(00:00) [Music] Welcome to the Deerwood Realty YouTube channel. I'm John Schink, founder and managing broker of Deerwood Realty in St. Louis, Missouri. Does anybody out there know who Lawrence Yun is? Did that ring a bell? He has been the National Association of Realtors economist for as long as I can remember, and people kick him all the time about being biased for realtors, which is, you know, I mean, that's who writes his checks. It's not a real surprise to me. But anyway, I suspect there's a realtor conference out in Anaheim, California, that I didn't go to this year. And the only reason why I know that it's out there is because a couple of the people that I follow on Facebook are all out there having a good time. I think they had the Goo Goo Dolls perform last night. Anyway, I'm not going to a conference with a bunch of realtors. I mean, they're nice people and everything, but it's just not my thing. So, and if you've been in the real estate space, what happens is, like, Lawrence Yun, he'll put his forecast out, okay? And then, if you're really lucky as an association, he'll fly in and give you the forecast, and it's normally during a breakfast or something. I went to see him talk. He was in Kirkwood, Missouri, last time I saw him. But he managed to make some headlines in his remarks, and I kind of wanted to go over them with you to see what you thought because it was a little confusing at first. So, let's get to it here. It says, "NAR Chief Economist Lawrence Yun forecasts existing home sales will rise by 15% next year, and mortgage rates will be between 6 and 7% by Spring of 2024." So, I mean, when you first read "existing home sales will rise by 15%," be honest, did you think that was the price of homes, the sale price? It's not. It's not. It is the amount, the volume of homes sold. So, spoiler alert, right? I mean, I was like, really? A 15% increase? That seemed unreasonable. So, let's get into it a little bit here. It says, "Elevated mortgage rates, high home prices, and limited housing inventory are making the dream of homeownership difficult for Americans," according to NAR Chief Economist Lawrence Yun. So, do we disagree with that? Elevated mortgage rates, they're high. High home prices, that's the key. And limited housing inventory. I just don't think people can afford it. So, that's his statement. Then it says, "Yun said that home sales will likely decline by 18% this year, compounding a 17.7% reduction last year." And this is why it pays to, um, if you're going to buy a home or sell a home, it's best to work with someone in your, you know, who has a good understanding of the local market. In St. Louis, we were gangbusters last year. I had my best year ever. But that didn't make up for like the four or five years that were terrible for me. And this year's been just a disaster. But, you know, it is what it is. Right now, is anybody going to call him out on, um, I mean, you're in November. I mean, he's got a pretty good chance of getting this number right. It's the forecasting in the future that's even more dicey. "Said Yun referenced the latest GDP figure, which grew by 4%, but warned statistically this is much better than the historical averages. But if we look at this component, there are some worrying signs in the economy. The first being that business spending is essentially flat. The second is that goods inventory is rising, meaning products are being produced but not getting sold. We cannot keep adding to the shelves, just like in housing. Businesses have to borrow money, and business spending is down because it's more expensive to borrow." Now, this is something that you don't, you know, a lot of people don't make the connection between housing and the greater economy. It's the same as like healthcare. Do you realize how big a portion of the economy healthcare is? So, when something happens in one of these industries, like housing, healthcare, I mean, defense, like if we were not at war all the time, I mean, it would be terrible, right? The military-industrial complex wouldn't have enough money to help out the politicians with their decisions. Anyway, um, if you saw Walmart, I believe they put out their earnings last night. This is Thursday, so it was Wednesday, and their stock got shot. They said they're seeing signs of a consumer slowdown. I am of the opinion that things are not great. But, you know, I'm biased. Things are not great on my front, so maybe things are going great for other people. So, anyway, that's one thing to look at. The other thing, it says, "Yun addressed job sitting. We're on the positive sides of jobs data, but each passing month shows diminishing or strength. Based on the trend line, employment could become negative. The upcoming GDP number looks to be worrisome." So, you know, for everybody that kicks the guy, he is, like, saying, "Hey, there are some things here you might want to pay attention to." The jobs data, to me, looks not great. People working second jobs. I don't know if you saw the numbers. I think it was the GDP where they changed the definition of the healthcare costs to show a dramatic reduction in the price. It's just ridiculous. "Yun said the 30-year mortgage and fed funds rates have likely crested. I believe we've already reached the peak in terms of interest rates. The question is, when are rates going to come down?" And this is the dangerous thinking that I'm always worried about. And here's the dangerous thinking: "Hey, great, the rates are coming down, so everything's fine." Normally, the rates don't come down because everything is fine. Normally, they're cutting rates because the economy is stalled. That's my issue. It's like, "Hey, great, you know, they lowered interest rates, so now we can afford to buy the house. Oh, wait a minute, we don't have a job." So, it's like, you know, that's what I think about that. And then he said something kind of interesting. He said, "Builders are back on their feet, up 5% in newly constructed home sales year to date. Builders can simply create inventory in a housing shortage environment. Builders are really benefiting." Yes, they shouldn't be. Again, neighborhood across the street, 1,200 square feet, $600,000. It's a lot of money. "Says, but I mean, you're seeing this all over the new home builders are just like they're happy, downright happy, giddy because of the situation. Who would have thought? Who would have thought that that would be happening? The inventory of used homes just isn't even close to being enough that people actually have to go buy new houses just to feel like they've got some sort of value. It's really fascinating." "He explained the National Association of Realtors' advocacy efforts are working to help create inventory, but it will take time. I don't believe that's true. I don't believe that the advocacy efforts are working at all. The letter didn't get answered by Powell." "He said pent-up sellers cannot wait any longer. People will begin to say life goes on," said Yun. "Listings will steadily show up, and new home sales will continue to do well. Existing home sales will rise by 15% next year." So, that's existing home sales, not new sales, not anything that is... I mean, tell me that that's what you got out of the headline when we started. What do you think? I mean, if you look at a chart, I mean, the existing home sales have fallen off a cliff. I mean, there's no question. Now, I feel like it's kind of twofold. One, everything's so darn expensive. The second thing I would say is that, um, uh, I lost it. The second thing I would say is that the, um, the... who's selling right now? Like, like, what's the point? It just doesn't... there's no inventory for somebody even to make an offer. It doesn't make any sense. So, that's what I saw. Do I think that we're going to see an increase in existing homes? 15% seems high. Seems high. Um, I mean, I've been kind of... I've been off on this whole run as far as the market keeps going up, and I think it's got to come down at some point, and it just keeps going. So, I don't know. What do you think? Put your comment in the comment section below. Um, that's all I have for tonight. A short and sweet. Thank you for watching. Thank you for listening, and I'll catch you on the next one.