Speaker 1: Welcome to How to Money. I'm Joel and I am Matt,
Speaker 1: and today we're talking traversing a broken housing market with
Speaker 1: Lance Lambert.
Speaker 2: Yeah. So, anyone who has spent any time in their
Speaker 2: Zillow and their Redfinn apps over the past few years
Speaker 2: knows that something is broken when it comes to home affordability.
Speaker 2: Or maybe they don't know it, maybe they don't have
Speaker 2: the data or the facts, but they feel it right
Speaker 2: as they're looking at homes. They might be overwhelmed to
Speaker 2: given the current state of the housing market. They might
Speaker 2: be saying, how can home prices continue to skyrocket like
Speaker 2: they have? And even if prices taper off some how
Speaker 2: am I supposed to save up a down payment in
Speaker 2: order to actually make a competitive offer. There are a
Speaker 2: lot of just big unknowns when it comes to the
Speaker 2: largest financial decision that many of us will make. But
Speaker 2: luckily we're joined by Lance Lambert. Lance is the nation's
Speaker 2: foremost data journalist and beat reporter in the residential real
Speaker 2: estate space. He's been the real estate editor over at
Speaker 2: Fortune Magazine, and he's recently launched Rezi Club to help
Speaker 2: folks to stay informed on the US housing market. Lance,
Speaker 2: thank you so much. For joining us today on the podcast.
Speaker 3: Yeah, thank you so much for having me on. And
Speaker 3: you hit the nail on the head right there, which
Speaker 3: is that housing affordability has deteriorated at the fastest pace
Speaker 3: ever over the past two years, only three years. And
Speaker 3: so what happened there is we had an overheating on
Speaker 3: prices during the pandemic. And what was going on is
Speaker 3: that there was an elevation in the demand for housing space,
Speaker 3: and so people, because they were working from home, could
Speaker 3: work in other you know, go live in other markets,
Speaker 3: go buy a home in let's say, you know, Lexington,
Speaker 3: can if they were working in New York City, and
Speaker 3: so they were able to depart their job market for
Speaker 3: a more affordable place. So that's work from home arbitrage.
Speaker 3: And then the second part is the people who stayed
Speaker 3: in those markets, even the places that had net out migration,
Speaker 3: think San Francisco, Los Angeles, New York City. The people
Speaker 3: who remained wanted more space because they wanted to work,
Speaker 3: they were working from home, they needed more room in
Speaker 3: their apartments. And so there was this elevation in demand
Speaker 3: for housing space and the work from home arbitrage that occurred.
Speaker 3: And at the same time, you had rates go to
Speaker 3: the lowest ever this century, really over the past one
Speaker 3: hundred plus years, and you had a lot of easy
Speaker 3: money rolling through the economy.
Speaker 2: And so appreciates any money.
Speaker 3: Yes, appreciation for housing. For home prices on a national
Speaker 3: basis went up about forty five percent from March twenty
Speaker 3: twenty to June twenty twenty twowenty twenty one alone, we
Speaker 3: were up like twenty one percent, which is the biggest
Speaker 3: year ever, one year jump ever in home prices.
Speaker 1: Yeah, Studio apartments basically became persona non grata who wants
Speaker 1: them because you need a space of orger Like I
Speaker 1: distinctly remember the beginning of the pandemic, my little sister
Speaker 1: and her husband working out, both of them trying to
Speaker 1: work from home in a studio apartment and it was
Speaker 1: not working very well. But listen, sorry, we have to
Speaker 1: ask you. One of the first questions we ask anybody
Speaker 1: who comes on the show is what's your craft beer equivalent?
Speaker 1: Because like, we want to get into all this housing data.
Speaker 1: And I love that you're like chopping at the bit
Speaker 1: to get started.
Speaker 3: Yeah, but you know, I'm always ready to just like
Speaker 3: take off the place. And so you want to know
Speaker 3: where I splurge on money, right exactly?
Speaker 2: Sure.
Speaker 3: Yeah, So I am a long I grew up in
Speaker 3: the Cincinnati area. I lived in New York before the
Speaker 3: pandemic hit. But when the pandemic hit, we had this
Speaker 3: guy named Joe Burrow that the Cincinnati Bengals drafted. Oh yeah,
Speaker 3: and I was already ready to move home, but that
Speaker 3: even made me wanted to get home more. And I
Speaker 3: kind of just had a feeling because I also watched
Speaker 3: college football that we were going to turn it around
Speaker 3: with Joe Burrow. It just kind of felt like it.
Speaker 3: And so my area that I splurge on is anything Bengals.
Speaker 3: I like to go to some road games, you know,
Speaker 3: I like to go to the home games. You know,
Speaker 3: I probably have bought like six or seven jerseys over
Speaker 3: the past, and I'm not you know, I'm a tightwad,
Speaker 3: so you know, and you know, like somebody have a
Speaker 3: big interception, I'll just go by their jersey. So I'm
Speaker 3: feeling splurging more on Cincinnati Bengals just because it feels
Speaker 3: like this is, you know, a rare moment for us
Speaker 3: where we might be all right. Although you know, by
Speaker 3: the time this publishes, we could have lost several games
Speaker 3: and lost. You know it hasn't been off to the
Speaker 3: best start.
Speaker 2: No, that is perfect. I love in particular your tight wad,
Speaker 2: but you are willing to splurge in this way. And
Speaker 2: by the way you said like six or seven jerseys.
Speaker 2: Those jerseys are not like that alone could have been
Speaker 2: on top of it. You at the away games.
Speaker 3: A few of them are official, and then a few
Speaker 3: were like the fifteen dollars from China.
Speaker 2: Nice. So you got to get you get the knockoffs
Speaker 2: where the color is not quite right. It's a I've
Speaker 2: done that before. Matt might have made fun of me.
Speaker 2: I got one from our local soccer team in Atlanta,
Speaker 2: and like the red was definitely a lot more abrasive.
Speaker 2: It was a little pink had a pick here than
Speaker 2: the red. Atlanta United was rocking. But Lance, I feel
Speaker 2: like you caught us up to speed when it came
Speaker 2: to the reaction of housing prices.
Speaker 3: Like I got to the first half, which is house prices. Sure, yeah, Really,
Speaker 3: the thing that a deteriorated affordability wasn't just the house
Speaker 3: price jump. Really, if you break down the math, the
Speaker 3: biggest part is just the historic move up in interest
Speaker 3: rates right, going from two three percent mortgage rates to
Speaker 3: four to five to six percent to seven percent, and
Speaker 3: then you know, this fall to hit that eight handle.
Speaker 3: And when you do the math with the house price
Speaker 3: move and then also the move up in rates and
Speaker 3: the fact that income, the third variable, just hasn't kept
Speaker 3: up over the past three years, what you'll see is
Speaker 3: that we were in the fastest deterioration ever for housing affordability.
Speaker 3: This is the fastest move up in a three year
Speaker 3: period ever. And we also have reached the most expensive
Speaker 3: period for housing this century since two thousand. But really,
Speaker 3: if you go back, this is the most expensive housing
Speaker 3: has been for new home buyers since nineteen eighty four
Speaker 3: and really only beat by eighty one eighty two, when
Speaker 3: mortgage rates were kind of pushing sixteen seventeen eighteen percent
Speaker 3: at the you know, at the peak of Paul Volker's
Speaker 3: interest rate hikes. And so the affordability has really deteriorated quickly,
Speaker 3: not just for housing, but also autos, which saw the
Speaker 3: same overheating for prices and the same rate shock as
Speaker 3: housing did. And the results there are interesting. You know,
Speaker 3: it's not just one you know, it's not all that
Speaker 3: you know, housing is in a bad spot, or housing
Speaker 3: it's in a good spot when you kind of break
Speaker 3: it down. There's a lot going on based on this
Speaker 3: deterioration and affordability for starters. The existing home sales now
Speaker 3: are lower than they were at the bottom of the
Speaker 3: eight ten, nine, ten, twenty eleven crash. And what's happened
Speaker 3: is that affordability has deteriorated so quickly that people with
Speaker 3: two three four percent mortgage rates and their lower monthly
Speaker 3: payments are like, well, why would I sell my home
Speaker 3: and go buy something new?
Speaker 1: Even if you had triplets, You're staying in the two
Speaker 1: two because you don't want to give up the three
Speaker 1: percent rate.
Speaker 3: Yeah, yeah, And so you know, my my wife's pregnant.
Speaker 3: You know, not all our family knows, but hopefully by
Speaker 3: the time publishes we will have told everybody. But we
Speaker 3: have a three bedroom house and this would be our
Speaker 3: third kid, and it just doesn't make sense for us
Speaker 3: to go buy some they knew right now, we'd rather
Speaker 3: just bunk at it because the math doesn't make sense.
Speaker 3: And so you've taken out what I call churn in
Speaker 3: the market, somebody selling to go buy something new, And
Speaker 3: so the existing resale market is just very constrained right
Speaker 3: now because there's not much coming up for sale. So
Speaker 3: that's the first part. The second part is if you
Speaker 3: look at the home construction side, the new side of
Speaker 3: the market, not the existing the new side where the
Speaker 3: home builders play, what they have done is unlike the
Speaker 3: existing side of the market, which has been very sticky
Speaker 3: on prices, the homebuilders have given up some on prices,
Speaker 3: and in particular on a net effective basis for mortgage
Speaker 3: rate buydowns, in particular in markets where there's a lot
Speaker 3: of new construction. Think Austin, Think Boise, think Phoenix, think
Speaker 3: a lot of these places in the South that build
Speaker 3: a lot of homes, and including Dallas. The builders have
Speaker 3: given up some on prices, but they've also done these
Speaker 3: mortgage rate buydowns, and they'll buy people down into the
Speaker 3: five handle and sometimes even into the four handle high
Speaker 3: fours to get people interested or getting them to pull
Speaker 3: the trigger. And so a lot of the people who
Speaker 3: would have normally looked at the existing resale market are
Speaker 3: now looking at the builders and looking there because affordability
Speaker 3: is so deteriorated, and they're the one player in town
Speaker 3: that has made some affordability adjustments, and so new home
Speaker 3: sales have actually rebounded after last year's big or in
Speaker 3: twenty twenty two is big cratering. There was a big
Speaker 3: plummet down in new home sales and a huge spike
Speaker 3: in cancelation rates among builders. But by early twenty twenty three,
Speaker 3: the builders had kind of figured out the right mix
Speaker 3: of incentives, buydowns, and price cuts to bring the buyers
Speaker 3: into the existing market. So new home construction on the
Speaker 3: single family side has been fairly resiling, and we haven't
Speaker 3: seen many layoffs in new and residential construction employment. One
Speaker 3: reason being that, you know, single family sales have rebounded
Speaker 3: in new construction. And then also the fact that there
Speaker 3: is this huge pipeline a multifamily still under construction and
Speaker 3: it was kind of planned back when rates were lower,
Speaker 3: so that's still in the pipeline. And why that matters
Speaker 3: is from an economic perspective, housing is one of the
Speaker 3: areas where the fed's rate policy has normally transmitted into
Speaker 3: the rest of the economy. And so how it's normally
Speaker 3: worked is the FED jack's up rates, affordability deteriorates, new
Speaker 3: home sales fall way down, builders pull back on construction.
Speaker 3: You know, there's some there's a lot of layoffs and
Speaker 3: residential construction employment. Those people spend less than the rest
Speaker 3: of the economy, and that kind of trickles through. We're
Speaker 3: not seeing that right now. We've seen the deterioration and affordability,
Speaker 3: but builders have made the cycle rolled over on affordability
Speaker 3: because they made some affordability adjustments and they were able
Speaker 3: to keep volume transactions and employment moving.
Speaker 2: So that's okay, So quick question, then I think I
Speaker 2: saw so according to data from the Census Bureau, like
Speaker 2: recent permits and starts, they seemed to be down from
Speaker 2: a couple years ago. So it does seem like construction
Speaker 2: has maintained, but as far as new construction, as far
Speaker 2: as new permits, those seemed to be declining compared to
Speaker 2: what we saw a couple of years ago.
Speaker 3: Yeah, there's been some there, but on the single family side,
Speaker 3: the completions have held steady. One of the things that
Speaker 3: was happening during the pandemic is that starts and also
Speaker 3: sales were outstripping the capacity to build, and the time
Speaker 3: to completion for these new homes got really high. And
Speaker 3: so what you've seen is you've seen the sales come
Speaker 3: down from the frothy pandemic tops and the permits come
Speaker 3: down from the frothy pandemic tops. But you have seen
Speaker 3: completions hold steady. And what had to happen there is
Speaker 3: that the time to completion is starting to normalize. Builders
Speaker 3: who are able to build the homes faster, And so
Speaker 3: you know, the hit there hasn't been that big when
Speaker 3: adjusting for how high it got during the pandemic. If
Speaker 3: you compare it to twenty nineteen levels on the starts
Speaker 3: and the permits, you start to get a bit of
Speaker 3: a different story.
Speaker 1: Is part of that that they're building smaller houses? I've
Speaker 1: read more about it seems like new home builds are
Speaker 1: for the first time in a long time, for the
Speaker 1: first time in like fifty sixty years, becoming like smaller
Speaker 1: homes are being built. And that seems to be given
Speaker 1: kind of how things have gotten locked up and affordability
Speaker 1: has become a problem. Maybe that's at least one part
Speaker 1: of a solution.
Speaker 3: Yeah, So what we've seen since really about twenty eighteen
Speaker 3: is that gradually builders have been building smaller homes. We've
Speaker 3: kind of seen a rolling over on the square footage
Speaker 3: for the average home and it's been moving down, not
Speaker 3: just you know, on a national aggregate, but really almost
Speaker 3: every market is getting smaller and that is probably going
Speaker 3: to continue to accelerate now that affordability has just deteriorated
Speaker 3: to the levels it has gotten to. But this has
Speaker 3: been a steady move down, and we're not talking like
Speaker 3: drastic moves. We're talking like two three percent contraction per
Speaker 3: year in square footage. So it adds up, you know,
Speaker 3: if you look at it from now versus twenty eighteen.
Speaker 3: But it's a very gradual move down.
Speaker 2: We're kind of talking about that. I guess overall the
Speaker 2: supply of housing and how that's impacted housing affordability. How
Speaker 2: have investors been impacting what's happening in the in the
Speaker 2: housing market. Do you think the different Wall Street firms
Speaker 2: out there investing in single family homes have they had
Speaker 2: a big effect on the lack of inventory for uner occupants.
Speaker 3: So on a national basis, institutional home buyers those with
Speaker 3: you at least one thousand homes in their inventory. They
Speaker 3: own about zero point seven three percent of the national
Speaker 3: single family housing stock according to Parcel Labs data. So
Speaker 3: they're not a huge amount of the total housing.
Speaker 2: Stock except for where we live here in Atlanta.
Speaker 3: Right, That's what I'm getting to is that in Atlanta
Speaker 3: they own four point four percent of the single family
Speaker 3: housing stock, and if you look at it based on
Speaker 3: a zip code level, there are around eleven zip codes
Speaker 3: in the Atlanta area where they own about half of
Speaker 3: the single family rental stock. And so my view on
Speaker 3: institutional home buyers is that I believe on a nationally
Speaker 3: aggregated basis, they're probably not moving the needle a ton,
Speaker 3: but on a regional basis in a certain specific pockets,
Speaker 3: it's they are probably the marginal home buyer in some
Speaker 3: of these areas where they've kind of all piled into
Speaker 3: and I think with Alanta in particular, they're probably you know,
Speaker 3: running their numbers and they're like, oh, Atlanta has good
Speaker 3: population growth, Oh, Alana has good rental growth. Oh Alana
Speaker 3: has good home appreciation growth.
Speaker 2: Oh.
Speaker 3: And by the way, affordability in Atlanta relative to where
Speaker 3: some of these buyers are coming from is kind of
Speaker 3: in a good spot, and the rent yields just work
Speaker 3: out great. And so a lot of them have probably
Speaker 3: just piled into the market because they're all seeing the
Speaker 3: same aggregate data. That's the view of kind of parcel labs,
Speaker 3: and I think they're probably right, and so I think
Speaker 3: they have an outsized impact in some markets. And I
Speaker 3: think those markets are probably Charlotte, Alana, Tampa, Dallas, Phoenix,
Speaker 3: and I'm missing one more, might you like Houston, but
Speaker 3: really you would probably think Raley and Jacksonville are right
Speaker 3: there too. But those, you know, the states in you know,
Speaker 3: the sun Belt that are kind of like high growth
Speaker 3: states that have good long term outlooks and reasonable state
Speaker 3: laws for you know, for landlords is probably you know
Speaker 3: what they're after, and really at the end of the day,
Speaker 3: it's about those yields. Can they get the returns on
Speaker 3: the capitol they want? And those have been some of
Speaker 3: the markets over the past several years that they've been
Speaker 3: able to And if you zoom out, what occurred during
Speaker 3: the pandemic is we saw a huge rush of investors
Speaker 3: everybody from you know, the mom and pops, the people
Speaker 3: who want to do you know, amateur airbnb folks. And
Speaker 3: then you also saw it on the institutional side. And
Speaker 3: what occurred is there was a very easy access to
Speaker 3: capital during that you know, low rate, high stimulus period.
Speaker 3: There was the low rates, soaring rents and high home appreciation,
Speaker 3: and when you add all those factors in the yields
Speaker 3: were just amazing. And so, you know, a lot of
Speaker 3: the biggest buyers American homes for rent, invitation homes, Amherst Tricon,
Speaker 3: you know, they were out there buying. And now what
Speaker 3: we've seen is we've seen rates move very high, home
Speaker 3: prices have stayed high. Rents relative to home prices are
Speaker 3: very strained, and there's not a lot of inventory on
Speaker 3: the market, and so there's not a lot out there
Speaker 3: available for sale and not a lot of it that
Speaker 3: is out there pencils. And remember these people often spend
Speaker 3: a lot of money on renovations too, and realizations and
Speaker 3: repairs are very expensive. Given the inflationary run and the
Speaker 3: move up and capital cost on that side, we're seeing
Speaker 3: less institutional home buying right now.
Speaker 1: Yeah, you mentioned you mentioned rents, and that is something
Speaker 1: that Yeah, during the really heart of the pandemic, rents
Speaker 1: were skyrocketing, and we had certainly a lot of listeners
Speaker 1: reaching out like what do I do? How do I
Speaker 1: push back against these crazy rent increases? But now rents
Speaker 1: are softening and in fact like falling year over year,
Speaker 1: which is good for what we're talking about the affordability
Speaker 1: for folks who are looking to rent, but that doesn't
Speaker 1: necessarily help home buyers. But I'm curious like to hear
Speaker 1: your thoughts on we have this massive spread now between
Speaker 1: the average cost monthly cost of a mortgage versus the
Speaker 1: monthly cost of rent, especially in places like California. So
Speaker 1: is renting a superior option for so many people who
Speaker 1: are like I want to own a home. Is patients
Speaker 1: the best way to proceed given kind of how much
Speaker 1: cheaper rents are relative to the home.
Speaker 3: Yeah, So I want to be careful here. You know.
Speaker 3: One of the things I try to do in the
Speaker 3: space is be a little bit more of a journalist,
Speaker 3: a little less of an analyst, and try to not
Speaker 3: make too many big predictions. That way, I can, you know,
Speaker 3: kind of spread other people's views and be a good
Speaker 3: place for people to get exposed to a lot of
Speaker 3: different viewpoints. But I will say, in terms of the data,
Speaker 3: we have seen a softening of rents and rent growth.
Speaker 3: That is true. We've seen some falling rents on the
Speaker 3: multifamily side in very big boom towns think Austin, think Boise, Phoenix,
Speaker 3: some of those places with a lot of multifamily inventory
Speaker 3: coming into the market, but we have continued to see
Speaker 3: rising prices for single family rents and you know, invitation
Speaker 3: homes which they own almost ninety thousand single family rentals.
Speaker 3: If you look at their earnings report year over year
Speaker 3: single family rents and there's on average we're up six percent.
Speaker 3: And so I think it's important to remember that there
Speaker 3: is a bifurcation happening throughout all of housing right now,
Speaker 3: and on one of those fault lines is multi versus
Speaker 3: single family and single family it appears, and at least
Speaker 3: among a lot of the investors I also talk to,
Speaker 3: they think there is upward momentum on single family rents.
Speaker 3: And you know, so the last time that the cost
Speaker 3: to buy versus rent got this strained, which right now
Speaker 3: a new monthly mortgage is substantially more expensive than renting
Speaker 3: the same home in most of the country right now.
Speaker 3: The last time that happened was six seven eight, and
Speaker 3: the gap there closed very quickly because house prices crashed
Speaker 3: and rents continued to rise. Now, maybe they're looking through
Speaker 3: rose collared glasses, but a lot of them think that
Speaker 3: there isn't going to be the downward momentum on house
Speaker 3: prices because this time we don't have the toxic mortgages,
Speaker 3: think the ninja loons, we don't have that this time
Speaker 3: like we did in the lead up to THEA crash
Speaker 3: and also in the lead up to the OA crash.
Speaker 3: Active listings inventory had been building for several years and
Speaker 3: there were substantially more on the market, and then when
Speaker 3: you had the foreclosure crisis that occurred in the job
Speaker 3: loss recession, it created this perfect storm to pull house
Speaker 3: prices down. Industry experts now think that's less likely for
Speaker 3: you know, a material correction in house prices, and they're
Speaker 3: talking on a national basis, but they think it's more
Speaker 3: likely that rents will do the work to help to
Speaker 3: narrow the gap. And again, maybe that's rose colored glasses,
Speaker 3: but at least that's the of you that shared a
Speaker 3: lot among the industry. And again i'm talking single family here.
Speaker 3: Multi is a very different story, and there's a tremendous
Speaker 3: amount of supply on the multi family side that's still
Speaker 3: making its way into the market over not just the
Speaker 3: next you know, the last six months, but really twelve
Speaker 3: eighteen months out.
Speaker 2: Still sure that being said, there are still some markets
Speaker 2: that have seen some declines and will actually ask you
Speaker 2: about that as well as some other wisdom hopefully that
Speaker 2: we can give to our listeners on how it is
Speaker 2: that they can go about purchasing a home, especially for
Speaker 2: those first time home buyers. And we'll get to all
Speaker 2: of that right after this.
Speaker 1: Are we're back from the break, we're still talking about
Speaker 1: traversing a broken housing market with expert Lance Lambert. And Lance,
Speaker 1: let's talk about kind of the You've mentioned the term bifurcation.
Speaker 1: And one of the interesting things all real estate is local, right,
Speaker 1: and that can be hyper local in for instance, in
Speaker 1: Atlanta where we live, like certain parts of Atlanta have
Speaker 1: seen outside growth, other parts have seen not nearly as much.
Speaker 1: Or that can be kind of town to town. Some
Speaker 1: towns were boomtowns during COVID. You mentioned Boise and Austin
Speaker 1: being a couple of those. There's a bifurcation there, right,
Speaker 1: some of those. I think you equated Austin to being
Speaker 1: like a meme stock the way kind of it shot
Speaker 1: up in value all around Austin. I saw all these
Speaker 1: investors talking about how they were buying up all this
Speaker 1: stuff in Austin. Well, now Austin is seeing a decline
Speaker 1: when other parts of the country are not.
Speaker 2: Is that correct? Can you talk about kind of the
Speaker 2: local realities of real estate?
Speaker 3: Yeah, that's right. So on a national basis, houseprices since
Speaker 3: you know, the twenty twenty two peak, you know, they
Speaker 3: started to correct a bit in the second half of
Speaker 3: twenty twenty two, down let's say four or five percent
Speaker 3: according to Key Schiller and Freddie Mack. But they then
Speaker 3: rebounded in the first half of twenty and twenty three
Speaker 3: this year and kind of made up for the gains
Speaker 3: that fell off. So on a national basis, houseprices have
Speaker 3: kind of been frozen essentially since you know, Summer A
Speaker 3: twenty twenty two. They gave up some, then they rebounded.
Speaker 3: But really, if you look at these different indices, we
Speaker 3: might be up one two percent a half a percent
Speaker 3: since the twenty twenty two peak based on the end
Speaker 3: of cy you look at. But on a regional basis,
Speaker 3: the bifurcation has been really historic. So we've had some
Speaker 3: markets like Hartford, Connecticut, where house prices are up about
Speaker 3: eight percent nine percent since the twenty twenty two peak,
Speaker 3: and then you have markets like Austin, Texas that, at
Speaker 3: least according to the latest Zillow data is down eighteen
Speaker 3: percent from the peak. Now slimendoses have them down closer
Speaker 3: to fourteen or thirteen percent. But Austin has seen a
Speaker 3: material correction in house prices. Now they're still up a lot.
Speaker 3: Austin's still up like forty two forty percent since March
Speaker 3: twenty twenty. But what happened is in the first twenty
Speaker 3: four months of the pandemic, say, they were up about
Speaker 3: sixty eight seventy percent for prices, and so Austin just
Speaker 3: got ahead of its you know, it got ahead of
Speaker 3: its skis. Prices went up too much. There was a
Speaker 3: lot of investors pouring in, a lot of people moving
Speaker 3: in from California during the pandemic remote work period, the
Speaker 3: lockdowns that just did you know, Austin seemed cheap to them.
Speaker 3: So they were driving up prices just really fast and
Speaker 3: too far beyond local fundamentals. And by the time mortgage
Speaker 3: rates started to move up, Austin on a historical basis
Speaker 3: was overvalued, according to Moody's analytics, by about sixty percent
Speaker 3: from historical fundamentals, and so that strained fundamentals and the
Speaker 3: fact that locals just could no longer really afford a home,
Speaker 3: and then you had fewer the people from the outside
Speaker 3: pouring in, and you know, and investors kind of also
Speaker 3: got over their ski. So we're going through that correction
Speaker 3: in Austin, and it really started summer in twenty twenty two,
Speaker 3: and it's carried over to now and we're in the
Speaker 3: seasonal saw period for twenty twenty three. I would expect
Speaker 3: these next few months to still be fairly soft for Austin.
Speaker 1: Isn't Isn't that the sign, at least to a certain extent,
Speaker 1: lance of a healthy market that some a market can
Speaker 1: get out over at keys and then maybe the speculators,
Speaker 1: the people who go in and buy top dollar banking
Speaker 1: on like continued ridiculous growth, they're the ones who get burned, right,
Speaker 1: That is what happens.
Speaker 2: Oftentimes.
Speaker 1: I feel like I'm, like I said, I'm seeing some
Speaker 1: investors being like a year ago, Austin, Austin, Austin, and
Speaker 1: now some of those folks who bought at the peak,
Speaker 1: they're having a tough time. And not that I wish
Speaker 1: that on them, but I feel like there is a
Speaker 1: reality as an investor that you have to be thoughtful about,
Speaker 1: like the long term approach, and if you're buying hoping
Speaker 1: to make a quick buck, you might lose out.
Speaker 3: Yeah, And I think you hit the nail on the head,
Speaker 3: which is that housing is not a meme stock. And
Speaker 3: what we have seen in the first two years of
Speaker 3: the pandemic, that level of house price growth that was unhealthy.
Speaker 3: We do not want to see that. That is that
Speaker 3: is not good. Now, maybe if you're an investor, maybe
Speaker 3: you kind of liked to have seen that, but you
Speaker 3: know it's not sustainable long term to have that. And
Speaker 3: I think one of the telltale signs of trouble in
Speaker 3: a real estate market is when you start talking to
Speaker 3: investors and you start finding out that they are buying
Speaker 3: homes that will cash flow. That means the revenue they
Speaker 3: will make on a monthly basis is less than what
Speaker 3: they can charge in rent. And so that's what you know,
Speaker 3: people like Michael Zuber over at one rent a lot
Speaker 3: a time call an alligator property, meaning it's costing the
Speaker 3: investor money every month. And if an investor has two, three,
Speaker 3: four of those, that that that's a lot of money
Speaker 3: going out a month. Now, an investor might be doing
Speaker 3: that because they're saying to themselves Wow, look at how
Speaker 3: fast home prices are going up. I'm going to make
Speaker 3: a fortune if I just hold these, even if I'm
Speaker 3: burning money every month. But what happens is into a
Speaker 3: housing correction once the fundamentals have gone too far and
Speaker 3: there's too many of that, you know, the investors who
Speaker 3: bought their speculating like that. It can put downward momentum
Speaker 3: on a market. And I think that's what's happening in Austin.
Speaker 3: And I had been talking to investors in real estate
Speaker 3: agents who had told me they were seeing alligator properties
Speaker 3: occurring where Austin had not just went up sixty eight
Speaker 3: percent over the past in the first two years of
Speaker 3: the pandemic, but if you zoom out, Austin was one
Speaker 3: of the few markets that did not bust following eight
Speaker 3: They only fell like eight percent during the eight crash error,
Speaker 3: and they had climbed up like two hundred and twenty
Speaker 3: percent over the past ten years. So investors who were
Speaker 3: in that market made a fortune. Then there was a
Speaker 3: big run up occurring during the pandemic, and there was
Speaker 3: just that fomo that occurred where it's like, oh, you
Speaker 3: can't miss in Austin. This city, is you know, taking
Speaker 3: off and even if I can't make the money up
Speaker 3: in rent, you know, throwing one hundred bucks a month
Speaker 3: or two hundred a month on these homes isn't going
Speaker 3: to hurt me because I'm making it up on the appreciation.
Speaker 3: And once the music stops, that's when you have trouble,
Speaker 3: and that's what's occurred in US.
Speaker 2: Sure sure, Well, forget the speculators and like even forget
Speaker 2: the investors. What about just the honest, good folks that
Speaker 2: are trying to buy a home. What would you say
Speaker 2: to our listeners out there? They want to buy their
Speaker 2: first place, and they've been saving up, but they're nervous
Speaker 2: that they might make their purchase and then we might
Speaker 2: see a meaningful correction or even years without any price growth.
Speaker 2: Do you think that that's a legit worry for those
Speaker 2: folks who are buying for more personal reasons, or is
Speaker 2: that something that they probably shouldn't be too concerned about.
Speaker 3: I want to start off with one thing, which is
Speaker 3: I cover mortgage rate forecast and house price forecast, and
Speaker 3: I do it religiously, and in my opinion, I don't
Speaker 3: think anybody in the country tracks down more housing and
Speaker 3: mortgage rate forecast than I do, and I will tell
Speaker 3: you we have been through a three year period where
Speaker 3: they are missing less and right in every direction. And
Speaker 3: I think the experts have really gotten house prices and
Speaker 3: mortgage rates wrong over the past couple of years. I
Speaker 3: think it's a lot of it's because of the unpreceded
Speaker 3: you know, things that occurred during the pandemic, with the lockdowns,
Speaker 3: the amount of stimulus money, how low rates went, you know,
Speaker 3: the inflationary shock. All of that plus work from home
Speaker 3: has made it really hard to predict. So the first
Speaker 3: thing I want to say is I'm not sure anybody
Speaker 3: really quite knows where house prices and mortgage rates are
Speaker 3: going to go in the next six months, twelve months,
Speaker 3: let alone three four years. So that's the first part
Speaker 3: is I think the forecast have really struggled here, and
Speaker 3: I don't want to make a prediction on the house
Speaker 3: prices and rates. The second thing is I try to
Speaker 3: not get into this game of is it a good
Speaker 3: time to buy? Is it a bad time to buy.
Speaker 3: My view is that there's always somebody that it is
Speaker 3: a good time to buy, and there was always somebody
Speaker 3: that it's a bad time to buy, and it really
Speaker 3: comes down to personal financial circumstances. And I think the
Speaker 3: number one thing to do if you want to become
Speaker 3: a homeowner is to really work on your personal wealth,
Speaker 3: your personal income, job prospects, entrepreneurial prospects, and then also
Speaker 3: your relationships. You know, the number one thing that drives
Speaker 3: people to have to sell is they have a divorce
Speaker 3: or a job relocation. And so I think it really,
Speaker 3: you know, housing is a little bit less on trying
Speaker 3: to gain mortgage rates and house prices and more on
Speaker 3: trying to work on yourself, on your personal financial circumstances
Speaker 3: and also, you know, your relationship.
Speaker 1: I one hundred percent agree with you. I think the
Speaker 1: one the one caveat I would throw in there is
Speaker 1: just you might want to have a longer timeline of
Speaker 1: ownership for the house that you buy. Typically maybe five
Speaker 1: to seven years is good enough. Like I think I'm
Speaker 1: gonna stay here for that long, but now maybe the
Speaker 1: upper end of that timeline is important, baby saying, I
Speaker 1: will I'm okay being in this house seven to ten
Speaker 1: years if there's a correction that I'm not expecting. Can
Speaker 1: you talk about talk about mortgage rates for just a second,
Speaker 1: land so you talked about how difficult it is to
Speaker 1: predict where they're going. But I guess one thing that
Speaker 1: we can see in the data is the difference between
Speaker 1: rates on like thirty year fixed rate mortgages and adjustable
Speaker 1: rate mortgages and adjustable rate mortgages for a lot of
Speaker 1: years we're just kind of like silly to really even
Speaker 1: think about, because like, well, if I can lock in
Speaker 1: a thirty year mortgage at three and a quarter, why
Speaker 1: am I going to look at the adjustable rate mortgage
Speaker 1: and even chance it? But now as rates have ticked
Speaker 1: up and the gap has grown, do they look more
Speaker 1: attractive in your opinion?
Speaker 3: You know, there's nothing wrong with getting a fixed rate
Speaker 3: and then if rates come down refinancing, and you know,
Speaker 3: I'm not sure how enticing the variable rates have been
Speaker 3: to people. If you look at like the Freddie Mac data,
Speaker 3: it hasn't really taken off that much since the rates
Speaker 3: have kind of moved up. But I do think a
Speaker 3: lot of people buying over the past twelve months have
Speaker 3: really thought, you know what, at some point rates will
Speaker 3: probably come down and I'll be able to refine. You know.
Speaker 3: The only thing I would say is what I've been
Speaker 3: saying for a while now, which is take people's mortgage
Speaker 3: rate forecast with a grain of sault. You know, I
Speaker 3: think there was a lot of people last year who
Speaker 3: were telling people, Hey, rates are going to come right
Speaker 3: back down into the forest really quick. Just go ahead
Speaker 3: and buy this home. And so what occurred is a
Speaker 3: lot of people who bought in twenty twenty two thought
Speaker 3: that rates would come down this year and they'd be
Speaker 3: able to refi. Well, what actually occurred is that rates
Speaker 3: went even higher. So on one hand, they didn't get
Speaker 3: to refi. But on the other hand, had they waited
Speaker 3: another year, they would have had to get even a
Speaker 3: higher rate if they bought, and maybe higher house prices
Speaker 3: depending on their market, or maybe lower depending on the market.
Speaker 3: And so I would say take some things with a
Speaker 3: grain of salt, and then, you know, be financially prepared
Speaker 3: to pay whatever you're agreed upon monthly principal and interest
Speaker 3: payment is, if your monthly payment principal and interest is
Speaker 3: twenty eight hundred a month, be prepared financially to pay
Speaker 3: that for a prolonged period or even longer than maybe
Speaker 3: you will actually have to. But I would say mentally,
Speaker 3: prepare yourself to just continue to make that payment and
Speaker 3: then if rates come down and you're able to REFI,
Speaker 3: you know, treat it as like a financial blessing instead
Speaker 3: of a guarantee.
Speaker 2: No, I think that's great advice.
Speaker 1: I think too many people are being told, also by
Speaker 1: real estate professionals, whether it's a realtor or a mortgage broker, Hey, no,
Speaker 1: you're totally gonna be able to refinance. The next year
Speaker 1: is not gonna be prob You're gonna save two points
Speaker 1: and this is gonna save you this much on your
Speaker 1: monthly payment. And people are buying the home saying, all right,
Speaker 1: I can slog through it.
Speaker 2: For a year.
Speaker 1: But then maybe that's that's not the case, Like you said,
Speaker 1: maybe rates keep going up. Where do they go from here?
Speaker 1: Who knows? That's anybody's guest. But Lance, we've got a
Speaker 1: couple more questions. When we get to Grant and I
Speaker 1: mentioned realtors, We specifically want to talk about that recent
Speaker 1: ruling and how that might the ruling a court, about
Speaker 1: how that might impact realtor fees and maybe saving consumers
Speaker 1: a lot of money. We'll talk a little bit more
Speaker 1: with Lance right after this.
Speaker 2: We are back again. We're talking with Lance Lambert formally
Speaker 2: with Fortune now has launched Rezi Club and Lance, let's
Speaker 2: talk about realtors specifically. We wanted to mention like that
Speaker 2: recent legal ruling against the National Association of Realtors, Like
Speaker 2: it seems like the fallout from this could be pretty massive,
Speaker 2: not only for real estate agents and what it is
Speaker 2: that they earn, but also for buyers and sellers. The
Speaker 2: amounts that consumers could save would be a significant amount
Speaker 2: of money. Do you have some thoughts.
Speaker 3: There, Yeah, So, a couple of weeks ago, a Missouri jury,
Speaker 3: a federal case, they awarded the plaintiffs in the sits
Speaker 3: Or Burnett Buyer Broker Commission Action lawsuit around like I
Speaker 3: think it was one point seven eight billion in damages,
Speaker 3: and that was against Keller Williams Home Services of America
Speaker 3: and the National Association of Realtors, and they accused them
Speaker 3: of conspiring to inflate commission rates, and the jury agreed.
Speaker 3: And so essentially how real estate has worked for a
Speaker 3: really long time is that there's a three percent fee
Speaker 3: for the buyer's agent and then a three percent fee
Speaker 3: for the seller's agent, so six percent of the total
Speaker 3: sale price, and usually that has always been paid by
Speaker 3: the seller and the seller's kind of been stuck paying
Speaker 3: the buyer's agent. And I think, you know, it's caused
Speaker 3: a lot of frustration every years, and there have been
Speaker 3: ways to get around it. But the accusation that the
Speaker 3: you know, the plaintiffs made in this case is that,
Speaker 3: you know, the agents and National Association of Realtors was
Speaker 3: essentially acting as like a cartel, forcing people into this
Speaker 3: type of agreement. And I think what comes out of
Speaker 3: this and my opinion is I think that ruling was
Speaker 3: an earthquake felt by the industry, and I think now
Speaker 3: we're just going to figure out was it a small
Speaker 3: quake or was it the first tremor and something much
Speaker 3: much bigger. And so what's going to occur from here
Speaker 3: is years of lawsuits. There's going to be lawsuits against
Speaker 3: numerous organizations, and we're gonna have to kind of figure
Speaker 3: out how this does or doesn't change the real estate industry.
Speaker 3: I think for the immediate Byron Byron seller, it probably
Speaker 3: isn't having necessarily a huge impact because we you know,
Speaker 3: I mean, the judge still kind of has to rule
Speaker 3: on the case, and it's already going to be appealed.
Speaker 3: But I think it's just uncertainty has really been brought
Speaker 3: into the market, and I think it's really been felt
Speaker 3: mostly by the industry, unless so by the buyers and sellers,
Speaker 3: and the industry just kind of wants to figure out how,
Speaker 3: you know, how how will this change the rules?
Speaker 1: Well, and let's be honest, the transaction costs for buyers
Speaker 1: and sellers kind of also insulate activity in the housing market.
Speaker 1: And because it is expensive to buy or to sell,
Speaker 1: that's just one other reason maybe to stay put a
Speaker 1: little bit longer. And when you look at worldwide, kind
Speaker 1: of what realtors, the percentage of the transaction that a
Speaker 1: realtor makes like they're they're higher in the United States
Speaker 1: and pretty much anywhere else. So it not that Matt
Speaker 1: and I are against realtors. We love realtors. We've had great
Speaker 1: realtor experiences. But that is I'm curious to see the
Speaker 1: shakeout as well. You actually you talk to the CEO
Speaker 1: of redfinn kind of not too long after that ruling
Speaker 1: came out. What was that like and what's his perspective
Speaker 1: because redfinn Is has kind of been at the forefront
Speaker 1: of trying to reduce broker fees and make home buying
Speaker 1: kind of more consumer friendly.
Speaker 3: Yeah, so before the rolling, you know, they had pulled
Speaker 3: out from the National Association of Realtors. And when I
Speaker 3: say they, I mean Redfin and it was really you know,
Speaker 3: on many fronts, but you know, the sexual harassment allegations
Speaker 3: against the National Association of Realtors, just some complaints about
Speaker 3: how the industry has done things. You know, Glenn over
Speaker 3: at Redfin hasn't felt great about that. But in terms of,
Speaker 3: you know, where things kind of go from here, I
Speaker 3: think Glenn is kind of in the same boat of
Speaker 3: what I said is there's just a lot of uncertainty.
Speaker 3: I think Redfin feels like they are prepared with whatever
Speaker 3: direction it goes. You know, this has obviously been one
Speaker 3: of the things that they've been pushing against the industry,
Speaker 3: and they've kind of tried to be a discount a
Speaker 3: discount player in the space. And then you know Glenn's view,
Speaker 3: I asked him if he thought the National Association of
Speaker 3: Realtors was a cartel. He didn't say it was a cartel. Well,
Speaker 3: but what he did say is there is a cartel
Speaker 3: in housing in his view, and it's homeowners, he says,
Speaker 3: who have fought against you know, zoning, and they fought
Speaker 3: against new developments for many decades, and you know, in
Speaker 3: his view, that's hurt the housing supply of the market
Speaker 3: and helped to you know, deteriorate affordability. And of course
Speaker 3: that deterioration and affordability is really the thing, you know
Speaker 3: now that people are really up in arms about. So
Speaker 3: I thought it was an interesting conversation with Glenn.
Speaker 1: Yeah, I don't think he's wrong on that, by the way.
Speaker 1: I mean, when you think about there's a lot of nimbiism.
Speaker 1: There's a lot of aversion to changing zoning laws or
Speaker 1: to making it easier to build things. Even fortunately, we've
Speaker 1: seen a lot of uptick in cities municipalities being okay
Speaker 1: with accessory dwelling units, and that is adding some supply,
Speaker 1: but that is a huge problem. Even where Matt and
Speaker 1: I live, there's a proposal to build like one hundred
Speaker 1: and twenty unit apartment building and it's being fought tooth
Speaker 1: and nail by the folks who live in the general vicinity. No,
Speaker 1: we don't this density, we don't want that here. But
Speaker 1: the reality is like while you're insulating and your increasing
Speaker 1: your own property values, you're dooming the next generation to
Speaker 1: exorbit in house prices.
Speaker 3: Yeah, it was interesting to see Glenn call homeowners the
Speaker 3: actual cartel in housing. But yeah, so I think where
Speaker 3: we are in housing is that affordability is very deteriorated.
Speaker 3: People are very upset, and the real estate agents are
Speaker 3: probably going to take some punches from the crowd because
Speaker 3: people are just so upset with where housing affordability is.
Speaker 3: And really, I want to also say that this is
Speaker 3: kind of kicking the industry when they're down right now,
Speaker 3: Existing in resale transactions are super low right now. Mortgage
Speaker 3: purchase applications at the end of October early November were
Speaker 3: at the lowest level since nineteen ninety six. So there's
Speaker 3: just not a lot of churn happening in the market
Speaker 3: and there's not a lot of the transaction occurring. So
Speaker 3: I think that's why the industry is also kind of
Speaker 3: frustrated because this is just occurring at a very you know,
Speaker 3: interesting time for them, kind of a low point for them,
Speaker 3: you know, it kind of feels like they're getting kicked
Speaker 3: while they're down.
Speaker 2: Yeah, Okay, so Lancey said, you were really willing to
Speaker 2: make housing price predictions or even rate predictions where you know,
Speaker 2: given where things might be going. What have you been
Speaker 2: hearing from other folks out there who do make predictions, right.
Speaker 3: We will make a little bit of one prediction, which
Speaker 3: is I do believe that the US housing market, which
Speaker 3: since summer twenty twenty two has been very bifurcated regionally,
Speaker 3: I expect that to continue. I think as long as
Speaker 3: there's not a substantial shift in the market, whether that's
Speaker 3: a breaking in labor or a swift moving down in rates.
Speaker 3: So it's like, let's say, all else being equal, like
Speaker 3: we're just kind of where we are today, but for
Speaker 3: a prolonged period, like let's say another twelve months, I
Speaker 3: would expect some markets to see prices fallsom and I
Speaker 3: would expect some other markets to continue to see prices
Speaker 3: raise rise. And I think what would occur is the
Speaker 3: markets that are going to give up some they probably
Speaker 3: will be fairly stale in the spring, and then in
Speaker 3: the seasonally weaker fall periods, that's when they'll kind of
Speaker 3: give up on the prices. And then I think the
Speaker 3: markets that are going to continue to see prices increase,
Speaker 3: like I think Hartford, Connecticut's going higher. I think what
Speaker 3: will happen there is that they'll be pretty stale at
Speaker 3: the end of the years in the falls, and then
Speaker 3: in the springs they'll be kind of bustling and a
Speaker 3: lot of bittingmores because there's just not enough inventory. So
Speaker 3: the thing that I would say to watch three things.
Speaker 3: One the bond market and mortgage rates, because if that
Speaker 3: were to move dramatically in one direct direction or the other,
Speaker 3: that would shift the environment. Two, watch the jobs market,
Speaker 3: watch unemployment. If that were to break one way or
Speaker 3: the other, that could move things as well. And then
Speaker 3: the third thing is watch local inventory levels. Austin, which
Speaker 3: is the market that's giving up on prices, they have
Speaker 3: seen inventory go back to pre pandemic inventory levels, while Hertford,
Speaker 3: Connecticut is down seventy eighty percent for inventory from now
Speaker 3: versus pre pandemic. And so what that means in Hertford, Connecticut,
Speaker 3: for every one home currently on the market in Hertford, Connecticut,
Speaker 3: there were four homes for sale in twenty nineteen, so
Speaker 3: just three homes disappearing from active listings essentially. And so
Speaker 3: how can you track this down to a regional level. Well,
Speaker 3: there's this guy called Lance Lambert that's this newsletter called
Speaker 3: RESI Club and I published this stuff continuously and I
Speaker 3: look at it very much on a regional level, and
Speaker 3: my view is I've been able to catch every single
Speaker 3: price correction that has occurred in the US down to
Speaker 3: a county level over the past eighteen months based on
Speaker 3: how I kind of watch active listing data. And so
Speaker 3: if you would really like the metro and county level
Speaker 3: and even some of the zip code data that I'm
Speaker 3: still kind of working on because I just launched this
Speaker 3: four weeks ago, But if you would like that, subscribe
Speaker 3: to Resie Club and then the premium membership is where
Speaker 3: I really give a lot of this robust data. And
Speaker 3: that's one hundred and fifty dollars a year to get
Speaker 3: access to my Lance Labert House Price Tracker and Lance
Speaker 3: Lambert Inventory Tracker.
Speaker 2: Lance.
Speaker 1: It's great information, man, Like I as a like an
Speaker 1: armchair quarterback on this stuff, like I like to nerd
Speaker 1: out on it. I want to hear it, like aggregate
Speaker 1: expert information. And you do such a great job of
Speaker 1: compiling that and sending it out. Like in a world
Speaker 1: that is newsletter heavy, yours is one that I read
Speaker 1: with regularity. So thank you for what you do and
Speaker 1: what is there anything else. You want our listeners to
Speaker 1: know about you and what you're up to before we
Speaker 1: say goodbye.
Speaker 3: The other thing I would say about Resie Club is
Speaker 3: so I have that pro offering, which is for people
Speaker 3: who really want to get the regional data, for people
Speaker 3: who don't want to pay for pro and they just
Speaker 3: kind of want to read my work. I still do
Speaker 3: five articles a week, and a lot of this is
Speaker 3: looking at some of it does have some of the
Speaker 3: regional data. I kind of sprinkle that in. But you know,
Speaker 3: I cover US home builders. I cover institutional home buyers
Speaker 3: better than anybody in the country. I'm really tapped in
Speaker 3: there to what's happening on the institutional side down to
Speaker 3: regional level. And then I also, you know, I cover
Speaker 3: the prop texts, real estate startups. Really, if you kind
Speaker 3: of are really hungry for housing information and what's going
Speaker 3: on with the biggest players in it, I'd say subscribe
Speaker 3: to Rezi Club. You know, I have a lot of
Speaker 3: good content there for free.
Speaker 2: That's right, and you do sprinkle a little bit in
Speaker 2: there to give everyone a little taste of what they
Speaker 2: could be receiving where they'd upgrade. But Lance, thank you
Speaker 2: so much for talking to us. We appreciate you coming on.
Speaker 2: Thank you all right, man Lance Lambert. We were off
Speaker 2: to the races when it came to talking about housing.
Speaker 2: It was like, listen, Lancer's this thing called the craft
Speaker 2: beer equivalent. We have to talk about before we keep
Speaker 2: talking about housing. He's like, we don't have time for
Speaker 2: personal personal banter. We got to talk about the goods. No,
Speaker 2: I really do appreciate man Lance's depth of knowledge and
Speaker 2: his passion for housing real estate here in the US.
Speaker 2: But yeah, did you have a big takeaway from our
Speaker 2: conversation mister Lambert.
Speaker 1: No, he definitely, I mean, he definitely knows a lot right.
Speaker 1: It's it's pretty pretty clear that he studies, eats breeze,
Speaker 1: and sleeps the data about what's going on in the
Speaker 1: housing market, what's going on with interest rates, predictions, prognostications,
Speaker 1: and on that front. My big takeaway was that the
Speaker 1: experts aren't always right, and.
Speaker 2: So sometimes they're wrong.
Speaker 1: What I love about Lance is he's kind of synthesizing
Speaker 1: the data. He's looking at what all the experts are saying,
Speaker 1: and he's kind of saying he's putting his finger to
Speaker 1: the wind.
Speaker 2: Does that seem right? Or when? When I aggregate all
Speaker 2: of these things. Is that true?
Speaker 1: And he basically said, the experts have been badly wrong.
Speaker 1: Understandable too, right, because we've been in like this, a
Speaker 1: really weird economy over the past three years. COVID throw
Speaker 1: a wrench in everybody's predictions about something everything.
Speaker 2: Something that we've never experienced before. Right, So understandable.
Speaker 1: So not not trying to throw shade on some of
Speaker 1: those some of those experts, but it is also important
Speaker 1: to note to not make a decision based on what
Speaker 1: the experts are saying. And I think a lot of
Speaker 1: people have been prone to do that, saying, oh, this
Speaker 1: is the hot market, oh this is oh interest rates
Speaker 1: are definitely going to go down, Well, then I should
Speaker 1: buy and and you have to be careful. And one
Speaker 1: of the things that Lance Lance said is it's all
Speaker 1: about your own personal personal finance situation.
Speaker 2: Hey, you can have multiple big takeaways during this episode
Speaker 2: and I'll let you finish.
Speaker 1: But well, even the thing and I'm going to say
Speaker 1: one more thing, even the thing he's said, Okay, free takeaway.
Speaker 1: Even the thing he said at the end, the three
Speaker 1: things to watch about where the housing market's going. I
Speaker 1: think he spot on. I don't think there are three
Speaker 1: better metrics then mortgage rates, jobs and unemployment, and local inventory.
Speaker 1: If you're trying to figure out what's going to happen
Speaker 1: in your local housing market, not that you can predict it,
Speaker 1: but if you're kind of like looking for an inkling
Speaker 1: of where things are headed, those are the three metrics
Speaker 1: really look at.
Speaker 2: Absolutely. Yeah, My big singular take big takeaway for this
Speaker 2: episode was going to be the fact that I think
Speaker 2: it can be an overwhelming task to think through is
Speaker 2: now the right time for us to move? Is now
Speaker 2: the time that we're going to buy a house? And
Speaker 2: I love what Lane said, And now I was actually
Speaker 2: a little surprised because he is so knee deep into
Speaker 2: the data, but he was able to back out and
Speaker 2: say no, it comes down to your personal circumstances, personal finance.
Speaker 2: That's what we're talking about here. That is at the
Speaker 2: core of what it is that we talk about. And
Speaker 2: I love that he was able to back out and say, well, ultimately,
Speaker 2: at the end of the day, it comes down to
Speaker 2: an individual's ability to make the payments on a property
Speaker 2: that they're looking to purchase. It comes down to so
Speaker 2: many additional things other than whether or not the market's hot,
Speaker 2: where exactly rates are. It comes down to whether or
Speaker 2: not you're going to have a kid, how many kids
Speaker 2: you're going to have in the coming years. It comes
Speaker 2: down to a job relocation, It comes down to wanting
Speaker 2: to be closer to family, because those remaining years perhaps
Speaker 2: to be close to your parents are more important than
Speaker 2: your ability to maybe save a little bit more and
Speaker 2: to achieve, say fire a little more aggressively. A lot
Speaker 2: of intangibles and yeah, there are so many of those
Speaker 2: personal factors that we all have to weigh and there
Speaker 2: is no perfect scale or measure that says, well, if
Speaker 2: it's kids, then that trump's this. No, it comes down
Speaker 2: to the individual. It comes down to each family to
Speaker 2: decide whether it's going to work.
Speaker 1: If you look on YouTube and see anybody talking about
Speaker 1: the housing market, it's always like the grimmest face and
Speaker 1: like the crash.
Speaker 2: The crash is always the word this use.
Speaker 1: The housing market crash, the looming and pending crash. And
Speaker 1: like I think, based on what Lance is saying, like
Speaker 1: unless there are sudden movements upward in interest rates or
Speaker 1: something like that, like don't I don't see a crash
Speaker 1: coming because we're still lack inventory, So those are often
Speaker 1: just clickbaity sort of things, just no focus on your fundamentals.
Speaker 1: And it's important to kind of understand what's going on
Speaker 1: in the housing market and what's led us to this point,
Speaker 1: and I think that can shed some light on where
Speaker 1: things are potentially going to go in the future, but
Speaker 1: also don't bank on exactly well people are telling me
Speaker 1: about what the future.
Speaker 2: Like it like, folks will start speculating and they're making
Speaker 2: decisions outside of their own personal factories, and that's when
Speaker 2: I think it can really end up coming back to
Speaker 2: bite you.
Speaker 1: And I do think some of that speculation is actually
Speaker 1: going to lead to some of the corrections that are
Speaker 1: going to help the.
Speaker 2: Previous speculation that we've seen up up until this point.
Speaker 1: It's going to help some of the folks who have
Speaker 1: been on the sidelines maybe be able to afford a
Speaker 1: home that they're currently unable to afford.
Speaker 2: All right, man. The beer that you and I enjoyed
Speaker 2: during this episode was by Other Half. This one was
Speaker 2: Juice Lovers Big thanks to Jason Joel. What your thoughts
Speaker 2: on this one?
Speaker 1: So this beer has one of my favorite all time
Speaker 1: hops in it. Nelson and I love.
Speaker 2: That hop it's what's a Nelson hot taste Like, it's.
Speaker 1: Just great, good, delicious, Like, man, I am no super taster,
Speaker 1: so I don't necessarily have a wonderful explanation for it.
Speaker 1: It definitely has like some pineapple vibes for sure, though.
Speaker 2: There's certainly it's called juice lovers. Juice lovers, it's got
Speaker 2: so many of those citrus like citrus pineapple. Actually on
Speaker 2: the side here it also says white wine. I can
Speaker 2: get behind that. Yeah, that sounds awesome, which.
Speaker 1: Is funny because I don't ever drink white wine, but
Speaker 1: white wine in beer, I'm like down with that. So yeah, yeah,
Speaker 1: but no, I love this one. And this one was
Speaker 1: actually kind of more approachable than some of the other
Speaker 1: half beers, but still like luxurious in the way it tastes.
Speaker 2: Yeah, super juicy, this one was delicious. Normally we kind
Speaker 2: of recommend IPAs for those who have tried a bunch
Speaker 2: of different craft beers before, But this is the type
Speaker 2: of IPA that I think someone who is new or
Speaker 2: two ips can get into because it doesn't have that
Speaker 2: super sharp hot bite, it does have so many of
Speaker 2: those juicy notes. It's not abrasive in like any way. Yeah,
Speaker 2: it's so good, but that's gonna be it, buddy. For
Speaker 2: this episode, We'll make sure to link to Lance's site
Speaker 2: any of the different resources he may have mentioned up
Speaker 2: on the show notes for this episode at howamoney dot
Speaker 2: com And that's gonna be it for this one, buddy.
Speaker 2: So until next time, best friends Out, Best Friends Out,