Latest / Connor with Honor: AI, Real Estate and Real Life / Severing realtor memberships by agents working for Redfin may not be consumer protective

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Severing realtor memberships by agents working for Redfin may not be consumer protective · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: The California real estate market continues to grow, but we are lacking that inventory.
• 0:05
  SPEAKER_00: Today's October 3rd, 2023.
• 0:07
  SPEAKER_00: I'm your host, Connor McIver, the Fat to Fit Realtor.
• 0:10
  SPEAKER_00: Here in California, we've seen the market change quite a bit.
• 0:14
  SPEAKER_00: We can track back to 2007, that last slump in the real estate cycle when we had the foreclosure market.
• 0:20
  SPEAKER_00: And ever since then, maybe put eight to ten years on that, ever since about 2014, 2016, the consensus is we're hitting another one.
• 0:30
  SPEAKER_00: We're going to hit this other, another downward spiral, and housing prices are going to slump yet again.
• 0:37
  SPEAKER_00: The issue that's holding that scenario back are a couple different things.
• 0:41
  SPEAKER_00: First off, we have very limited inventory.
• 0:44
  SPEAKER_00: The second part of that, because we have limited inventory, I don't see that changing at all because new home builders are unable at this time to overrun the market by building because they're still being held back by the COVID supply chain issue that was created via that virus and all of the mess that that started in the supply chain industry of the supply chains for all different industries.
• 1:09
  SPEAKER_00: That scenario still exists.
• 1:12
  SPEAKER_00: The other thing that's causing the market to stay incredibly stable and strong is the lacking inventory is stated, but the reason why it's lacking is sellers are currently locked into some very potential sellers, homeowners, are locked into some incredibly low interest rates.
• 1:30
  SPEAKER_00: And because those interest rates are so low, when they look to sell and purchase again, that interest rate isn't going to move.
• 1:38
  SPEAKER_00: They're going to get a whole new one.
• 1:40
  SPEAKER_00: And usually that new one is a lot more.
• 1:43
  SPEAKER_00: So it could be two, three, four, five points in some cases higher than the current interest rate that they're holding.
• 1:51
  SPEAKER_00: Most of the owners of properties are in a 30-year fixed loan program.
• 1:56
  SPEAKER_00: That is where your payment doesn't change.
• 1:59
  SPEAKER_00: Your interest and principal, those items are, well, the interests is fixed for a period of 30 years.
• 2:07
  SPEAKER_00: That's those loan programs that potentially, if you're watching, depending on age, your parents really like.
• 2:13
  SPEAKER_00: I know my dad loved that 30-year fixed.
• 2:16
  SPEAKER_00: And when we track back to the last foreclosure cycle, there were a lot of different loan programs out there besides that 30-year fixed.
• 2:26
  SPEAKER_00: So we saw a lot of adjustable rate mortgages.
• 2:29
  SPEAKER_00: And some of those adjustable rate mortgages had balloon payments attached to the end.
• 2:34
  SPEAKER_00: So you had to pay them off in short order.
• 2:37
  SPEAKER_00: So some were five-year terms, seven-year terms.
• 2:40
  SPEAKER_00: The interest rate was a little higher than market, maybe double, maybe a little bit more.
• 2:46
  SPEAKER_00: But the issue is, is you had to repay that loan in five years or refinance out of it and still give them their payment.
• 2:54
  SPEAKER_00: That created issues for people, especially at the height of the market when they purchased.
• 2:58
  SPEAKER_00: Then after that, they started to see that well, where's the equity in five years from now for that loan that I took out?
• 3:05
  SPEAKER_00: That is an adjustable rate mortgage due in five years.
• 3:08
  SPEAKER_00: The equity's not there.
• 3:10
  SPEAKER_00: So what did they do?
• 3:11
  SPEAKER_00: Most of the people were unable to continue.
• 3:15
  SPEAKER_00: Is that a case of overbuying?
• 3:17
  SPEAKER_00: That's going to be very individual.
• 3:19
  SPEAKER_00: A very individual question.
• 3:21
  SPEAKER_00: In some cases, yes.
• 3:22
  SPEAKER_00: Of course, there were the rumors out there.
• 3:24
  SPEAKER_00: You had the waitress in Vegas buying$35,000, making$35,000 a year, buying over a million dollars in real estate.
• 3:31
  SPEAKER_00: You can't sustain that for very long, but these are personal decisions that people made.
• 3:35
  SPEAKER_00: However, let's throw this back out there.
• 3:37
  SPEAKER_00: The financial industry was running around like a bunch of cowboys and Indians as well.
• 3:42
  SPEAKER_00: You take away from that and you see all the oversight now that's been put on the lending and loan programs, mortgages.
• 3:50
  SPEAKER_00: They're still offering adjustable rate mortgages.
• 3:52
  SPEAKER_00: Now they're coming back a little bit.
• 3:54
  SPEAKER_00: But most people are still very secure with a 30-year fix.
• 3:57
  SPEAKER_00: But it's going to depend on your real estate goals.
• 4:01
  SPEAKER_00: Are you going to hunker down and stay in that residence for the rest of your life?
• 4:05
  SPEAKER_00: Or is this something that you're using as a stepping stone?
• 4:08
  SPEAKER_00: Maybe you're going to be expanding family, adding people into your fold, and you're going to need a larger residence.
• 4:14
  SPEAKER_00: Maybe you're only in a particular city for a temporary amount of time till you retire.
• 4:19
  SPEAKER_00: Maybe you're there just for a specific job and then you're going to go live somewhere else.
• 4:23
  SPEAKER_00: These are all very personal investigations that one has to do before they embark on any kind of a real estate journey.
• 4:30
  SPEAKER_00: But just to give you a little insight into the market as far as the overall collapse of the housing industry, we really are lacking supply.
• 4:40
  SPEAKER_00: And that supply doesn't seem to be coming or is not going to come from some mysterious source.
• 4:46
  SPEAKER_00: It's either going to come from homeowners now, which aren't really are very reluctant to put their houses on the market because their current interest rate, or it's going to come in the form of new housing and new building, new local zoning ordinances to increase the ability of builders to build.
• 5:03
  SPEAKER_00: But we still haven't caught up yet with all the lumber and the nails and all of the other items that are required to build houses.
• 5:13
  SPEAKER_00: There's still a slump in that supply chain.
• 5:16
  SPEAKER_00: Once that kicks off, though, I believe we're going to see new home builders go absolutely crazy and they're going to really start building, and there's going to be a higher competition mark set between them and also the resale market people that actually own houses that have lived in them for a while.
• 5:34
  SPEAKER_00: Final thing with regard to interest rates.
• 5:38
  SPEAKER_00: Interest rates fluctuate all the time.
• 5:40
  SPEAKER_00: Here in the near future, if prior to the election somebody that was running wanted to appear to be very helpful for people, maybe they might try to do what they can to have that interest rate lowered.
• 5:54
  SPEAKER_00: Now I know it doesn't really work that way, but you know, there's a lot of mystery that goes on in the political world.
• 6:00
  SPEAKER_00: So if interest rates do come down, that could potentially kick off this market.
• 6:06
  SPEAKER_00: And because of the current limited supply, if that doesn't change, we're going to have a feeding frenzy that we saw four years ago where people were overbidding on homes.
• 6:15
  SPEAKER_00: And trust me, they're still doing it now.
• 6:17
  SPEAKER_00: But we're going to see people over bidding in incredible amounts to buy real estate.
• 6:22
  SPEAKER_00: And again, we're going to see the same scenario where they're going to waive their appraisal.
• 6:26
  SPEAKER_00: You can only do that with certain loan programs, but basically stating, I don't care what this house appraises for, I'm willing to pay whatever that difference is.
• 6:35
  SPEAKER_00: These are some of the things that people put into contract in the last cycle that haven't yet created issues because we've been going up since then.
• 6:44
  SPEAKER_00: And maybe those people that paid$100,000,$150,000 are now just becoming kind of even.
• 6:50
  SPEAKER_00: But if there does become an issue where now we have oversupply and then the demand wanes just a little bit, again, we're going to see a real estate slump.
• 6:59
  SPEAKER_00: Don't see that coming, but it's definitely something to watch out for.
• 7:03
  SPEAKER_00: And unless something big fails, and if you remember 2007, we were kind of leading up 2006, 2007, the subprime bank new century, maybe.
• 7:12
  SPEAKER_00: That was, I believe that was the name of it.
• 7:15
  SPEAKER_00: This didn't happen overnight.
• 7:17
  SPEAKER_00: This was a slow roll process.
• 7:19
  SPEAKER_00: But once they filed bankruptcy, that's when this house of cards that was the real estate financial world back in 2007 started to fold in on itself.
• 7:29
  SPEAKER_00: That was the beginning of that scenario and that foreclosure cycle.
• 7:34
  SPEAKER_00: I don't see what could be in this next one coming, but maybe an overall financial depression could do it.
• 7:41
  SPEAKER_00: But again, something to watch out for.
• 7:43
  SPEAKER_00: I'm Connor with Honor.
• 7:44
  SPEAKER_00: Let me know what you think, and I do appreciate you watching.
• 7:47
  SPEAKER_00: Be well.