Latest / Financial Survival Network / Weak Economy Doesn’t Mean Weak Real Estate Market --Andrew Ragusa #5948

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Weak Economy Doesn’t Mean Weak Real Estate Market --Andrew Ragusa #5948 · Financial Survival Network

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  I would anticipate you so serious changes to start taking place into the market,
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  perhaps prices lowering, but definitely this way before closures that's being reported now.
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  This is not something that I'm speculating. It's being reported now that or closers
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  are increasing for all of these people with new mortgages with high debt to income
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  ratios. That is going to water down this hot market and really start to
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  reduce prices once we see a lot of listings. Bob up, you are
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  listening to Carrie Letz's Financial Survival Network, where you get valuable information you just
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  can't find anywhere else to thrive in today's trying times. You need the Financial
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  Survival Network now more than ever. Go to Financial Survivalnetwork dot com and get
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  your free newsletter and gift. Financial Survival Network now more than ever. Welcome
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  you are listening to and watching the Financial Survival Network. I'm your host,
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  Kerry Lutz. Well, here we are. It's nearly Thanksgiving. The economy,
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  certainly you can't deny, is weak. But real estate is another story.
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  And with us now is an expert real estate expert Andrew Ragusa from my
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  home state or our home state of New York. Andrew, So we are
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  talking just because the economy is tanking doesn't mean that real estate is tanking with
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  it, does it? No? You know, actually it's kind of the
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  opposite when you think about it. As the value of the dollar goes down,
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  real estate has to get more expensive. So people are still selling their
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  houses pretty high. Rentals are still really high. People are paying a lot,
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  so even a cash flow on some of these rental properties is producing more
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  income than it normally would be at the moment. Interesting. And then what
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  of the supply. You know, in Florida it's very tight. Is a
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  supply still tight? In New York it's still very tight, very If you
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  look at a map, and I'm not sorry, Matt, a chart you
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  look at historically, our supply is down. It's the most down it's ever
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  been. But within the last i want to say, in thirty days or
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  so, maybe about six weeks even has started to increase. So we're seeing
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  a small raise and that's kind of odd because the holiday season's right about to
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  approach. But I think people are starting to think to themselves, oh boy,
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  I'm maybe at the tip of this market where there's definitely going to be
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  a turning point sometime soon and people are starting to list despite into the holiday
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  season. Uh huh, So they're listing in spite of the down period of
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  the year, which is interesting because in the Northeast, the seasons always goes
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  from you know, late February early March through to the summer, so maybe
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  they're getting a little jump on it. Here in Florida, it's a little
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  different because the season goes more from the vacation season, which is right about
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  now through April maybe to Mother's Day, so you do have seasonal variations here.
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  You know, I've read a lot about all of these cheapy mortgages that
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  people just don't want to let their houses go because, you know, even
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  if you're going to downsize, unless you're going to buy for cash, you
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  take a mortgage out for half the amount that the one you have now is,
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  you're paying the same amount for half the house, right, Yeah,
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  you know, it's an interesting statistic. I actually just read recently. It
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  was reported by the nar National Association Real News that as of last month,
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  thirty three percent of all real estate transactions that took place were cash transactions,
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  and historically that number would be about ten percent. So it's been a humongous
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  increase in the number of cash transactions, and just speaking from experience of speaking
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  with customers on a regular basis, that is the number one concern of people
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  who own homes with mortgages right now is say, hey, my monthly payment
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  is really nice. I got a three percent rate. I got a two
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  point seventy five you seven rate? Hey, even if your rate's still in
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  the fours, you know you're looking at monthly payments when your rate is now
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  going to be seven and eight percent, Your monthly payments maybe double what you're
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  paying in some crazy so I don't know how people are going to come up
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  with that money. Sometimes and you know, like, look, could you
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  might be getting half the house, but you're probably not going to be paying
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  half the taxes, half the HOA fees if you have an HOA. Right,
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  so you wind up you get less than half the house and you pay
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  like two thirds as much, right, right, You knows that, Just
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  so you get an understanding right now, with an interest rate about seven,
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  let's say seven and a quarter seven and a third, you know, a
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  house that's about five fifty six hundred thousand, which on Long Island and Queens
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  and New York. That is not a hard number to hit at. Every
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  house is expensive. So a house is about five six hundred thousand with property
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  taxes that are about twelve thousand dollars a year, you're looking at a monthly
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  payment about forty five to forty eight hundred with twenty percent down, assuming you're
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  not paying private mortgage assurance. So we're almost fine brand a month to just
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  pay your mortgage, which is tremendous increase because only in twenty eighteen and nineteen
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  the average warriage game was looking like twenty five twenty two hundred. So we
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  are much higher than what we would normally be. And just another side note,
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  even the property taxes have gone up significantly. For example, New York
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  City has almost three times. It's almost tripled where it was prior to COVID.
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  I see people in New York City with property taxes now twell with thirteen
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  fourteen thousand for New York City. I mean you could have been on island,
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  and you know, New York City taxes used to be four thousand and
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  five six thousand on average. People are making way more all around. That's
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  funny because I lived in Westchester County, New York where we had the privilege
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  of paying the highest property taxes in the country. Yeah, yes, you
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  do gradually. So when people are looking to sell, often it's because they're
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  moving out of the area to lower, lower cost states like Florida, though
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  Florida is not that lower cost anymore, but the Carolina is Georgia. Maybe
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  they're going to Alabama for whatever reason. Maybe they're going to Texas, right,
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  yeah, yeah, most of the people are relocating south of here.
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  And I will tell you that the majority of the people who I sell their
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  properties, the two situations are either they're moving in with family and sharing a
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  space somewhere and they're going to contribute to that cost, or they are relocating
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  to another state. So it actually, if you take their grand picture and
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  just look at the way real estate used to move, people would move for
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  more than just those two reasons. They would be, you know, we
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  want to save money, we would downsize, you know, empty nesters,
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  kids went away to college, you know, or maybe we want a bigger
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  place just because we're you know, family is growing. Those are not the
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  top reasons anymore, and now it seems like the top reasons are cost reduction,
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  right, moving in with another person to save money or moving out of
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  state to save money. So those are the two biggest driving factors for motivation
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  of sellers ringing as of now. But we do have a housing shortage,
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  there's no question about that, right, Yeah, without a doubt. I
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  mean it's still even though I said inventory is increasing, it's still way lower
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  than where it would be normally. So looking ahead with this trend, you're
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  seeing inventory creeping up, but it hasn't by any means exploded. What what
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  do you think it's going to look like at the end of the year next
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  year? Well, look, I mean again all speculation here, but in
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  my opinion, I think everything that goes up has to come down, and
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  at some point I would not be surprised to see the market actually tank,
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  especially if they do another interest rate increase. It's absolutely going to hurt because
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  as soon as those announcements are made, like when Fed's announced that, oh,
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  the mortgage rates are going up or whatever rates are going up, because
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  they don't exactly say mortgage rate, they say the raids are going up,
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  right, raid, Yeah, but that's what we think of first thing,
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  right, right, Yeah, But that's not the case, and a lot
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  of people don't know that, but automatically the lenders start raising and now when
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  they look at these and when we hit that eight percent mark, real estate
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  actually came to a standstill here on Long Island for a little bit. And
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  it was a good, i want to say, eight week period where everyone
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  that I was working with was like, ha, you know what, maybe
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  we just wait, Maybe just wait till spring. See what happens. Everyone
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  starts getting their doubts as soon as they hear that message. So I know,
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  if there's a nine percent, right, if we go up again,
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  then at some point people are going to say, hey, I can't pay
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  six thousand dollars a month to live in this house. That's like, you
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  know, people are already stretched. In fact, there was another statistic that
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  came out recently, and it's showing that the majority of foreclosures that are coming
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  out now that are being filed are from people who bought houses from twenty twenty
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  until now, and their interest rates are on the higher side because they're actually
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  borrowing at higher debt to income ratios than traditionally what people would normally borrow at
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  since the interest rate is so high. So my prediction for next year is
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  basically looking at it's not looking good as far as the real estate market is
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  concerned. At what goes up has to go down. If there's another rate
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  increase, I would anticipate, you know, so serious changes to start taking
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  place into the market. Perhaps prices lowering, but definitely this way of foreclosures
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  that's being reported now, this is not something that I'm speculating. It's being
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  reported now that foreclosures are increasing for all of these people with new mortgages with
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  high debt to income ratios. That is going to water down this hot market
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  and really start to reduce prices once we see a lot of listings pop up.
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  All right, well that's inspiring. But look, even though the foreclosure
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  rate has bumped up a bit recently, it's still well below historic norms,
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  especially this far along in the cycle. Right, Yes, yes it is,
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  and I definitely don't want to cause spear and panic here, but it
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  was just interesting to note that the majority of the foreclosures that are taking place
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  were all the newer loans. So the majority were the newer loans where they
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  had rates that are like six, seven and eight percent. So if that
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  continues, that's going to some effects for us for sure. All right,
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  Well, it's going to be interesting to see. Hey, Andrew, we
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  want to get in touch with you, connect with you on the web.
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  How do we find you? Yeah, I mean you could just just find
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  me on Instagram, just just my name Andrew Ragussa. Find me on Facebook
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  Andrew Ragusa as well to see my big shiny smile on all my profiles.
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  And you can also just google my name and you'll find my business contact information
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  there as well as website just Andrew Regussa of licensed real estate program Google all
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  right links in the show notes this interview on Financial Survival Network dot com.
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  You got a question for Andrew myself? Shoot me at email kyl at Kerry
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  Lutz dot com. Hey, while you're at the site, you'll find the
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  Andrew's link Financial Survival Network dot com. Take that chance to sign up for
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  your free newsletter. Got one coming out shortly. It's been a couple of
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  weeks. We'll try to keep up with it. Andrew, always a pleasure,
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  Thanks for stopping by, and man, I love being here. Thank
• 10:52
  you, Thanks for listening to Carrie Letz's Financial Survival Network. Your solution to
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  today's trying time For the latest, go to Financial Survivalnetwork dot com Financial Survival
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  Network now more than ever,