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Speaker 1: Well, let's turn out to the outlook for the US

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Speaker 1: housing market, which has been under pressure because of high

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Speaker 1: mortgage rates. According to the latest survey from the real

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Speaker 1: estate company Remax, home sales dropped nine point eight percent

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Speaker 1: from October to November, the media and sales price dropped

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Speaker 1: by five thousand dollars to four hundred and five thousand dollars,

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Speaker 1: and new listings were down nineteen point one percent. Joining

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Speaker 1: us now for an exclusive interview is Nick Bailey, the

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Speaker 1: CEO of Remax. So, Nick, some of those numbers were

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Speaker 1: fairly eye popping, and you know it's not all to

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Speaker 1: do with the price of a house necessarily, is obviously

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Speaker 1: inventory and mortgage rates and so on. The pivot this

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Speaker 1: week from the Federal Reserve chair, will that make an

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Speaker 1: immediate difference?

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Speaker 2: Well, these are great questions, and you talk about these

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Speaker 2: numbers being nine point eight percent down on sales a

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Speaker 2: little bit of its seasonality, But it is no secret

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Speaker 2: that interest.

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Speaker 3: Rates have affected the real estate market this year.

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Speaker 2: However, there is something to be said that's happening right now.

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Speaker 2: There is the very beginning of some optimus going into

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Speaker 2: twenty twenty four to have the thirty year fixed rate

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Speaker 2: drop to below seven to slightly six point ninety five.

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Speaker 3: And I think none of us have the perfect crystal ball.

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Speaker 3: But as we look.

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Speaker 2: Into twenty four, there is maybe some optimism on the

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Speaker 2: horizon for some relief on competitive rates, and that's going

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Speaker 2: to mean good things for buyers and better affordability.

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Speaker 1: How many percentage points, though, would you need for rates

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Speaker 1: to drop in order to combat what might be a

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Speaker 1: slowing labor market or a slowing economy of some type,

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Speaker 1: even if we don't slip fully into recession or anything.

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Speaker 3: Well, it's not just the rate.

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Speaker 2: We've got to keep in mind that there are a

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Speaker 2: couple of other things affecting this. You mentioned the five

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Speaker 2: thousand dollars that the medium price has fallen since October,

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Speaker 2: but keep in mind that's up thirteen thousand dollars from

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Speaker 2: where it was a year ago, and that's all driven

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Speaker 2: by the fact that we don't have enough homes on

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Speaker 2: the market, and so the pent up demand out there

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Speaker 2: continues to grow. There's estimates that we have around four

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Speaker 2: and a half to five million homes that were short

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Speaker 2: in the US. New construction can't come out of the

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Speaker 2: ground fast enough, So it's not just the rate.

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Speaker 3: Now certainly.

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Speaker 2: I think any rates that get into the low sixes,

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Speaker 2: or by some if we get down into the five

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Speaker 2: sometime in twenty twenty four, that's going to help stimulate

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Speaker 2: the industry and.

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Speaker 3: In the entire market overall.

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Speaker 2: However, we're going to continue to struggle with inventory levels

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Speaker 2: and that's going to affect price.

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Speaker 4: I want to talk about that pent up demand you mentioned.

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Speaker 4: Where is it coming from. Is it mainly from first

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Speaker 4: time home buyers who are desperate to get into a home,

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Speaker 4: or is it from those who need to trade up

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Speaker 4: to a larger house.

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Speaker 2: Well, look, the first time home buyers are always a

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Speaker 2: significant part of the market. There are generally anywhere from

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Speaker 2: twenty five to thirty percent of the market.

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Speaker 3: And right now we have the millennial.

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Speaker 2: Population at the prime of household formation, and it's estimated

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Speaker 2: that there are forty five million millennials that'll be ready

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Speaker 2: and want to buy in the next few years.

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Speaker 3: So that's a big part of the demand. But when

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Speaker 3: we think of inventory, we have to remember this.

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Speaker 2: Thirty four percent of homes across the US do not

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Speaker 2: have a mortgage, and of those that do, ninety percent

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Speaker 2: of those that have a mortgage are under five percent,

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Speaker 2: with fifty percent of those being under three and a half,

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Speaker 2: which means we still have a lot of people in

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Speaker 2: love with their rate and may not want to put

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Speaker 2: their market home on the market anytime soon.

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Speaker 4: Yeah, even if it means squeezing into a home that

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Speaker 4: might be too small for their purposes right now. Nick,

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Speaker 4: you mentioned also seasonality. How much does that even matter

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Speaker 4: right now when there isn't enough inventory on the market

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Speaker 4: and people are desperate to get into whatever house they

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Speaker 4: can find as long as they can somehow catch a

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Speaker 4: dip in the mortgage rate.

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Speaker 2: This is a great question that I believe what we're

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Speaker 2: seeing is we're not seeing the seasonality that we historically have. Generally,

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Speaker 2: the spring market is the hottest season of the year.

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Speaker 2: But if twenty three is going to be any reflection

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Speaker 2: of the spring market in twenty four because the rates

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Speaker 2: that I just mentioned, the move up buyer didn't come

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Speaker 2: to the market in the spring market, and because of

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Speaker 2: the low inventory, people are just waiting for the right house.

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Speaker 2: But if buyers are out there, one piece of advice,

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Speaker 2: look at new construction builders have lending partners with even

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Speaker 2: more competitive rates.

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Speaker 3: They're giving incentives and upgrades, and so there are other

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Speaker 3: possibilities out there.

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Speaker 1: We just heard that from Lennar today. In fact, Nick,

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Speaker 1: where geographically are you seeing the work from home versus

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Speaker 1: work in the office dynamic playout in the housing market?

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Speaker 2: Still, well, that is all across the board.

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Speaker 3: Now.

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Speaker 2: We are seeing in many cases your high density areas

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Speaker 2: that people are wanting to move back closer to cities,

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Speaker 2: and you're seeing companies that are bringing people back to

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Speaker 2: office locations on a more regular basis. I wouldn't say

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Speaker 2: that we see it in one particular geography over another,

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Speaker 2: but I think it just is dependent on the company

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Speaker 2: and the farther away we get from the pandemic, I

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Speaker 2: think will continue to see return to office and some

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Speaker 2: of the things that we saw pre pandemic.

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Speaker 1: And just in terms of trends, Nick, you guys see

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Speaker 1: a phenomenal amount of data. Are people putting down the

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Speaker 1: standard twenty percent to pause us? Are they trying to

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Speaker 1: pay more in cash upfront? How are those trends working?

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Speaker 2: Because affordability has been a challenge for a lot of buyers,

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Speaker 2: especially first time home buyers. We're seeing less than twenty

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Speaker 2: percent typically those that are putting down twenty percent or more.

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Speaker 3: Our return repeat buyers to the market.

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Speaker 2: But we've even seen mortgage plans that are very low

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Speaker 2: down payment programs to help first time home buyers and

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Speaker 2: underserved populations get into a home, and we're seeing some

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Speaker 2: of these at one percent down, three percent down. So

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Speaker 2: for those buyers out there that are looking for a

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Speaker 2: lower down payment, that can really help drive their ability

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Speaker 2: to get into a home.

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Speaker 4: And I'm glad Bonnie brought up that question because I

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Speaker 4: think about how a couple of years back, the people

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Speaker 4: who didn't put down any kind of down payment paid

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Speaker 4: all in cash were usually international buyers from Russia, for instance,

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Speaker 4: from China, But given the geopolitical tensions of late perhaps

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Speaker 4: those buyers are not really in the market in a

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Speaker 4: big way. What kind of demand do you see from

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Speaker 4: international buyers.

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Speaker 3: I think we'll continue to see it grow.

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Speaker 2: I mean, not so long ago, there was over fifty

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Speaker 2: three billion dollars from foreign buyers that was spent in

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Speaker 2: the United States during the pandemic. That off you obviously

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Speaker 2: dropped dramatically, But I think in twenty four and especially

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Speaker 2: going into twenty five, we will see a return from

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Speaker 2: some of the foreign investors and foreign buyers back into

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Speaker 2: the United States and Canada.

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Speaker 4: All right, Nick Bailey, the CEO of Remax, really appreciate

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Speaker 4: your joining us. That was an exclusive conversation with Nick