060423- HOME SOLUTIONS PODCAST

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Episode Transcript

(00:00):
Buying a home and selling a homeshouldn't be stressful. Renters, homeowners and
investors in southern Arizona worked with theWin three team powered by e ESP Reality
because they match buyers with sellers likethe e harmony of real estate buying.
We're selling. This is where you'llfind what you are looking for. This
is Home Solutions on K and ST. It's the Win three team powered by

(00:22):
exp Reality. Now Bob Zach Meyersbecause I'm going on the Day Displace show.
Good morning, and welcome to theshow. I'm Bob Zach, buyer
of e XP Realty, and I'mjoined by Jerry Sunt of Cross Country Mortgage.
Morning Jerry, Morning Vibe. Howare you? I am good Jerry.

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We've got some news to talk abouttoday, quite a bit actually,
and the jobs report came out,so you want to share what the numbers
were and how the economy is lookingcompared to the latest job report. You
know, this job report number wasthe Goldilocks of jobs reports. You know,
we're all hoping and inflation is comingdown. And when you read the

(01:07):
headline number of this jobs report isno. One. There was three hund
thirty six thousand jobs created last monthand they were expecting under one hundred and
ninety thousand, so it was almostbubble expectations now, so you have that
piece of it, then the otherpiece when you look under the hood a
bit. So the unemployment rate wentup from three point four to three point

(01:30):
seven. Now unemployment and more peoplefiling for unemployment. So that's kind of
chinking away at the armor a littlebit, which is again it sounds like,
well, wait a second, you'retalking out on both sides of your
mouth. You create more jobs thanexpected, but the unemployment rate goes up,
and it has to do what's calledthe birth death ratio, you know,
the number of people leaving the workforceversus entering the workforce. But so

(01:53):
unemployment went up, but the goodnews is is wage inflation reduced, so
people are so the pressure that we'vebeen seeing over the last year and a
half of this wage inflation where peopleare being paid more and more for their
positions, that actually came down andthat is a welcome sign. So you
had more jobs creative than expected.Unemployment went up, which makes the FED

(02:17):
happy that unemployment number, and mostimportantly, wage inflation receded. So it
was kind of like the perfect report. And I was talking to a borrower,
you know, just yesterday, andthey were like, gosh, when
a rate's going to fall, andyou know, with a with a jobs
report number this strong, they're notgoing to fall anytime soon. And I

(02:38):
said, you know that is true. But really what we want is we
want low inflation and the economy warrant. That's what this job's report exemplified.
That's what that's what it showed isthat that's what's taken place from we have
a tough economy. We have areally really strong economy. And when you
look at the jobs reports for thelast over the last five months, and

(03:02):
I think it's three out of thefive have exceeded expectations, I meaning more
jobs were created than what we're expected. Now, back in February, there
was something you know, I'm gonnaI'm going off here, but it was
something like four hundred, five hundredthousand jobs were created and they were expecting
like one hundred and fifteen. Itwas such a blowout number, right,

(03:24):
and you know we've seen this nowthree out of the five lasts three out
of five months, these numbers exceedingwhat was the what estimates were so um
you know, there you go.It's it just it was a great jobs
report number I you know. Nowthe big question is, well, what
does that do to the That is, if I get to raise rates in

(03:44):
June. My understanding is is thatthey are more than likely not going to
raise rate in June and pause andpotentially raise rates in July. And I
think that's what's gonna be the messagethat we're gonna just set this one out,
wait and see what happens, andthat they may raise rates in July
unless the you know, the windsare the the the uh, the economy

(04:08):
changes change his course and we startlosing steam. Um, that's what I
get. That's the latest that I'mreading anyway, that that's what what will
take place with the meeting here intwo weeks. Well, finally, I
mean hearing that they're thinking of apause instead of just like a bull in
the China shop, just running straightthrough and not pausing at all. How
many how many meetings in a rowhave they raised rates and I think it's

(04:30):
ten ten, and so yeah,that would be really good news. And
you know, um, I guesswe can talk about the interest rates and
the second segment of the show thatwhich we always do. But um the
you know what, we Elon Muskcame out with his prediction that the real
estate market was in big trouble.And I want to share another article and

(04:56):
that is barbarok Corcorant on Shark Tank. So this week and this hit a
lot of headlines and everybody's like,oh, the real estate markets in trouble.
All hell is going to break loose. That was the title of the
article that came out in Interpreneur magazine, and all hell is going to break

(05:19):
loose. Barbara Corkoran issues warning aboutreal estate market interest rates. Okay,
so just reading the headline again,newspapers do dramatic headlines to sell newspapers and
a lot of times the actual gistof the article is completely one hundred and
eighty degrees different than what the articlesays. So what did Barbara Corkoran actually

(05:45):
say, Despite a plethora of commercialvacancies and cities, people aren't going to
jump on them for pennies on thedollar because there isn't enough confidence to purchase
these buildings right now. So sheis talking about New York City commercial buildings,
commercial, not exactly exactly, andno one really believes it's going to

(06:06):
turn the corner. People are stayinghome. Our best office buildings in Midtown
Manhattan are fifty percent occupied, andin most major cities or in secondary cities,
we have twenty percent vacancy rate.No one wants to take that chance.
So again she's talking about vacancy ratesin commercial buildings. Quirkran's stats reflect

(06:30):
a larger trend nationally. According todata obtained by NBC from commercial real estate
company j l L, real estatevacancies in the US to reach levels as
high as twenty percent by the fourthquarter of twenty twenty two, the highest
they've been since the Great Recession.So commercial real estate vacancies. The reason
this could be an issue is itaffects banks because they won't be able to

(06:53):
make the payments on the bank loansthat they have. And there's a tremendous
amount of commercial paper that is comingdue that was granted at much lower interest
rates, and when it's recast asa new loan, those payments are going
to be a lot higher. Andthat's what a lot of this speculation comes
from. Corkran believes that the regionaland small banks will be the ones to

(07:15):
suffer as many businesses are unable toafford mortgage payments to their lenders. I
don't see that turning around. Ithink it's going to be a bit of
a blood bath before it gets better. Again, talking commercial real estate,
now she shifts gears when it comesto residential real estate. Corkran said the
market is rebounding, but has aninventory problem. We've been talking about that

(07:39):
for months, pretty much all ofthis year. She also noted there's no
relationship between commercial and residential markets.Sellers don't want to move from their home
because they don't want to take ona higher interest rate. The people who
are going out there and buying arehaving a hard time getting their hands on
the house. Now, what everybody'safraid of is the high interest rates.

(08:03):
But the minute those interest rates comedown, all hell is going to break
loose, and prices are going togo through the roof. So the all
hell is going to break loose.The headline insinuated that the market was going
to have this free fall two thousandand eight. Like dramatic punch. She's
saying she wouldn't be surprised if housingprices jumped up by twenty percent, should

(08:26):
interest rates drop by two points whatdo you think of that, Jerry.
That's an important point. If welook at where the trajectory of where real
estate was and how values were increasingfrom twenty nineteen, twenty and twenty one
and into the first half of twentytwenty two, what if mortgage rates had
not gone up the way they did, where would real estate prices have gone?

(08:50):
Well, right, I mean theyhad to go up to slow down
the trajectory of twenty five percent increasein one year, which is not sustainable.
Which again if that continued for anothertwelve months to uh or twenty four
months. If that would have continued, it really would have set up for

(09:11):
another crash like two thousand and eight. Yep, you knows. As of
April, Jerry, the year overyear game nationally is three point two percent.
That's right in line with where itshould be, right in line where
it should be exactly. And theyso it's funny. I mean, I
think you have to go through thiscorrection to to bring things back down to

(09:35):
earth to get it stabilized. Andum so, I it's funny because you
and I have said this before.Our frans get down into the mid fives
and or when they get down tothe mid fives, you're going to see
a lot more buyers jump on thebandwagon a because now they can qualify and
be it will bring their their housingpayment down enough where it becomes in line

(09:58):
with their incomes with their wage.Right. So maybe you know, the
FED is thinking about this and sayingwe need to keep you know, because
they're they're monitoring what's going on,of course in all different segments of the
economy, and real estate being oneof the largest sectors of the economy.
But we also don't want to haveyou know, go from you know,

(10:20):
twenty miles an hour to one hundredmiles an hour by lowering. If if
rates were to come down to thefours, would we get back into a
cycle where it would be a problemfor real estate going up in value too
much. So maybe there is amethod to that, Magnus and why rates
need to stay higher for longer,including mortgage rates. Sure, and again,

(10:41):
Jerry, when you look over time, We've talked about this many many
times, but over time, Imean rates never from nineteen seventy one,
when Freddy Mack started first reporting interestrates, they never went below six percent
ever until two thousand and four.So that's all of the seventies, all
of the eighties, all of thenineties, and half of the two thousands

(11:03):
they were above six. And thenwhen you look at they finally got below
four. We basically had a decade. Most of the time during that decade
they were below four. And thatwas during the Great Recession. The recovery
of the Great Recession, of course, COVID hit and they dropped into the
twos and threes, which was totallyunexpected and abnormal. And a lot of

(11:26):
people that are comparing the real estatemarket to the last couple of years that
the last couple of years were notnormal. I mean, that's not a
normal market. And when you startseeing things that we are back to twenty
nineteen level of appreciation, that's agood thing. When you know everything that
if we can get back to twentynineteen, that was the last normal year

(11:48):
that we had in the US.We still had a shortage of homes back
then. But the twenty twenty andtwenty twenty one, when you injected you
know, ten trillion dollars into theeconomy in twelve months, that money had
to go somewhere, and it justyou know, people are sitting at home.
They had more time to shop andgo buy vacation homes and everything else.

(12:11):
They had the money to do it, and then they could work from
home. Most employers were allowing thatduring COVID, so you know, it
just really changed the dynamic of realestate and the number of second homes being
purchased, the number of airbnb's,because hey, if I'm going to go
on vacation, why would I stayin a hotel and eat breakfast with a
hundred people. I don't know whenI can eat with my family in a

(12:33):
single family home that someone has asan airbnb. So anyway, there's all
kinds of things that come about withthat. And we are coming up on
a break, so we're going totalk about three other articles in the news,
the interest rates, what's going onin interest rates, and what happened
this week in inventory. So we'llbe back after the break. This is

(12:56):
Tucson Home Solutions on K and ST. He makes buying and selling homes easy.
He'll do the work so you won'thave to stress. This is Home
Solutions with the Win three team poweredby exp Real to Day. Here's the
Win three team leader, Bob zachMeyer. Good morning, and welcome back
on Bob zach Meyer of e XPRealty. I'm joined by Jerry Sunt of

(13:20):
Cross Country Mortgage, and Jerry isyour go to guy if you want to
get a loan and navigate this market, Jerry is your guy. And Jerry,
what is happening out there with interestrates? Well, you know,
as we were talking about in thelast segment about you know, the number
of jobs created in the jobs report, that actually didn't make rates move higher,
but that's not the end of theworld. They actually did improve this

(13:43):
past week after the after the debtceiling agreement was was was achieved. And
but I also wanted to give clarification. I think I said in the first
half or first segment that there werethree hundred and thirty six thousand jobs created.
There was three thirty nine three hundredand thirty nine thousand jobs created.
So that's that you just want tomake that correction there. But so mortgage

(14:05):
rates actually, you know, improvedthis week because again at a week and
a half ago, rates were sittingat seven percent, so they've come back
down and they're sitting about in thehigh sixes. So they've dropped about an
eighth of our percent over the lastweek. That's good news. And yeah,
so and again I think if ratescan stay somewhere around six and a

(14:28):
half percent, when they get toseven, the market gets scooped. It's
amazing how how consumers are so intune with it, right, and I
don't. Yeah, it shuts offlike a switch, and whenever it touches
seven, it just shuts off.And that was you know, that week
leading up to the standoff for thedead ceiling really had a negative impact on

(14:48):
interest rates. So hopefully they willcontinue to improve if we see that inflation
is waning. If inflation is notwaning, we could see rates north of
seven percent again very soon. Wow, all be you know, dictated by
the inflationary numbers that come out inthe next two weeks. Interesting. So

(15:09):
if somebody was buying at home rightnow, putting down twenty percent as a
down payment, they got a sevenforty or higher credit score, they're like,
what six and seven eight six?Yeah, six point seven five six
point eight seven five yeah? Wow? Okay, Now what about investment properties,
Jerry, for someone buying a rentalproperty that they don't intend to occupy,

(15:33):
so they it's funny, is thecoupons for the higher rates above,
like seven and a quarter seven anda half are not there, So you're
kind of stuck with if you're puttingdown twenty five percent, you're kind of
stuck with a rate of seven anda quarter, but you're paying a point
to get that. Wow. Soit's it's just, you know, rates
are are elevated, and until wesee signs of inflation waning, we're gonna

(15:58):
well, we turning through this overthe next couple months. So if somebody's
buying a four hundred thousand dollars home, they got to put twenty five percent
down, it's one hundred thousand dollarscash means they're getting a three hundred thousand
dollars loan, and that costs apoint. So it's three thousand dollars that
they're paying for the right to geta seven and a quarter percent loan.

(16:19):
Yeah, and it's difficult to navigate, Bob, because how do you you
know, I'm a big believer,although no guarantee, I'm a big believer
that rates will fall sometime over thenext six to twelve months. And so
if we if that is the message, rates will fall, and I tell
people, hey, you know ratesare higher. Now you know date the
rate marrying the house. Ye,and we will reap into when when rates

(16:44):
do fall. But wait, I'mpaying this this point right now, I'm
paying points to get the rate I'mdoing. I don't want to do that.
Well, there are there are noother coupons higher than seven and a
half there the market is not offeringthat. So it's a it's a it's
a tough situation or tept ecotomy.So so if you don't pay the point,
you're going to pay seven and ahalf instead of seven and eight.

(17:07):
But it's not like you can raisethe rate to seven point seven five and
not have any points because you knowthat rates are going to follow them in
the next six months, right,So you can't do that. You cannot
The highest cuban out there that Isaw as a Friday for an investment property
with seven and a half. Wow. So, Jerry, I have a

(17:27):
property listed one thirty one West PastimeRoad in Tucson. It is a five
bedroom, two bathroom house, youknow, so think about that. What
would rent be on a five bedroomhouse. This is a huge gated yard.
So for a contractor that has equipmentthey want to park and trailers and

(17:49):
dump trucks. There's no h way. I mean, this thing is three
quarters of an acre lot that's allfenced and the house is you know,
five room. So even if youdon't want the house and you want it
to park your stuff there, that'sone thing. But the owners are willing
to carry the paper on this propertywith a twenty percent down payment, They

(18:12):
will carry the paper at five pointfive percent. And that is a fixed
rate, thirty year loan five pointfive percent. So if you're interested in
finding out you know, more informationabout that, you can go five two
zero three one four sold, oryou can look at up Bob has thehouses

(18:33):
dot com and it's one thirty oneWest Pastime Road in Tucson. So you
know, that's one way for aninvestor to get a rental property in a
storage yard. If you have afriend that's a car collector and he's you
know, kicking this around because thatproperty could easily, you know, build
a thousand or two thousand square footshop on it and rent the house out

(18:56):
and keep the shop for yourself.And so he's looking at that to keep
some of his collector cars in.So there's a lot of opportunity there,
and that's what really you got tolook for and what you said, you
know, when interest rates last weekwent above seven. By the way,
we did our show remote last weekand unfortunately the KNST staff that normally does

(19:19):
it was on vacation and nobody postedthe show, so it was a repeat
last week, but we did recordthe show. If you would like to
hear last week's show, you cango to KNST dot com, or the
easiest way is just to go toiHeart dot com, click on podcasts and
then search my last name Zach Meyerz A C H M E I E

(19:41):
R and you will find all theshows back to August of twenty twenty one
when we became nationally syndicated on theshow. So apologize to our listeners.
We did have a show last week. Unfortunately the radio station got a little
mixed up and didn't get it posted, so you can still go back and
listen to it. And Jerry talkedabout the rates going higher, and there's

(20:03):
a lot of really good content inthat show, and I was very disappointed
when I had several of our listenerscall and say that it didn't appear.
So is the market the same allover? Jerry? You know this is
something that we've talked about. Whenpeople come and say, how is the
real estate market? My first questionas well. It depends are you a
buyer or are you a seller,because if you're a buyer, there's no

(20:25):
inventory. If you're a seller,it could be pretty good for you,
unless your property is a very highpriced property, because the demand for those
properties with the higher interest rate haswaned substantially and the demand for the low
price properties is off the charts higherthan it was. So it's really depending

(20:45):
on a lot of things. Butit also varies by the region in the
area of the country. So thisweek we have a report from lending Tree,
and it was this article, Here'show the largest metro's rank for homeownership
and starts off. Securing a homein today's market can be rough in the
face of high interest rates, highhome prices, and limited inventory. I

(21:10):
agree with all that the long termbenefits of homeownership are often resoundingly beneficial,
but buying is only part of thebattle. Once purchased, buyers face a
litany of new challenges as a homeowner. So they came up with a list
in the fifty largest cities, ninedifferent categories that they're going to grade tow
housing markets on. So what isthe five year median home price appreciation,

(21:36):
the median family income for that community, what is the rate of home ownership
for that community, like what percentageof the people own houses? The median
taxes, which is a big dealmedian ratio of housing costs to household income.
So what does it cost. We'vetalked about this in the past.

(21:56):
How San Francisco, I mean,people are pushing fifty eight sixty seventy percent
of their total pay going to housing. And then the occupied houses with one
or fewer occupants per room. That'san interesting dynamic. I mean, I
don't know how they're determining that.They have Sensus data about how do they
know how many people are per room? And then how many have complete plumbing

(22:21):
facilities? Wow? What are wetalking like deliverance kind of you know,
adequated for plumbing facilities. You know, that's that's one of those things it's
hard to when you're an inspector,it's hard to They test, of course
the plumbing, but they're not youknow, are are they always scooping all
the pipes to see the date ofit? And some you know, you're
getting these older communities, and youknow, the piping can be you know,

(22:45):
if you know, something gets flashdown the toilet that converse pipes,
it can be a you know,a huge expense for an owner. Sure,
and a lot of this country inthe early part of the nineteen nineteen
hundreds, I mean they used ashtiron and we're saying that in Tucs or
some of these cast iron pipes arepaper thin and basically you know, they're

(23:07):
caving in and they have to bereplaced. So and then the other thing
besides plumbing is kitchen facilities and phoneservice. So if you want to know
the best metros for homeownership based onall that Criteriam Raleigh, North Carolina was
number one, followed by Charlotte,North Carolina, Saint Louis, Missouri,

(23:30):
Nashville, Tennessee, Atlanta, Georgia. So look at the top five regionally
where they fall, it's all thesoutheast portion of the United States. And
then when you look at the secondbecause this is the top ten best places
to own a home, Minneapolis,Minnesota. Now you go way up north

(23:51):
Jacksonville, Florida. Now we're deepdeep south, and then Indiana, Indianapolis,
Indiana, Kansas City, Missouri andSalt Lake City, Utah. So
now you know, it kind ofbreaks it up, but those would all
be deemed pretty much Midwest except forJacksonville, Florida. So it's very interesting.

(24:11):
The best places and now the worstmetros up home for homeownership Los Angeles,
California, San Francisco, California,Miami, Florida, San Jose,
California, Riverside, California. Sothat's not unexpected for affordability and just know

(24:33):
how how many people can afford home. I was actually shocked to see that
only forty eight percent of the peoplethat live in California own a home.
Forty eight percent, less than half. Yeah. So the next five and
the worst ones is New York City, Las Vegas, Nevada, Providence,

(24:56):
Rhode Island, Houston, Texas,and Philadelphia, PA. The good news,
no Arizona cities on that list oneither list. I always like it.
I like, yeah, I likeit when we're anonymous and we're not
drawing on a whole bunch of peoplebecause we have the fastest appreciation like we
did back in two thousand and four, and that's what drove the big run

(25:18):
on houses and the meltdown because ofit. So anyway, those are the
cities in the country. We're comingup on another break. This is twosun
Home Solutions on K and St.He doesn't want to list your home,
he wants to sell it. Thisis Home Solutions with the Win three team
powered by exp Reality. Here's theWin three team leader, Bob zach Meyer.

(25:44):
Good morning, and welcome to theshow. I'm Bob zach Meyer EXP
Realty. I'm joined by Jerry Suntof Cross Country Mortgage and Jerry, I
have another property to talk about.This one Jess came out yesterday and is
at two one six two three EastReunion Road that's up in Red Rock,
north of Tucson. And this isa home that was built in two eleven.

(26:07):
It's seventeen hundred and seventy six squarefeet, three bedroom, two bath,
home, two car garage. Getthis, two hundred sixty nine thousand,
nine hundred dollars. They never heara two, you know at the
starting of a house price just sorare as amazing. So I did a
search just out of curiosity, howmany other homes in the MLS are listed

(26:32):
for sale under two hundred and sixtynine nine And the answer is forty one
homes in all of three thousand squaremiles. So think about that. It
goes all the way up to whileRed Rock starts at Red Rock at the
top of the map, all theway south of Green Valley, out west
pasted Oho and almost to Benson.And in that area there are a total

(26:53):
of forty one homes that are listedat two sixty nine nine or less.
And then when you say, well, how many of them are over seventeen
hundred square feet, there are threeand the year built on them is nineteen
ninety four, nineteen seventy and thishome, of course is twenty eleven.

(27:15):
And the other two houses do nothave garages. So this is the only
house over seventeen hundred square feet witha garage of any type, not only
a two car garage. It's thenewest house build and it's two sixty nine
nine. So anybody that's been shopping, yes, it's a little bit of
a drive to get the Red Rock. I drove it myself. But you
know what, it is so quietout there. And if you want a

(27:38):
sizeable home that's affordable is your answer. And I think just because of sheer
supply and demand, the number ofhomes that are available in that price range
are unbelievable. And when you lookin central Tucson, what run down,
not very well maintained. This ispride of ownership. The original owners still

(27:59):
live there and it's been maintained.You know, this is their home instead
of something that's been a rental forforty years and now is for sale for
over three hundred thousand dollars. Thisis a much better deal. So again,
if you want to check it out, two one six two three East
Reunion Road and you can find iton bob has the houses dot com,

(28:21):
give me a call five to zerothree one four sold if you'd like to
find out more about it, orif you have a real estate agent,
contact your real estate agent and let'sget this household. I don't think it's
going to take very long at all. It's one day on market as we
speak, so act fast. There'sjust not much else out there. I
can't believe that's going to sell veryquickly. If that makes it through the

(28:41):
weekend, I'll be surprised. Youknow, it's an interesting market, and
I you know, when rates lastweek peaked above seven, even the smaller
home properties slowed down and again lastweek was Memorial weekend, and that we
tried to avoid listing properties on MemorialWeekend or any holiday because of a lot

(29:02):
of people go out of town andyou just don't get the exposure during that
first week that you would normally get. You know, we listed a property
for the owner's request and no offersand very few showings. Two showings all
week long on a very low pricedproperty. Now this week we've got multiple
people showing that property. Is kindof an interesting thing. When perception is

(29:23):
everything, and when there's a wholebunch of people there, then people want
it more because they're afraid someone elseis going to get it. But when
it's a ghost town and nobody elseis showing it, that's where people come
and think they can negotiate and writeyour low ball offers or But let's talk
about the inventory, Jerry, whathappened this week? You know, two
weeks ago, I said, youknow what, we just went for the

(29:44):
first time since November eighteenth, Ourinventory in Tucson increased two weeks ago and
went up to two thousand and twototal homes listed for sale from eighteen hundred
and eighty. So that was apretty drastic You know, increase one hundred
twenty two houses in a week.So last week dropped a little bit back
down to nineteen fifty seven. Thisweek we increased again. We went back

(30:07):
to nineteen seventy seven, so stillnot as high as it was two weeks
ago, but it did go upagain for the second time. Now we
had a week up, a weekdown, a week up in the last
three weeks. But where do thenumbers fall. Homes under two hundred thousand,
we actually gained two this week.We went from eleven to thirteen,
but homes under two fifty we lostfour. So we went from thirty homes

(30:32):
under two hundred and fifty thousand downto twenty six. And as we said
under two hundred and seventy thousand ortwo sixty nine nine, as we just
ran the numbers, there are fortyone houses, and then under three hundred,
we actually gained five. Houses underthree hundred thousand. There are now
one hundred and twenty six homes inall of Tucson and three thousand square miles.

(30:56):
There are one hundred twenty six homesunder three hundred thousand dollars, and
then under four hundred thousand, sixhundred and twenty four, we gained twelve
and under one million, fourteen hundredand eighty seven houses. So when you
look at total inventory, nineteen seventyseven fourteen eighty seven are below one million

(31:18):
dollars. So there's just not alot of inventory out there, and we
actually dropped. You know, there'sonly two categories this week that fell in
the number of homes available. Thetwo fifty and less fell by four,
the one million and more fell bythree. We're now in one hundred and
seventy seven homes under one million dollars. So very interesting that that price point

(31:42):
would be one of two that fellin the number of homes available for sale.
Yeah. I don't know if thatsignals anything. It just I think
it's the day to day. Imean, overall, the inventory is still
very, very very low. Couldn'tagree more. Mortgage lending, let's talk
about that. This article came outfrom ADAM Data on June one. First

(32:04):
quarter mortgage lending falls to twenty yearlow. The overall report stated that one
point two five million mortgages were securedon one to four unit residential properties in
the US, the lowest point sincetwo thousand. The year two thousand that's
twenty three years. The figure wasdown nineteen percent from the previous quarter,

(32:24):
marking the eighth consecutive quarterly decreased.So it's been going on now for two
years. Where the number of loanshas fallen really started mid last year.
Yeah, that's when the things reallystarted sewing down. But it has been
tweaking down a little, and thenwhen the interest rates hit seven last year,
it just came to a standstill.This is kind of interesting. The

(32:46):
ongoing declient residential lending resulted from anotherround of downturns in both refinance and purchase
loan activity and home equity lending dueto elevated mortgage rates, consumer price inflation,
and other signs of economic uncertainty,confidence and uncertainty of the market.
See all these headlines that scare people, and when you read the article,

(33:08):
it's like they're saying, by now, like Barbara Corcoran's article said, I
think it's not out of line thatthe real estate prices would go up twenty
percent if they lower the interest ratesby two points. You know, there
would be a stampede of the realestate market. Think about it, especially
on the lower priced properties. Thehigh interest rates are pushing more people into

(33:28):
lower priced homes. If the mortgagerates fall, that means those people could
afford higher priced homes, but allthe people that have been priced out would
be coming roaring back into the marketto get a home before the rates go
up again. So I have alwayssaid, and this is why when I
do my notes, I own mortgageson homes to people that are self employed.

(33:50):
And I like the lower price pointsbecause the highest demand. Those homes
are going to appreciate faster than anythingbecause of the sheared demand and for them
in the lack of supply. Let'skeep going here. Overall activity included five
hundred and ninety five thousand, twohundred and fifty three loans. That's in
an entire quarter. You put thatin perspective. Last year we sold in

(34:15):
the United States six point four millionhouses, and if you divide that by
quarters, that's one point six millionhomes per quarter. The loans that were
granted in the first quarter this year, that's only five hundred and ninety five
that's two thirds off of what ourrate of homes were last year. That

(34:37):
rate is down nineteen percent from theprevious quarter, forty four percent year over
year, and then the refis,of course, nobody's refinancing, or very
few people are refinancing, because whywould you trade in a three percent loan
for a seven But there are somefour hundred and seven thousand mortgages were rolled
into new ones, the smallest amountthis century, this century. Well,

(35:02):
and again it's you know you're goingto extremes, right, you know,
you go from low to high,and we just haven't seen this big of
a variance between three percent and we'lljust say, you know, seven percent
for so you're seeing a four percentincrease within a twelve month period of time.
That is an abnormal increase. Iget calls, bought four equity lines

(35:25):
of credit. More people are tryingto tap into the equity in their home
than I can remember in recent memory. And I say that, and all
Q one was slow, But thenQ two, which we're you know,
finishing up of twenty twenty three wasactually a very strong month or a strong
quarter. When the numbers come out, it's very much in line with twenty

(35:45):
eighteen. So I mean, Ithink things kind of were back. And
maybe is that because of perception thatrates lower rates are on the horizon and
people will buy and then refinance outlater. I don't know. But as
far as equity line rates go,I get calls every single day for people
who I don't want to give upmy rate of three percent, but I
want to take out an equied line. And EQUIEDLNE rates are again primary to

(36:08):
eight and a quarter. Right now, equity line rates are nine to ten
percent. Wow, So Jerry,this article kind of concludes that the mortgage
rate for refinances is down seventy threepercent from a year ago, eighty five
percent from two years ago during thefirst quarter of twenty twenty one, and

(36:29):
the summary is the latest slide extendsa run that started two years ago and
carved away nearly three quarters of thehome mortgage business. Things remain uncertain in
the inter future, with the potentialfor interest rates and inflation to go either
way, but the spring buying seasonwill be a key indicator of whether things
may or may not turn around.So very interesting article. We are coming

(36:52):
up on a break, but beforewe go, I want to remind people
that if you miss an episode ofour show, can go and find it.
iHeart. We have been nationally syndicatedsince August of twenty twenty one,
and after that they started recording usand we're actually a podcast out on iHeartRadio,
so you can drive around in yourcar and listen to the show throughout

(37:15):
the week on iHeart and all yougotta do is go to iHeart dot com,
click on podcasts, and then doa search on my last name,
Bob zach Meyer, and the lastname is zac H M E I E
R. And it will pop upall of the episodes since August of twenty

(37:36):
twenty one. So if you reallylike this show and you don't want to
miss any future episodes, that's theplace to find it on iHeartRadio or iHeart
dot com. We'll be right backafter the break. This is Tucson Home
Solutions on K and ST. Thisis Home Solutions with the Win three Team
powered by EESP Reality on K andST. Here's the Win three team leader,

(38:00):
Bob zach Meyer. Good morning andwelcome back. I am Bob zach
Meyer of XP Realty. I'm joinedby Jerry sunt Across Country Mortgage, and
we are talking about the real estatemarket in Tucson and actually a lot of
national news here, and we pullednational news every week just to see how

(38:22):
does Tucson compare to what's going onin other parts of the country. Here.
We talked at the last segment aboutthe lending and the number of loans,
and the mortgage market over the lasttwo years has been eroded down to
three quarters of the business that wentaway because everybody that could was refinancing during
the brunavirus when the interest rates werethree to two and a half tune a

(38:45):
quarter. I actually have some folksthis week that have a two point seven
five percent investment property that they own, and they have a mortgage at two
point seven five on a rental andit's like, man, you must have
hit the absolute best day of thehigher downturn to refinance it. I mean,
I've never heard of a rental propertyat two point seven five percent.

(39:07):
I mean I was happier in aclan when you refinanced all mine at three
in a quarter. I thought Ihad the world by the tail, which
I still do, which is great. This is this article is kind of
interesting. Investor home purchases fell arecord forty nine percent year over year in
the first quarter. That makes totalsense. Investors buy property based on how

(39:27):
much cash flow it produces. Homeownersbuy property based on emotion. I want
to raise my family in this home, and the value of that property is
determined by what the neighbor's house soldfor. That's the same floor plan with
virtually the same amenities. But whenyou're selling a rental property, the appraiser
looks at it as how much incomedoes it produce. It's normal in this

(39:49):
market for the rate of return onthese properties, and isn't making money where
That's not the case when you're lookingat a single family home that is being
sold as an owner occupied so aselevated interest rates, declining rents, and
housing values eight into potential profits formany. New data revealed real estate investors
purchased forty eight point six percent fewerhomes in the first quarter of twenty twenty

(40:14):
three than they did a year earlier. Of course, we said twenty twenty
two is not a normal year.YEP. That's the largest annual decline on
record, an outpaced the forty pointseven percent dropped in overall home prices in
forty major markets analyzed. So asa whole sales are down forty point seven

(40:35):
but investor sales are down by fortynine percent. They rounded up to forty
nine from forty eight point six soit's not that much different. Why are
home sales down? Well, one, interest rates are higher, but inventory
has been dropping since November. Thisweek it went up a little bit into
some but two weeks since November eighteenth, inventory has gone up. All the

(40:58):
other weeks inventory has gone down.We are still less than two thousand homes
total on the market in Tucson,Arizona. I mean, that's Indy a
one million, seventy thousand people.That is nothing, and especially when you
start looking at affordable homes, lessthan one hundred and thirty total homes under
three hundred thousand dollars single family homes, that's unheard of. Why are the

(41:19):
investors pulling out, Well, theyaren't making money. And while investors have
pumped the brakes on home purchases,they're still scooping up a bigger share of
homes than they were before the pandemic. So that's what really matters. So
again, this is another article Jerrythat the headline says, oh Man Investor
home sales are down forty nine percent, but then when you read the fine

(41:42):
print, it's more than it wasback in twenty nineteen before the coronavirus changed
everything. So what are they buying. This is interesting. Investors have gravitated
toward more affordable properties due the highcost of housing and rising mortgage rates,
which is left first time homes witheven less homes to choose from. So
the investors that we're buying the moreexpensive homes because of the low interest rates

(42:07):
have now migrated to lower priced homes. That makes sense because the rents on
low priced homes. I used todo a lot of notes in Tucson,
Arizona. You know, back intwenty twelve, you could find three bedroom,
two bath homes on the east sidefor under one hundred thousand dollars,
and that house back then would rentfor nine hundred dollars. Made a lot

(42:30):
of sense because it was almost hittingthe one percent rule. Those same houses
today it's hard to find any ofthem under three hundred thousand dollars. And
the rent. Yeah, the rentwent from from nine hundred to sixteen hundred,
but the price went up by morethan three hundred percent. So this
is where we invest more in thein the deep South, like Alabama.

(42:53):
I love Texas, North Carolina,Georgia. Georgia has the second fastest foreclosure
rate in the United States, butyou can still in a lot of those
markets. Buy a three bedroom homefor under one hundred thousand dollars, That
house a rent for eleven or twelvehundred dollars a month, and it's one
hundred thousand dollars, where in Tucsonyou can't even find what one hundred and

(43:15):
twenty six houses under three hundred thousandand the rent is sixteen hundred. Why
wouldn't you buy three houses in FortSmith, Arkansas and rent them for eleven
or twelve hundred dollars each instead ofbuying one house that rents for sixteen hundred
and at the same cost of threemakes perfect sense. Investors bought up a
large amount of homes during the pandemicbecause record loan mortgage rates and skyrocketing housing

(43:38):
demand, creating opportunities for strong return. They're now pulling back in response to
the rising interest rates, which iscausing housing values to continue falling in much
of the US as home buyer demandfaulters. While many investors purchase homes with
cash, they're still impacted by highinterest rates because they often take out non

(43:59):
mortgage loans to cover renovations and otherexpenses, so private money loans that are
not backed by a mortgage, andlet's talk about that home price is falling.
I want to point out that inTucson, at the peak of the
market, we hit three hundred andeighty five thousand. That was April of
twenty twenty two. Our home pricesdropped at the median down to three fifty

(44:22):
and it is now back up tothree sixty five. The new numbers come
out next week and we'll have itfor the show. But we never saw
this big two thousand and eight downturnthat everybody thought was going to happen,
and isn't going to happen just now, just because of sheer supply and demand.
We have a tremendous supply shortage.The demand is still less than normal,

(44:44):
and last month we were back downto two thousand and ten numbers,
but our inventory is less than itwas by half. It's just kind of
staggering when you're looking at all thisinformation. It's like, wait a minute,
if you have half the buyers thatyou used to have, you should
have way more inventory because it's growingevery month. Well up all you know,
two of the last three weeks,it's been shrinking every month. Who

(45:06):
knows what's going to happen with interestrates. That's what's really driving the bus,
and affordability is the bottom line thatunderlies that. So yes they stop
when it hit seven, but itis because of seven or is it because
they can't afford it anymore. I'mreally at the belief, Bob, that
I think the consumer is at thebreaking point, the breaking point maybe you

(45:27):
know, an extreme. They're atthe tipping point where it's been you know,
the cost of credit cards have goneup, the costs up for commercial
loans have gone up. I mean, fuels pull back a little bit,
you know, fuels pull back thispast few weeks. So that's the one
bright side. But for the mostpart, everything just costs more money.
I think the consumers at the pointwhere they're they're kind of done. Yep,
the limit on the credit card.We've been reporting this for over a

(45:50):
month that we are over eighty fivepercent capacity on credit cards. So people
are starting to hit their spending limitand pretending that the inflation hasn't happened to
you. That's about to end becausethe pretending is over. There's no more
credit card when you hit your max'slimit. There's no more credit card that
lets you just keep buying the samethings. And I think you're starting to

(46:10):
see that in a lot of companieswhere the discretionary purchases are slowing dramatically,
and you're starting to see the peoplemaking choices where prior to this, they
just kept spending no matter what.And that's what I see out there,
and that's that's why I'm sensing thatfrom the from borrowers and consumers. So

(46:30):
I think that you know, we'reclose to that that inflection point where you
know when the when the consumers stopspending that's the biggest part of the economy,
you will see rapid change in thenumber and when that happens, that's
when the FED will pause and you'llsee rates start to come down. And
I think we're very very close tothat inflection point. No, I agree,

(46:51):
And Jerry, before we forget,don't forget to check out if you
miss the earlier segments of the show. We have two properties that bear mentioning.
The first one is two one sixtwo three East Reunion Road and Red
Rock for two sixty nine nine.That is a three bedroom, two pass,

(47:12):
seventeen hundred and seventy six square foothome with a two car garage built
in twenty eleven. There's nothing elseon the MLS that has seventeen hundred feet
or more with a garage at all. There's only three properties that have seventeen
hundred square feet for less than twohundred and seventy thousand, so that's definitely
something to check out. It ispriced at two sixty nine nine twenty one

(47:36):
six twenty three East Reunion Road andthen also one thirty one West Pastime Road
in Tucson that is very near toPrince and Stone, and it is on
nearly a three quarter acre lot that'sfenced. If you are a contractor and
you have a lot of equipment,you could park dump trucks and trailers and

(48:00):
everything. There's no ha. Thehouse is a five bedroom, two bath
house. So even if you don'tneed a house to live in, buy
the property for the lot, andyou could build a shop on the lot,
rent the house out and pay forthe whole thing. So you don't
find big parcels of land like that, and that lot, you know,
I don't want to guarantee it,but it is large enough to split per

(48:22):
the zoning. Of course, thecity has to approve all lot splits,
but so I don't want to comeright out and say, yes, you
can split it, but it's bigenough to split per the zoning directive.
You know, each buyer would haveto go down and look. So think
about that. You could buy it, have a house on one, possibly
split it and build another house onthe other and end up with two properties
for the price of one. Andthe price just got set at two ninety

(48:46):
nine nine, so under three hundredthousand. Again, we just told you
there's one hundred and twenty six housesand all of Tucson under a three hundred
thousand. This one has a tremendousamount of opportunities. So definitely let's look
into that and Jerry anything more toadd before we close down another show.
Yeah, I just want to giveour numbers out, you know, one

(49:07):
of us if it's reached me fivetwo zero three seven zero ninety five seven
six all right, that's Jerry suntAcross Country Mortgage and to reach me Bob
Zachmeyer e XP Realty, you canfive to zero three one four sold or
Bob has the houses dot Com.All right, Thanks for everybody listening.

(49:27):
Again, if you missed last week'sshow, which everybody did because they played
a previous week's show. You cango to iHeart dot com, click on
podcast and just type in my lastname Zach Meyer z A C H M
E I E R and it'll popup the show and you can listen to
it there. So thanks everybody forlistening. We'll be back again next week.

(49:50):
Have a great Sunday.