Home Purchase Power Today With Higher Interest Rates
Transcript Of Video:
<begin s
ubtitles>
00:00:01:25 00:00:04:24
- Hello everyone, my
name is Brenden Rendo,
00:00:04:24 00:00:07:15
and this is the Orlando Real Estate Buzz.
00:00:07:15 00:00:11:06
I'm here today with Joseph
Dionne, of Home 1st Lending.
00:00:11:06 00:00:12:18
And we wanted to take a moment
00:00:12:18 00:00:14:20
with the interest rate
changes that have happened
00:00:14:20 00:00:18:16
over the past six months,
and do a little breakdown
00:00:18:16 00:00:20:11
of what it's done to the purchasing power
00:00:20:11 00:00:22:17
for people out there on the market today.
00:00:22:17 00:00:26:12
To give you a little idea,
in January of this year,
00:00:29:09 00:00:3
4:05
the average interest
rate
was sitting right around 4%.
00:00:35:18 00:00:36:13
Okay?
00:00:36:13 00:00:37:09
- 4% is really good.
00:00:37:09 00:00:38:09
- That's a nice range.
00:00:39:05 00:00:41:24
And if you look at the
history, I went back last night
00:00:41:24 00:00:43:22
and looked all this history.
00:00:43:22 00:00:46:24
Over the past two years,
we averaged right in that
00:00:46:24 00:00:50:05
4% window, and actually
dipped down below it.
00:00:50:05 00:00:53:16
So what's happened is,
mentally, a lot of people
00:00:53:16 00:00:56:15
have gotten used to that
4% mortgage interest rate.
00:00:56:15 00:00:59:19
So when we took a little
spike up to 4 1/2%,
00:01:01:05 00:01:04:20
I won't tell my age, but when I started
00:01:04:20 00:01:06:24
we were averaging about 11%.
00:01:07:21 00:01:12:01
When you're still seeing 4
1/2, you're, okay, no big deal.
00:01:12:01 00:01:14:13
But, to a lot of people,
because of conditioning,
00:01:15:22 00:01:19:04
it's a shock, and it was
a shock to the system.
00:01:19:04 00:01:20:23
And I'll go over some other numbers
00:01:20:23 00:01:23:11
about web searches a little bit later.
00:01:23:11 00:01:27:05
But I think you, have
you felt it, that's it's
00:01:27:05 00:01:29:20
slowed down a little bit, the market feels
00:01:29:20 00:01:31:04
kind of a little bit softer?
00:01:31:04 00:01:33:13
- Yeah, it's a little bit,
and you know, things like this
00:01:33:13 00:01:36:11
or when it was four and four
and eighth, or something,
00:01:36:11 00:01:37:22
it was right in that
range, nobody questioned,
00:01:37:22 00:01:40:11
nobody was just like, "Oh,
I gotta find a lower rate."
00:01:40:11 00:01:41:23
- Right.
00:01:41:23 00:01:42:22
- Everybody's out there, would say,
00:01:42:22 00:01:43:18
"Oh, that rates too high."
00:01:43:18 00:01:44:13
- Yup.
00:01:44:13 00:01:45:09
- But now, you notice
00:01:45:09 00:01:47:05
the market's gotten stronger,
these rates have ticked up
00:01:47:05 00:01:48:21
a little bit higher, over 4 1/2,
00:01:48:21 00:01:52:25
now we're sitting close to
4.75 our conventional logs.
00:01:52:25 00:01:57:01
And people are, "Whoa,
like this is really high!"
00:01:57:01 00:01:58:03
- Exactly, and that's--
00:01:58:03 00:01:58:24
- An interesting story.
00:01:58:24 00:01:59:20
- Yes.
00:01:59:20 00:02:01:16
- The crazy part is, let's go back before
00:02:01:16 00:02:03:21
you know, seven, eight years ago.
00:02:03:21 00:02:07:13
These rates are lower than
historic, before any other
00:02:07:13 00:02:08:09
time in history.
00:02:08:09 00:02:09:05
- Very true.
00:02:09:05 00:02:11:09
Even if you look at the time of the boom
00:02:11:09 00:02:16:02
in 2005, '06, and '07, interest
rates still were at the six,
00:02:16:02 00:02:17:24
between six and seven percent.
00:02:17:24 00:02:18:23
- Yeah.
00:02:18:23 00:02:20:10
- I mean, you know, the
houses were appreciating, but
00:02:20:10 00:02:23:00
we had the good old liar ones back then.
00:02:24:04 00:02:25:23
No more of those.
00:02:25:23 00:02:27:19
- (mumbling words), no more to those.
00:02:28:24 00:02:31:03
- It has been kind of
kind of a mental shock.
00:02:31:03 00:02:33:06
So really, right now,
00:02:33:06 00:02:35:05
right now in July,
00:02:35:05 00:02:36:17
of 2018,
00:02:38:11 00:02:43:10
you're kind of looking at
4.75%, on a conventional loan.
00:02:43:10 00:02:44:06
- Absolutely.
00:02:44:06 00:02:46:13
- How's the (mumbles)
chain, comparative to this?
00:02:46:13 00:02:48:12
- There's no chain right
now, it's sitting where
00:02:48:12 00:02:50:06
a buyer that, you know,
00:02:50:06 00:02:52:22
said, let's say same
credit, same credit profile,
00:02:52:22 00:02:54:15
they're probably right
around four and half.
00:02:54:15 00:02:55:22
- Okay.
00:02:55:22 00:02:57:12
- Maybe 4.6 to five,
depending on the debt.
00:02:57:12 00:02:58:25
- Okay.
00:02:58:25 00:03:02:14
- And you if go back a year
or more ago, remember that,
00:03:02:14 00:03:04:02
that difference between I could take,
00:03:04:02 00:03:05:21
conventional is a little bit bigger.
00:03:05:21 00:03:06:21
- Mm-hmm, sure.
00:03:06:21 00:03:07:17
- (mumbles) strung a lock.
00:03:07:17 00:03:08:13
- Has it?
00:03:08:13 00:03:09:09
Okay.
00:03:09:09 00:03:11:23
So the big thing is (coughs)
00:03:11:23 00:03:14:10
to look at, is what is has this done?
00:03:14:10 00:03:19:10
This .75% change in
interest rate increase?
00:03:20:09 00:03:25:09
What has that done to your
purchasing power, as a buyer?
00:03:25:09 00:03:29:16
But also, what has it done as a seller?
00:03:29:16 00:03:31:19
If you've priced your house,
00:03:32:16 00:03:36:05
and it's been on the market
say since March, or April,
00:03:36:05 00:03:40:06
or even late May, and
you've got it priced here
00:03:40:06 00:03:44:06
because you're in the summer
market, things are strong.
00:03:44:06 00:03:47:20
What has that done, and
how do you have to look at,
00:03:47:20 00:03:50:06
do I have my house priced right now?
00:03:50:06 00:03:51:18
Can the person
00:03:51:18 00:03:54:18
who may have looked at it back in January,
00:03:54:18 00:03:56:01
and was waiting you know,
00:03:56:01 00:03:57:10
for the end of school, a lot of people
00:03:57:10 00:04:00:18
wait 'til the end of school,
to start their shopping.
00:04:00:18 00:04:01:23
And they've seen this spike,
00:04:01:23 00:04:03:19
this increase in interest rates.
00:04:04:18 00:04:07:14
Maybe they can't afford
that house anymore.
00:04:07:14 00:04:09:23
You've got to look at these things.
00:04:09:23 00:04:12:05
Joseph, why don't you take
and go through a little bit,
00:04:12:05 00:04:14:05
and let's do a comparison
00:04:14:05 00:04:18:02
of what someone at 4% could afford,
00:04:18:02 00:04:21:11
versus what someone at 4.75% could afford,
00:04:21:11 00:04:23:16
as far as purchase price allowance.
00:04:23:16 00:04:25:09
- And you know, let's try to make this
00:04:25:09 00:04:27:12
as real as possible, right?
00:04:27:12 00:04:29:08
So let's just say,
00:04:29:08 00:04:32:06
and in Central Florida,
we're right here, you know,
00:04:32:06 00:04:33:08
we're Water Springs Central Florida,
00:04:33:08 00:04:35:00
and Central Florida market.
00:04:35:00 00:04:39:03
Fannie Mae dictates that
the average median income
00:04:39:03 00:04:42:07
for someone in Central Florida is $62,000.
00:04:42:07 00:04:43:17
- Okay.
00:04:43:17 00:04:44:16
- It's 62 and some change.
00:04:44:16 00:04:46:13
But for this purpose, let's just be very,
00:04:46:13 00:04:47:19
you know, basic.
00:04:47:19 00:04:50:23
You make $62,000 a year.
00:04:52:03 00:04:52:24
Alright?
00:04:52:24 00:04:54:08
So, let's go into,
00:04:54:08 00:04:55:14
because nobody just makes money,
00:04:55:14 00:04:57:04
we all have expenses too, right?
00:04:57:04 00:04:58:13
- Yes.
00:04:58:13 00:04:59:12
- Unfortunately.
00:04:59:12 00:05:01:03
So what are some of the
most common expenses?
00:05:01:03 00:05:02:10
I mean, do you know anybody--
00:05:02:10 00:05:03:10
- Your wife.
00:05:03:10 00:05:04:22
- Okay.
00:05:04:22 00:05:05:17
- I'm sorry, no, no.
00:05:05:17 00:05:06:19
I'm sorry (laughs)
00:05:06:19 00:05:08:05
- We'll list it there, first off, car.
00:05:08:05 00:05:09:14
Let's say, car payment.
00:05:09:14 00:05:11:16
I don't think I've done an application,
00:05:11:16 00:05:15:15
I would say 95% of my
applications have a car payment.
00:05:15:15 00:05:16:11
- That makes sense.
00:05:16:11 00:05:18:11
- You know, where you're making $62,000,
00:05:18:11 00:05:20:11
you probably don't have you know,
00:05:20:11 00:05:23:01
a Pinto, you don't have a baseline,
00:05:23:01 00:05:24:15
but you don't have an expensive car.
00:05:24:15 00:05:25:22
And let's say you've got a great rate,
00:05:25:22 00:05:28:18
and you put a little down,
your payment's 375 a month.
00:05:28:18 00:05:30:13
- Where you suppose.
00:05:30:13 00:05:31:21
- Right, feasible?
00:05:31:21 00:05:35:11
Went to college, to get that
$62,000 a year job you have.
00:05:35:11 00:05:36:11
- Yeah, wooh!
00:05:36:11 00:05:37:10
- Student loans.
00:05:37:10 00:05:41:13
You see 90% of that, so we'll just say,
00:05:41:13 00:05:43:04
S.L. for student loans.
00:05:43:04 00:05:44:04
Let's say, you know,
00:05:44:04 00:05:46:19
you're on a income-based repayment plan,
00:05:46:19 00:05:50:04
and that's what, 175, which
is kind of a nice square.
00:05:50:04 00:05:52:00
You're making enough, that
you've got to make a payment,
00:05:52:00 00:05:53:14
but the reality is, it's probably not
00:05:53:14 00:05:55:21
paying down your balance,
with the (mumbles).
00:05:55:21 00:05:56:18
- Not a lot, yeah.
00:05:57:18 00:05:59:15
- You have a wife,
00:05:59:15 00:06:00:14
she's not that expensive.
00:06:00:14 00:06:01:13
(laughter)
00:06:01:13 00:06:03:24
But you know, about two years ago,
00:06:03:24 00:06:06:04
let's say you had a credit card at Jared
00:06:06:04 00:06:10:12
and you're paying $75.00 a month on that.
00:06:10:12 00:06:13:01
And you like to have a
little extra spending money
00:06:13:01 00:06:14:10
so you got a second credit card
00:06:14:10 00:06:16:20
and that's $50.00 a month.
00:06:16:20 00:06:18:02
Right?
00:06:18:02 00:06:19:01
So.
00:06:19:01 00:06:19:24
- Pretty reasonable.
00:06:19:24 00:06:20:24
- We've got not too much.
00:06:20:24 00:06:23:05
Standard profile, we've got car payment,
00:06:23:05 00:06:25:12
student loans, credit card,
00:06:25:12 00:06:26:14
and credit card.
00:06:26:14 00:06:28:18
That's about what I see 90% of the time.
00:06:28:18 00:06:29:17
- Okay.
00:06:29:17 00:06:30:12
- Pretty basic, kind of cost.
00:06:30:12 00:06:31:08
Nobody's really (mumbles)
00:06:31:08 00:06:32:15
some people will be a
little bit lower or higher
00:06:32:15 00:06:34:23
but this is just a great example.
00:06:34:23 00:06:36:10
So with that buying,
00:06:36:10 00:06:38:16
like with scenario, $62,000.00
00:06:38:16 00:06:41:19
these monthly debts,
you're gonna still qualify
00:06:41:19 00:06:43:08
for a $300,000.00 house
00:06:43:08 00:06:45:11
at a 4% interest rate.
00:06:45:11 00:06:46:20
Right?
00:06:46:20 00:06:47:19
We're starting to give you
00:06:47:19 00:06:49:21
let's just say, 4% interest rate,
00:06:49:21 00:06:54:08
300,000 home and this not
saying you wanna spend
00:06:54:08 00:06:55:23
300,000 but it's just kind of,
00:06:55:23 00:06:57:13
saying maximum debt to income.
00:06:57:13 00:06:59:25
This is where you have
maximum you can afford.
00:06:59:25 00:07:02:20
- Right now, what is Fannie
letting you get away with
00:07:02:20 00:07:03:17
on debt?
00:07:03:17 00:07:04:18
- So the debt to income,
00:07:04:18 00:07:06:09
total debt to income is,
00:07:06:09 00:07:09:19
we can get all the way up to 49.999.
00:07:09:19 00:07:10:20
We have a standard 50%.
00:07:10:20 00:07:11:19
- Okay.
00:07:11:19 00:07:13:02
- The other key is, is to get to that
00:07:13:02 00:07:14:23
you know, this person right here
00:07:14:23 00:07:16:05
has to be doing a good job
00:07:16:05 00:07:18:13
so we'll say they have a 720 credit score.
00:07:18:13 00:07:19:08
- Okay.
00:07:19:08 00:07:20:04
- So fair enough.
00:07:20:04 00:07:21:10
- Alright.
00:07:21:10 00:07:22:05
- So, we're at 300,
00:07:22:05 00:07:24:10
you saved up a little bit you know,
00:07:24:10 00:07:25:21
you've got 5% down
00:07:25:21 00:07:29:18
which would be $15,000.00 you know.
00:07:29:18 00:07:33:03
So now you're gonna be
financing $285,000.00.
00:07:33:03 00:07:34:08
- Okay.
00:07:34:08 00:07:35:14
- Alright, so what does that look like?
00:07:35:14 00:07:37:06
So there's a couple of things.
00:07:37:06 00:07:38:16
You will just plug in some square numbers,
00:07:38:16 00:07:41:06
again 4% interest rate.
00:07:41:06 00:07:45:09
So, let's say you know, 4% on a 285 loan
00:07:45:09 00:07:49:14
is gonna be roughly $1,360.00 a month
00:07:49:14 00:07:52:17
for a principal and an interest payment.
00:07:52:17 00:07:53:16
- P and I.
00:07:53:16 00:07:54:12
- P and I.
00:07:54:12 00:07:56:07
But we need the tax--
00:07:56:07 00:07:57:06
- The TI.
00:07:57:06 00:07:58:10
- The TI, too yes.
00:07:58:10 00:08:00:14
- You know, so you write interest.
00:08:00:14 00:08:02:11
Let's go at it $300,000
00:08:02:11 00:08:04:12
120 a month sounds pretty reasonable.
00:08:04:12 00:08:05:12
- Yeah, that's sounds reasonable.
00:08:05:12 00:08:06:12
- You know, maybe, maybe a little bit
00:08:06:12 00:08:07:19
on the conservative side.
00:08:07:19 00:08:09:01
- Yeah.
00:08:09:01 00:08:10:13
- But it's not gonna be
much lower than that.
00:08:10:13 00:08:14:10
Let's just a your, your taxes are 300.
00:08:14:10 00:08:15:06
- What?
00:08:15:06 00:08:18:02
- What are we not, we're
missing one piece on this.
00:08:18:02 00:08:19:15
You only put 5% down.
00:08:19:15 00:08:20:19
- You brought it.
00:08:20:19 00:08:23:16
- 4% rate, so you've got
mortgage insurance, too.
00:08:23:16 00:08:24:12
- Yes, mortgage insurance.
00:08:24:12 00:08:26:03
- And this is something that
is really important because
00:08:26:03 00:08:29:18
I've noticed a lot, and I love, I love,
00:08:29:18 00:08:31:05
I love Zillow.
00:08:31:05 00:08:33:03
I'm not gonna talk a whole
(mumbles) about Zillow.
00:08:33:03 00:08:34:02
(laughter)
00:08:34:02 00:08:35:01
- I will.
00:08:35:01 00:08:35:25
(laughter)
00:08:35:25 00:08:36:20
- But, this is what it means
00:08:36:20 00:08:37:23
that (mumbles) very, very low
00:08:37:23 00:08:40:10
is on every house, they talk about
00:08:40:10 00:08:41:07
what's your payment?
00:08:41:07 00:08:43:05
You know what that does?
00:08:43:05 00:08:45:14
They give you this number.
00:08:45:14 00:08:46:10
- Yes.
00:08:46:10 00:08:47:17
- And that number is not accurate
00:08:47:17 00:08:50:04
so you go, I can buy a $300,000.00 house.
00:08:50:04 00:08:52:02
- I kind of like their Z estimate.
00:08:52:02 00:08:53:10
- I don't know (mumbles).
00:08:53:10 00:08:55:23
(laughter)
00:08:55:23 00:08:58:16
So you've got that, and
we do this whole math
00:08:58:16 00:09:00:04
right there (mumbles) right.
00:09:00:04 00:09:00:25
- Yeah.
00:09:00:25 00:09:02:07
- Eight, another eight.
00:09:02:07 00:09:03:21
So around 1885.
00:09:03:21 00:09:05:04
- Okay.
00:09:05:04 00:09:06:00
- This completes your dent to income,
00:09:06:00 00:09:07:03
it's gonna be over 49 and a half
00:09:07:03 00:09:08:14
on the back-end.
00:09:08:14 00:09:09:12
- Okay.
00:09:09:12 00:09:10:12
_ You're pretty much maxed out right here.
00:09:10:12 00:09:11:11
- You're maxed out.
00:09:11:11 00:09:12:17
You're not going any higher.
00:09:12:17 00:09:13:13
- This is (mumbles) no HOA
00:09:13:13 00:09:14:08
because that's a factor
00:09:14:08 00:09:15:19
we have to evaluate, too.
00:09:15:19 00:09:16:15
- That's true.
00:09:16:15 00:09:19:23
- So this is 4%, so we can't go 4% today.
00:09:19:23 00:09:23:09
We can get it back in January remember.
00:09:23:09 00:09:25:21
We can't get it today in July
00:09:25:21 00:09:27:17
so what is it doing if my rate
00:09:27:17 00:09:30:09
goes from a four to what
the current market is,
00:09:30:09 00:09:34:17
so let's say I'm super, super picky.
00:09:34:17 00:09:37:05
And I just couldn't find what I liked.
00:09:37:05 00:09:38:01
- Yup.
00:09:38:01 00:09:39:02
- At 300,000.
00:09:40:09 00:09:44:13
Now we're at a 4.75 so what
happens is that principal
00:09:44:13 00:09:45:24
and interest payment adjusts
00:09:47:07 00:09:49:05
because now your principal
and interest goes up.
00:09:49:05 00:09:51:21
What actually happens is the
key to the similar payment
00:09:51:21 00:09:53:14
to qualify within your debt to income--
00:09:53:14 00:09:55:01
- Yup.
00:09:55:01 00:09:56:03
- You just dropped your
buying power all the way
00:09:56:03 00:09:58:14
down to $275,000.00.
00:09:58:14 00:09:59:10
- Okay.
00:09:59:10 00:10:01:22
- So what is, what is $275,000.00.
00:10:03:02 00:10:04:07
It's about $25,000.00 difference
00:10:04:07 00:10:05:23
between you know, (mumbles) I owe
00:10:07:02 00:10:08:19
more on my webstream during that (mumbles)
00:10:08:19 00:10:10:17
probably would cost 25,000
00:10:10:17 00:10:13:08
but, what is that gonna do nowadays?
00:10:13:08 00:10:15:09
Like, you just over six months,
00:10:15:09 00:10:17:24
seven months time, you lost 25,000.
00:10:17:24 00:10:18:19
- You lost
00:10:20:24 00:10:21:19
25K.
00:10:24:21 00:10:26:04
25,000 in purchase power.
00:10:27:07 00:10:29:03
That's huge.
00:10:29:03 00:10:30:00
That's really bad.
00:10:30:22 00:10:33:08
Now I'll tell you a
place where I've seen it
00:10:33:08 00:10:34:18
in the past several months,
00:10:34:18 00:10:35:18
we've had the opportunity
00:10:35:18 00:10:36:19
to sell a couple properties
00:10:36:19 00:10:37:18
in Sweet Water.
00:10:37:18 00:10:39:04
- Okay.
00:10:39:04 00:10:39:25
- It's actually by where I live.
00:10:39:25 00:10:42:07
And they're a little bit older homes.
00:10:42:07 00:10:43:03
- Swarming, big yards.
00:10:43:03 00:10:44:22
- Yeah, big yards, love it,
00:10:44:22 00:10:47:01
absolutely love the area.
00:10:47:01 00:10:51:24
But what you saw is back in
the early part of the year
00:10:51:24 00:10:53:19
these four bedroom, two bath homes
00:10:53:19 00:10:55:01
you know, 2,000 square feet
00:10:55:01 00:10:56:21
about 2,500 square feet.
00:10:56:21 00:11:00:17
Starting now between 350 and $400,000.00.
00:11:02:05 00:11:05:18
Well, all of a sudden if
you look at Sweet Water
00:11:05:18 00:11:07:09
in the number of price reductions,
00:11:07:09 00:11:09:15
they've had over the
past couple of months,
00:11:09:15 00:11:11:24
it's numerous because people
00:11:11:24 00:11:13:11
had to bring it down.
00:11:13:11 00:11:17:15
You have sellers who are pricing homes
00:11:17:15 00:11:20:20
for the 4% market.
00:11:20:20 00:11:22:10
- Mm-hmm.
00:11:22:10 00:11:25:10
- Stretching it, everyone's you know,
00:11:25:10 00:11:28:19
it's unfortunate and one reason why
00:11:28:19 00:11:30:11
I asked Joseph this, and the reason why
00:11:30:11 00:11:35:11
I'm doing this is I hate
the 30 second sound bite.
00:11:35:14 00:11:36:10
Freakin' hate it.
00:11:36:10 00:11:39:23
It pisses me off and I really look at this
00:11:39:23 00:11:42:14
as going beyond the economy.
00:11:42:14 00:11:44:19
Really getting into what
00:11:44:19 00:11:47:01
effects you as a customer,
00:11:47:01 00:11:49:16
as a client because when we just sit
00:11:49:16 00:11:51:13
and look at the 30 seconds
00:11:51:13 00:11:53:23
you know, the were
later, the later realtors
00:11:53:23 00:11:54:19
do a great job.
00:11:54:19 00:11:56:13
They put out a monthly (mumbles).
00:11:56:13 00:11:59:16
But if you look at the
numbers that they've put out
00:11:59:16 00:12:02:01
currently, it looks great.
00:12:02:01 00:12:04:15
Whoa, median price from last year,
00:12:05:14 00:12:07:22
June of last year to June of this year,
00:12:07:22 00:12:09:23
you had 7% increase.
00:12:09:23 00:12:11:07
That's fantastic.
00:12:11:07 00:12:12:03
- That's a great (mumbles).
00:12:12:03 00:12:15:11
- Yeah, it sounds great for long term.
00:12:16:08 00:12:17:04
Alright.
00:12:17:04 00:12:18:18
But let's look at the other numbers.
00:12:18:18 00:12:19:25
Percentage of sales,
00:12:19:25 00:12:21:19
down 11%.
00:12:21:19 00:12:24:13
Pending sales, down 12%.
00:12:24:13 00:12:27:10
New listings, down 11%.
00:12:27:10 00:12:30:17
Inventory, down 17%.
00:12:30:17 00:12:33:23
So you're getting conflicting information.
00:12:33:23 00:12:36:14
One part makes it sound
like, wow, it's fantastic.
00:12:36:14 00:12:38:04
The other part, you're looking going,
00:12:38:04 00:12:41:19
"Wait, those are some
pretty big negative numbers,
00:12:41:19 00:12:42:23
"that are sitting on there."
00:12:42:23 00:12:44:15
And what's the key?
00:12:44:15 00:12:48:07
Interest rate average, 4.61
00:12:48:07 00:12:51:12
and that just, when I look at numbers
00:12:51:12 00:12:53:23
and we get the (mumbles)
numbers every month.
00:12:53:23 00:12:56:16
What are the things that I always look at
00:12:56:16 00:12:58:07
is original price,
00:12:58:07 00:13:00:05
versus sold price.
00:13:00:05 00:13:02:12
- This is what they
listed for, versus what--
00:13:02:12 00:13:03:11
- Yeah.
00:13:03:11 00:13:04:17
- What they're actually willing to pay.
00:13:04:17 00:13:06:21
- Because unfortunately
what happens a lot of times
00:13:06:21 00:13:09:14
we get with Zillow and
some of these other points
00:13:09:14 00:13:12:10
all you see is the final list price.
00:13:12:10 00:13:13:06
- Mm-hmm.
00:13:13:06 00:13:15:21
- Not the original list price
00:13:15:21 00:13:17:18
and any, and any price reductions.
00:13:17:18 00:13:19:16
So yeah, so I started to (mumbles)
00:13:19:16 00:13:21:21
on $390,000.00.
00:13:21:21 00:13:23:08
That was great.
00:13:23:08 00:13:27:01
No hits, well let's drop it to 375.
00:13:28:05 00:13:29:23
Whoops, no hits.
00:13:29:23 00:13:31:22
Let's drop it to $350,000.00.
00:13:32:24 00:13:37:05
Oh, fantastic, we sold it for $349,000.00.
00:13:38:09 00:13:39:15
So what does this look like?
00:13:39:15 00:13:41:20
Well, we sold the house
00:13:41:20 00:13:45:16
at 99.9% of the listing.
00:13:46:21 00:13:48:17
No, you didn't.
00:13:48:17 00:13:49:24
- No you didn't.
00:13:49:24 00:13:51:09
(mumbles) list price.
00:13:51:09 00:13:53:12
- This of the current list price.
00:13:53:12 00:13:55:15
It's not the real number.
00:13:56:13 00:13:57:12
So one of the things that I did
00:13:57:12 00:13:58:25
is I pulled the chart
00:13:58:25 00:14:00:25
going from January of this year
00:14:00:25 00:14:02:24
until July of next year.
00:14:02:24 00:14:04:21
Here's the interesting thing.
00:14:04:21 00:14:06:19
The original median price
00:14:06:19 00:14:10:06
in January was $224,000.00.
00:14:11:08 00:14:13:11
These are Seminole County numbers,
00:14:13:11 00:14:14:10
just to let you know.
00:14:14:10 00:14:15:06
I pulled just for Seminole County.
00:14:15:06 00:14:17:07
- Not (mumbles) just Seminole.
00:14:17:07 00:14:18:06
- Just Seminole.
00:14:18:06 00:14:20:03
July of this year,
00:14:20:03 00:14:21:16
the July numbers for this year
00:14:21:16 00:14:24:10
median price, you think has gone up.
00:14:24:10 00:14:27:13
- You said, it said 75 was what we saw.
00:14:27:13 00:14:29:03
- Yeah, so we (mumbles).
00:14:29:03 00:14:31:01
- (mumbles) maybe 230's?
00:14:31:01 00:14:34:25
- No, 225.
00:14:34:25 00:14:38:12
Median price is actually stabilized.
00:14:39:13 00:14:42:03
We did see a spike back in May
00:14:42:03 00:14:44:24
up to $233,000.00
00:14:44:24 00:14:46:11
but since May--
00:14:47:12 00:14:50:05
- May was when this piece.
00:14:50:05 00:14:51:00
- Yes.
00:14:51:00 00:14:52:22
- Started (mumbles) some
of the biggest (mumbles).
00:14:52:22 00:14:54:09
- Started to pop up.
00:14:54:09 00:14:55:08
- Right, yeah.
00:14:55:08 00:14:56:04
January was here,
00:14:56:04 00:14:57:11
and it goes up a little bit.
00:14:57:11 00:14:59:17
February, March, April, and May (mumbles).
00:14:59:17 00:15:01:19
- We could've spiked, yeah.
00:15:01:19 00:15:04:17
- 65 to four point
interest, boom, boom, boom.
00:15:04:17 00:15:06:00
Really got up
00:15:06:00 00:15:07:21
and a lot of that is not because
00:15:07:21 00:15:09:18
you know, banks are being greedy at all.
00:15:09:18 00:15:10:24
- No.
00:15:10:24 00:15:11:20
- It's because the economy is actually
00:15:11:20 00:15:12:17
getting stronger where (mumbles).
00:15:12:17 00:15:14:08
- Exactly.
00:15:14:08 00:15:15:04
- The people don't like to hear
00:15:15:04 00:15:16:20
that interest rates are going up
00:15:16:20 00:15:17:20
'cause it's actually a quick bit because
00:15:17:20 00:15:19:16
when it was held at the four
00:15:19:16 00:15:22:03
or you know, we go back further in time
00:15:22:03 00:15:24:06
add it was you know, the high three's
00:15:24:06 00:15:25:11
and such, this is
actually not good at all.
00:15:25:11 00:15:27:02
Like it was great for our wallets.
00:15:27:02 00:15:28:11
- Oh (mumbles)
00:15:28:11 00:15:29:09
- For a time card.
00:15:29:09 00:15:30:09
- We loved it.
00:15:30:09 00:15:31:09
- But his the economy,
00:15:31:09 00:15:32:12
as the entire nation
00:15:32:12 00:15:34:15
it was saying, "Hey we
weren't doing well,"
00:15:34:15 00:15:35:24
because--
00:15:35:24 00:15:36:24
- Exactly.
00:15:36:24 00:15:37:22
- The program was pulling brakes,
00:15:37:22 00:15:39:10
they were pressing
brakes to keep (mumbles).
00:15:39:10 00:15:40:07
- They were (mumbles)
00:15:40:07 00:15:41:03
but artificial involvement.
00:15:41:03 00:15:41:24
- There was, they perfect
basically giving a,
00:15:41:24 00:15:43:18
like a penicillin shot--
00:15:43:18 00:15:44:17
- Exactly.
00:15:44:17 00:15:46:01
- To the housing project.
00:15:46:01 00:15:47:07
- Exactly.
00:15:47:07 00:15:48:07
So those days are over.
00:15:48:07 00:15:50:22
We've got the normalized rates.
00:15:50:22 00:15:52:13
But I the Feds is
actually doing a good job
00:15:52:13 00:15:54:04
of doing so.
00:15:54:04 00:15:55:00
- Yeah.
00:15:56:10 00:15:57:11
- But your still getting that
00:15:57:11 00:15:59:20
mental breakdown where people
00:15:59:20 00:16:01:12
are just saying, "Whoa"
00:16:01:12 00:16:02:22
for a second.
00:16:02:22 00:16:04:18
So, let's look at this.
00:16:04:18 00:16:09:08
May we were at $233,000.00 median.
00:16:11:03 00:16:11:23
Okay.
00:16:12:23 00:16:17:09
June, we're at 229,900.00
00:16:21:05 00:16:26:05
and then July, we're
seeing that 225,000.00.
00:16:27:01 00:16:29:15
So these are the median original prices.
00:16:29:15 00:16:30:24
Original prices.
00:16:30:24 00:16:32:16
So we've actually,
00:16:32:16 00:16:33:16
it's tightened out,
00:16:33:16 00:16:35:05
the market's tightening
00:16:35:05 00:16:37:19
so for sellers, you've got to look at this
00:16:37:19 00:16:39:05
and go, "Ooh."
00:16:39:05 00:16:40:05
- Can I ask some questions?
00:16:40:05 00:16:41:17
- Sure.
00:16:41:17 00:16:42:17
- And this might just be that
00:16:42:17 00:16:45:13
(mumbles) the mortgage side
and not the real estate side
00:16:45:13 00:16:49:06
but isn't this like, isn't
this peak buying season?
00:16:49:06 00:16:50:02
- It is.
00:16:50:02 00:16:51:16
- Isn't this when most people are buying
00:16:51:16 00:16:54:08
which doesn't that mean this
should be going another way,
00:16:54:08 00:16:55:17
right?
00:16:55:17 00:16:56:16
- Right.
00:16:56:16 00:16:57:12
Well here's a very interesting thing.
00:16:57:12 00:16:59:03
This is the geek in me
00:16:59:03 00:17:00:12
'cause I am a geek.
00:17:00:12 00:17:01:12
(laughter)
00:17:01:12 00:17:02:11
If you look around this room,
00:17:02:11 00:17:03:22
you would realize I am a geek.
00:17:03:22 00:17:04:23
Alright.
00:17:04:23 00:17:08:09
I went on to some of the top local realtor
00:17:08:09 00:17:09:19
web pages.
00:17:09:19 00:17:10:22
I'm not gonna tell you what they are,
00:17:10:22 00:17:12:19
but I'll tell you I did.
00:17:12:19 00:17:13:17
(laughter)
00:17:13:17 00:17:14:13
And their bell curve
00:17:14:13 00:17:17:09
for web traffic looks like this.
00:17:18:16 00:17:19:16
- So this is now.
00:17:19:16 00:17:20:19
- This is now.
00:17:21:16 00:17:24:09
This, was May.
00:17:25:11 00:17:29:13
Their hits totaled averaged about 14,000
00:17:30:21 00:17:32:21
and you know, this is a great parameter
00:17:32:21 00:17:33:22
for the real estate market.
00:17:33:22 00:17:34:20
You know why?
00:17:34:20 00:17:36:12
Because 95% of people
00:17:36:12 00:17:39:17
start their home search on the web.
00:17:39:17 00:17:40:21
- Mm-hmm.
00:17:40:21 00:17:43:07
- So, you watch, one thing I always do
00:17:43:07 00:17:44:20
is I watch the web tracker.
00:17:45:20 00:17:49:02
Because you can tell
how the market is also
00:17:49:02 00:17:50:21
based on the web tracker.
00:17:50:21 00:17:53:17
Well, this is now July.
00:17:55:02 00:17:56:10
And they dropped down
00:17:56:10 00:18:01:07
to under 6,000 web hits
00:18:01:07 00:18:02:21
and that's four or five,
00:18:02:21 00:18:03:17
I can't remember exactly,
00:18:03:17 00:18:07:11
four or five different very good
00:18:07:11 00:18:09:05
realtor-based web pages here
00:18:09:05 00:18:10:23
in Orlando that are locally based.
00:18:12:04 00:18:14:15
So, again, here it is.
00:18:14:15 00:18:17:09
Matches up to these numbers.
00:18:17:09 00:18:18:21
Now here's another interesting number
00:18:18:21 00:18:20:04
that I love.
00:18:20:04 00:18:21:22
Is I took a look
00:18:21:22 00:18:24:23
at the difference from
the original meeting
00:18:24:23 00:18:26:06
original priced median
00:18:26:06 00:18:28:10
versus the sales price median.
00:18:28:10 00:18:30:10
Well, in January (mumbles).
00:18:36:02 00:18:38:21
In January the difference
00:18:40:06 00:18:42:22
was $34,000.00.
00:18:44:17 00:18:46:10
- So original list price
00:18:46:10 00:18:48:02
to where they actually sold for.
00:18:48:02 00:18:48:23
- Right.
00:18:48:23 00:18:49:18
- $34,000.00.
00:18:49:18 00:18:53:10
- So this was sitting at 224 median.
00:18:53:10 00:18:56:10
Median actual sales price was 190,000.
00:18:57:22 00:18:59:05
- So does that mean--
00:18:59:05 00:19:00:01
- Different (mumbles).
00:19:00:01 00:19:02:10
- That on access (mumbles)
overpriced 34,000.
00:19:02:10 00:19:03:06
- Yeah.
00:19:03:06 00:19:04:02
- Right?
00:19:04:02 00:19:04:23
- Slower, slower markets,
00:19:04:23 00:19:06:17
what happens in a slower market?
00:19:06:17 00:19:08:07
You try and get a bigger,
00:19:08:07 00:19:11:03
bigger discount off the the list price
00:19:11:03 00:19:11:24
which make sense.
00:19:11:24 00:19:13:10
- Yeah.
00:19:13:10 00:19:14:06
- Okay.
00:19:14:06 00:19:16:16
Well, what's now in July
00:19:16:16 00:19:18:23
we're at, we're at July.
00:19:25:20 00:19:30:00
The difference is $12,000.00
00:19:31:20 00:19:33:19
tightened up immensely.
00:19:35:00 00:19:37:07
So you've got a 225,
00:19:38:11 00:19:39:08
nice numbers, huh.
00:19:39:08 00:19:40:18
- Yeah.
00:19:40:18 00:19:43:25
- 225,000 median versus a 213,000
00:19:46:16 00:19:49:14
sales price, so $12,000.00.
00:19:49:14 00:19:54:14
- So, what's been (mumbles)
literally the market's
00:19:54:24 00:19:57:22
gone a little bit just 'cause it's gotten
00:19:57:22 00:19:59:14
better, more quicker.
00:19:59:14 00:20:00:21
- Well.
00:20:00:21 00:20:02:17
- Is it because of the price better?
00:20:02:17 00:20:03:19
- To me it's a couple things.
00:20:03:19 00:20:06:14
One, they're priced better.
00:20:06:14 00:20:10:03
If you notice, our line really
00:20:10:03 00:20:13:10
looks like this now as
far as price increases
00:20:13:10 00:20:14:20
in homes.
00:20:14:20 00:20:15:16
Alright.
00:20:17:16 00:20:18:12
So, we've leveled off,
00:20:18:12 00:20:19:08
we really kind of leveled off
00:20:19:08 00:20:21:19
on the prices, and actually
the past couple months
00:20:21:19 00:20:23:20
the median has come down just a hair.
00:20:23:20 00:20:25:13
So, the sellers are learning that,
00:20:25:13 00:20:29:05
"Hey, I can't overprice the houses.
00:20:29:05 00:20:31:22
"If I price it right, I'm gonna get closer
00:20:31:22 00:20:34:03
"to what I'm looking for."
00:20:34:03 00:20:36:14
What the real true value of the house is.
00:20:36:14 00:20:38:12
- So we can't dream too big.
00:20:38:12 00:20:39:14
- Right, and then the,
00:20:39:14 00:20:42:01
and then the buyers are realizing,
00:20:42:01 00:20:44:03
"Okay, it is competitive."
00:20:44:03 00:20:46:15
The inventory is tight,
00:20:46:15 00:20:48:22
so yes, am I gonna have to
pay closer to what they're
00:20:48:22 00:20:50:07
asking for that house?
00:20:50:07 00:20:51:04
Yes, I am.
00:20:52:22 00:20:57:19
So, these, the details and the data
00:20:59:11 00:21:00:09
when you break up the numbers,
00:21:00:09 00:21:02:12
you get beyond that 30 seconds--
00:21:02:12 00:21:03:16
- Mm-hmm.
00:21:03:16 00:21:07:09
- Sound play, there's a
lot of information there
00:21:07:09 00:21:08:23
and when you're looking to price a home
00:21:08:23 00:21:11:11
these you got it a look at these things.
00:21:11:11 00:21:13:23
You know, when you're
looking at buying a home
00:21:13:23 00:21:15:17
you wanna know this type of stuff.
00:21:15:17 00:21:17:11
Okay, for this subdivision.
00:21:17:11 00:21:19:11
Let's take a subdivision in Sweet Water.
00:21:19:11 00:21:21:03
How many price decreases have they had
00:21:21:03 00:21:23:05
in the past two months?
00:21:23:05 00:21:25:03
You know, what's, what's the tendency
00:21:25:03 00:21:27:02
within that, within that subdivision?
00:21:27:02 00:21:28:02
You know, what's the tendency
00:21:28:02 00:21:29:16
within that town?
00:21:29:16 00:21:31:22
So I think what we're gonna see really
00:21:31:22 00:21:35:03
over the next probably six months
00:21:35:03 00:21:36:10
is we're gonna see this
00:21:36:10 00:21:38:14
even though the inventory is still tight.
00:21:39:16 00:21:40:13
You know, we've only got I think
00:21:40:13 00:21:43:03
7700 or 7500 homes you know,
00:21:43:03 00:21:44:18
on the MLS.
00:21:44:18 00:21:47:00
So even though the market is tight
00:21:47:00 00:21:49:17
because people's wallets
00:21:49:17 00:21:50:21
are gonna be tighter,
00:21:51:25 00:21:54:03
you're gonna see this number
00:21:54:03 00:21:55:24
this difference stay tight
00:21:57:04 00:21:59:01
and they're gonna be much pickier
00:21:59:01 00:22:03:18
because you've lost $25,000.00
00:22:04:16 00:22:07:10
in purchasing power.
00:22:07:10 00:22:09:15
- I really just wanna,
I feel like this is huge
00:22:09:15 00:22:11:23
because if you sell a house, right?
00:22:11:23 00:22:12:19
- Mm-hmm.
00:22:12:19 00:22:16:06
- What do you, almost 95, 99%
00:22:16:06 00:22:17:20
have to do after that?
00:22:17:20 00:22:18:22
- Buy another house.
00:22:18:22 00:22:19:17
- Buy another house.
00:22:19:17 00:22:22:12
So you just listed in January
00:22:22:12 00:22:25:04
and then you lost 34,000
00:22:25:04 00:22:27:05
as you went through this, right?
00:22:27:05 00:22:28:13
- Mm-hmm.
00:22:28:13 00:22:32:00
- And then you lost 25,000
00:22:33:05 00:22:35:11
you know, on your purchasing power.
00:22:35:11 00:22:39:03
So you really lost 59,000.
00:22:39:03 00:22:40:02
- Where's the (mumbles)?
00:22:41:23 00:22:43:10
- (mumbles) website.
00:22:43:10 00:22:44:17
Right?
00:22:44:17 00:22:47:10
(laughter)
00:22:47:10 00:22:48:07
You gotta go to the camera first.
00:22:48:07 00:22:49:09
(laughter)
00:22:49:09 00:22:50:10
This 60,000.
00:22:50:10 00:22:51:15
- Right (mumbles).
00:22:51:15 00:22:52:14
(laughter)
00:22:52:14 00:22:55:20
- Yeah, that's almost
$60,000.00 in loss because--
00:22:55:20 00:22:57:19
- Oh, sure yeah (mumbles).
00:22:57:19 00:23:00:14
- Like this is the
challenge right there is--
00:23:00:14 00:23:01:13
- Yup.
00:23:01:13 00:23:03:18
- You are trying to get
as much as you could
00:23:03:18 00:23:06:24
but you didn't listen to the professional
00:23:08:03 00:23:11:20
that was telling you where the values are
00:23:11:20 00:23:13:22
and how because you're
going in as a realtors
00:23:13:22 00:23:15:06
what--
00:23:15:06 00:23:16:04
- Yeah.
00:23:16:04 00:23:17:11
- Sell it for the most
and you're (mumbles).
00:23:17:11 00:23:19:03
- You always wanna get the best,
00:23:19:03 00:23:20:11
best value for your client.
00:23:20:11 00:23:21:18
- Mm-hmm.
00:23:21:18 00:23:22:23
- You know, you wanna maximize the value
00:23:22:23 00:23:25:11
but sometimes, I'll tell you
one of the hardest things
00:23:25:11 00:23:27:15
for a lot of realtors to do--
00:23:27:15 00:23:28:11
- Mm-hmm.
00:23:28:11 00:23:30:22
- Is to actually look
your client in the face,
00:23:30:22 00:23:33:16
and say, "Yeah, I know you've
got the nicest kitchen,
00:23:33:16 00:23:35:01
"you've got the nicest bathroom,
00:23:35:01 00:23:37:07
"you've got the nicest yard.
00:23:37:07 00:23:41:25
"But I'm sorry, it does not
make that much of a difference
00:23:41:25 00:23:43:08
"in the value."
00:23:43:08 00:23:44:04
- Yeah.
00:23:44:04 00:23:46:14
- You know, comparables are comparables.
00:23:46:14 00:23:48:24
- You can have of course,
but the Kaughs have granite.
00:23:48:24 00:23:50:06
- Right.
00:23:50:06 00:23:54:07
And it's one of the, honestly
one of the hardest things
00:23:54:07 00:23:57:20
is when, "Well Zillow said
it was worth this much."
00:23:57:20 00:23:58:20
(laughter)
00:23:58:20 00:23:59:16
- You're Zestimatg.
00:23:59:16 00:24:01:18
- Yes, the essence.
00:24:01:18 00:24:02:14
Well, here's the thing.
00:24:02:14 00:24:03:23
Anyone who wants their Z-estimate
00:24:03:23 00:24:08:04
and the 60,000 other
automated evaluation models
00:24:08:04 00:24:11:00
that take a look, we sold a house,
00:24:11:00 00:24:14:22
the Z-estimate was $257,000.00.
00:24:17:06 00:24:18:11
Gorgeous house.
00:24:18:11 00:24:21:19
House was redone by one
of the best builders
00:24:21:19 00:24:24:06
in the county.
00:24:24:06 00:24:26:16
And practically gorgeous.
00:24:26:16 00:24:28:13
We sold the house,
00:24:28:13 00:24:30:09
I think it was for $357,000.00.
00:24:33:15 00:24:35:07
You know the Z-estimate changed to?
00:24:36:07 00:24:37:03
$300,000.00.
00:24:38:05 00:24:40:02
(laughter)
00:24:40:02 00:24:42:07
I was dying laughing.
00:24:42:07 00:24:45:23
And again, details, you wanna have fun?
00:24:45:23 00:24:47:24
Go into the back page of Zillow
00:24:47:24 00:24:49:06
where they hide it,
00:24:50:08 00:24:51:12
and look at their numbers.
00:24:51:12 00:24:53:15
They came out with their
numbers in February 2018,
00:24:53:15 00:24:56:08
they come out with their
numbers all the time.
00:24:56:08 00:24:58:22
On average, they're off 5%.
00:25:02:14 00:25:03:18
5%, okay.
00:25:04:18 00:25:06:16
On a $300,000.00 house,
00:25:08:07 00:25:10:17
you're 15 grand off.
00:25:11:15 00:25:13:11
But it's not 15 grand in one way,
00:25:13:11 00:25:16:25
you can be 15 grand too high,
00:25:16:25 00:25:18:12
or 15, excuse me, too high
00:25:18:12 00:25:20:01
or too low.
00:25:20:01 00:25:21:22
So you really gotta $30,000.00 swing
00:25:22:18 00:25:25:00
on what the real value of your house is.
00:25:25:00 00:25:28:01
And this is only for 40% of the market.
00:25:29:05 00:25:33:11
The other 60%, they average 10 to 20%
00:25:33:11 00:25:34:07
I believe it is.
00:25:35:14 00:25:36:10
- Okay.
00:25:37:19 00:25:42:09
- So that's, that's, that's
why we spend so much time
00:25:42:09 00:25:44:14
(mumbles) the price and
valuations accounts.
00:25:44:14 00:25:45:25
- So that's why you can't rely on
00:25:45:25 00:25:47:00
a computer algorithm.
00:25:47:00 00:25:47:21
- Exactly.
00:25:47:21 00:25:49:09
Because they don't know.
00:25:49:09 00:25:50:10
'Cause what they're doing is
00:25:50:10 00:25:52:05
they're taking okay,
00:25:52:05 00:25:53:04
first it's your house.
00:25:53:04 00:25:56:01
You know, something,
you're taking your house
00:25:56:01 00:25:58:08
and then they're going, to like summarize
00:25:58:08 00:25:59:22
over on the other side of Tuscaloosa,
00:25:59:22 00:26:01:20
and because it's in
the geographical area--
00:26:01:20 00:26:02:16
- Okay.
00:26:02:16 00:26:03:21
- Okay?
00:26:03:21 00:26:04:20
Two totally different subdivisions.
00:26:04:20 00:26:06:02
- Two miles to be exact.
00:26:06:02 00:26:07:25
- Two miles and they average them out.
00:26:09:06 00:26:10:04
They can't do it that way.
00:26:10:04 00:26:12:08
- Once a (mumbles) neighborhood.
00:26:12:08 00:26:13:08
- Exactly
00:26:13:08 00:26:14:03
- And then they would say--
00:26:14:03 00:26:15:05
- A move up.
00:26:15:05 00:26:16:04
- Establish it.
00:26:16:04 00:26:17:03
- Yes, a move up.
00:26:17:03 00:26:18:24
- There you go, neighborhood.
00:26:18:24 00:26:20:02
- Exactly.
00:26:20:02 00:26:21:10
- So I mean, I think these
numbers are out of point
00:26:21:10 00:26:23:05
and I don't wanna leave and you know
00:26:23:05 00:26:25:21
the design here is not to
sit there and scare anybody
00:26:25:21 00:26:26:17
or (mumbles).
00:26:27:13 00:26:28:19
- Correct.
00:26:28:19 00:26:29:18
- (mumbles) the goal here
00:26:29:18 00:26:31:19
is to give you a little bit more knowledge
00:26:31:19 00:26:32:24
and a little bit more power
00:26:32:24 00:26:35:06
in understanding what is happening
00:26:35:06 00:26:36:12
because guess what?
00:26:36:12 00:26:38:23
That 4.75 we talked about isn't,
00:26:38:23 00:26:41:00
it's not stopping right there.
00:26:41:00 00:26:41:24
- No.
00:26:41:24 00:26:43:19
- You know, they're projecting
over 5 by the end of,
00:26:43:19 00:26:45:17
the Feds have already announced another--
00:26:45:17 00:26:46:16
- What four more--
00:26:46:16 00:26:47:14
- At least--
00:26:47:14 00:26:48:14
- Four more or three more.
00:26:48:14 00:26:50:05
- They're projecting at
the start of the year
00:26:50:05 00:26:51:23
they said three rate increases
00:26:51:23 00:26:53:00
to the Fed fund rates
00:26:53:00 00:26:55:19
which is based, like
it's what the government
00:26:55:19 00:26:58:08
gives banks to borrow money overnight.
00:26:58:08 00:26:59:07
- Okay.
00:26:59:07 00:27:00:17
- It's kind of a round
about simple explanation.
00:27:00:17 00:27:02:23
So if that goes up,
then the give it charges
00:27:02:23 00:27:03:19
banks more money.
00:27:03:19 00:27:06:09
Banks are gonna charge the consumers
00:27:06:09 00:27:07:08
more money.
00:27:07:08 00:27:10:12
So what happens is that
what kind of drives this--
00:27:10:12 00:27:11:10
- Yup.
00:27:11:10 00:27:12:18
- Is the (mumbles) it's
not the only factor
00:27:12:18 00:27:14:08
like they originally had to start
00:27:14:08 00:27:15:25
in the year they projected the rate
00:27:15:25 00:27:17:14
now they're saying four.
00:27:17:14 00:27:18:16
We're already at two
00:27:18:16 00:27:19:12
which basically is another two more
00:27:19:12 00:27:20:08
for the year.
00:27:20:08 00:27:21:06
- Yeah.
00:27:21:06 00:27:22:01
- We're gonna be around five.
00:27:22:01 00:27:24:01
And the reality is the stable economy
00:27:24:01 00:27:27:03
should be at five and a half to six.
00:27:27:03 00:27:28:10
- Yeah.
00:27:28:10 00:27:29:08
- Right in there.
00:27:29:08 00:27:31:11
- Our GDP, number which
is supposed to come out
00:27:31:11 00:27:33:14
next week, is projected to be something
00:27:33:14 00:27:35:01
we haven't seen in years.
00:27:36:02 00:27:40:01
4%, that's a boom.
00:27:40:01 00:27:40:22
- Yeah.
00:27:40:22 00:27:41:18
- That's a boom.
00:27:41:18 00:27:42:15
4% is a boom.
00:27:43:20 00:27:46:09
So, everything is pressure
00:27:46:09 00:27:48:19
on all interest rates is gone this way.
00:27:48:19 00:27:50:05
What may hold it now,
00:27:50:05 00:27:51:23
Europe, China.
00:27:51:23 00:27:52:18
- Other markets.
00:27:52:18 00:27:54:11
- Other markets because right now
00:27:54:11 00:27:56:19
the US is the only booming economy.
00:27:56:19 00:27:58:07
Everyone else is struggling.
00:27:58:07 00:27:59:22
- What's nice about this though
00:28:01:01 00:28:02:08
is the economy is booming
00:28:02:08 00:28:04:08
and what I'll say here is,
00:28:04:08 00:28:07:19
we're not seeing housing
market go, go, go, go up.
00:28:07:19 00:28:08:14
- Right.
00:28:08:14 00:28:09:19
- Like before.
00:28:09:19 00:28:10:14
It's gone up a lot, don't get me wrong.
00:28:10:14 00:28:12:00
You know, but the key is like,
00:28:12:00 00:28:14:02
when a lot of people talk about
00:28:14:02 00:28:16:05
the previous housing collapse,
00:28:16:05 00:28:17:22
the Recession, everything that was started
00:28:17:22 00:28:18:21
because of housing.
00:28:18:21 00:28:20:06
- Yup.
00:28:20:06 00:28:21:01
- And you've noticed we've tightened up
00:28:21:01 00:28:21:22
on underwriting.
00:28:21:22 00:28:23:02
Appraisers--
00:28:23:02 00:28:24:01
- Oh yeah.
00:28:24:01 00:28:25:00
- They don't have,
00:28:25:00 00:28:25:24
and say loan officer,
00:28:25:24 00:28:26:20
you can't, I just can't call an appraiser
00:28:26:20 00:28:30:03
and say, "Hey, I need
that value at 300,000.
00:28:30:03 00:28:31:18
"I'll take you to lunch tomorrow."
00:28:31:18 00:28:34:08
No it doesn't, now maybe 15 years ago
00:28:34:08 00:28:35:10
you could do that.
00:28:35:10 00:28:36:09
- Yeah, yeah.
00:28:36:09 00:28:37:08
- You know, during the boom
00:28:37:08 00:28:38:07
you could do it.
00:28:38:07 00:28:39:06
You can't do that.
00:28:39:06 00:28:40:06
Like I can't even talk to 'em anymore.
00:28:40:06 00:28:41:02
I have to go through our
appraisal management company.
00:28:41:02 00:28:42:01
They--
00:28:42:01 00:28:42:25
- Exactly.
00:28:42:25 00:28:44:05
- Everything's separate and
they done all these things.
00:28:44:05 00:28:46:03
They tightened up how we underwrite.
00:28:46:03 00:28:47:09
They're starting to loosen up
00:28:47:09 00:28:49:17
because now we have technology
00:28:49:17 00:28:51:17
and data that could say there you go,
00:28:51:17 00:28:53:12
okay and that's why when we talked about
00:28:53:12 00:28:55:19
49.999--
00:28:55:19 00:28:56:18
- Yup.
00:28:56:18 00:28:57:17
- That debt to income, you know,
00:28:57:17 00:28:59:09
a year ago, it is was 45%.
00:28:59:09 00:29:01:10
But they went up because what they found
00:29:01:10 00:29:04:04
is they looked at, they
looked at FHA and VA
00:29:04:04 00:29:05:22
and all these other type of buyers
00:29:05:22 00:29:07:22
that were over 45 and they were like,
00:29:07:22 00:29:09:07
"Wait a minute."
00:29:09:07 00:29:12:14
Being over 45 isn't a
catalyst for defaulting
00:29:12:14 00:29:13:18
on your loan.
00:29:13:18 00:29:15:01
There's other pieces that are
00:29:15:01 00:29:17:07
and guess what, with technology,
00:29:17:07 00:29:18:18
Fannie Mae which you know,
00:29:18:18 00:29:20:11
Freddie Mac, you know,
00:29:20:11 00:29:22:19
these entities can now look at
00:29:22:19 00:29:25:08
your FICO, your totality
of your credit file
00:29:26:08 00:29:28:00
and they can go, "Hey,"
like, "You have a 720,
00:29:28:00 00:29:29:23
"but we saw that last year why had,
00:29:29:23 00:29:32:17
"you missed three
payments on a student loan
00:29:32:17 00:29:33:22
"and then the year before that,
00:29:33:22 00:29:35:11
"you missed a payment on a car,
00:29:35:11 00:29:36:23
"and the year before
that, you missed this."
00:29:36:23 00:29:39:20
And they're going, "We
don't like that as much."
00:29:39:20 00:29:43:03
You know, whereas before
the system was only
00:29:43:03 00:29:43:24
intlelligent enough to go,
00:29:43:24 00:29:46:19
"You have a 720, you're
not missing anything now."
00:29:46:19 00:29:49:09
- Yup, I remember, okay,
here's our there scores.
00:29:49:09 00:29:50:17
- Yup.
00:29:50:17 00:29:54:02
- Oh, we got a 745, 720, and a 650.
00:29:54:02 00:29:55:08
Oh we get to take the middle one.
00:29:55:08 00:29:56:16
Thank God.
00:29:56:16 00:29:57:16
(laughter)
00:29:57:16 00:29:58:21
- And we still use the middle one
00:29:58:21 00:29:59:17
but guess what?
00:29:59:17 00:30:01:21
Now we take that 650 into consideration.
00:30:01:21 00:30:03:09
We price on the middle,
00:30:03:09 00:30:04:07
that low one,
00:30:04:07 00:30:07:15
now we have to go, why is
that one so much lower?
00:30:07:15 00:30:08:21
So that's why it's changing
00:30:08:21 00:30:09:23
and that's what's you know,
00:30:09:23 00:30:11:09
that's one of the pieces
00:30:11:09 00:30:12:16
we market housing.
00:30:12:16 00:30:14:06
These things are not rising his quickly
00:30:14:06 00:30:16:01
as they were.
00:30:16:01 00:30:16:25
- Yeah.
00:30:16:25 00:30:17:23
- Like--
00:30:17:23 00:30:18:19
- We, we needed it.
00:30:18:19 00:30:19:22
We, quite honestly,
00:30:19:22 00:30:20:18
we needed it.
00:30:20:18 00:30:22:04
Because I'm sorry, but there's just
00:30:22:04 00:30:27:04
you can't have 10, 12% appreciation
00:30:27:11 00:30:29:04
continuously in the market.
00:30:29:04 00:30:32:08
It doesn't make sense.
00:30:32:08 00:30:35:13
You know, it just, we
needed a little pressure
00:30:35:13 00:30:38:04
up to help stabilize the market.
00:30:38:04 00:30:39:21
Is what we really needed.
00:30:39:21 00:30:41:21
Now hopefully what we'll see
00:30:41:21 00:30:44:15
really over the next six months to a year,
00:30:44:15 00:30:46:22
is that when this growth rate,
00:30:46:22 00:30:48:14
unemployment worries
00:30:48:14 00:30:50:16
is we're gonna see, start to see
00:30:50:16 00:30:54:09
people get pay increases.
00:30:54:09 00:30:55:06
I think that's the one thing
00:30:55:06 00:30:56:11
where we're seeing--
00:30:56:11 00:30:57:07
- That great.
00:30:57:07 00:30:58:11
- We're seeing a little bit of lack
00:30:58:11 00:31:00:06
is, is the pain.
00:31:00:06 00:31:03:12
What is interesting, I
saw a number the other day
00:31:03:12 00:31:05:05
there's actually more people
00:31:05:05 00:31:06:20
quitting their jobs
00:31:06:20 00:31:08:02
than ever before.
00:31:08:02 00:31:08:24
(laughter)
00:31:08:24 00:31:10:08
Yeah.
00:31:10:08 00:31:11:08
(laughter)
00:31:11:08 00:31:12:25
- Oh, man.
00:31:12:25 00:31:14:02
- Oh, man.
00:31:14:02 00:31:16:00
- Anne strives (mumbles).
00:31:16:00 00:31:18:05
- And it's because the see opportunity.
00:31:19:06 00:31:20:17
And there's optimism.
00:31:20:17 00:31:21:21
And it's a nice,
00:31:21:21 00:31:23:10
it's a nice feeling.
00:31:23:10 00:31:24:14
- We're no longer
looking at life stagnant.
00:31:24:14 00:31:26:00
- Yes.
00:31:26:00 00:31:27:00
- Where the economy is stagnant.
00:31:27:00 00:31:27:23
- Yeah, what's, but it's funny
00:31:27:23 00:31:30:18
because I think there's still
a lot of people out there
00:31:30:18 00:31:34:09
who went through that housing crisis.
00:31:34:09 00:31:35:05
- Mm-hmm.
00:31:35:05 00:31:37:16
- You know, people who lost their homes.
00:31:37:16 00:31:38:13
- Yeah.
00:31:38:13 00:31:39:20
- And they're looking at it now
00:31:39:20 00:31:41:19
again and they're a little bit nervous.
00:31:42:16 00:31:43:22
I think probably one of the next (mumbles)
00:31:43:22 00:31:46:01
we're gonna do is 'cause I watched,
00:31:46:01 00:31:47:03
I've read some articles
00:31:47:03 00:31:48:19
over the pat week
00:31:48:19 00:31:52:00
is Millennials and others
00:31:52:00 00:31:53:08
they're actually starting to feel that
00:31:53:08 00:31:54:23
renting is better than owning.
00:31:56:00 00:31:59:20
And long term, I still don't see that.
00:32:00:22 00:32:02:12
You know, I don't see it.
00:32:02:12 00:32:05:06
That's not the American dream.
00:32:05:06 00:32:06:23
You know, it's not.
00:32:06:23 00:32:08:07
You know, and I think that's something
00:32:08:07 00:32:09:12
you know, we need to look at,
00:32:09:12 00:32:10:12
we need to show 'em,
00:32:11:12 00:32:13:02
hey, you still can own,
00:32:13:02 00:32:15:05
you still can you know,
00:32:15:05 00:32:17:04
you still, there's still
opportunity out there.
00:32:17:04 00:32:18:17
But I think a lot of those
00:32:18:17 00:32:20:20
saw what happened to their parents.
00:32:20:20 00:32:21:16
- Yeah.
00:32:21:16 00:32:22:19
- As they crashed.
00:32:22:19 00:32:23:19
- Mm-hmm.
00:32:23:19 00:32:24:15
- And now, they're at that stage
00:32:24:15 00:32:25:11
and they're like,
00:32:26:08 00:32:27:23
"Well, my parents went through this."
00:32:27:23 00:32:31:05
You know, it kind of reminds
me of my grandparents.
00:32:31:05 00:32:32:01
Because my grandparents
00:32:32:01 00:32:32:23
were very frugal.
00:32:32:23 00:32:35:18
My grandparents went
through the Depression.
00:32:35:18 00:32:37:15
And anyone who's my age,
00:32:37:15 00:32:39:00
18, 19.
00:32:39:00 00:32:40:07
(laughter)
00:32:40:07 00:32:41:23
Anyone who's my age,
00:32:41:23 00:32:45:04
you know, their grandparents
00:32:45:04 00:32:47:05
you know, who went through the Depression
00:32:47:05 00:32:49:03
they kept, they had all their money
00:32:49:03 00:32:51:10
and they never lived at
the end of their means.
00:32:51:10 00:32:52:09
- Mm-hmm.
00:32:52:09 00:32:53:08
Yeah.
00:32:53:08 00:32:54:14
- And I think there's, we're
seeing a little bit of that
00:32:54:14 00:32:56:17
in the Millennials.
00:32:56:17 00:32:58:03
They're not out stretching.
00:32:58:03 00:33:00:23
They saw what happened to their parents.
00:33:00:23 00:33:02:01
- So a payments (mumbles) for.
00:33:02:01 00:33:04:11
You're definitely gonna want to stay tuned
00:33:04:11 00:33:05:14
for the next one.
00:33:05:14 00:33:07:20
It's Joseph Dionne with Home 1st Lending.
00:33:07:20 00:33:11:14
- Brenden with, Brenden Rendo
with Homes in Orlando team
00:33:11:14 00:33:13:13
and Nexthome Neighborhood Realty.
00:33:13:13 00:33:15:06
Thank you four time today,
00:33:15:06 00:33:17:00
hope we taught you something.
<end subtitles>
