S2E32 – What’s The Answer For More Inventory and Affordable Housing?

Housing affordability and the lack of inventory are 2 major problems affecting the housing market. In order to see a more balanced market, we need a surplus of available homes for sale on top of lower mortgage rates to help increase housing affordability. What would create more housing inventory? Who are the sellers in the current housing market? In this episode why inventory is the biggest problem in our real estate market and why it’s not likely to grow in a meaningful way anytime soon as we prepare you to buy a house in 2023 while becoming The Educated HomeBuyer.

✅ – Want to get connected with us or to a local expert in your market, please reach out at http://www.theeducatedhomebuyer.com/expert

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

📩 – info@theeducatedhomebuyer.com

For Show Notes, See Below 👇

[00:00:00]  Jeb Smith, Huntington Beach Realtor: Inventory remains one of the biggest challenges in today’s housing market. And with that said, many sellers are currently sitting on super low rates, not putting their homes on the market. But at the same time, I’m often getting the question from various people out there in the market, because I’m a real estate agent, asking who is selling their properties? 

And in today’s video we’re gonna tackle two different things. We’re gonna talk about the idea of low inventory. When will we see inventory come to the market. Again, Josh, what is going to drive that inventory on top of the idea of sellers. Who is selling in this market? Why are people selling? Why are people not selling? 

Because ultimately what we need is more supply because at the moment we have equal number of buyers, equal number of sellers, which is really keeping the market stable. And if we had more supply, what we would see is a more active real estate market and in theory, probably lower prices.

So with that said, Josh, I think, let’s talk about the idea first of inventory, where it is now, why we’re here, and then we can get into the reason that we’re here and talking about who’s selling in this market and what’s gonna drive that inventory. 

[00:01:25] Josh Lewis, Certified Mortgage Consultant: Absolutely in, in super broad strokes, Jeb the big years, 21 even 22 last year, we did have a high sales volume, although it tailed off the second half of the year, but we had reached a seasonally adjusted annualized rate north of 6 million sales per year. 

[00:01:40] Jeb Smith, Huntington Beach Realtor: Yeah, six and a half million. 

[00:01:41] Josh Lewis, Certified Mortgage Consultant: And we are descending down to just above 4 million. Since 1996, it has been almost impossible with our population size, with all of the things that we’re talking about, just what makes people move, regardless of what the optimal time to move would be is about 4 million. So we’ve seen the upper bounds of what is possible with the amount of supply and the number of people that are willing to move. Somewhere just over 6 million.

And the lower bound is somewhere just above 4 million. So if we believe that activity will continue in the future, meaning people wanting to buy, either enter into the market as their first time purchase or move up to a newer, larger home, downsize, different area, any of those things. We have to say, where is the selling volume going to come from?

We’re gonna talk about the big picture things that are keeping people from moving and primarily it sounds simple and overly simplistic to say it’s lock in with current interest rates, but largely that’s what we’re looking at. People will tolerate an increase in their payment when they move, either due to, Hey, I’m moving up to a higher purchase price and financing more, or that, and I’m getting a slightly higher interest rate.

But [00:03:00] the big move that we’ve seen, we talked a hundred times on the show, the end of 2021, early 2022, we had rates plus or minus 3%. And we’ve reached over 7%, but call it six and a half pretty consistently for the last year. That’s more than a doubling of the interest cost on your mortgage in addition to the elevated prices and many sellers are simply saying, “No thanks. I’m going to wait it out and see what happens.” 

And Jeb talk about this cuz what are we saying? It’s only been 18 months since rates went from three to 6.5%. That’s not a long time for sellers to wait. Like right now we saw homes for sale increase after about four or five months last year. Of those rate increases and people could see their door was closing for them to sell their home and buy at one of these low interest rates. So we saw a bunch of people head for the exits. 

Now what we’ve seen, they all just said I missed that window. I’m gonna step back and see what happens next. And that’s where I see sellers in the current market is they wanna see what’s next because they don’t like what they’re seeing today. 

[00:04:08] Jeb Smith, Huntington Beach Realtor: No, I agree with that. I’m in the same boat to some extent, right? We were on the cusp, my family and I were on the cusp of trying to find the right property during the pandemic. Locked into your home for, several months, three boys, three growing boys, active boys, energetic boys makes you rethink your life in many ways. And one of those ways is hey, we need more space because, we’re all in the same environment all the time.

And so we’re looking at potentially upgrading. What happened, like a lot of other people out there is it got competitive. Things were selling quickly, things were selling above the asking price. Me as a real estate agent, didn’t really want to get in the middle of that for a number of reasons, but primary reason is we just never found the right property. 

It was looking, my wife primarily looking, during this whole time. And just the couple of times we thought we saw something that would work, there was always something that kind of brought us back going, okay, where we are now isn’t perfect, but it’s better than everything else we’re looking at.

We’re sacrificing something to move and we didn’t wanna sacrifice, right? If we move, we want what we want without the sacrifices. And the primary one for us is location, right? We’re in a a premium location here in Huntington Beach as far as I’m concerned with where we are in our life. And we didn’t want to give that up. 

And so that said, we’re still looking for the right property. So I agree to some extent that a lot of people are locked in, cuz we are to some extent. But for the right property, would I make the move? I think the answer is yes. Because I know at some point in the future, rates are gonna come down.

There’s gonna be an opportunity to make that property a little bit more affordable, and I also believe that if rates come down, demand’s gonna pick up and it’s gonna make it more difficult to find that right property if you don’t pick it up when it comes to the market. Now, I realize I just went off on a [00:06:00] tangent there, but I can relate to what a lot of potential sellers, would be sellers, are going through because of the rising cost and rising rates and going from where I bought in 2012 to now. Higher property taxes, all of that stuff, right? 

So I’m in the same boat as a lot of people out there in many ways. So the question I am often asking Josh, I’m not seeing that property come to the market, right? We’re looking at the inventory. We’re going, where are the properties that we wanna buy? So what drives that inventory?

What creates potentially more inventory? Now we’ll talk about the sellers in a minute. Who is selling in this market? But who or what Rather, would give us more inventory. Everybody believes that, Hey, listen, just more inventory coming to the market is a good thing. It is. But what I’ve learned as a real estate agent for nearly 20 years, and somebody that reads quite a bit on this stuff is that most sellers aren’t selling their homes, Josh, to go rent a house. Aren’t selling their home to go live in their rv.

They’re selling their home and they’re buying another. Which means it’s a one for one exchange. So every time that seller puts their home on the market, they’re also taking one off on the other side. And what we really need is a seller to come to the market that is not a buyer for inventory to grow in any meaningful way.

[00:07:23] Josh Lewis, Certified Mortgage Consultant: I agree a hundred percent. So let’s really talk what is the source of supply? New construction is the holy grail because that’s a home that doesn’t exist, that has to be sold because it’s a corporation that’s building it for profit and wants to put that into the market. So whether it’s a luxury home for someone to move up into, whether it’s an entry level home for a first time buyer, that is true new inventory added on what is out there. 

We also have people like yourself. If you chose to sell your home, to move up into a bigger home, better location, whatever the situation may be, it’s new inventory that is available for sale on the market. But as you pointed out, you are a buyer, so you are also additional.

So it didn’t really help that supply demand imbalance. The other thing we would say is, are there institutional owners of homes out there. We know that hedge funds have bought thousands, I don’t know if it’s hundreds of thousands, but tens of thousands of homes across portions of the United States, and they are holding those for profit in the rents, profit and appreciation profit in terms of tax shelter.

So that could also come to the market. But outside of that, Jeb, I can’t think of any additional sources of supply coming to the market. We had building permits come out today and building permits encompass a lot, but they were down, they were below expectations. So builders are not overbuilding.

We’ve talked about builders have been since the great crash in 2007, 2008. They have underbuilt for that 15 year period and we are seeing them permit [00:09:00] less projects going forward. We can talk about what the composition of what they’re building is in terms of how it matches up more to their desire to maximize profitability versus filling the needs of the market.

So we’re underbuilding. We’re not building the supply that would alleviate the majority of these problems. And I guess, Jeb, when I circle back and I look at that, from the mid nineties when I got into the business till now, the thing that I was always told is a healthy housing market has to be healthy on the low end because the first time buyer buying that entry level home allows the person to profit and buy their next home. 

And that home is sold to buy the dream home when someone’s on their third or their fourth purchase. And absent that, We’re going to have trouble. And we’re gonna review some numbers here from Redfin that basically says homes are turning over at a lower rate than we have ever seen.

So what we have is first time buyers having to fight each other for a very limited amount of supply. And I guess anecdotally, Jeb that perfectly makes sense to me because what I’m not seeing much of right now is the move up buyers. Because that would be your supply, right? Yeah. That would be the person that’s selling the home.

I’m not talking to a lot of those people that’re saying, Hey, we’re gonna sell our 900,000 house. We’re gonna buy a 1.2 million house. We’re gonna sell our $600,000 condo. We’re gonna buy an $850,000 single family. We’re not seeing that at all. I’m talking to lots of first time buyers. So very skewed, very distorted market.

You and I, Jeb. It’s fun. You put anything out on the internet, you get a lot of trolls. The trolls say, Hey, don’t pay attention to those guys. They’re a realtor and a mortgage guy, so they’re biased. As if we can say some things here on the internet and we’ll go from 4.2 million sales this year, back to 6.2 million, and we will have all of the sales that we want.

[00:10:46] Jeb Smith, Huntington Beach Realtor: We have a lot of influence. 

[00:10:47] Josh Lewis, Certified Mortgage Consultant: We have a lot of influence. I don’t think we quite have that much. The reality is, yet I own five pieces of real estate. You and I want to acquire more. You want to buy another home? My business and my livelihood depends on this. So if we say that a third of the volume in the market from two, three years ago is gone, there’s no talking on the internet to move volume. 

We’re saying what is going to happen? Who is transacting? Both selling, buying, and what do they need from a mortgage professional, from a real estate professional? And that’s what we’re really talking about today. 

[00:11:21] Jeb Smith, Huntington Beach Realtor: You said a couple of things that struck me. One is you said our livelihood depends on this. Something I wanna be clear at, we’re never here giving advice so that we benefit, right? We’re giving education. You use it how you want. Understand that if prices go down and homes become more affordable or less price, we are going to buy more of them which in turn, we’re going to benefit that way. So don’t take it as, Hey, we’re giving this advice to push the housing market forward. It’s not that. It’s about education. 

The second thing I heard you say is the idea of properties coming to the market in the lower price point, which then allows, first [00:12:00] time home buyers to purchase those. And then that, that moves up the move up buyer, so on and so forth. And when I think of that concept, or when I thought of it in a moment ago, I thought of the velocity of money, right? Money transfers hands. It allows that next person to do something with that money. It transfers hand, it keeps transferring.

And what we’ve seen is the velocity of money has slowed down. I’m gonna coin a new thing here. We’ve got velocity of housing. Velocity of housing is more or less non-existent to some extent. There was a stat that we read earlier. It’s only 14 of every 1000 US homes changed hands during the first six months of 2023. That’s insane. 14! They said a more normal market was like 20, but prior to the pandemic it was even higher than that. 

So you just have less transactions taking place. So the velocity is slowing down. But without that entry level buyer, Josh, you are essentially pricing almost I don’t know what the percentage is that of people buying in that price point or could afford in that price point. But you’re more or less cutting a segment of the population out entirely by not building on that lower price point. And understandably to some extent, right? Builders are in it to make profit. So they’re going to build where they can maximize price and dollar and sell and I get all of that.

But like you said, that is a problem. On top of that, at the moment, new construction makes up, I think about 33% of the active inventory out there in the market. And for a while, for the better part of a year and a half, it was new construction was gonna crash the housing market. New construction is the only thing saving the housing market at the moment because you’ve got a good portion of buyers that are able to transact right now buying new construction.

That’s the only thing that’s moving the market in some segments because there’s nothing else out there for these people to buy. So we talked about new construction not really being the answer and could it be the answer? It could. But Josh, we talked about regulatory cost here in the state of California I don’t know what the latest figures are, but in, two years ago it was about 90,000 to a hundred thousand dollars to break ground, to build a house here in, in the state of California because of, environmental studies, because of all of the things you have to do just to get permits and get the process moving forward.

So until you figure out all of that, and that’s just, we’re talking about Southern California or California in general, we’re not talking about the nation. That isn’t going to change inventory in any meaningful way. And lastly, I think we should talk about it because people believe this, even though I’m, on the other side of this is distressed sales.

So let’s talk about distressed sales at the moment. Ran some numbers, 91% of homeowners have a rate below 5%. Less than 3%, 26% of people out there have an interest rate below 3%. 45% have an interest rate between three and 4%. [00:15:00] 20.3% have a rate somewhere between four and five. So that right there is 91%. And then five to 6% you have 5.3%, and then above 6% you have 3.7%.

And on top of that, foreclosures at the moment only represent 2% of sales in May, which is more or less unchanged year over year. So Josh distress isn’t gonna be the answer. New construction’s not likely gonna be the answer, sellers that need to buy another home aren’t the answer. We can talk about homeowner equity or we can talk about, who is actually selling in this market and why these people are selling.

[00:15:38] Josh Lewis, Certified Mortgage Consultant: Let’s just rephrase it this way a again, People love to say you’re a permabull, you’re trying to talk up the market. These are facts that we cannot get around. What I think is important to know what is a healthy housing market in terms of affordability. People say we want affordability really high.

You don’t want affordability really high. Because what that means is homes have been depressed in price. So go back to say 2010. California Home Affordability was at record highs. Homes were selling for less than their replacement cost. You couldn’t buy the land, build the house for what that home would actually sell for. That’s not healthy. 

What we have right now, Is not healthy, where it’s exceedingly low and you have very high wage earners can buy entry level homes that are not exceptionally nice. That’s not healthy. You want something in the middle where a reasonable entry level home, can be built and sold at a profit, and can be afforded by a large group of people. 

So when we look at this, we just talked about some structural changes that have happened in my time, in your time in the business that have been going on and will continue to. We have watched when I first got in the business, an average homeowner would be in a home about seven years.

In that timeline, it’s gone, I think the last numbers I saw were 12 or more years that someone’s in a home. We’re looking at Redfin is measuring it in a different way. Out of a thousand homes, how many of ’em are gonna sell in a year? They’re gonna turn over 14 of them. So we’re at a much lower level there.

Shorter term structural stuff. You talked about Building. Building has been depressed because of the cost of construction that dictates what can be built. So nicer, higher end homes, multifamily properties, things held for rent. We have entire communities in parts of the country that are single families being built for rent.

And then recently the whammy here is not just that interest rates went up. We looked at data from First American earlier today and they said, Hey, the last six times we’ve had a rapid increase in interest rates only three of those led to a decrease in home sales volume. And you look at ’em and you’re like, Okay, one of their examples was 2013.

In 2013, interest rates went from about three and a half to four and a half. And you go, that’s big, right? So 1% jump. But it’s less than a 25% increase. We just went from three to six and a half. [00:18:00] That’s more than a hundred percent in increase. That is a shock to the system. Of all of these things, that one is more likely to correct than people suddenly going back to turning over their homes every seven years or permitting costs, dropping to a point where builders just go on a building spree, building nice entry level properties. 

So these are big, long-term structural things in addition to people sitting on record levels of equity at record, low interest rates, and being incentivized to continue that trend of staying in their home longer term. These are just facts. I don’t like them. You don’t have to like them as a potential first time buyer, as a professional. No one needs to like it. It is not a recipe for happiness, but it is what we are dealing with. 

[00:18:45] Jeb Smith, Huntington Beach Realtor: And with that, Josh, we talked about like sellers and that sort of thing. A lot of people believe that, hey, look, the economy is slowing down. One thing I heard during the pandemic a lot is, hey, when things change, people are gonna sell their homes. They’re not gonna be able to continue making the payments. They’re gonna have to sell them. 

What we’ve seen is that low interest rate, right? It was almost a subsidy from the government in some ways. And what I mean by that is, so instead of giving somebody four or $500 a month every single month, what they did was they allowed them to take their four and a half, 5% interest rate and refinance it to two and a half, 2%. So now they’re saving $500, $1000 every single month.

So it’s a thousand dollars paycheck. Every single month that you didn’t have prior to that. And during that same time, wage growth increased, appreciation went up. So all of these things changed that changed what that homeowner looked like financially. Now, in many cases, savings are down and things are changing.

So I’m not making it this rose colored sunglasses view for everything. But what I am saying is these are things that you have to take into account when thinking about what is driving the market, what’s gonna drive it in the future. So at the moment, Yes unemployment looks to be strong, economy is slowing.

But when you ask me, Jeb, who are selling their homes, who are you seeing? Who are you talking to? What does the demographic of that person look like? What I can tell you is the people that I’m dealing with at the moment are people that have to sell for one reason or another. And when I say have to, I’ll explain here in a moment, but out of the sellers that I’ve had recently, we’ve had job relocations, right?

People moving from one state to another. In many cases, the job, the company that they’re paying for are paying some of these costs as well. So they’re not even being upset, if you will, by the move because the costs are being covered. But a job relocation in many cases would get somebody to sell their home. Especially if they’re in a situation where they need that equity to buy the next property in another state. So I’ve seen that. 

People moving out of the area, right? I’ve had a listing appointment a couple of weeks ago and got another one on Saturday where somebody is older. Family is saying, Hey, listen, we don’t [00:21:00] live in the area we want mom, dad to come live with us. It’s easier versus sending them to a retirement facility, a senior living facility. We want ’em to be close to family. Hey, just sell your home. Come live with us. So that’s another part of that relocation. 

On top of that, you got the downsizing right now, and I’m not talking about Josh, we can go into it if you want, the silver tsunami. I know we’re gonna do a podcast on this here real soon, but what we’re talking about is people that are downsizing, right? They have the larger home that has the stairs. There is no downstairs bedroom in there. We need a smaller property just to make life a little bit more manageable.

Those are the people that are making some moves in this market. But at the same time, I have those same people that were potential sellers and then they looked and go, okay, I could sell my house and what I can buy, I’m not really saving here, so I’m just gonna make this work. So that kind of goes both ways.

But then you have death, right? Somebody has passed away. Left one spouse owning the home, they can no longer manage it. Therefore, hey it’s better off that I’m in a smaller property, maybe a condo. Or you have the case like a client right now. Dad passed away a couple years ago. Mom unfortunately just passed away now.

Property is left to the heirs of the trust. They don’t wanna be landlords, they don’t wanna rent. We’re in the state of California. Being a landlord can be tough in some ways. Very tenant friendly state. They don’t wanna deal with that. They’re going to sell that property. These are properties that are coming to the market, and then you got life changes, right?

Also, have a client right now had a baby within the last year, has a dog, not a small dog, a big dog. He lives in a condo, second story, Long Beach. He’s looking to get a yard. He wants his kid to be able to ride a bike, go outside and play. The stages in life when home ownership makes sense.

We always talk about buy when it makes sense. That makes sense, right? I have three growing boys. We’re in a three bedroom house. They choose to be in one bedroom together. There could be some separation there but we need more space. Like as a family, we just need more room.

These are things that drive people to sell their homes versus the idea that, hey real estate is down. I’m selling half the number of transactions that I did last year. I can’t keep my house. I have to now go pay rent that’s more expensive than my mortgage. No, that makes zero sense at all. Therefore, people stay put in their homes and we continue this problem at least for the foreseeable future. 

[00:23:27] Josh Lewis, Certified Mortgage Consultant: Yeah. Again, we talk about the expectation and hope that interest rates will moderate. Does moderate mean under 6%? Do we get back under 5% at some point? That will loosen up some sellers who will choose to sell and buy another property.

But this again, it feels a lot like a muddle through market for the foreseeable future. I don’t see a boom where we have a lot of supply and a lot of buyers who can afford to purchase, and we don’t see a bust for all the reasons that you talked about. [00:24:00] Record levels of equity, record low interest rates.

I saw an article earlier this week that US household debt currently is 77% of gdp. Prior to the downturn in 2008, it was 101% of gdp. So households have less debt at lower interest rates, more home equity, more of a cushion, less distress, and every reason to hold on because buying is harder than it has been at any point in the last 15 years.

So certainly don’t wanna paint a vision of doom and gloom. What we wanna say here, it’s not good to be overly optimistic. We all remember back, 15 years ago when The Secret came out. You would just sit there and you would imagine that you were rich and you would get rich one day.

[00:24:38] Jeb Smith, Huntington Beach Realtor: Mailbox, money baby!.

[00:24:40] Josh Lewis, Certified Mortgage Consultant: We have to be optimistic, but realistic of what is happening out there. Believe that you can do this. You can enter into the market. We successfully help buyers every month. I’ve got a text over here that just popped up, gentleman that’s gonna be buying his first home, $600,000 here in Southern California.

He, his girlfriend and their two kids are going to move into that property. So it is being done successfully. Do not let anyone tell you it cannot be done. You have to be a millionaire. But let’s also be a realistic, it’s gonna be more difficult. There are a few sellers relative to buyers. There’s going to be competition.

You may have to settle for something less than what you envisioned when you first said, Hey, what is my first home going to look like? Play the long game. Jeb has said a thousand times on here. Real estate is not a get rich quick scheme. It is a get rich, slow scheme. Entering in at what looks like a difficult time, over 10, 15, 20, 30 years, will still pay dividends relative to renting, which faces many of these same issues that will lead to higher rent prices over time. Whereas a rent versus own analysis today may say, Hey, it’s cheaper to rent. That may be true. Once we get out about seven years. Not true at all. 15 years, it’s weighted way in favor of owning. So important to know those. 

[00:25:57] Jeb Smith, Huntington Beach Realtor: No. And so with that let’s talk about what continues to drive the market, right? Demographics. We’ve talked about demographics, not in a lot of detail. But I think when we start talking about the silver tsunami or the idea of a silver tsunami.

We’re gonna be talking about demographics, right? Millennials still buying homes. The gen Z’ers, who’s behind millennials?

[00:26:16] Josh Lewis, Certified Mortgage Consultant: Gen Zs, 

[00:26:16] Jeb Smith, Huntington Beach Realtor: gen Z, is, I get confused. There’s so many, there’s so many letters in the alphabet that follow these guys and they’re out of order, which makes it more difficult to understand.

[00:26:25] Josh Lewis, Certified Mortgage Consultant: I’m just getting used to the idea of millennials buying, and now we’re looking in that the leading edge of Gen Z. The early buyers will be, are and will be getting into the market. Mind boggling for us old folks. 

[00:26:36] Jeb Smith, Huntington Beach Realtor: No, so you got demographics continuing to push home buying. You got boomers, right? They’re living longer, they’re passing homes along to their kids and many of these kids couldn’t have been homeowners any other way other than acquiring that property from their family. In fact, I have a client recently, his father just passed away. Left the home to the kids.

He bought his brother out. He now is in a position where he [00:27:00] has a home. He wouldn’t have had that home otherwise. That’s the sort of thing that, that’s keeping that property off the market. On top of investors, right? Investors aren’t selling even with the record appreciation, even with the tenant issues that they’ve had over the last couple of years.

Why? Because rents continue to go up. We’re becoming, quote unquote a renter nation to some extent and investors are the ones reaping the rewards of that. Sellers are also buyers. That’s keeping property from growing. New construction, it’s expensive to build. And then you got people again that just won’t sell because they have a super low rate.

And that’s me to some extent, right? I have that super low rate on my property if and when I decide to buy another property, really good chance that the current home becomes a rental. Why? Because there’s nearly $2,000 a month in positive cash flow on that property by keeping it. That creates an additional problem that we haven’t really even seen yet in the market.

I hope that, things do improve and I think it’s important to note I’m not coming here saying that Things aren’t going to improve. I know it can seem that way. I just, at the moment I see this gridlock in the environment or in the housing market, and I don’t see an easy answer.

It makes it difficult to explain that and come across positive because I do see it as a problem. But with that said, home ownership is important. We talk about it all the time. What it creates generationally long term. In fact, I saw a stat this morning, Josh where we’ve been wrong. We’ve been talking about 4.6% appreciation. And I read the stat this morning and it said that, where is it? It said, That’s five. It was a 5%. 5.5%. 

[00:28:44] Josh Lewis, Certified Mortgage Consultant: It was a shorter timeframe. 

[00:28:46] Jeb Smith, Huntington Beach Realtor: Yeah, shorter time. Shorter. 

[00:28:48] Josh Lewis, Certified Mortgage Consultant: 5.5%. So it’s been more. And we can go into that in the future episode. Again, there are reasons for that, structural reasons, and again, accuse me, of being a perma bull but what I will say is I think it is highly unlikely for two different reasons that we will see that level of appreciation going forward. If I’m buying and going into the current market, I’m gonna count on two and a half, 3% appreciation going forward. Slightly above the rate of inflation, rate of GDP that we’re likely to see.

And we can go through that in more details, but you don’t need five and a half percent appreciation to get rich slowly in real estate. You need two and a half, 3% annual appreciation. 

[00:29:25] Jeb Smith, Huntington Beach Realtor: No, that said, Goldman Sachs is predicting 1.3% in 2003, 1.7% in 2024, 2.4% in 2025, and 3.8% in 2026, I believe.

So again, home ownership’s important. Do it when it’s the right time in your life, have money in the bank, have the longer term time horizon, all of the things that we’ve talked about. So with that said, guys, let us know if you like the podcast by liking, subscribing, sharing with your friends.

Also let us know what you want us to cover, right? I know a lot of this stuff has an overlap, and we want to make [00:30:00] sure we’re bringing you the information that you want to hear so that ultimately you can become The Educated Home Buyer. But until next time, Buy Right, Borrow Smart, Build Wealth.


[00:30:11] Josh Lewis, Certified Mortgage Consultant: Amigos.

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