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I may have a key for your golden handcuffs!!! · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: Here's your update.
• 0:01
  SPEAKER_00: Here we are at December 12, 2023.
• 0:03
  SPEAKER_00: I'm Connor with Honor.
• 0:05
  SPEAKER_00: Thank you so much for tuning in.
• 0:06
  SPEAKER_00: Homeowners are facing losses.
• 0:08
  SPEAKER_00: Some homeowners who purchased homes last year are experiencing significant losses, with the worst hit losing over$100,000 in home value.
• 0:16
  SPEAKER_00: The verification for this information is sourced from a late November report from Real Estate Search Portal Point 2, which used data from RedfinZillo and local multiple listing service systems and brokerages.
• 0:29
  SPEAKER_00: Now, nationwide price corrections, price corrections are impacting condo owners in 36 cities and single-family homeowners in 25 of the 100 largest U.S.
• 0:40
  SPEAKER_00: cities, according to point two.
• 0:41
  SPEAKER_00: A core logic report from early December indicates 1.1 million homes in the United States do have negative equity.
• 0:49
  SPEAKER_00: Verification: the information is based on data from reputable sources such as Red Fred.
• 0:54
  SPEAKER_00: Now we have number three, the third point, price drops concentrate in the West.
• 1:00
  SPEAKER_00: Large Western cities, including San Francisco, Oakland, Las Vegas, Colorado Springs, Austin, and San Antonio have experienced the biggest drop in home values.
• 1:10
  SPEAKER_00: And double blow to the market in certain cities.
• 1:12
  SPEAKER_00: We have home buyers in cities like San Francisco facing high home prices and initially followed by a decline in values.
• 1:20
  SPEAKER_00: San Francisco recorded the highest net loss for condo prices at 10.6% with a median loss of$122,500.
• 1:29
  SPEAKER_00: Impact on current homeowners: a drop in home values coupled with higher internet mortgage rates or mortgage interest rates may keep current homeowners who want to move locked into their current homes.
• 1:42
  SPEAKER_00: Sellers may face challenges in recouping their investments.
• 1:46
  SPEAKER_00: Of the people out there that own real estate, some of them are wearing what we call in the real estate industry is golden handcuffs.
• 1:55
  SPEAKER_00: The golden handcuffs is because they're wearing those because they would really love to sell, but the handcuffs feel pretty good sitting at a 2% and 3% mortgage rate.
• 2:06
  SPEAKER_00: That's what the golden handcuff scenario means.
• 2:09
  SPEAKER_00: So those sellers, potential sellers that really do want to move, aren't going to be going anywhere.
• 2:15
  SPEAKER_00: So we're going to see more than likely the people that really overspend buying real estate, it's going to take a market a while to catch up with them.
• 2:25
  SPEAKER_00: But historically, it has always caught up.
• 2:28
  SPEAKER_00: And I believe in this case, it's not going to be any different.
• 2:30
  SPEAKER_00: I believe that equity is going to be regained in the next year, two or three, potentially five, depending on how much higher they paid for the residents and also what's going on in that particular neighborhood.
• 2:42
  SPEAKER_00: We saw some neighborhoods, very few, of course, in Los Angeles, that were not included in that major foreclosure debacle, meaning everybody there, almost everybody in particular neighborhoods owned the residential real estate.
• 2:57
  SPEAKER_00: They didn't have any foreclosures, they didn't have any of those things that would cause a market drop in those local areas, and they retained a lot more value than other areas that had a lot higher incidence of foreclosure in bank-owned properties, real estate-owned actions taking place on properties where people were unable to continue with the mortgage payments that they picked up and those mortgages that they picked up back in 2005, 6-7, that were not your traditional 30-year fixed, but required prepayment penalties.
• 3:34
  SPEAKER_00: You had to solve the note or pay it off in a particular amount of time, or you had to refinance.
• 3:40
  SPEAKER_00: For a lot of people, the option to refinance, while it's beautiful and it's all wonderful and cotton candy and clowns and all that fancy stuff, it wasn't in the cards for these people because they had lost so much equity.
• 3:55
  SPEAKER_00: This is the same scenario that could be.
• 3:58
  SPEAKER_00: It's just going to pin.
• 3:59
  SPEAKER_00: Now, we have regional variances in pricing trends.
• 4:02
  SPEAKER_00: San Francisco is a different market than Los Angeles.
• 4:05
  SPEAKER_00: Santa Clarita is a different market than Des Moines.
• 4:08
  SPEAKER_00: So all these are very different.
• 4:10
  SPEAKER_00: Now, home prices are down in a few select cities, but if you look overall in the United States, because of the lacking inventory and the golden handcuff scenario and the people that might have overpaid scenario, we have a lot of people that are sitting in their residences.
• 4:25
  SPEAKER_00: Also, for them to purchase, understand that that mental process is whether or not they are going to be able to, they want to sell their residence if they want to go buy something paying the 7 or 8% interest rate that currently exists.
• 4:40
  SPEAKER_00: If they have enough money to inject into the transaction, it might be a cause where they might be able to buy down the rate, saving them a little bit money, a little bit of money every month.
• 4:48
  SPEAKER_00: And of course, for the long term, long term on a 30-year loan, a little change in interest rate goes a big way 30 years from now.
• 4:55
  SPEAKER_00: Maybe they're looking into that.
• 4:56
  SPEAKER_00: We see a lot of people that are doing some very creative things when it comes to financing real estate.
• 5:01
  SPEAKER_00: And we're also seeing some cases where people are assuming other people's loans.
• 5:07
  SPEAKER_00: So they have particular assumable type loans.
• 5:10
  SPEAKER_00: So FHA is one.
• 5:11
  SPEAKER_00: I believe VA, you can also transfer.
• 5:15
  SPEAKER_00: And because they're transferable, that new homeowner could potentially purchase that house and save that same interest rate being where it is in the twos and the threes.
• 5:25
  SPEAKER_00: Does it happen?
• 5:26
  SPEAKER_00: Haven't seen a lot of it yet, but it definitely is talked about.
• 5:30
  SPEAKER_00: In addition, there are a couple startup companies that are talking about lower out-of-the-shoot interest rates for special people.
• 5:36
  SPEAKER_00: Whatever that means, maybe there's a market for these loans at this low percentage rate, but it's going to depend.
• 5:42
  SPEAKER_00: That could just be pillow talk, trying to make the market people out there very happy.
• 5:46
  SPEAKER_00: Now, of course, we don't know what's going to happen in the future.
• 5:49
  SPEAKER_00: Predicting future home prices is challenging due to various factors such as inventory levels, mortgage rates, making it important for buyers and sellers to understand those local market conditions.
• 6:00
  SPEAKER_00: You want to ask your expert, whomever you're working with, ask them what they think about the local market and how you can best take advantage of it.
• 6:08
  SPEAKER_00: In each individual market, if you're in Santa Clarita, there's certain things that we would discuss.
• 6:12
  SPEAKER_00: If you're looking to buy in Simi Valley, I would have a different conversation with you.
• 6:16
  SPEAKER_00: If you're looking to buy in the city of Oxnard, again, a different conversation.
• 6:20
  SPEAKER_00: These are just very specific areas.
• 6:22
  SPEAKER_00: And when I approach real estate, as every good agent should, they look at it as an investment portal for everybody, because realistically, real real estate is the investment people don't normally consider as being an investment.
• 6:38
  SPEAKER_00: It's almost like at the end of your 30 years at a house, you probably haven't given a lot of thought to how much equity you've saved up in that time.
• 6:48
  SPEAKER_00: It seems like people are more glued on their 401k, their retirement accounts, what their job's doing for them, and they're really ignoring the equity that they have in place, which is probably great because if they realized they had it, they'd probably go spend it.
• 7:01
  SPEAKER_00: And if they went and spent it, they probably wouldn't have it anymore, right?
• 7:04
  SPEAKER_00: So that's how that process seems to come to fruition every single time.
• 7:08
  SPEAKER_00: We go those 30 years, we pay it off our house.
• 7:12
  SPEAKER_00: Now we're sitting a million dollars in equity.
• 7:15
  SPEAKER_00: What's that next step look like?
• 7:17
  SPEAKER_00: Well, it wouldn't be a bad idea, especially if you're getting towards retirement, even before.
• 7:21
  SPEAKER_00: Let's break that stuff up and let's get out there and buy some rental properties in cities that really support rentals.
• 7:28
  SPEAKER_00: You buy them in California, a lot of times you're not going to be able to cash flow.
• 7:32
  SPEAKER_00: Even in this high-end rental market where we have a lot of high-end money transferring hands, going from tenants to landlords for places that five, six hundred square feet, it's tough.
• 7:44
  SPEAKER_00: It's tough.
• 7:44
  SPEAKER_00: But that's the way that market is.
• 7:46
  SPEAKER_00: You try to then take those figures and apply them to coming into the Southern California market in order to buy a rental to cash flow.
• 7:54
  SPEAKER_00: It's going to be very difficult depending on your money down.
• 7:56
  SPEAKER_00: There are a lot of other markets more university-centric that would allow for this type of investment strategy.
• 8:04
  SPEAKER_00: And we see that happening.
• 8:05
  SPEAKER_00: Maybe Texas, Austin isn't the best place currently as we close out 2023.
• 8:10
  SPEAKER_00: I've seen some reports.
• 8:11
  SPEAKER_00: That market is overinflated.
• 8:12
  SPEAKER_00: I'm not boots on the ground, so I don't know.
• 8:14
  SPEAKER_00: I can tell you about Santa Clarita.
• 8:16
  SPEAKER_00: Can't talk about that, but we have some of our investors using that strategy and going to other locales in the United States.
• 8:24
  SPEAKER_00: Happy to hunt those for you.
• 8:25
  SPEAKER_00: Just let me know what you want to do and we can discuss it.
• 8:29
  SPEAKER_00: All right.
• 8:29
  SPEAKER_00: So we do see the potential stabilization of home crisis looking ahead.
• 8:33
  SPEAKER_00: There is speculation that some prices could stabilize as the market corrects itself from the rapid increases of the past couple years.
• 8:42
  SPEAKER_00: Negative impact on sellers, issue with negative equities may affect sellers' exit strategies.
• 8:47
  SPEAKER_00: And this is where we talked about those golden handcuffs earlier.
• 8:51
  SPEAKER_00: They want to move, but they might not be able to just because they're sitting in a residence where they're somewhat upside down on.
• 9:00
  SPEAKER_00: Maybe they don't have enough money to make up the difference when it comes to selling.
• 9:04
  SPEAKER_00: And more than likely, they probably don't want to go that other way, which would be the foreclosure bankruptcy route.
• 9:10
  SPEAKER_00: If in fact they're upside down their house and want to jump ship.
• 9:13
  SPEAKER_00: That is very person-to-person specific.
• 9:17
  SPEAKER_00: And I only say that because, you know, that's up to you.
• 9:21
  SPEAKER_00: That's your choice, not my choice.
• 9:23
  SPEAKER_00: But again, I've been one of those that pays.
• 9:26
  SPEAKER_00: So just different view.
• 9:28
  SPEAKER_00: But again, not here to judge, just here to help.
• 9:31
  SPEAKER_00: Caution and speculation.
• 9:32
  SPEAKER_00: This is good.
• 9:33
  SPEAKER_00: You know, people, when they talk about buying houses and real estate, a lot of the times they're not giving you that full story.
• 9:42
  SPEAKER_00: So they're not telling you all of the things that you should be prepared for.
• 9:47
  SPEAKER_00: And we look at the future.
• 9:49
  SPEAKER_00: I can tell you more than likely what's going to go on maybe this month in real estate because I have a few months to gauge it with.
• 9:56
  SPEAKER_00: But the market changes moment to moment.
• 9:59
  SPEAKER_00: Interest rates could come down the first quarter of 2024 to 5%.
• 10:04
  SPEAKER_00: If in fact that happened, we're going to see the market take off like we haven't seen probably in the last couple years.
• 10:11
  SPEAKER_00: And it's going to be very inventory dependent as to where prices are going to go.
• 10:16
  SPEAKER_00: The rumor is we're going to have more inventory.
• 10:19
  SPEAKER_00: Don't see where that's coming from.
• 10:20
  SPEAKER_00: And I also don't see new housing building at that level that it really wants to build because they're still working off of the supply issues that were created during COVID.
• 10:32
  SPEAKER_00: So you have that as well.
• 10:33
  SPEAKER_00: I'm Connor McIver.
• 10:34
  SPEAKER_00: Thank you so much for watching this update.
• 10:36
  SPEAKER_00: I will be in touch.
• 10:37
  SPEAKER_00: Let me know.
• 10:38
  SPEAKER_00: You can find me online.
• 10:39
  SPEAKER_00: Just Google Connor with Honor or Fat to Fit Realtor.
• 10:42
  SPEAKER_00: No offense.
• 10:43
  SPEAKER_00: And I'll talk to you soon.
• 10:44
  SPEAKER_00: Be well.
• 10:44
  SPEAKER_00: We'll talk to you later.