortgage professional in this environment, to not only help navigate you through the market, but also just to give you a little bit of insight as to what is going on so that you can make better decisions as a potential home buyer out there, 

Josh, where do we wanna start with this whole thing?

[00:00:32] Josh Lewis, California Mortgage Broker: What I like to think in terms of the quality of your insights are directly related to the quality of the questions that you are asking yourself.

So this market, fortunately for us, we’re lucky. It presents us with a lot of questions. Questions every day, you know, we’ve been talking earlier this week that we see the headlines and headlines backed by numbers, whether it’s Case Shiller, black Knight Figures, and you’re like “okay. I see that they have actual real repeat sales indexes that are showing prices coming down in many areas.”

Not significantly , but a real number. And then you and I we’re sitting here working with clients that are getting outbid having a hard time finding good properties. So just trying to square what is going on out there and what it means for you as a buyer. 

[00:01:23] Jeb Smith, Huntington Beach Realtor: And I think it’s important to note we often mention this on the show, but real estate’s local, right?

We’re located in Southern California. Many of you guys know that. We know Southern California real estate really well. And we could even go to say, we know other parts of California well better than most out there. But when we start talking outta state, a lot of the information that we’re getting isn’t coming from headlines. 

We’re not reading headlines, we’re trying to read articles, get the context of the article, and then having conversations. I know a lot of agents across the United States, successful agents that do a lot of business in a lot of the major metros out there and having these conversations about what’s going on? What are you seeing? Are you seeing price reductions? Is it competitive? 

And taking that and giving it back to you, but on top of that, Many of you guys know I have a YouTube channel and people are not shy about commenting on what’s happening in the markets across the United States. And on one side of that, you get the completely outlandish people saying I’m in San Francisco and home prices have dropped by 30%.

And I’m saying, “no, they haven’t. There’s no data, the support that prices are dropping by 30%.” So I know that is on one side of the coin. And then I have people in the upper area of the East coast, markets like New Jersey and Maryland and some of these states talking about how the market is still super competitive.

Houses come on immediately and are bid up, multiple offers. And Josh, I think that’s a good place to start in fact. You and I were having a conversation earlier this morning. And you were talking about an agent back on in Maryland, I believe it was in fact. And you said something along the lines [00:03:00] that they were saying, Hey, it’s not what it was a year ago or two years ago with 20, 30, 50 offers.

But they’re still two or three. And any of us in the business know all it takes is two or three offers to get a situation where people are, a little bit more emotional, having to go above the asking price, having to do things that they maybe didn’t think they were going to have to do in a decelerating market.

[00:03:26] Josh Lewis, California Mortgage Broker: Jeb, that supports your point of saying it is incredibly important. If you’re listening to a podcast, you could be anywhere in the world. If you’re listening to us talk, hopefully you’re in the 50 continental United States. Because that’s really all, I hope you’re not talking about how our markets operate here.

Some small country in the Phil lippines or something. 

But just to put that into context I had that conversation. I host a weekly live video in a really big Facebook group dedicated to veterans. So again, that realtor last week in Maryland said literally everything, multiple offers we’re seeing everything going above list price.

Not as crazy as it was at the peak, but definitely things selling one to 2% over with multiple offers. Talked to an agent last night in San Antonio San Antonio a very different market. He’s got four listings right now. All of them are sitting and he didn’t feel like there was one consistent reason for all four of them sitting.

So it was four different solutions to that for him as an agent to move those properties and get a successful transaction and sale for his owners that want to move on to a new home. But long way of saying, you have to look, not just state, not just county, not just city. Different neighborhoods are gonna perform differently.

So if you’re looking at Fox News, MSNBC, CNN remember if it bleeds, it leads. They’re only gonna tell you bad and negative information and they can only look at it from a national level. You need to know what your market looks like. Jeb Austin had super appreciated and so it’s doing a little worse than other areas.

San Francisco, the Bay Area, super appreciated. Doing a little worse than others, so you need to know where am I? Am I in Omaha, Nebraska where you know, properties didn’t super appreciate and probably aren’t gonna suffer much as a result. 

[00:05:07] Jeb Smith, Huntington Beach Realtor: I flew into Omaha, Nebraska one time. Worst flight of my life. In the back of the airplane, wind was blowing what felt like a thousand miles an hour. Completely off the subject, but you mentioned Omaha. I have nightmares about that place, so I thought I would throw it in there. 

But when you talk about all of those things you mentioned, Josh, I would also like to throw the idea of seasonality in there because interest rates peaked last year in October upwards of 7% depending on who you’re looking at you know what the actual number was with the peak.

But that’s a typically a time in the market that’s gonna slow down. If you go back historically and you look at the ebbs and flows of the real estate market, you can look every single year. Historically speaking, the summer is when inventory peaks, it starts to diminish as we head into the fall, the winters the slower time of the market, and then it starts to pick up in February, right?

 October last year was a little bit [00:06:00] different. Interest rates peaked, but at that time, supply was also peaking later than normal. So it was peaking later in the year. And so you saw this big slowdown in the market and people were attributing it to rates. People were attributing it to housing affordability.

All of those are true, but the one thing that people just, forgot to mention or left out for a re whatever, it was just the natural slowdown in the market that time of the year. And so now what’s happening, you’re moving into the beginning of the year, typically a time when the market would start to heat up.

We start to see more inventory come to the market. And this time, what happened with the beginning of the year is we actually saw that drop in rates, right? Interest rates, many markets out there, or I guess nationwide rather, not many markets, but rates dropped to the mid 5% range for a lot of well-qualified buyers out there.

That spurred buyer demand. So a lot of that inventory that was coming to the market has now been gone and with that, we’re not seeing a lot of new sellers come to the market because they’re locked in to super low interest rates. I saw a stat, actually today 45% of homeowners have no mortgage on their home.

Of the remaining 55% of the people that own homes, nearly 85% of those people have an interest rate lower than 5%. . And so when you have interest …. 

[00:07:21] Josh Lewis, California Mortgage Broker: 90% under five and 70%. Ok, 90% of people, 70% below four, 70% below four. 

[00:07:29] Jeb Smith, Huntington Beach Realtor: Those are crazy stats. So think about that for a minute. You have interest rates sitting at the moment, again today, somewhere between six and a half and 7% depending on how well qualified you are. So as a seller, are you going to sell your house for likely more money than you paid, because earlier we talked about, yes, there are some declines in markets, but most markets out there, the values are still higher than the majority of people paid for their homes.

You’re paying more money for a home. The interest rate is higher for that home, therefore, It’s a more costly move. Even if you sold your home in a state like California and you were to buy in a state, say like Arizona for example. If you had a home here in California that you were able to finance at a three and a quarter percent rate, say 3% rate, and you go to buy out-of-state today, yes, you can buy a significantly bigger home for less money out of state.

So you could buy that nicer home, if you will, but because of the financing aspect, your mortgage payment is probably going to be higher out of state than it would be staying put therefore, sellers aren’t selling their homes. So here we are today. We’ve got this conundrum. Josh this gridlock. And that’s really what I want to talk about.

[00:08:38] Josh Lewis, California Mortgage Broker: Let me give you an example of this gridlock. Have a client who called, they want to sell pants on fire, hair on fire. I wanna sell this house. I wanna get a sign in the yard that just need to hear from you. What do I qualify for? What does my payment look like? So it turns out they had bought their home for about $700,000, six years, seven years ago.

It’s gone up to about $1.2 million now. Nice house, nice [00:09:00] neighborhood here in the city of Orange. What he wants to do, sell that house at $1.2 million and buy another house about 1.2, but go further out rural and have land. So I told him, I go, Mike, you don’t wanna do that. He’s what do you mean I want the land, I wanna move.

I’m like, yeah. You’re missing a couple things. In California, we have Prop 13, so your taxes are based off of closer to that $700,000 purchase than the 1.2 million value. And we have you locked into the 3% interest rate and the new rate is gonna be just shy of 7% right now.

Ran the numbers for him. So basically sell the same priced home, take that money net of transaction costs, plug it into the next one. Payment was gonna go from $5,000 to $7,800 a month, and he heard that and he goes, All right, then what can we do? Immediately it just shut down the conversation. There was no more, okay let’s do it and we’ll hope we can refinance in six months.

It’s just no, that doesn’t make sense. And he’s not an a dumb person, not an uneducated person, but most of you out there listening, you are not real estate professionals. You don’t see these numbers all day, every day. So you know intuitively, okay, rates are a little higher. My payment’s gonna be a little bit worse, but I’m making more money. I can handle it. I really want some land. 

And for them it’s just like that was the end of the conversation right there. And I don’t believe that they’re unique. Jeb, why don’t we go back and talk about this. I want to talk about being both simultaneously, spectacularly right and horrifically wrong. 

When rates started going up last year. I said rates can’t go above 5% for because, for a couple of reasons, because government debt, as it rolls over, will get renewed at those levels, and we have more debt than we’ve ever had. That will be problematic for the US government in terms of debt service.

The second piece is if we hit 5%, that will cause a major decrease in home prices. I didn’t think it was gonna happen. I didn’t think home prices were gonna come down. What we failed to account for, I include you in this. I’m gonna use the Royal We, Jeb, you’re included. What we did not account for, 

[00:10:56] Jeb Smith, Huntington Beach Realtor: we’re on the same podcast, therefore it’s us.

[00:10:58] Josh Lewis, California Mortgage Broker: Is that lock-in of owners saying, , I’m not gonna sell. So for prices to come down, there has to be a supply demand imbalance, more supply, less demand. So right now there’s definitely less demand due to lower affordability with high rates and high prices. But what we absolutely don’t have Is more supply because people just like the guy that I told you about don’t wanna move.

And Jeb closing the loop. The last thing on there where I say I was right, there is a level, and it appears to be about 7% on the interest rates where prices just are not going to move. Where buyers just back out. We hit it in November. And that was when activity stalled. You rightfully pointed out seasonality involved there.

But then we get into the beginning of the year, December or January. people come out of that seasonality where the first early arrivals on the scene start looking and they arrive and see lower interest rates. January was a pretty good month for most everyone, most better than what it was expected.

Now we’ve run right back up to those same levels and we’re looking at very similar activity levels to what we were seeing in October and [00:12:00] November. 

[00:12:00] Jeb Smith, Huntington Beach Realtor: Yeah, no, that’s a good point. It, I thought it would be helpful if you know right now to mention about real estate being local. Cause I have an example.

You, you spurred something there. I had a listing appointment this past Monday. And in having the conversation looking at comps with the seller, I said basically look, there’s no inventory. They have a four bedroom, three bath home. It’s a two-story home on a 6,300 square foot lot. 

And value…. they bought it in 2021. So in 2021, they bought it for $1.38 million. At the time, it was listed for one, three and a quarter. They paid $1.38, so $55,000 more for the house at the time because that was the market they were in. They moved here job relocation. He’s now getting relocated, so they’re moving outta state.

So in our conversation and looking at it, there were only 11 homes in all of South Huntington Beach that had at least four bedrooms and a single family detached home. That was my basic parameters. I didn’t do square footage or any of that stuff, and there were 11 homes in that whole area.

Now, mind you, Huntington Beach, I don’t know how many homes are in what’s considered South Huntington, but Huntington Beach is as a whole, has about 205,000 or so people, right? So a lot, quite a few people. For our market, only 11 homes in that market available. So I said in our conversation, there’s not a lot of inventory.

Not a lot of homes that offer what your home offers, there’s a really good chance that we price it right where we think it’s worth, we’re gonna get multiple offers. And they said this is exactly opposite of where we were just looking at homes. And they happen to be relocating to Dallas, Texas. And so they’re telling me in going to Dallas, Texas, there’s inventory everywhere.

Like we see houses all over the place and we’re having conversations, we’re, looking at different neighborhoods, different properties, and there’s different incentives and what have you. And so when we talk about real estate. We mentioned earlier real estate’s local, but that is a really important thing.

Distinction there between two different markets. Two very popular markets, having two different types of activity at the same time of the year. And so understand when you’re listening to this, just know, we’re not out here to try to sell you a bill of goods, if you will, with regards to, trying to get you to buy a house.

It’s more educating you on what’s happening in the market. So again, you can make the best decisions for yourself. 

[00:14:17] Josh Lewis, California Mortgage Broker: Absolutely. Again, you talked earlier about trolls on YouTube online. They show up to the live show every week. The purpose of this show, the purpose of the live show, the purpose of your YouTube channel is never to tell someone or convince someone they should buy a house, and they should do it right now.

We’ve talked about this a million times. Over a lifetime, about 65% of American households choose to be homeowners versus renters. So the question isn’t should you own, you absolutely should own. The question is, when is it right for you? And when it is right for you, how do you do it in the most advantageous way possible?

 This market, and I say this market from 2019 until now has been an adventure. I’ve done this as my 27th year in the business. So after 20 [00:15:00] years, of being in the business, you start to think I have seen it all. And you know what a change or a shift in the market looks like.

We expected rates to come down in 2019, and they did. It was a good year for purchases. It was a good year for refinances. And then 2020 shows up and says, hold my beer, COVID hits, rates go to the floor. Refinances go through the roof. And the one thing that no one expected is that people would jump out and even though they have to wear masks and do virtual tours of homes, buy homes in unprecedented levels.

So now we’re coming to the flip side of that and we’re seeing some of the consequences. You and I talk regularly about what are we reading, what are we seeing? What’s this person saying? What’s that person saying? And you’re trying to triangulate your professional opinion of where we’re at. And I think, Jeb, that I would love to say to anyone listening, if you’re not somewhere where you can work with Jeb, if you’re not in a state where you can work with me, there are other expert professionals out there.

Please make sure you’re working with someone who does the same. They don’t have to have the same opinions, they don’t have to have the same beliefs, but that they’re doing the same. They’re reading a lot of different sources. They’re reading people with differing opinions than them, than one another and coming and saying, “okay, here’s all of the facts as we know them, and based off of that, this is where I think we are.”

[00:16:23] Jeb Smith, Huntington Beach Realtor: Yeah, and it’s important to note, like you and I don’t always agree on this stuff. Last year we were talking about price declines. You and I didn’t necessarily agree on declines year over year and prices going down. But I think the overall consensus is that. We don’t believe there is a crash coming for the reasons that we’ve talked about.

And it primarily, again, comes down to inventory. Now, you could be in a market that’s seeing a little bit more inventory, like we mentioned earlier, those markets might be a little bit softer. Here in Orange County, at the day that we’re recording this episode, we’ve got about 2200 homes on the market.

Okay? That’s less inventory than we started the year with by quite a bit of a margin there. In fact, we’re at the lowest level of inventory here locally that we’ve seen since I believe, may of last year. So it’s crazy, right? All this inventory came to the market supposedly, but yet we’re less than we were last year.

But how is that showing up for buyers. Let me tell you, I’ve written let’s not even the offers I’ve written, the calls I’ve made to agents to either schedule showings or find out about properties, feels like I’m back in the heyday of 2022 in the first quarter where agents aren’t returning my calls.

It’s a very templated type response. We’ve got 15 offers. We’re reviewing ’em, so and I had one that we actually wrote an offer in. Called the agent. It’s like a Saturday, Friday, or Saturday said, Hey, we’re looking at offers on Monday. We submitted our offer on Sunday. On Tuesday. So a day after they were supposed to look at offers, they responded back to me after me reaching out to them saying, we’re not reviewing offers until next Tuesday.

So 10 days or so on the market. And needless to say, we didn’t get the property even with [00:18:00] above the ask offering price because agents are doing things to, to get activity… I’ve written three offers in the last week. All of ’em have been above the asking price. I’ve gotten nowhere with any of ’em.

And a lot of it has to do with agents pricing property, what I feel like almost is a little bit below where the asking price is, whether it’s strategy or something that they’re actually trying to do. It’s working because buyers are making offers. And I also, Josh, I don’t know, maybe you can answer this for me.

Do you believe buyers are anxiety ridden almost to the point where they’re like, I don’t want for rates to go even higher… I see tight inventory… there’s a potential that prices go higher, which I don’t necessarily think is gonna happen, but they believe that and then they’re in this rush to get into a property again?

[00:18:46] Josh Lewis, California Mortgage Broker: A little bit of that. Here’s what I would say. While you were talking about the three offers, so three offers not accepted this week… what was the condition of those three properties? Just on a scale of one to 10, you don’t give details, but scale of one to 10, what would you call the condition of each of those?

[00:18:59] Jeb Smith, Huntington Beach Realtor: One was, one was nice, nicer. Two of them needed work like we’re fixers. Okay. And that’s what’s crazy to me, Josh, is that, couple months back we were saying focus on the properties that needs some work. That’s where your opportunity is. That’s not the case right now because there’s so little inventory out there.

The properties that need some work are also getting offers. They’re getting bids and so I’m confused at the moment as to where this inventory’s gonna come from, amongst other things, but… 

[00:19:29] Josh Lewis, California Mortgage Broker: Let’s talk about that for a minute. What is supporting home prices with affordability at low levels is that there’s not supply because the sellers who hold the inventory are not selling.

So there’s this theory, and we get this question on the live show fairly regularly. What happens if rates go back to four and a half percent? So not the all time lows at two point a half, 3%, but at four point a half percent. Doesn’t that bring a glut of supply to the market? Because now all these people who felt they missed out, throw a sign in the yard because now they’re comfortable moving to their new property.

You pointed this out to me two or three months ago. I said, “cool. Those people are not gonna just harvest the money and go sit on a beach somewhere. They’re gonna take their money and they’re gonna be writing offers on all of that inventory coming to market to see a decrease in values.” 

Widespread, major, significant, I’m not talking a one, two, 3% year over year change. I’m talking a 10, 15% change. You have to have a massive amount of sellers that greatly exceeds the number of buyers. We don’t have the formula for that, what we’ve always had in the past, and the people fall back on. We get this question on the live show every week, Jeb, when are the foreclosures coming?

I want to buy a foreclosure. I have a slide for the next show that shows we’re getting better month over month, less foreclosures, less problems. People are sitting on really low rates, lots of equity and payments that many times are [00:21:00] well below. What it would cost to rent that property. You were telling me earlier today, Jeb, you can get double what your mortgage payment is in rent for your property.

Is that roughly?

[00:21:10] Jeb Smith, Huntington Beach Realtor: It’s pretty close. It’s crazy. Yeah. Property in my neighborhood’s renting for 5,200 now my mortgage is with taxes, insurance, everything is three grand. 

[00:21:17] Josh Lewis, California Mortgage Broker: So riddle me this, Jeb, what can you rent for three grand? Let’s say Jeb has a rough time and goes, we gotta sell, we gotta get outta here.

What can rent?

[00:21:25] Jeb Smith, Huntington Beach Realtor: I have to stay in the office. Yeah. No I nothing that, that’s the thing is, yeah. Nothing absolutely zero. And therefore, we’re stuck. We could go rent a nice property outta state but that doesn’t help. 

[00:21:35] Josh Lewis, California Mortgage Broker: So we have all of this inventory in strong hands with a massive disincentive to sell.

It doesn’t give us a formula for a large increase in supply, and that’s what it would take for home prices to come down. And if we do have the large increase in supply, it’s because affordability improved due to lower rates, and those sellers are also at the same time buyers. 

You used the term earlier today. I dunno if it was earlier in the episode or we were talking gridlock. It’s gridlock where it’s a stalemate. We’re just sitting here going, what? What happens? It is a recipe for low appreciation, low volume for the foreseeable future.

[00:22:14] Jeb Smith, Huntington Beach Realtor: With that Josh we know what changes that, right? High interest rates. Higher than 7% for an extended period of time changes that probably but to what extent. That kills buyer demand I think to some extent. Properties probably sit a little bit longer. Does that cause more homes to come on the market? I don’t think so.

I’ve mentioned it. I don’t know if it’s on here or some other, we do so many of these different shows. And what have you that, out of the last three properties I’ve sold this year, all three have a reason, a viable reason that they were selling. One, it was a property that was in very much in disarray. It was a complete fixer. It needed to be sold to a cash investor, which it was, but that gentleman was moving out of state to go live by his family.

He wanted to be closer to family and grandkids and what have you, the co and he was able to take his proceeds from California and buy a house cash in Arizona. It seems like a really reasonable thing there. Second one is in escrow at the moment. Hasn’t sold yet, but she is moving. She’s been in her house 57 years.

She’s moving to Tennessee. Less expensive, be closer to family, live out retirement, last years of her life closer to those she loves and just less house to deal with in, in moving there. So that’s one. And then the other gentleman who was a purchase, Josh came from YouTube to start with, but he has a growing family, right?

His wife has a small, young child, just had another baby. So now there’s four of ’em. Got to the point where he’s not renting anymore. He was looking a year ago when you could get way more bang for your buck. Rates were a lot less expensive, so he actually paid more, got less property, but for him it was the right move because it was the right time in his life.

[00:23:52] Josh Lewis, California Mortgage Broker: We probably should do an episode on that, Jeb, just because we get this question a lot. Who’s buying houses right now? You just talked about who’s selling, but who’s [00:24:00] selling what’s, what is a typical profile of a seller? , what is a typical profile of a buyer? 

What do credit scores look like? What do down payments look like? And the thing is, Everyone wants to generalize. “Hey, anyone buying in this market has to be a rich person with a huge down payment, perfect credit, and tons of income”, and it’s not the case. I’ve got a client right now, he’s buying a manufactured home on two and a half acres here in Southern California, $420,000.

He was willing to go out where he could afford because the most important thing to him was that two and a half acres. Couple of clients, good friends of mine, unfortunately divorcing, so they were a seller. They sold because of the divorce. They’re buying nice condos. One for each of them. because they’re homeowners.

They don’t want to be renters. They could have paid cash. They are doing loans for them. Lots of situations but generally it’s either a first time buyer who their life stage has said, I’m making good money. I’m either adding to my family by marriage, by birth things of that sort. Adoption, I suppose would be one of those, and I need more room.

One of those clients, the condo they’re buying sweet little detached condo, but it’s 1500 square feet with two small bedrooms, and they have two kids. The kids are getting older, they just need more room. Those fundamentals don’t change.

When you have a really good market where everything’s in your favor, home prices are going up rapidly, interest rates are low, affordability still to a pretty good level. There are people who will buy and sell homes because it’s fun. 

I’d like a change. I want something different. I don’t really see anyone doing it for sport right now. There’s a valid reason why they want and need to buy or sell a home. Would you say that’s true? 

[00:25:29] Jeb Smith, Huntington Beach Realtor: Yeah. In thinking about what you’re saying and then thinking about how this episode has gone on now, we’re, 25, 27 minutes in this it could be taken as a very negative portrayal of the market, right? 

That inventory’s not gonna increase, that home values aren’t gonna go down. That affordability sucks and so I don’t want the episode to come off like that because it’s not. There are tough things to deal with in this market, and this episode is more about education than anything else to know what you’re getting into, right?

So if you’re the buyer that thinks, Hey, I can just go write a below asking offer and they’re gonna accept my offer and gimme everything I want, this is a reality check for you. 

[00:26:05] Josh Lewis, California Mortgage Broker: Well hold on, Jeb. Let’s go back to what you had said earlier about all markets are local, cuz I’ve talked to people. In some markets, hell yeah you can go in and say, I want all my closing costs covered and I’m gonna give you 95% of what you’re asking. 

So it goes back to know your market, deal with experts that know that market really well, cuz it is possible. For us, we’re not seeing that so much in California. 

[00:26:23] Jeb Smith, Huntington Beach Realtor: No. And again, just to follow up on that it’s more about, hey, understand your market. If you’ve got somebody like me in your market, Josh in your market that reads on the market, understands the market can provide you with data to back that up. 

Those are good people to listen to and pay attention to, but even listening to us, doing your own reading. Make your own decisions, right? Make it for you when it’s the right time in your life.

Josh and I talk about this often, but I think if you’re buying in the environment, at the moment, in any environment really, but at the moment it’s a little bit, probably more stressed than years past. Just make sure you have that longer term time horizon, some money [00:27:00] in the bank, some reserves, you’re comfortable with the payment. You’re not counting on interest rates to go significantly lower, so you can afford that. 

And Josh, I think that’s where I want to end today. What do you think about the idea of buying a house with super high rates, with the expectation that rates are gonna go lower? Is that the right move? What does that conversation look like at the moment? What are your thoughts? 

[00:27:24] Josh Lewis, California Mortgage Broker: I tend to agree with the concept. I don’t discount expecting or believing it’s going to happen. You cannot depend on it happening. I don’t ever want a buyer saying, okay, I’m buying FHA today at 6%, and if we hold on and go through all of our savings in the next 18 months, we’ll be okay.

But as long as we can refinance the next 18 months to a 5% rate, four and a half percent rate we’ll be fine. You can’t depend on it. You have to know that you are comfortable and going to be okay. I believe it’s gonna happen again. That’s another episode. Why has it been delayed? Why are things taking longer to normalize than what was expected?

And this where we fall back, Jeb again. We read a lot of smart people and those smart people are confused and coming down on opposite sides of that coin. We are in the fog of war. Usually you can say okay, 80% of these smart people that we talk to see it one way and there’s 20% contrarians out there.

It’s 50/50 and in each camp different reasons and beliefs and thoughts. So if you ask me where are we at 12 months from now, interest rates should be a good bit lower than where they are today. Would I bet my life on it? I wouldn’t. 

[00:28:33] Jeb Smith, Huntington Beach Realtor: There you go. Good stuff. So again, just in summary here, just make sure you’re working with the professional in your market.

Real estate is local. Be comfortable with whatever decision you make for yourself. And stop, focusing on what others are saying, don’t read the headlines. Make sure you read the context, all that good stuff. But we appreciate the constant support. We appreciate you guys reaching out, letting us know how much this is helpful.

If there’s something you want to hear, be sure to reach out to us and let us know until the next episode, Adios!

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