[00:09] welcome to the deward realy show I'm

[00:11] John shank founder and managing broker

[00:13] of dearwood realy in St Louis Missouri

[00:16] well had a very interesting article that

[00:19] I saw today and wanted to go over with

[00:22] you uh it's written by the the the head

[00:26] of the uh the head of Nars economics he

[00:30] a head Economist for Nar National

[00:32] Association Realtors Lawrence Yun as

[00:34] long as I've been in Real Estate

[00:35] Lawrence Yun has been happy about how

[00:37] the things are going like in in the

[00:39] market doesn't matter if the house

[00:41] prices are going down doesn't matter if

[00:42] price prices are going up he's always

[00:44] happy and I think that's a maybe an

[00:47] admirable quality but also kind of an

[00:50] odd quality you you think at one point

[00:52] in time during his career it'd be just

[00:53] like look at this is just terrible

[00:56] everything is awful but it's it doesn't

[00:58] ever go that way and it's always kind of

[01:00] kind of sus as the kids would say let's

[01:03] get in the article and uh and we'll just

[01:05] go to it says things are looking up now

[01:07] this this would presupposed that things

[01:09] had been looking

[01:10] down which for him I don't know that

[01:13] that ever happens so it was a very even

[01:15] the title got me but it says with prices

[01:18] and rates stabilizing home sales will

[01:21] continue the upward trajectory that

[01:23] started the final months of 2024 now

[01:27] look he's in an unenviable position in

[01:30] in my my opinion because if if house

[01:33] prices go down sellers are sad if house

[01:37] prices go up sellers are happy but

[01:40] buyers are sad so there's always two

[01:42] sides to a deal and if you're if you've

[01:44] been a buyer over the last four years

[01:47] you're probably miserable you're

[01:50] probably miserable because you were

[01:51] trying to get a house and you had to pay

[01:53] stupid amounts for it now things are

[01:55] changing all across the United States I

[01:59] mean it's it's very very fascinating in

[02:01] the sense

[02:03] that you have some places doing very

[02:05] very well and then you have other places

[02:06] that are not doing so well and uh so

[02:09] depending on where you are it it really

[02:12] real estate is local right so he says

[02:15] this past year was another terrific one

[02:16] for homeowners their overall net housing

[02:19] Equity swelled to 35 trillion in 2024

[02:22] nearly a third of that growth came in

[02:24] the past four years now is that

[02:26] sustainable just ask yourself is that

[02:29] sustainable a third thir of the uh

[02:31] growth came in the last four years of

[02:34] equity for your home I

[02:37] mean now there's going to be argues that

[02:40] you know we need more Supply and all

[02:43] this but just just think about it what

[02:46] goes up forever and doesn't come down

[02:50] well I guess the housing Bulls would say

[02:52] housing right they say well historically

[02:53] if you just bought a house instead in it

[02:55] would be it' be fine but I just I don't

[02:59] know something doesn't seem right right

[03:01] um and it goes to say that said has been

[03:04] a difficult couple years for real estate

[03:05] brokers and agents Mor mortgage lenders

[03:07] Title Insurance moving truck companies

[03:10] and others whose business depend on real

[03:11] estate sales in the Years 2023 and 2024

[03:15] marked the slowest home sales in nearly

[03:16] 30 years and housing affordability H

[03:19] historic lows so maybe you might be

[03:21] wondering John and like I used to see

[03:23] you all the time and you were saying

[03:24] like you know things suck you go out

[03:26] there and write multiple offers every

[03:28] weekend and never get a house and then

[03:29] when you do get a house and then you

[03:30] still got all these other buyers where

[03:32] have you been the past I don't know year

[03:34] or so well I've been I've been like not

[03:38] working it's bad not a lot of

[03:41] transactions not a lot of stuff to talk

[03:43] about we doing other

[03:46] things

[03:48] so you know but again I talked to one of

[03:51] the better agents in St Louis uh and I

[03:53] was like how are you doing and they sold

[03:55] more houses last year than they sold the

[03:56] year before now their budget alone for

[03:59] advertising is more than I mean it's

[04:02] unbelievable and I don't know that I'd

[04:03] ever want to be in that situation but

[04:05] for some they've done well even even in

[04:07] the worst of markets so it's it's all in

[04:09] how you look at it it says all is

[04:11] expected to change for the better this

[04:13] year now just just on a side note like

[04:16] last year he said things were good and

[04:18] the year before that he said things were

[04:19] good and the year before that he said

[04:21] things were good so but it says the

[04:24] momentum of highest home sales was

[04:26] already noted in the final months of

[04:29] 2024 so we're going to guess that he's

[04:30] talking about higher home sales is the

[04:33] number of transactions versus higher

[04:35] prices we're going to hope for that a

[04:36] steady boost in inventory starting in

[04:39] the summer months has brought more

[04:40] options and excitement for those looking

[04:42] to buy incomes have been rising a shade

[04:44] above home price

[04:45] appreciation

[04:47] well but have they for the last four

[04:50] years and who's got these jobs and I

[04:53] mean you could just go on and on and on

[04:55] about you know picking this apart but

[04:57] let's let's try to stay kind of above

[04:59] board here and say

[05:02] um a steady boost in inventory starting

[05:04] in the summer months has brought more

[05:06] options and excitement to those looking

[05:09] to buy so I can say that when I work

[05:11] with Buyers we go to houses that need a

[05:14] lot of Maintenance um it's normally an

[05:17] estate and it's dated and yet people

[05:21] want a premium for it sellers want a

[05:22] premium for that house and they were

[05:24] getting it would they get it now if it's

[05:26] a nice house yes okay if it's a nice

[05:29] house but we're not talking about those

[05:31] types of houses we're talking about

[05:32] houses that are from Estates and so

[05:34] those I don't think are doing as well as

[05:37] they they have been in the past here

[05:39] right now would I take a listing and and

[05:42] and and and and Market it where I

[05:46] thought it would sell yes um I wouldn't

[05:49] I wouldn't cut that much but at the same

[05:50] time you have to know exactly what you

[05:53] have it says but one can be confident

[05:56] that over the next four years existing

[05:58] home sales will will easily reach 20

[06:01] million along with a solid 3.5 million

[06:03] new home sales and so he was comparing

[06:06] during Donald Trump's term of 21.8

[06:08] million existing homes and 2.7 million

[06:12] newly constructed homes were sold and

[06:14] during Biden it was 19.3 and 2.8 million

[06:19] so but I mean like if it

[06:22] reaches uh 20 million for the next four

[06:27] years it's really not that much more

[06:29] than the 19.3 million under Biden says

[06:33] why why are we supposed to be happy it

[06:35] says the high mortgage rates of 7 and 8%

[06:37] are over the FED will make further rate

[06:39] cut decisions in 2025 to move toward

[06:42] non-restrictive monetary policy that's

[06:44] because the overall Consumer Price

[06:46] inflation which the FED constantly

[06:48] mentions as its top goal will be

[06:49] contained now look I've argued for a

[06:52] long time that even if you got rates to

[06:53] be like in the fives you've still got

[06:56] this problem of house prices have

[06:59] appreciated

[07:01] according to you what

[07:04] 30% 35% in the past three years they

[07:08] were already ridiculous before that as

[07:10] far as compared with

[07:12] wages I don't

[07:14] see I don't see if you're a buyer a

[07:17] great a great

[07:19] situation it says one thing that has

[07:21] held back the FED is rent inflation this

[07:25] is where it's it's it's tough it says

[07:27] but that Arena government data still

[07:28] acts the real world the number of newly

[07:30] completed apartment units that reached

[07:32] the market in 2024 was 560,000 the

[07:35] highest since the early 1980s now

[07:38] look there's these there's these

[07:41] economic ideas there's

[07:43] substitution which is like if if state

[07:46] gets too expensive people buy chicken

[07:50] okay yes it's a concept I've always been

[07:53] a little bit hazy on the if people can't

[07:56] find if people can't buy a house they're

[07:58] going to live in an apartment and like

[08:00] somehow that's going to be cheaper

[08:02] because what we saw during whatever you

[08:04] want to call it the great

[08:05] flu um your rent prices were getting

[08:08] higher than I mean they were just

[08:11] getting ridiculous they're to the point

[08:13] where you can't save money to go buy a

[08:15] home

[08:16] afterwards I mean you're spending all of

[08:19] your money on shelter it's not a good

[08:21] situation it says the official and

[08:23] somewhat fuzzy public data on rent in

[08:26] the Consumer Price Index shows a 5% rise

[08:29] it's just a matter time for the official

[08:30] figures to reset lower the Federal

[08:32] Reserve can declare victory in having

[08:34] brought the inflation rate to its Desir

[08:36] goal in 2025 and thereby permit more

[08:38] cutting of the short-term Bank borrowing

[08:41] rate I don't know I mean when was this

[08:44] article written because things came in

[08:46] hot this is February 18th it's the

[08:50] 21st I don't know I mean there's nothing

[08:54] wrong with having

[08:56] a a theory and giving your points of of

[09:00] you know this is why I think this will

[09:01] happen but it doesn't mean it's going to

[09:03] be

[09:03] right I think I think we've I think

[09:06] we've kind

[09:07] of gotten into that place where you know

[09:10] the experts are very very good at just

[09:12] putting

[09:13] forth something that sounds

[09:17] plausible and it may happen it may

[09:20] not on this

[09:24] one I again I see that the prices are

[09:26] the were the problem but anyway let's

[09:28] continue it says the new normal rate

[09:30] for the new normal for mortgage rates

[09:32] will be um between 6 and 7% which I

[09:36] think given that the prices are um

[09:42] higher here's your up you 2026 10 to 15%

[09:46] year-over-year increase in in in

[09:48] existing home sales

[09:50] 420,000 for the national median home

[09:53] sale price up

[09:56] 2% year-over-year

[09:58] how many people are going to be

[09:59] stumbling into a $420,000

[10:04] home FHA now you know like obviously if

[10:07] you're in California there's nobody

[10:09] because there's not a $420,000 home

[10:10] available FHA and VA lending programs

[10:13] have an explicit government guarantee

[10:15] the intense bidding WS of a few years

[10:16] ago left FHA and VA borrows at a

[10:18] distinct disadvantage but as housing

[10:21] markets see more Supply we are likely to

[10:22] see more buyers who qualify opting to

[10:24] use those programs very interesting you

[10:25] say that I don't I don't think that they

[10:29] were at a dis Advantage as much as

[10:30] people were coming with Straight

[10:32] Cash and so even if you had a

[10:34] conventional mortgage you were to

[10:36] disadvantage and you say well how are

[10:37] people getting the cash they were

[10:39] usually using their family members

[10:41] usually using their retirement and

[10:43] usually uh at the last minute switching

[10:45] over to a mortgage which isn't isn't

[10:49] wrong or bad it's just they guaranteed

[10:51] cash you were not going to beat that

[10:53] with a conventional or any other type of

[10:55] mortgage um and other than that they

[10:57] talk about commercial real estate but

[10:59] that's not really what I want want to

[10:60] talk about today so anyway what do you

[11:02] think I mean it's

[11:05] February there's there's all kinds of

[11:08] like just for what I'm seeing and what

[11:10] I'm hearing is there's a shadow

[11:12] inventory of newly constructed homes and

[11:15] you say well how is that possible well I

[11:17] don't know the idea is that even though

[11:20] on the um like homes that our new

[11:24] construction homes aren't usually on the

[11:26] MLS so how do you track them

[11:30] well until they're built there's going

[11:32] to be an occupancy permit but I don't

[11:34] know that they cross reference the

[11:35] occupancy permit with the Lots

[11:37] beforehand so that you would know so

[11:39] there's

[11:40] that um what do I expect to see as long

[11:44] as the prices are high and as long as

[11:46] we're we can't continue to have record

[11:50] employment that's another thing it can't

[11:53] continue down this path so that's got to

[11:55] have some sort of impact you're going to

[11:58] have to have lower prices at at some

[11:60] point in time we're seeing it in some

[12:01] parts of the country a Boom Town like a

[12:03] boom State like

[12:05] Florida um places in Austin apparently

[12:08] not doing as well as they used to so I

[12:10] don't really know when that's going to

[12:13] happen in St

[12:14] Louis maybe it already has happened in

[12:16] St Louis I don't know I don't I mean I

[12:18] have like three buyers right now it's

[12:19] not it's not I'm not doing that well so

[12:24] anyway I don't I don't know I I've

[12:27] thought that this can't continue and it

[12:28] just does it just roles so I guess it

[12:32] can keep going I don't know anyway

[12:34] that's what I have I mean Lawrence Yun

[12:36] is excited he's feeling optimistic about

[12:39] home sales in the United States so I

[12:41] guess I should be with that I'm Going H

[12:44] out thank you for watching thank you for

[12:45] listening and I'll catch you on the next

[12:47] one bye