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Has SC Housing Finally Become Affordable? The Interest Rate and Inventory Numbers That Tell the Real Story · Dishin' Dirt with Gary Pickren

• 0:02
  SPEAKER_00: This is Dish and Dirt with Gary Pickering, South Carolina's only podcast dedicated to the real estate agent craft.
• 0:09
  SPEAKER_00: And now the host of Dish and Dirt and Greens, and welcome back, everyone, to another episode of Dish and Dirt.
• 0:15
  SPEAKER_00: I'm your often opinionated, but rarely wrong host, Gary Picker, coming to you from the beautiful downtown Columbia, South Carolina offices of Blair Cato, Picker, and Castellan, this, the third week of February 2026.
• 0:25
  SPEAKER_00: Before I start today, I do have some special thank yous to give out to everyone who made the fifth annual Real Estate Success Summit such a special event this year.
• 0:33
  SPEAKER_00: In fact, I think it was the best one we've ever had.
• 0:35
  SPEAKER_00: We had tremendous speakers, Krista Michore and Garrett Maroon were returning from previous appearances at our success summit.
• 0:41
  SPEAKER_00: Chris, I think it was her second and Garrett his third time, and we knew what they were going to bring to the summit, and they did not fail to deliver.
• 0:47
  SPEAKER_00: We had newcomers Ryan D.
• 0:48
  SPEAKER_00: April and Eric Post.
• 0:49
  SPEAKER_00: I'd seen their presentation and I knew what that was going to be about, and I knew it was going to be outstanding, and they did not disappoint anybody.
• 0:56
  SPEAKER_00: Tremendous responses from all four of the speakers.
• 0:59
  SPEAKER_00: And of course, we had our very own Cynthia Blair talk to you all about FenCEN because FenCEN is going into place here in just a few days here on March 1st.
• 1:06
  SPEAKER_00: And Cynthia wants to make sure that you guys are not telling clients wrongly that you're not becoming liable for the reporting.
• 1:12
  SPEAKER_00: And she did an excellent job doing that as well.
• 1:14
  SPEAKER_00: I do want to thank all the agents and the brokers who bought tickets.
• 1:17
  SPEAKER_00: As I said, we sold out in four and a half days, 305 tickets.
• 1:20
  SPEAKER_00: There was not a seat available in the room.
• 1:22
  SPEAKER_00: It was the crowdest I've ever seen it.
• 1:24
  SPEAKER_00: We had a waiting list of over 60 people when we finally cut it off because it was growing so quickly and so many people we knew we would never get to all those people.
• 1:32
  SPEAKER_00: Had people literally calling me days before the event asking if they could buy tickets, if I had a special or hidden stack of tickets that we were holding back, which we weren't, asking for names of people who were going so they could call and try to buy their ticket from them.
• 1:44
  SPEAKER_00: And so what a tremendous event.
• 1:45
  SPEAKER_00: And wanted to really thank the agents and brokers who continue to support it.
• 1:49
  SPEAKER_00: The bottom line is who other than Blair Cato can bring you this kind of value?
• 1:52
  SPEAKER_00: You know, we're the only real estate firm in the market in South Carolina that continually brings you this kind of value, this level of education, this level of information, all wrapped up together with entertainment, whether it's covering legal matters, sales and marketing matters, we're the only firm out there that is truly dedicated to protecting you as a real estate agent, whether it's my service on the Real Estate Commission or Cynthia Blair's service at Alta, we're the ones that are always out there fighting for changes for you, like broker-to-broker compensation and things of that nature.
• 2:21
  SPEAKER_00: We're the ones that are trying to make real estate practice better for you and also at the same time trying to help you increase your business by bringing in tremendous speakers like Garrett and Krista and Ryan and Eric and others.
• 2:32
  SPEAKER_00: Very happy and very appreciative of what y'all are doing and know that Blair Cato is the only one in the marketplace that can bring you this level of value.
• 2:40
  SPEAKER_00: Some exciting news has come out of the Real Estate Success Summit this year.
• 2:43
  SPEAKER_00: Had several agents ask me if we could start doing this summit also in Myrtle Beach or in the upstate.
• 2:48
  SPEAKER_00: They said we love the summit.
• 2:49
  SPEAKER_00: Could you do it in our upstate?
• 2:50
  SPEAKER_00: I know if you do it in the upstate, you can fill the room.
• 2:52
  SPEAKER_00: If you do it in Myrtle Beach, you'll fill the room there.
• 2:54
  SPEAKER_00: And so we started exploring at the summit that day.
• 2:57
  SPEAKER_00: We got together and huddled up and said, hey, you know, I think we should do this in Myrtle Beach.
• 3:00
  SPEAKER_00: I think we should do this in the Greenville-Spartenburg area because we have a lot of people travel to come to the events.
• 3:04
  SPEAKER_00: We are exploring right now an opportunity to do this event in Myrtle Beach and in the upstate in the fall.
• 3:12
  SPEAKER_00: We're going to try to make this every single year.
• 3:15
  SPEAKER_00: One event in the upstate, one in the Midlands, and one in the Myrtle Beach area.
• 3:19
  SPEAKER_00: And so we are working very hard with our partners, with our speakers to see if we can't put this on for you this year, this fall.
• 3:26
  SPEAKER_00: And I believe we'll be able to get there.
• 3:27
  SPEAKER_00: So keep listening to Edition Dirt for more details.
• 3:29
  SPEAKER_00: Keep following Blair Cato social media, and we will continue to announce more information as we get there.
• 3:34
  SPEAKER_00: But I am very confident that there will be a real estate success summit in Myrtle Beach this fall, as well as one in the upstate.
• 3:41
  SPEAKER_00: And I am confident that the speakers will be top-notch for you.
• 3:45
  SPEAKER_00: Other exciting news that came out of the summit is when we started the summit, we had nine offices at Blair Cato.
• 3:50
  SPEAKER_00: When we finished the summit, we had 10.
• 3:52
  SPEAKER_00: We announced at the summit that we are opening another office at Blair Cato.
• 3:56
  SPEAKER_00: This time we are going to be servicing the Richland Northeast clients on Killian Road.
• 4:00
  SPEAKER_00: We're going to open an office at Killian Road where it intersects with I-77 right off the interstate ramp.
• 4:05
  SPEAKER_00: And it's going to be, I can't give you exact location because we're still negotiating their lease right now, but I'm just saying it'll be very close to a restaurant where you can buy chicken except on Sundays.
• 4:15
  SPEAKER_00: Figure that out.
• 4:16
  SPEAKER_00: That's where hopefully we'll be here.
• 4:17
  SPEAKER_00: We'll have a major announcement as to the exact location, hopefully next week or this week coming up as soon as we have everything locked down.
• 4:24
  SPEAKER_00: But we are very excited to be able to service the Blythewood agents and the Richland Northeast agents.
• 4:29
  SPEAKER_00: I've had lots of agents ask us for a Blythewood office, and we're very excited that we'll have this office, one exit down from your Blythewood exit that will service all of your needs, so you want to come downtown for closings.
• 4:40
  SPEAKER_00: Two other announcements we made is that we're growing like crazy.
• 4:44
  SPEAKER_00: Our Lexington and our chapent offices are adding additional space.
• 4:47
  SPEAKER_00: We've outgrown the Lexington space tenfold.
• 4:50
  SPEAKER_00: And so we were crammed in there.
• 4:51
  SPEAKER_00: So what we're doing is adding another 1,500 square feet.
• 4:54
  SPEAKER_00: We're adding the YMCA of Lexington space next door to ours, and we're incorporating it into our space.
• 4:59
  SPEAKER_00: We'll add a fourth conference room for you guys in Lexington, so even more closing times for you in Lexington.
• 5:05
  SPEAKER_00: And our chapin office is going to double in size.
• 5:07
  SPEAKER_00: We're going to take the suite next door to us and add it to our suite.
• 5:10
  SPEAKER_00: So we'll double our suite size, which means we'll have more parking available for everybody, as well as more conference rooms and more waiting areas.
• 5:16
  SPEAKER_00: Other law firms are shrinking, laying off staff, laying off attorneys, which we're gobbling up.
• 5:22
  SPEAKER_00: We are very excited that Blair Keto continues to expand.
• 5:25
  SPEAKER_00: We continue to grow.
• 5:26
  SPEAKER_00: When the market was down, we were continuing to expand.
• 5:28
  SPEAKER_00: So continue to follow us on social media.
• 5:30
  SPEAKER_00: I guarantee you our 10th office will not be our last office.
• 5:34
  SPEAKER_00: Now let's go on to our show this week.
• 5:36
  SPEAKER_00: We're going to discuss housing affordability.
• 5:38
  SPEAKER_00: Particularly what we're going to talk about is housing affordability finally turning a corner in a positive manner.
• 5:44
  SPEAKER_00: And I think the answer to that is yes.
• 5:46
  SPEAKER_00: If you've read headlines at all in the news over the last few months, housing affordability has been labeled a disaster.
• 5:51
  SPEAKER_00: But when you read the data and you really look at it carefully, we're starting to see something very interesting that has happened.
• 5:57
  SPEAKER_00: There's a recent article in Emin News.
• 5:59
  SPEAKER_00: It was written by Marianne McPherson.
• 6:02
  SPEAKER_00: And what she does is she gives us the actual numbers that have been compiled by a global technology and data firm called Intercontinental Exchange.
• 6:10
  SPEAKER_00: And what Intercontinental has done is they've looked at all the numbers to see is this marketing truly, truly turning?
• 6:16
  SPEAKER_00: And if it's turning, is it turning for the positive and how quickly?
• 6:19
  SPEAKER_00: Here's some of the things that we learn from the Intercontinental data.
• 6:23
  SPEAKER_00: First of all, the 30-year fixed rate mortgage down to 6.04%.
• 6:28
  SPEAKER_00: Tremendously low number considering where we were just a year and a half ago.
• 6:32
  SPEAKER_00: 20% increase in borrowers that become refinance eligible.
• 6:36
  SPEAKER_00: Talk about why that matters to you in just a minute.
• 6:38
  SPEAKER_00: 4.8 million borrowers are newly refinanciable.
• 6:42
  SPEAKER_00: Now, I recognize that you sell properties for a living and refinances do not help you.
• 6:46
  SPEAKER_00: The fact that 20% increase or 4.8, almost 5 million borrowers are now eligible to save$164 a month by having their payment drop if they were to refinance also means that new buyers are seeing their average monthly payment being$164 less than what they thought it would be just months.
• 7:05
  SPEAKER_00: So it does absolutely demonstrate a new affordability in real estate that we haven't seen in quite a while.
• 7:12
  SPEAKER_00: In fact, the payment to income ratio is now sits at 27.8%.
• 7:17
  SPEAKER_00: According to Andy Walden, who is Intercontinental's head of mortgage and housing market research, he says even small reductions toward 6% rates can significantly boost affordability, particularly for homeowners who could refinance in a lower rate and monthly payments.
• 7:32
  SPEAKER_00: Same's going to apply for homeowners that are looking at buying homes which were at 7% are now at 6%.
• 7:38
  SPEAKER_00: They are seeing those same rate savings.
• 7:40
  SPEAKER_00: When you hit rates at 6.04%, like we had in January 9th, affordability has hit its best level in four years.
• 7:48
  SPEAKER_00: Say that again.
• 7:49
  SPEAKER_00: Housing affordability is the best that it has been in four years since 2022.
• 7:54
  SPEAKER_00: Numbers we were not expecting, didn't think we would hit, four years, the best numbers we've seen.
• 7:59
  SPEAKER_00: That 27.8% number matters a whole bunch.
• 8:03
  SPEAKER_00: For decades, the industry has used 30% of income as the psychological and underwriting threshold of affordability.
• 8:10
  SPEAKER_00: And even though we're not there, the numbers get in versus whether we're there or not, we're knocking on that door, that 30% number.
• 8:16
  SPEAKER_00: Even those small reductions are making powerful statements.
• 8:20
  SPEAKER_00: This does tell us something, in fact, very powerful.
• 8:22
  SPEAKER_00: Housing affordability does not require a return to 3% interest rates.
• 8:27
  SPEAKER_00: It simply requires stability at the 6% level and time of it sitting at the 6% level.
• 8:33
  SPEAKER_00: In fact, this is a very, very different narrative that's been sold to you by the so-called media.
• 8:38
  SPEAKER_00: They constantly have been telling you you have to be at 5% or the market will continue to be frozen.
• 8:43
  SPEAKER_00: That is not true.
• 8:44
  SPEAKER_00: What we're seeing actually is if we can get down to a steady 6% for a length of time, then the market will move greatly for us.
• 8:52
  SPEAKER_00: I think we all can agree that we are feeling this market differently now than we did just 12 months ago.
• 8:58
  SPEAKER_00: There is a palpable difference in how people in the market, real estate agents, lenders, attorneys, feel about February 2026 versus how they felt about February 2025.
• 9:07
  SPEAKER_00: The summit's a prime example.
• 9:09
  SPEAKER_00: Our ticket sales just went nuts, four and a half days.
• 9:13
  SPEAKER_00: That was not the case last year.
• 9:14
  SPEAKER_00: We had to work a little bit to sell them.
• 9:15
  SPEAKER_00: We sold them out, of course, but it took a little bit more effort.
• 9:18
  SPEAKER_00: This year we did basically no effort, and they sold in four and a half days.
• 9:23
  SPEAKER_00: You could feel it in the air.
• 9:24
  SPEAKER_00: You could feel it at the summit.
• 9:25
  SPEAKER_00: You could feel excitement, enthusiasm, a desire of agents to buckle down and get to work because they knew this year that that work would absolutely pay off.
• 9:33
  SPEAKER_00: And we haven't seen that enthusiasm in several years.
• 9:36
  SPEAKER_00: Now let's dig a little deeper into the mechanics and the math behind the whole affordability equation.
• 9:42
  SPEAKER_00: Affordability has three main drivers.
• 9:44
  SPEAKER_00: Number one is interest rates, number two is home prices, and number three is household income.
• 9:49
  SPEAKER_00: All three are moving positively, just not at the same speed.
• 9:52
  SPEAKER_00: So let's start with interest rates.
• 9:54
  SPEAKER_00: Interest rates at the 6% range are not historically high.
• 9:59
  SPEAKER_00: In fact, from 1971 to 2008, the average 30-year mortgage rate was roughly 8%, which is 2% higher than 6.
• 10:10
  SPEAKER_00: The anomaly in these interest rates was actually 2020 to 2022.
• 10:14
  SPEAKER_00: Freddie Mack has noted repeatedly that ultra-low pandemic rates were, quote, extraordinary monetary conditions unlikely to be repeated in the near future.
• 10:25
  SPEAKER_00: So part of our psychological problem is that buyers and their minds have been anchored at 3%.
• 10:32
  SPEAKER_00: That mindset is when the rates get to 3%, then I'll buy.
• 10:35
  SPEAKER_00: But we're six years out of COVID, and I believe that mindset is changing.
• 10:40
  SPEAKER_00: Interestingly, people still talk about COVID like it happened last year, but COVID was in fact six years ago this year.
• 10:46
  SPEAKER_00: The fact remains 3% interest rates were never sustainable.
• 10:51
  SPEAKER_00: You knew it, I knew it, your consumers knew it.
• 10:54
  SPEAKER_00: But you know, one thing we all see today is no one wants to let facts interfere with their feelings.
• 10:59
  SPEAKER_00: Your feelings apparently are much more important than actual facts.
• 11:03
  SPEAKER_00: And here's an example of that.
• 11:04
  SPEAKER_00: Everybody's feelings are that I want to have interest rates at 3%, then I'll buy a house.
• 11:09
  SPEAKER_00: And that is just not reality.
• 11:11
  SPEAKER_00: The reality of interest rates aren't going to go back to 3%, and interest rates fall into this category of your feelings don't matter, acts matter.
• 11:20
  SPEAKER_00: Secondly, let's look at home prices.
• 11:21
  SPEAKER_00: Home prices have remained elevated because we built too few homes after 2008.
• 11:28
  SPEAKER_00: After the 2008 collapse of real estate, money for builders became a lot more difficult.
• 11:33
  SPEAKER_00: Became a lot more difficult for developers.
• 11:36
  SPEAKER_00: Less builders were willing to take big financial risk.
• 11:40
  SPEAKER_00: Financial institutions were also less willing to take risks.
• 11:43
  SPEAKER_00: We have not built nearly enough houses in the last 18 years.
• 11:48
  SPEAKER_00: And that's a problem.
• 11:50
  SPEAKER_00: And now you have millennials entering peak home buying years.
• 11:54
  SPEAKER_00: So it's a large group of people coming into the market with too few houses.
• 11:57
  SPEAKER_00: And of course, the pandemic migration distorted regional markets.
• 12:01
  SPEAKER_00: We have had, since COVID, the whole world moving to South Carolina, whether it's been from California or Oregon or Washington State or up north.
• 12:10
  SPEAKER_00: Half of Ohio now lives in South Carolina.
• 12:12
  SPEAKER_00: I'm jokingly call it South Ohio.
• 12:13
  SPEAKER_00: You can't drive down a single street in a neighborhood without seeing at least one Ohio State fan.
• 12:18
  SPEAKER_00: And I'm telling you, I don't think that Ohio State is that popular outside of Ohio.
• 12:23
  SPEAKER_00: I think that is just all the Ohio people have relocated to South Carolina.
• 12:26
  SPEAKER_00: Freddie Mack's research has estimated there is a housing shortage still today of between three and four million units nationally.
• 12:35
  SPEAKER_00: The primary driver of housing affordability challenge remains a persistent undersupply of home, according to Freddie Mack.
• 12:41
  SPEAKER_00: The shortage didn't disappear when our rates went up.
• 12:43
  SPEAKER_00: It simply suppressed track transaction volume.
• 12:46
  SPEAKER_00: Luckily, it does seem that we are improving.
• 12:49
  SPEAKER_00: Numbers that we did not believe we would see in inventory for years to come are starting to creep back a little bit.
• 12:55
  SPEAKER_00: So it is improving and moving in the right direction.
• 12:57
  SPEAKER_00: Thirdly, income.
• 12:59
  SPEAKER_00: Intercontinental, in their study, pointed out that price to income ratio set at 4.11, where pre-pandemic norm was 4 to 1.
• 13:08
  SPEAKER_00: Income would need, therefore, to rise 15%, assuming that inflation is gone, just to rise to historic norms.
• 13:15
  SPEAKER_00: 15%.
• 13:17
  SPEAKER_00: In fact, the NAHB estimates that 87 million households can't afford a$400,000 home.
• 13:24
  SPEAKER_00: That's important because that's around the median price of home.
• 13:27
  SPEAKER_00: For every$1,000 increase in price, roughly$115,000 households get priced up.
• 13:34
  SPEAKER_00: It's completely priced out by a$1,000 increase in price.
• 13:38
  SPEAKER_00: So affordability is not just a rate problem, it is an income problem and it is also a supply problem.
• 13:44
  SPEAKER_00: Now here's the overlook part.
• 13:45
  SPEAKER_00: Median wages have been rising.
• 13:47
  SPEAKER_00: The Bureau of Labor Statistics reports wage growth running around 4% to 5% annually over the past couple of years.
• 13:53
  SPEAKER_00: If that continues for three years, you're halfway there without any types of price drops.
• 13:57
  SPEAKER_00: So affordability normalization can happen gradually through income growth.
• 14:01
  SPEAKER_00: Now let's look over at South Carolina's housing affordability and let's have our local reality check.
• 14:06
  SPEAKER_00: In late 2025, South Carolina median home price was roughly$329,500, which was rising about 3% year over year, significantly below many national metro areas.
• 14:17
  SPEAKER_00: However, some other sources show a little difference in that variance.
• 14:20
  SPEAKER_00: We saw one in 2026 where the data had our median closing price close to$388,900,$388,900.
• 14:28
  SPEAKER_00: This range tells us two things.
• 14:29
  SPEAKER_00: One is that South Carolina prices remain well below U.S.
• 14:33
  SPEAKER_00: markets, but there is geographical variation in the coastal areas, Charleston, and resort areas that tend to be higher than the Midlands and the upstate.
• 14:41
  SPEAKER_00: It's unlike overheated metros where median prices can exceed$600,000.
• 14:46
  SPEAKER_00: Much of South Carolina will offer a more attainable entry price point, which is why I believe half of the world wants to move to South Carolina.
• 14:55
  SPEAKER_00: But remember, affordability is relative.
• 14:57
  SPEAKER_00: Asking price is only one part of the affordability equation.
• 15:00
  SPEAKER_00: Number two, affordability and supply indicator.
• 15:02
  SPEAKER_00: South Carolina has historically fared a little bit better on affordability and home building than the national average.
• 15:08
  SPEAKER_00: According to Realtor.com, our state report card, we earn the top grade of an A for balancing affordability and building activity.
• 15:16
  SPEAKER_00: And that matters because in many states, affordability is all price and no supply.
• 15:20
  SPEAKER_00: In South Carolina, relative affordability exists with continued building, which helps moderate our pricing over time.
• 15:27
  SPEAKER_00: That still doesn't mean that everybody can find affordable housing, but it certainly does help.
• 15:31
  SPEAKER_00: Now, our income, our income and cost burden at the local level is still something to deal with.
• 15:37
  SPEAKER_00: More than 30% of income is spent on housing.
• 15:40
  SPEAKER_00: That's a problem.
• 15:41
  SPEAKER_00: About 90% of South Carolina households earning less than$35,000 are a cost burden, meaning they can't buy a house.
• 15:47
  SPEAKER_00: However, more than one-third of houses earning between households earning between$35,000 and$75,000 are also cost burdened.
• 15:55
  SPEAKER_00: So what does this mean?
• 15:56
  SPEAKER_00: It illustrates that middle income householders, the teachers, the first responders, those service workers, are still struggling to not just our low-income renters.
• 16:05
  SPEAKER_00: Number four, we have to look at supply and inventory dynamics in South Carolina.
• 16:08
  SPEAKER_00: Statewide active listings remains elevated compared to recent years, with 44,000 plus homes for sale and a median time on the market of about 67 days.
• 16:17
  SPEAKER_00: This is a sign that supply is loosening compared to our pandemic lows.
• 16:22
  SPEAKER_00: Yet some regions remain very tight.
• 16:24
  SPEAKER_00: Charleston, Bluffton, Hilton Head are a little higher price points and lower supply.
• 16:28
  SPEAKER_00: Areas like Aiken, Lexington, Columbia, they're showing more moderate prices with better inventory debt.
• 16:33
  SPEAKER_00: So the affordability experience really varies considering on where you are in South Carolina.
• 16:38
  SPEAKER_00: Number five, rent and workforce housing costs.
• 16:40
  SPEAKER_00: And since South Carolina are easing some in our markets, median rent cover around$1,824 a month with some year-over-year downward pressure.
• 16:48
  SPEAKER_00: But the state still faces a significant gap in affordable housing for rentals.
• 16:54
  SPEAKER_00: There are few rental units at price points affordable to lower income houses than needed.
• 16:58
  SPEAKER_00: And I think that has to do with our taxes situation of 6% taxes.
• 17:02
  SPEAKER_00: But the gap not only affects renters, it also affects first-time home buyers because they cannot save money while they're renting because of their high rental costs.
• 17:10
  SPEAKER_00: And we need those renters to save money and become first-time home buyers.
• 17:13
  SPEAKER_00: And then lastly, South Carolina Housing administers programs like Palmetto Heroes, mortgage credit certificates, and so forth, down payment gaps, essential worker access to home, credit access for moderate income buyers.
• 17:23
  SPEAKER_00: These programs help bridge that affordability issue, but a lot of those are out of money.
• 17:28
  SPEAKER_00: So that's another issue to be looked at in South Carolina.
• 17:31
  SPEAKER_00: The good takeaways for South Carolina is affordability is better in South Carolina than in many other states, yet it's not easy for many working households.
• 17:39
  SPEAKER_00: Our median prices are moderate compared to national metros.
• 17:42
  SPEAKER_00: Our supply has improved, but we still have some serious demand on some on particular counties.
• 17:47
  SPEAKER_00: Income growth has not kept pace with housing costs for many households.
• 17:50
  SPEAKER_00: It's getting better, and the rental affordability gap does remain significant.
• 17:54
  SPEAKER_00: In other words, the South Carolina housing market is relatively affordable compared to many other parts of the USA, but real affordability gaps still exist, particularly for that low and moderate income households who we need moving out of rentals and into first-time home buyer houses.
• 18:10
  SPEAKER_00: Now let's talk about those 4.8 million refinance eligible homeowners.
• 18:14
  SPEAKER_00: That's not just good news for those borrowers.
• 18:16
  SPEAKER_00: It injects liquidity into our economy.
• 18:19
  SPEAKER_00: Those lower payments reduce financial stress, it improves customer spending, increases mobility.
• 18:24
  SPEAKER_00: So that's why we're talking about even a small movement from 7% or 6.7% to 6%.
• 18:30
  SPEAKER_00: Borrowers should be reacting quickly to that.
• 18:32
  SPEAKER_00: Intercontinental called it borrowers responding quickly to rate shifts.
• 18:36
  SPEAKER_00: That responsiveness means that the market is functioning at its tight, but it is functioning better.
• 18:40
  SPEAKER_00: When you see that refinance movement, that's also good news for the resale market.
• 18:45
  SPEAKER_00: Now I want to address one other thing that does affect the affordability.
• 18:48
  SPEAKER_00: That's the underwater borrowers.
• 18:50
  SPEAKER_00: Currently, there is 1.1 million homeowners underwater, which sounds like a tremendously bad number.
• 18:55
  SPEAKER_00: It is, in fact, the highest since 2018.
• 18:57
  SPEAKER_00: If you look and see what those numbers are concentrated in, it's the 2022 home buyers that bought at the peak of the market, the FHA and VA borrowers and the Southern growth markets.
• 19:06
  SPEAKER_00: It sounds scary, but some context does matter here.
• 19:09
  SPEAKER_00: And so when you look at 2009, there were 10 million borrowers who were underwater.
• 19:14
  SPEAKER_00: Today we're only at a million.
• 19:15
  SPEAKER_00: So it's much better than it was in 2009.
• 19:17
  SPEAKER_00: It doesn't appear that we are worried about any type of issues like we had in 2009.
• 19:22
  SPEAKER_00: It's only about 2% of all mortgage homes.
• 19:24
  SPEAKER_00: The good news is, according to the Urban Institute, these borrowers do have higher credit scores than in 2009.
• 19:30
  SPEAKER_00: They have full documentation underwriting, which they didn't have in 2009, and they're all in fixed rate mortgages, where in 2009 a lot of the problem was these adjustable rate mortgages.
• 19:38
  SPEAKER_00: So what this is what economists are calling pockets of localized corrections.
• 19:47
  SPEAKER_00: Real reason, however, that affordability hasn't normalized faster is still supply.
• 19:51
  SPEAKER_00: The NA National Association of Home Builders has mentioned, as I said, for every$1,000 increase in home prices, 100,000 plus home households are priced out.
• 20:00
  SPEAKER_00: The reason these prices are still sticky is because builders are still facing labor shortages, regulatory delays, zoning restrictions, material volatility, and land constraints.
• 20:10
  SPEAKER_00: And the Brookings Institute has stated that restrictive local land use regulations remains one of the most significant barriers to housing production.
• 20:18
  SPEAKER_00: So isn't a partisan issue?
• 20:20
  SPEAKER_00: It's simply math.
• 20:21
  SPEAKER_00: When cities restrict density, prices rise.
• 20:24
  SPEAKER_00: So when all of these smaller communities come out and say, well, we don't want the growth in our community, all that's happening now is the prices in your community are skyrocking and people are being taxed out of houses.
• 20:36
  SPEAKER_00: They've been in for years.
• 20:37
  SPEAKER_00: People are unable to sell houses and buy other houses, and so it truly destroys the market.
• 20:42
  SPEAKER_00: Lastly, I want to do a deep dive into some proposed legislation on affordability.
• 20:46
  SPEAKER_00: The U.S.
• 20:47
  SPEAKER_00: House of Representatives overwhelmingly passed the Housing for the 21st Century Act on Monday.
• 20:52
  SPEAKER_00: Now, this act is a 130-page bill.
• 20:55
  SPEAKER_00: It is aimed at trying to improve housing affordability by streamlining zoning and permit laws.
• 21:01
  SPEAKER_00: It encourages upzoning to increase housing distances, and it's trying to expand access to develop block grants, increasing the use of manufactured housing, and trying to improve finance options for home buyers.
• 21:13
  SPEAKER_00: So it's aimed at doing a whole lot.
• 21:15
  SPEAKER_00: It's passed the House.
• 21:16
  SPEAKER_00: It has not gone to the Senate yet.
• 21:17
  SPEAKER_00: The House Committee on Financial Services said that more than 70 groups have backed this bill, including the National Association of Realtors, the National Association of Home Builders, and dozens of housing, banking, and manufacturing groups.
• 21:29
  SPEAKER_00: So this has wide bipartisan support and support from the industry.
• 21:33
  SPEAKER_00: In fact, an NAR spokesperson said they strongly support the Act, adding that the bill provides the kind of comprehensive approach needed to help solve a decades-long housing affordability crisis.
• 21:45
  SPEAKER_00: NAR strongly supports bipartisan efforts in both chambers to address this crisis, and we believe Congress must act decisively to remove barriers to housing production and reform outdated programs while giving communities the tool they need to build more homes.
• 22:00
  SPEAKER_00: By addressing barriers at the federal, state, and local levels, this bill represents the kind of comprehensive approach needed to expand housing opportunities and restore affordability.
• 22:10
  SPEAKER_00: The thing about this bill is it is supply focused, not demand focused.
• 22:14
  SPEAKER_00: And that's important.
• 22:15
  SPEAKER_00: We've tried demand focused here for years.
• 22:18
  SPEAKER_00: That's not been the pro problem.
• 22:20
  SPEAKER_00: Demand has never been the problem, is that we don't have the supply.
• 22:23
  SPEAKER_00: When we've done the demand side with tax credits and low rates and down payment assistance, when you have a constraint supply, demand simply rises price, raises prices.
• 22:34
  SPEAKER_00: So when we heard politicians back during the election talking about giving first-time home buyers more money, that didn't really make sense.
• 22:41
  SPEAKER_00: It's not a first-time home buyer problem.
• 22:43
  SPEAKER_00: What the problem is we don't have enough housing.
• 22:45
  SPEAKER_00: The bill's got five main parts.
• 22:47
  SPEAKER_00: Part one is building smarter in the 21st century.
• 22:50
  SPEAKER_00: It creates a zoning framework.
• 22:52
  SPEAKER_00: It encourages upzoning, reducing minimum parking requirements.
• 22:55
  SPEAKER_00: It allows duplexes, triplexes, and fourplexes, office to residential conversions.
• 23:00
  SPEAKER_00: And it's believed that this could unlock some infield development in urban cores.
• 23:04
  SPEAKER_00: All office conversions are huge right now, given the commercial vacancies.
• 23:09
  SPEAKER_00: Secondly, there's a multifamily loan limit that they're talking about quadrupling FHA multifamily loan limits.
• 23:16
  SPEAKER_00: That's a significant change.
• 23:17
  SPEAKER_00: It could reduce capital friction for developers and capital access to determine how fast units can come online.
• 23:23
  SPEAKER_00: There's a manufactured housing component.
• 23:25
  SPEAKER_00: The cost of a manufactured home costs roughly half per square foot compared to site build.
• 23:30
  SPEAKER_00: And so FHA small dollar mortgage pilot program under$100,000 could potentially transform rural markets, allowing these entry-level housing that has basically virtually disappeared.
• 23:42
  SPEAKER_00: So that's going to try to target that section or segment of the market.
• 23:45
  SPEAKER_00: There's also a modernization of HOME and the CDBG programs.
• 23:50
  SPEAKER_00: These are locally funded development programs.
• 23:52
  SPEAKER_00: You also have some oversight in government, annual HUD testimony, stronger marketing.
• 23:57
  SPEAKER_00: And so there's a lot of areas where this possibly could help.
• 24:00
  SPEAKER_00: I haven't reviewed the entire bill, but 138 pages, and you got uh NAR and the uh Home Builders Association both on board with it gives me some hope.
• 24:09
  SPEAKER_00: So, in closing, where are we really?
• 24:11
  SPEAKER_00: Affordability is improving incrementally.
• 24:14
  SPEAKER_00: Structurally, we are still constrained.
• 24:16
  SPEAKER_00: There's still a supply-driven side that we have to look at, but politically, it's acknowledged that we're not in crisis, we're in compression.
• 24:24
  SPEAKER_00: The market's tightened, it's not broken.
• 24:26
  SPEAKER_00: If we can stabilize rates around that 6% marketplace, if we could slowly increase supply and income continues to rise, the three factors that really factor into affordability, affordability will improve gradually.
• 24:41
  SPEAKER_00: Won't do it dramatically, but it will do it gradually.
• 24:44
  SPEAKER_00: And historically, housing adjusts gradually.
• 24:47
  SPEAKER_00: It doesn't adjust quickly.
• 24:49
  SPEAKER_00: We all know that housing doesn't collapse easily, but it also doesn't heal overnight.
• 24:53
  SPEAKER_00: It simply tightens, it stretches.
• 24:55
  SPEAKER_00: And right now, we're watching the beginning of that adjustment.
• 24:59
  SPEAKER_00: Very good news on the home affordability front.
• 25:02
  SPEAKER_00: Let's continue to keep our eyes on those mortgage rates.
• 25:04
  SPEAKER_00: Hopefully they'll sit down the low sixes and get maybe into that five range.
• 25:08
  SPEAKER_00: Supply will continue to increase.
• 25:10
  SPEAKER_00: Hopefully, we'll see incomes continue to increase as well.
• 25:13
  SPEAKER_00: And if that continues to happen, then P6 is going to be on fire, guys.
• 25:18
  SPEAKER_00: We're going to have a tremendous year.
• 25:19
  SPEAKER_00: All right.
• 25:19
  SPEAKER_00: I hope that helps you guys out this week with some information about affordability.
• 25:23
  SPEAKER_00: Please come back again next week for another episode of Dish and Dirt.
• 25:26
  SPEAKER_00: Hope you all have a wonderful weekend.
• 25:28
  SPEAKER_00: Don't forget to like us, share us, and tell all the other real estate agents all about Dish and Dirt.
• 25:31
  SPEAKER_00: Y'all have a great weekend.