Real Estate News Radio with Rowena Patton

Navigating the Evolving Real Estate Market: Trends, Strategies, and New Regulations

August 03, 2024 • Rowena Patton

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Can the real estate market truly normalize after years of volatility? Join me, Rowena Patton, as we navigate the current landscape of home sales and uncover strategies to maximize your property's value. In this episode of the Plain English Real Estate Show, we introduce the innovative Cash CPO offer, a game-changing concept inspired by the automotive industry's certified pre-owned models. We'll dissect the best times to sell your home and analyze economic cycles from 1978 to 2024 to provide you with the data-backed insights needed to make informed decisions. Don't miss our discussion on the new requirements for buyer-agent agreements, following the National Association of Realtors and DOJ settlement.

The real estate market is evolving, and so are the dynamics of buying and selling homes. Discover how the decoupling of buyer's agent commissions from MLS listings is reshaping the industry and the ethical concerns it raises when sellers offer zero commission to buyer's agents. We also delve into the financial challenges faced by real estate agents who now need written buyer agency agreements before showing houses. This episode aims to bring transparency to the process while addressing misconceptions about EXP's role in these significant changes. Whether you're a buyer, seller, or agent, this segment is packed with vital information you can't afford to miss.

From the highs of 1978 to the predictions for 2024, we take a nostalgic yet critical look at the fluctuations in home sales and prices over the years. By contrasting historical data with current figures, we highlight the stark increase in home prices and the widening gap between home prices and salary growth. Learn the parallels between managing stocks and real estate investments as retirement approaches, and understand the impacts of life events on home selling decisions. Finally, we explore how the shift from a market flooded with multiple offers to one driven by necessity impacts both buyers and sellers. Tune in for practical advice on preparing your home for sale and in-depth market analysis that will arm you with the knowledge to navigate today's real estate market confidently.

Speaker 1:

This is the Plain English Real Estate Show with your host, rowena Patton, a show that focuses on the real estate market in terms you can easily understand. Call Rowena now. The number is 240-9962 or 1-800-570-9962. Now here's the English girl in the mountains, the agent that I would trust, rowena Patton.

Speaker 2:

Hey, sean Hannity here talking with the only real estate agent in your market. I recommend Rowena Patton with All Star Powerhouse. So now that the market is normalizing again, how's that going to impact home selling right now?

Speaker 3:

You know, sean, that's a great question and people all around the country are asking it. I'd really like them to know about the cash CPO offer. It's certified. Pre-owned homes are inspected often they're appraised and cash CPO offers sell for 11% more and twice as fast, and there's no hassle of the showings.

Speaker 2:

So is now the time to sell.

Speaker 3:

You know, Sean, it's really all about do you want to sell now or not? You know, Sean, it's really all about do you want to sell now or not? Are you just dipping your toe in the water? If you want to get top value, sell it now. You've got a small window before we expect to see that real flatting out the market.

Speaker 2:

Call Rowena Patton right now at 828-333-4483 or online at mountainhomehuntcom.

Speaker 4:

Hi, this is Rick and we sold our home with Rowena Patton at All-Star Powerhouse. We didn't really want to move, but needed to for my job. Our first realtor didn't listen, didn't care, didn't try. Not a single showing in two months. A friend recommended Rowena. She saw the hard work we'd put into the home, what it meant to us and what it could mean to someone else. Next thing you know it's sold. If you need to get your home sold and not just listed, you need to talk with Rowena Patton. Give her a call at 828-333-4483.

Speaker 2:

Don't let real estate pass you by with All Star Powerhouse.

Speaker 3:

Rowena Patton, here at All Star Powerhouse, sell it now, don't wait. Call me at 828-333-4483.

Speaker 2:

Don't let real estate pass you by with All Star Powerhouse.

Speaker 3:

And good morning. This is Rowena Patton on the Real Estate News Radio Show. How are you doing this morning? Wow, we've got a big numbers show today. We are talking about the economic cycles between 1978 and 2024. And well, that's not a big show at all, is it? And we're going to be looking at existing home sales, new home sales, average home prices, median home prices, average interest rates, average inflation rates, average unemployment rates across that time. This is going to be a fun one.

Speaker 3:

Guys, we're going to make it fun. Just to warn you, the studio has been sprayed with some kind of air freshener today which I'm really allergic to, so I might just keel over on you in about 10 minutes. So just a warning there, so you know what's going on. If I start breathing, you can hear it in my voice. I'm going to it's going to be a really husky show where I can barely breathe, but that's okay, Randy. What do you think? We can get the management looking at this next week, right? Oh, my good word. So, guys, here's a top tip for you when you're selling your house, do not spray this stuff. A lot of people are allergic to it. Actually, I just spent some time down in Florida where all the Ubers have those car danglies. It's any kind of fake sense. I'm not the only one. I promise you they're super toxic. So don't do that stuff. You don't want people coming to look at your house. This is selling season, after all. When you've got all of that going on.

Speaker 3:

So, yeah, it's going to be the heavy breathing show of numbers today. That'll be fun. So the first thing I want to touch on yeah, let's start with the big one. You've probably all been hearing about the NAR National Association of Realtors and the DOJ settlement, which isn't quite there yet. The actual, the final part of the court case comes in November.

Speaker 3:

So what does it mean to you as home sellers and home buyers? Well, honestly, there's a lot of confusion out there. Any of you that have realtor friends will know about that. There are a few people that have really sort of got their arms around it, but it's all changing very rapidly. So from August 17th nationwide and a lot of places have put it into effect now. Most of the Florida MLSs have put it into place. Ours has. Legally, it has to go in place by August 17th, but most people are adopting it now.

Speaker 3:

So the main thing is that, as a buyer, you have to have a written agreement with your agent before you see a house. Now we're actually fortunate in North Carolina in that that's been in place for a long time, not that you had to have a written agreement in the moment when you were seeing a house. You could go and see a house and then maybe have an agreement with your buyer's agent because you know, after all, you want to try them out, right? However, we've always had that buyer's agreement that you write with your agent. It's basically saying you're not working for free, but you know many buyers and I understand that would say, well, I haven't even met you yet, so why am I signing this contract? I don't want to sign any contracts, so you can sign it for the one house you're going to see. And you know that seems fair, right? If somebody takes you in a house, they are going to get whatever commission is attached to that, and of course, that's all negotiable. By the way, that hasn't changed. It's always been negotiable. Nothing's changed there.

Speaker 3:

I've been doing this for 18 years now and I don't remember the last time that I went to meet with a seller and I didn't talk to them about how, the fact it was negotiable or that, where they weren't negotiating me with me from the outset. So one of the questions would always be what's your commission? So that's the main change right now that you will see as a home buyer and a home seller, buyer and a home seller. And, of course, if you were party to, if you're a realtor listening, you're party to all those big sites with tens of thousands of agents on them where it is just the topic of conversation and somebody will post. My buyers, you know, decided they weren't signing something with me. What do I do now? Or all kinds of more complex scenarios that are happening over the time, which is always interesting to look at, of course. But that's the main difference, you'll see. And of course, buyers are a little bit confused because in many places in the country that was not required. Excuse me again, if you've just tuned in, there's a big air freshener spray in here that has me barely being able to breathe. Can we do an outside, randy? Can we just go outside and do this? Oh my goodness.

Speaker 3:

So what the DOJ has done basically is decoupled commissions from the listing agent. So it used to be the listing agent would go and see the home seller and the home seller would decide what commission was going in there. So you know, let's say, for example, it's 6% and then on the listing agreement, you as the listing agent would say and 3% of that is for the buyer's agent. So everything was taken care of, that was advertised on the MLS and the concern was even though we've always had very clear rules and if you break those rules you can get chucked out of the Realtor Association that you can't take people to homes depending on how much commission they're earning. That was where all of this came from, because, like any industry, you'll always have those people that you know do it to suit themselves. So, yes, did you have any rogue agents running around doing that? Of course, but, gosh, don't you have that in every industry? Don't you have that in politics? Don't you have that in everything you know? I would say yes, but but never mind, this was brought and millions and millions and millions of dollars will be going to the attorneys who brought the case, of course.

Speaker 3:

So now, nothing can be displayed on the MLS, which means every single showing and this is my concern for sellers every single showing the buyer's agent is instructed to text or call the listing agent. You can publish it on your own website. The listing agent can publish it on the website, except that if your website has the MLS, the multiple listing service, attached to it, you can't publish it, which means basically, you can't publish it. You can't publish it, which means basically, you can't publish it. So the baseline is these buyers agents have to text slash call the listing agent to see a home. Now, obviously, listing agents have lives too, even though we work seven days a week and you know I primarily do listings, so I can speak to this myself. I'm doing the radio show right now.

Speaker 3:

So what happens if somebody wants to see one of my listings and the agent's texting me right now? So should I just put the show on pause and go back to them and say the seller is offering 3%? Now the other issue is whatever I say at that point the seller may change their mind, because it kind of depends on what the offer comes in at. So let's say but that really hasn't changed either, right? So when the offer comes in, let's say we've got a $400,000 house and the offer comes in at $350,000. And then we negotiated up to $375,000 and the seller says listen, I'll do it, but you both have to reduce your commissions, by the way, that's no different. So what it's added in from your perspective is a complexity that slows things down a little bit and allows us to use text and phone. Now, if you're a listing agent with, you know if you, if you're employing a listing agent with 30 listings, then, as you can imagine, if those 30 listings get three showings a day, that is 90 phone calls and texts that you're monitoring with the offer of commission from the seller. So I think things are going to change in that, because trying to especially for the heavier listing agents that have a lot of listings, that gets very hard to handle.

Speaker 3:

Right now there aren't a lot of showings going on because the market softened somewhat. We've come into this in a softening market where interest rates did just drop just a little bit. However, now we've got the stock market drop. Did you see that, randy? Oh my gosh. Yeah, the stock market had a humongous drop because of all kinds of factors, but the main one was the jobs report coming out, so we increased the unemployment level by about 20%. That was a high increase and it was not what was expected, which is the major factor that led to that going on.

Speaker 3:

If you'd like to call in and give us some more facts about this maybe you know about it, or maybe you have a question on what on earth is going on right now in the economy, or maybe you've just got a statement you'd like to make here's your floor. Call us at 828-240-9962. If you're calling in from Mars, 800-570-9962, or, again locally, 240-9962, and that's an 828 area code. And the funny thing is we've all got cell phones now, so it doesn't really matter if it's local or the 800 number right, you're supposed to be using a cell phone. If you're using a landline and you want that free line, 800-570-9962.

Speaker 3:

And if you've got somebody that should hear this somewhere else in the country and you're listening right now in your car or on your radio locally, you can get the link to listen live anywhere at realestatenewsradiocom. You can listen to old shows there. You can get into our website there, you can get all kinds of other dandy things and listen to all of the old shows, which are then podcast. So let's scoot over, let's see if I can find you any other pieces in narAR that might be interesting and again, call in if you have any questions on it.

Speaker 3:

The main thing is it's been decoupled from all the MLSs around the country, so a buyer's agent now can't go on the MLS and see what is offered to the buyer's agent. So what that means is some sellers are offering zero. By the way, if you're a seller, I wouldn't recommend that, especially while we're in the transition period because you want as many agents as possible highlighting your house and bringing them in Now. It's also an ethics violation not to take your clients into a house if they want to see it. However, let's just get real here.

Speaker 3:

If you've got a house that's offering zero, you know you've got agents working for nothing, which means that a lot of people as buyer agents and I know this from all the posts are getting very nervous about not being paid, and many of you think that real estate agents earn a lot of money. Most of them don't. The average earnings are in the 30,000s and there's an awful lot of work that you do, especially in this weather and especially in the winter and especially when you're you're, you know, nurturing those relationships in a market like this, which is many markets where people are coming in from elsewhere. We have people calling us now who are coming in in the fall. We have people calling us now that we've been working with for some of them for 18 years, literally. So naturally, you've got people who primarily, you've got a lot of agents who work primarily with buyers.

Speaker 3:

That's where the the real sting is coming in this, for for all the change is coming in this should I say for agents? Because now they don't know what they're being paid or whether they're being paid at all, and to find that out before they show the house, first of all they've got to get that written buyer agency in place. There's a lot of agents out there who would say well, if you knew your value, you'd always have been working with that anyway. Many states didn't require that at all. Here we just required it being put down in writing before the offer was put in. Or with the offer, it had to be in writing before you actually made an offer on a property. Now it's before you see a house. So if you're coming in from New York and we say, listen, we've got anywhere in the country actually, so if you're a buyer anywhere in the country looking to buy anywhere in the country, now you have to sign a buyer agency. Can you control the terms on that? Absolutely, it can be for one house. So you know, I guess now you're going to have to go choose a house that you want to go and see and protect that one in most cases. Or I guess you could have an agreement with your buyer's agent that they're going to work for free for you. We'll see how that one works out. So will it leave to cost savings?

Speaker 3:

You know a lot of people want to work with an agent. The commissions have always been negotiable. Nothing has changed. It's just the way that those are advertised have been changed, which I see. Some of that. There were some of the rogue ones who would look up. You know the commissions maybe were at 2% says, oh, I'm going to show that one last, or something like that. Clearly, none of us who are professional agents which is, you know, hopefully in the main number in there would never do that. So this is coming at a time, too, when housing sales have already been hit. So what we want to do is protect you as much as possible as the sellers and the buyers and help you through this. That's what they're there for.

Speaker 3:

Most people want to use a real estate agent, even for sale by owners. You know over 90% of them it's about 94%. Even for sale by owners. You know over 90% of them, it's about 94% come back and use an agent because of the exposure that we can create and because of the network that we've got, because of all those conversations that any of us who are good agents have, seriously seven days a week. I was on my text last night. I started at 7. Yesterday morning I was texting with an agent who wanted to know what commission was available on one of my new listings. That came on last night at about 8.30. So, and of course there's no guarantee in that, because now it's not advertised on the MLS. There's no clarity there. So it's just there's a lot of dynamics going on here, obviously it's just there's a lot of dynamics going on on here, obviously so, and we're doing it when houses generally other than in the northeast houses are sitting on the on the market longer already. People are very concerned about what's going on with the economy and interest rates and we're all navigating this uncertainty. So more news on that coming up. I'll let you know how it's affected it. I know it's created a massive amount of confusion and then we have brokers in charge across the country, or they have different names for them, but basically the managing brokers trying to navigate through all of this confusion.

Speaker 3:

Exp has. There's been a lot of news about EXP, the company that All-Star Pass is brokered by not paying buyers agents is absolutely not true. What they've done is decoupled it from the listing agreement. So any of my sellers out there, you've already got documents where we scratch out the offer of compensation to buyers agents. But there's another form just to. This is all the boring complexity behind the scenes for you as consumers, right. But there's another form that is called an offer of compensation that will have you sign at the same time. So all we're doing is coupling it and you're paying the buyer's agent. Slash the buyer directly, essentially. So enough on that. I've got a, I think, a 29 page document, a 27 page document from the NAR. You can Google NAR settlement FAQs if you're interested. I will have a blog post out on this shortly. Honestly, I was letting it all settle down for a minute so I could give you some better information on it and showing you what these changes were really doing.

Speaker 3:

The main one is just logistics going. You know, back in the old days we had an MLS that was a paper book and that paper book was a big fat book that looked like a dictionary, and that big fat book was redone every week with all the new homes in it. We still have magazines home magazines, obviously like Homes and Land, with the listings in, and those are redone every week because, especially in a market that's moving. Those homes are sold and obviously you're not seeing all of the homes. And these days most people are going on and simply, you know, looking at homes based on their search criteria.

Speaker 3:

We made it all much simpler by using the internet so you can go on a website. If you're looking locally, our website goes out about 100 miles, even more than that, actually. You can go to mountainhomehuntcom. That's mountainhomehuntcom. That'll uh, it even brings charlotte houses in, which is two hours away, if that gives you any sense. But if you're looking for a home in the mountains, you can use mountainhomehuntcom. There's lots of criteria on there. That makes it very easy to search. Of course we can do it for you. Yes, we can get to, uh, different criteria on the back end of the website, which is basically the mLS.

Speaker 3:

However, I designed it way back when so that you could get to as much as I could possibly put on there. So if you want a barn on the property, you can have a barn on the property. You can use keywords in it, such as the actual zip code. If maybe you're in a neighborhood like, I don't know, mountain View Estates or something, and Mountain View Estates is a neighborhood that you'll find three times, even over the Carolinas, never mind nationwide. So you can put keywords in there if you want a garage or all the basic stuff.

Speaker 3:

But you can do a lot of the extras too that you can't do on the big box websites. Why? Because the big box websites exist. We like to say they exist to provide consumers information. What they do, their money-making opportunity, is to charge realtors for leads. And guess who? The lead is you. So if you don't want to be gobbled up like that and spat out the highest bidder who's the real estate agent, then you might want to go to mountainhomehuntcom. If you're somewhere else in the country, don't worry about that. I have got, I promise you, the best agents for you all around the country. And you are able to watch these shows as well on YouTube. By the way, we're pulling up the entire show on YouTube if you like to watch a moving picture behind what?

Speaker 3:

we're talking about. You can look up Rowena Patton on YouTube or Real Estate News Radio on YouTube. So let's jump in to. I love this. I've been wanting to do this one for a while and it's taken weeks of research to get here, as you can imagine. So let look at 1978. Do you remember 1978, randy? So randy's I, I, I do remember it. However, let's just say I was a gymnast then and I was very young and and I was at, uh, middle school so, but I was alive. I remember 1978, but I don't remember, you know, existing home sales or anything like that.

Speaker 3:

It was actually a boom year for existing home sales and we can dig into these numbers a little bit more as well. But I want to give you more of an overview today, because this is a lot of numbers to get through. It's kind of interesting. So we had 4.8 million existing home sales. It's kind of interesting, right. The numbers for new home sales are much harder to get, so I have less of a comparison on those. But existing home sales 4.8 million Now, what does that mean? Let's put it into perspective with 1991, 2.8 million. So a 2 million drop, and we'll go into the early 90s recession there going on, or then we went back in 2005 to 7.1 million sales. Can you believe that? Like the amount on top of all those home sales going on? Imagine what that did to the market.

Speaker 3:

And remember this is why home sales affect the economy so dramatically. It's not just about a home sale. So a home sale triggers a home purchase. What happens when we have a home sale? Think about all the businesses that are supported when a home sale happens.

Speaker 3:

So, yes, it's all the frontline real estate people. So it's the real estate agents, and some of you will go boo just making the real estate agents rich. But remember the average real estate agent earns in the 30s. So it's, you know, funding the real estate population, which is very large. It's also funding the attorneys. I can hear people going boo out there to the radio, unless you've got an attorney in the family. But it funds the attorneys.

Speaker 3:

It also funds the inspectors. There are inspectors generally almost every home. It's probably 95 percent of homes or higher. People employ an inspector, please. If you're purchasing a home, employ an inspector. Trust me, I've sold homes that didn't have the inspector and you're wondering why we're finding those things now. You may be a contractor. You may know your way around being a handy person or how to build a house, just get that inspection, because otherwise it's just kicking it down the road. So it's funding the inspectors, it's funding the surveyors, it's funding the septic texters. It's funding all the contractors that put things right on a home.

Speaker 3:

So, for example, in our cash offer program we have a full market value cash offer program all around the country. Just go to cashcpocom C-A-S-H-C-P-Ocom. What's the CPO bit? I'm often asked that what's the CPO bit on the cash offer? That's because you end up with a listing that is certified pre-owned. That's like a car that's certified pre-owned Cars sell for four to six percent more. And who wants to buy a car that isn't certified pre-owned or CPO? Every dealership has them. It's the. You know it's been growing in the car industry for 30 years and I've been growing CPO in the housing industry since 2007.

Speaker 3:

We started CPO Experts. That's where you, as the seller, get the inspection, maybe the appraisal, and possibly offer a home warranty. It's the trifecta becomes more and more important as the market starts to slip, which happened here in. You know I'm seeing figures now 2021, but at least 18 months ago. We're bumping along the top and as we're going through the figures today you'll see what that means. So we started back at 1978. That was a peak 4.8 million home sales. The average home price. What do you think the average home price was in 1978, randy? The average home price. What do you think? The average?

Speaker 4:

home price was in 1978, Randy 80,000.

Speaker 3:

62,500. Isn't that wild.

Speaker 2:

Yeah.

Speaker 3:

And the interest rate was 9.64%. Of course we saw higher interest rates than that in between, which you and I have talked about before we scoot forward to 1982. So we're only going forward four years. Four years, right? So look at the difference in the numbers and I want you to think about what's happened with interest rates now. So 9.64% Nobody thought that was that high at that point.

Speaker 3:

1978, 4.8 million sales and it doesn't matter if you weren't born in 1978, guys, these figures are important because you see trends. Good old Clermont-Juglar set up the economic cycle in 1860 and not much has changed. I always say it's a 7 to 11 year cycle. If you work on these numbers you'll see that I'm pretty much correct through these. And who cares if I'm correct? It was good old Clermont clement jugular in 1860. Seven to eleven years is the cycle, so peak to peak or low to low.

Speaker 3:

So here we are sixty two thousand five hundred. A lot of us would be very happy if we could buy a, a median house, at sixty two thousand now, given that in asheville we're at six hundred. Or if you look in the metro area I think we're at 460. Uh, nationally let me see if I can find that on here nationally 2024 is predicted. Predicted outcome is about 420 425 000. So nationally we've gone from 62 000 in 1978 to 421 700, so 422000. Basically that's quite a big hike. How many times does 60 go into 400? A lot. Can you do that math, randy? He's working out the math now. So what you have to ask yourself has have salaries gone up that much? I think we know the answer is no.

Speaker 4:

Six times.

Speaker 3:

So do we think salaries have improved six times since then? No, is the answer right. So might have to do some research on that. But we know and then we look at. Let's look at the inflation rate. The inflation rate was 7.63%. We're going to do all this through the years and I'll have this up on a blog post for you. You can direct message me, you can give us a call. If you'd rather, just give us a call and leave a message and I will send all of the figures to you. It's 828-333-4483. We've got people standing by 24-7 to take your call, any questions you've got.

Speaker 3:

If you'd like me to do a deep dive into your zip code and give you the 30 data points and a report of what's happening in your market more than happy to do that anywhere in the country. I've got an army out there now of cash CPO agents writing offers all over the country. It's over 1,100 agents. We also have assisted living rocking and rolling. If you know anybody that's working in assisted living or is on the list to go into assisted living, go to assistedlivingcpocom. Assistedlivingcpocom we definitely have. We're going out to see facilities all over the country. We're going to have a massive database it's already started of those and of course, the the cash offer is is very helpful in those situations. Um, you've been on a wait list for ever. In a day you get the call and then you have to sell your house. And we've actually had managers of assisted living in ohio and new jersey, uh, both of whom gave us feedback saying one of them had a mom and one of them had a dad. The actual managers themselves saying I wish we had this. One was six months ago, one was a year ago saying, um, I wish we had this then because we had to give the house away. I mean, not literally give it away, but sell it for next to nothing because they needed the money to go in.

Speaker 3:

This offer isn't doing that at all. In fact, two thirds of our seniors get more than with a traditional listing. They get the majority of their equity within 14 days and then we get. They're able to move into the assisted living. So there's none of that delay. They can sign on the dotted line and then we go in and do HGTV magic.

Speaker 3:

And then we go in, we do our HGTV magic and the majority of the time we sell it for quite a bit more money and then you get another check. We're essentially flipping it Most of you know what that flipping it means On behalf of the time. We sell it for quite a bit more money and then you get another check. We're essentially flipping it Most of you know what that flipping it means on behalf of the seller. So we're flipping it on behalf of the seller and then you get the majority of the profit for that second check.

Speaker 3:

But the good thing is you don't have the stress of showings, you don't have the stress of fixing anything. Most of us have got teams of people that can help you get all that furniture out that we go in. We might just paint the walls or do a deep clean, help you move the furniture into storage, whatever it is new countertops, new roof, whatever the home needs which is why we're getting more money for it. So then. So average employment rate was six point one. We're in the, we're above the middle fours at this point. So just to put it in comparison so 1978, we had strong economic growth, favorable demographics, so we were rocking and rolling in 1978.

Speaker 3:

We'll do a whole show one day where we put music to this Randy, is there anything we can do in here and get some air or anything, so I'm not choking all the way through it? Or maybe some nice cold water or anything would be awesome. Oh my gosh, this is embarrassing guys, but this is real life, right? So welcome to knowing what real life is like. The real life of the real life train hits us sometimes, so let's go up to 1982. So now we move on, four years later, and this is at the low. So the existing home sales have dropped from 4.8 million to 2 million. Isn't that amazing? That's an incredible drop. So only 2 million homes were sold at that point.

Speaker 3:

The average home price went up, and you sometimes see this because houses since the beginning, if you so, even though you see the peaks and the troughs, imagine what an economic cycle looks like. It goes up, it goes down. It goes up, it goes down. You've all seen those charts in the last few days. If you're looking at what the stock market does goes up, it goes down. However, if you draw a line through the trend and what happens in home sales, my wonderful producer, randy, just brought me some water. How nice is that. Thank you, randy.

Speaker 3:

If you look at the trend of what happens. It's the same as the stock market. If you imagine a line starting at the bottom and then going to the right, it goes up. The trend line is always up. It's just painful in between sometimes. You know, I had a call from somebody this morning who said he just lost a million dollars in his paper money in the stock market. However, he's keeping all the money in the same stocks because the trend line is always up. You might have to hold on to it for a while.

Speaker 3:

This is where it becomes interesting if you're especially in, if you're in your 40s or 50s or older and thinking about selling your home. Because do you have the time? That's why you know, if you, if you talk to financial advisors, for example, that they always look at where you're at in your timeline, because if you're getting close to retirement, you want your investments to become less risky, right, so you've all heard that they put you in less generally. You know you can choose your risk. It's all up to you. You're in control, obviously but generally you want it to be less risky the the closer you get to retirement. So why is that randy? Why do you want the stocks, do you think, to be less risky, as you're getting towards retirement and then having to call on your money.

Speaker 4:

I'm sorry I've been padded up over here.

Speaker 3:

You've been running the fans and getting rid of all the sense in here, so I'm not keeling over on the studio chair. So you know, if you go and see a financial advisor, they tell you to get your finances or they invest in things that are less risky the closer it gets to retirement. Why do you think that is?

Speaker 4:

Well, those funds are necessary. It's the goose that laid the golden egg. Don't mess with the goose.

Speaker 3:

Right, and the trend line always goes up. But remember good old Clément Jugla, the French economist 7 to 11 years, right? So do you have that 11 years? Or the last cycle was 14 years? Do you have that 14 years to wait for your money to come back? If you're 30 years old, it might not well, who knows what happens in life? Right, but you always work on probabilities. That's what underwriters do. They know when you're going to die within a 14-day period. So, yes, really.

Speaker 3:

So you want those stocks to get less risky the closer you get towards retirement or the older you get. Well, guess what? It's the same in houses. So what is your investment? What is your asset? It's your house. So the older you are, the more likely it is to sell it now. Let me repeat that. So the older you are, the more important it is to sell it now.

Speaker 3:

Now, what do I mean by that? So if you're 70 years old, then do you want to be waiting until you're 80 years old? I mean, we don't know the peaks and the troughs. However, we do know it's followed a pattern of 7 to 11 years. People would never be able to invest in the stock market if they didn't follow patterns or have some evidence or bullet points behind them. So if you're 70 years old, do you really want to wait? If you're 60 years old, do you want to wait 60, you know you're going to be in your 70s the next time we are projected to hit that peak home sale. Meanwhile, we're going to go down right those prices. You're going to start seeing an effect on them. Now they're saying in 2024 that we have an expected improvement in interest rates. What that means is interest rates are going to go down a little bit. Guess what If you're moving and maybe you're going into assisted living, is that good? I'd argue no, because if the interest rates are going down and you're going into assisted living, or you're maybe thinking to heck with this, I'm moving to? I don't know. Where are you moving? To Puerto Rico, are you moving to? I've got somebody who's moving to. Um. I don't know. Where are you moving to puerto rico? Are you moving to? I've got somebody who's moving to spain. I met um a couple of weeks ago. He said I'm, you know, I've got a house in malaga. He's very fortunate, um, he's got a house in malaga, a house in the uk and a house here. It's like I'm moving to spain. You've all outpriced me in the states. He's got a beautiful condo very expensive, so this hits people at all levels. He's letting some of his houses go, so you know we're pricing people out of the market here. We are going to see a big move to other countries.

Speaker 3:

So let's say you're doing something else other than buying another house here. Then chances are you want to sell it now while you're at the peak, and go with that higher interest rate right now with any earnings that you've got Right, or put that money into your earnings because now you're getting a return that's higher. It's all in your absolute strategy. If you're a buyer, of course you don't want those high interest rates Right. Obviously you're buying at a higher interest rate. That that wouldn't feel very good, would it now? So the average right now is in the mid sixes and let's do the uh inflation rate through. Let's do the interest rate excuse me through the years. I don't have the heading on this one here, so let me just put my papers in the right place. So I don't do the inflation rate instead.

Speaker 3:

So back in 1978, we're looking at 9.64. Ouch, imagine if it were that now, 1982, we were looking at wait for it 16.04. 1982. You remember those days, don't you randy? So it directly correlates with the 2.0 million in sales that year. 2.2 million in sales when back in 78, which was only four years earlier, we did 4.8 million sales, right? So obviously that's way over double. So let's go to 1989 looking at the interest rates 10.32. 1991 didn't change that much, 9.25, but they were still in the nines, in the 90s. So we had an early 1990 recession and then, of course, everything started booming. You had all those you know stock market movies coming out and all that good stuff.

Speaker 3:

And then 2005, we peaked again 7.1 home sales. That's the highest number I've got on here in 2005. And we're looking at an interest rate of 5.87. So not too far away from where we are today. So back then, 2005, heck, 5.87. This is a steal. That's what people were thinking about, the interest rates. So much so we're not just saying that, guys, so much so we're at that point that there were that many home sales. So 5.87, nearly six percent, which is where we're at now, and we had seven million home sales.

Speaker 3:

To put that into context again, I can only imagine how busy everybody was um supporting all those home sales, the moversvers. You know Home Depot Lowe's. Look at their figures for that year. I'm sure they were booming. Imagine how many movers I mean that's doubling the amount of moves that a mover did, I'll guarantee it. The home warranty companies, all of that, the people that would go, the contractors, the contractors that were supported with the remodels. The home builders, the home builders that were building homes to try and keep up. Now those are existing home sales. So you can only imagine how the existing home sales, the new home sales, were growing at that point. But they're always a small fraction of what the existing home sales are, for obvious reasons.

Speaker 3:

So where are we at? So 1990, so we've done interest rate nine point six, four, nineteen, seventy eight, sixteen point, oh, four in nineteen, eighty two, nineteen, eighty nine, ten point three to eighty, nineteen, ninety one, nine point two, five, two thousand and five five point eight, seven, about where we're at now. And then 2011, which was a low in the market. This is the post 2008 financial crisis. We are now three years after the big crash and interest rates that dropped to 4.45. And, of course, we went down in the twos.

Speaker 3:

So 2021, we were in the twos, which that was a historic low. We'd never, ever, seen them that low. 2023 we're back in the 60s, in in the 60s. Excuse me, 2024 we're back in the 60s. So you can see, historically that is still relatively low in the interest rates and we're running about 4 million sales this year, which is pretty high. That's, those are the sales. Last year we had 3.89.

Speaker 3:

2021, where we had an interest rate of 2.96, we did 6.1 million. It's the second, since we're recording in 82. It's the second only below 19,. Excuse me, 2005, when we did 7.1 million in sales. That's some big changes in home sales. Imagine what that does to the market. So when you halve the home sales by 4 million, you're going to lose a lot of agents in that market. Obviously, but not only that contractors, movers, attorneys, home Depot sees their sales go down. Look at what's happening right now. It's interesting right so.

Speaker 3:

Now the other thing to watch very carefully here. So the post-financial crisis after 2008 and 2011,. Our average unemployment rate was 8.9%. Now these are averaging out over the years. So you know, you can Google it if you want and tell me oh well, in January it was X, y, z, but we're averaging out over the years. So you know, you can Google it if you want and tell me. Oh well, in January it was XYZ, but we're averaging out over the years. So this is a guide. Nearly 9% on the unemployment rate. Now we're in the fours. We're back up in the fours. That is very concerning because obviously now people argue about the unemployment rate. Oh, it's not real. But again, it's a trend.

Speaker 3:

Guys, you've got to look at the trend. Are some of the numbers around the outside gray and fuzzy? Absolutely, is it because they didn't report this and report that? Absolutely, however, it's a trend. Again, love to hear your thoughts on this. 828-240-9962. If you're listening to the podcast, you can call us 24-7,. 828-333-448 44 83 if you've got questions on listing your home or what your zip codes are doing in your market. Same thing 800, um, uh, 800 570 99 62 to get us live, or send your question on the podcast. Um, 8, 2, 8, 3, 3, 3, 44 83. It's quite mouthful, I can't believe. I remember all those Randy, my brain's working this morning, kind of sort of.

Speaker 3:

Let's look at some of the other numbers. I want to look at the inflation rate because that's an important one. So at the peak in 1978, the inflation rate was 7.63. It's so funny when you know you hear all the stories, stories now of oh my goodness, the inflation rate is XYZ, and then you look at what it's been over the years as you look at the trend always look at the trends and what that means. The average unemployment rate then was 6.1%, but we did 4.8 million sales. So sometimes that's a lagging or a leading indicator, depending on what's going in on in the market at that time. So right now we are projected to have a 4.2 million um sales. That's actually pretty high. That's projected, of course, for 2024. We never know what's going to happen um, but 4.2 is is um is a decent amount of home sales. It's not terrible and we expect interest rates to come down a little bit.

Speaker 3:

Now why do we think people are selling their homes? People are selling their homes because of the reasons they always sell their homes. So there's all the givens, right? The givens are you're getting a divorce, someone's passed away. They're usually, once you tip over age 30, they're not terribly positive. Sorry, someone's passed away. Let's do the happy ones in your 20s, you're getting married, you're having a baby that could stretch in your 30s as well. Congratulations to Chelsea, by the way, on my team who just moved house and she's taking care of all the kids with her lovely husband Ben, and she's about to have a baby any second now, and it's the heat of the summer. So you go, Chelsea, I don't know how you're doing it, I'm in complete awe.

Speaker 3:

So 4.2 million dollar sales not too shabby. That's a lot of people selling their existing home this year. So why is there an uptick from last year? There isn't an uptick from 2021. However, that was the surge during COVID-19 or COVID, and of course, we had very, very low interest rates. We had 2.9%, 2.3%. Basically, it did go down into the twos for some. For most people, they were around three. So that spurred on the second biggest home sales at 6.1. I think we should. Um, oh, let let's hear from Sally Randy.

Speaker 5:

So we're going to look at the different home sales and what's happening here in just a second. Hi, this is Sally. I'm really concerned as I just lost hundreds of thousands in my portfolio and I was hoping that was going to take me through retirement. I'm 50 and recently divorced. My home is too big for me but with all I've been through, I can't face selling. I'm in Santa Fe.

Speaker 3:

Wow, yeah, it's always and we were just talking about that different triggers for why you're selling your house. Now I'd put that into the given range. When I say that and thank you for that, we're looking at what happens during a divorce. So most often it's probably 95% of the time you're going to sell the house. Sometimes you don't, you know, and you're going to sell it, maybe to each other. You know, maybe the wife's staying, maybe the husband's selling, or you're going to sell it because generally you've built that house together. It has memories and it's probably too big for one of you.

Speaker 3:

So now you're selling your house because of something that's happened in your life cycle. It might be that somebody has passed in your family, it might be that you has passed in your family, it might be that you're having a new baby, it might be. All kinds of things have happened. So you know your parents lost someone, lost their partner, and then two years later they're not around anymore and you're dealing with siblings, and often this happens from another state. How are you going to get that home sold? And so that's why you know a lot of people are selling the house or all the things that happen. There's the happy ones, generally happy ones in your 30s, up to your mid-30s maybe, and then they get the more sort of difficult things that happen in life that trigger a home sale. So those are going to happen anyway. Here's the issue. When you put age on there, we've got a cycle of seven to 11 years. So we've got all the givens right.

Speaker 3:

You're getting a divorce, and so let's do it with divorce, because that's unfortunately such a common one. Now you're getting divorced and you're going. Well, you know, I don't know if I can face it. I got just like the call there. Everything's going on in my life. I have to clear everything out. I just, you know, I'm heartbroken or I'm glad they've gone, whatever it is, I've gone through a period of difficulty, all the things that go on with a divorce.

Speaker 3:

Many of us have been divorced and know what goes on with that. And now you're thinking of having to sell the house. It sounds miserable, right? So most people would be thinking. I would think it'd be perfectly common to think, oh, you know what, I'm just going to get to that in two or three years. What do you think, randy? So if people are listening out there, if you get divorced and you're in the house and you know you found a way to buy out your partner or I don't know. Maybe you've traded some things in the divorce so that the house is now yours. Maybe you've bought them out whatever it is. Do you think it would feel like it's really tricky to sell it right away, after everything you've been through?

Speaker 4:

Of course it's going to be tricky anytime.

Speaker 3:

Right.

Speaker 3:

So you would think that 80% of the people let's just, you know, guess here 80, 90% of the people who are divorced and I'd love to hear from you if you're going through that 828-570-90, sorry, 800-570-9962, 800-570-9962. If you're going through that, we'd love to hear from you. So many of you are thinking I'm just going to give it a couple of years. Here's the problem where you've got to pin your strategy on the economic cycle. What does that look like? So you know if we're still bumping along the top or we're starting to see prices decrease. By the way, I can give you a very good indicator of that. All I have to do anywhere in the country is plug in your zip code. The first indicator I like to look at are price drops. Now what does that look like? It looks like it compares for the last six or seven years. What percentage of price drops are happening? So it looks at this point in time you know early august in 2024 and it compares it to early august for all the previous years what percentage of homes that are currently listed have price drops? You want to see if that number is going up or down.

Speaker 3:

I can tell you in almost every market that I've checked in the country. I've got five straight months of price drops, high price drops. Now what does that mean? You'd expect that to happen so you could argue that you know spring has come. People start to drop their prices through the summer because we know winter is coming in the markets where winter affects the market. That's not all of them, of course, and in fact in Florida you'll see a more happening market, often in the winter as the heat cools down, depending on what part of Florida you're in. You know there's all kinds of pieces in here, but I can literally paint a picture around your market if you want to call in and we'll go through that. So you know the price drops have been happening for five months. Now here's the difference. They are higher than all the other years. They're at a higher percentage. I can even show you a heat map on them for all the counties around you and all the zip codes around you.

Speaker 3:

It's very, very interesting to look at. Now what does that mean in real terms? It means that come Thanksgiving, because if you list your house now and if you list it without CPO, forget the cash CPO offer. If you list it without CPO now, if you've got a regular listing. Chances are, in 80% of the markets around the USA, you're going to get your money at Thanksgiving. And guess what? You're going to get your money 67% of the time. Why? Because the average contract falls out 33% of the time. It's more likely to fall out now because of the economic crisis. It's more likely to fall out now because of what's going on in the election coming up here.

Speaker 3:

So really, really, look at that. We're going to see a lot of homes close at a lower rate come Thanksgiving when all these price cuts come home to roost. So, price cut, price cut, price cut, price cut. Eventually, if you cut it enough, your home's going to sell and you may say I'm not cutting my price. Well, okay, but then you've got no problem with that at all. I'll help you hold it through the next seven to 11 years, whatever that looks like for you and your family. You know, until we're back at the peak again, don't think about, oh, I'm just going to put it off and do it in two or three years. That's the most dangerous thing to do right now.

Speaker 3:

I've been talking about this for the last couple of years on the show, but now it's here, guys. It is here. I can show you all the figures behind that. I've been warning about you. I've been warning you for the last couple of years where you know you could have gotten multiple offers. A year ago I was even warning you then. Listen, this is coming because multiple offers drive people buying things overvalued and then they have to sell them, which depletes the market when they have to sell because of life choices. Thanks for listening today, guys. Thanks for being here with me on the radio. It's been a blast going through all these numbers. I'll see you on the radio next week.

Speaker 1:

This has been the Plain English Real Estate Show with Rowena Patton. Visit Rowena and post your questions at radioashvillecom or call her at 828-210-1648. From the Appletree Automotive Superstore Studios, this is WWNC Asheville, an iHeartRadio station, the exclusive audio home of NBC's coverage of the 2024 Paris Olympics.

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