Real Estate Reality Check

In episode 196 of the Martini Mortgage Podcast, we’re serving up a hefty dose of reality in real estate. Host Kevin Martini, a Certified Mortgage Advisor with the Martini Mortgage Group, tackles the often misleading perceptions surrounding the housing market.

Kevin starts with two fundamental truths about quality assets and economic cycles, setting the stage for a deeper exploration of current market dynamics. Are we heading for a recession? Is a housing crash imminent? Kevin breaks it down, debunking myths and offering a clear view of the real estate landscape.

Discover why the ‘lock-in effect’ keeps the housing market stable, how the inventory shortage drives prices, and why demand continues to outstrip supply. Kevin also dives into ‘sectoral recessions’ and explains why your personal economic feelings might not align with national data.

Whether you’re a homeowner concerned about your property’s value or a potential buyer wary of market conditions, this episode provides the insights you need. Kevin wraps up with a compelling argument for why now might be the best time to lock in your home price despite higher mortgage rates and introduces the strategy of ‘marrying the house and dating the rate.’

Tune in for a no-nonsense, fact-based reality check on real estate, and arm yourself with the knowledge to navigate these uncertain times confidently. Listen now to episode 196, “Real Estate Reality Check,” on the Martini Mortgage Podcast.

 

Kevin Martini | NMLS 143962 | Certified Mortgage Advisor | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | [phone] | www.MartiniMortgageGroup.com | [e-mail] | Equal Housing Lender

 

Episode Transcript

(00:00):
Let's be real. Your perception shapes your perspective. Many folks have a perception of

(00:08):
the house market that doesn't quite match up with the reality. I get it. The headlines
can be head spinning. One day is recession. The next day it's a housing crash. But here's
the thing. Headlines rarely paint the whole picture. Welcome to the Martini Mortini Podcast.
I'm Kevin Martini, a certified mortgage advisor with the Martini Mortini Mortini Group. And

(00:33):
this is episode 196, which I am calling the real estate reality check. Before we dive in,
let's get two things straight. First, no quality asset, whether it's stocks or gold or real
estate, goes up endlessly. They have their abs and flows, sometimes stagnation or even dipping

(00:59):
before hitting new highs. Second, economy cycle through expansion, peak, contraction and troughs.
Contraction means recession. And while the word might sound very scary, it's just a normal part
of the economic cycle. Not all recessions are like the financial crisis of 2007 and 2008. And the

(01:27):
recession doesn't automatically spell a housing crash. In 2007 and 2008, the housing crisis triggered
the recession, not the other way around. Today, we're looking at home prices, inventory, mortgage rate,
and inflation. It's natural to wonder about recession. But remember, quality assets like real estate

(01:55):
tend to thrive even in recessions. So what's a recession? Simply put, it's a widespread economic
downturn, often defined by two consecutive quarters of negative GDP. As of now, the last seven quarters
of GDP have been positive. So by that definition, we're not in the recession. But economic data might

(02:23):
not match what you're feeling. Sometimes a specific sector experienced a downturn without
dragging down the entire economy. This is known as a sectoral recession. Right now, you might be a
homeowner worried about your home's value or someone looking to buy fearing a market crash.

(02:47):
Let's clarify, a housing crash is a rapid decline in values, typically a 20% or more drop. A
housing crash? Highly unlikely. Here's why. The lock-in effect keeps homeowners holding on to their
properties with lower mortgage rates. Millenials are buying homes and the population growth is back

(03:14):
to pre-pandemic levels. This all adds up to a housing deficit of around 4 million units. With
demand outshipping supply, a crash is not in the cards. Here's the Kevin Martini breakdown.
We don't have enough supply to meet demand. So home prices won't fall regardless of where mortgage

(03:38):
rates are. When demand exceeds supply, prices go up. This is not just my opinion. It's backed by the
housing market economists who don't foresee a crash in 2024 or beyond. To put it plainly, there's a
significant inventory shortage that will not be fixed overnight, maybe not even in decades.

(04:03):
As long as there's a shortage of homes, prices cannot crash.
Focusing on inventory, the National Association of Relatures reported an average of 5.3
months supply from 1999 to 2023. As of now, 2024 has an average of 3.3 months. A balanced market

(04:30):
is considered 6 months supply, which we have in seen since 2011. So we're in a seller's market.
This term indicates a supply level, not a signal when you should buy or sell.
On home prices, in some markets, prices might pause but won't plummet.

(04:53):
Most markets will see modest to typical annual appreciation. Based on the data, I believe that
today's real estate prices are at the lowest we'll see in my lifetime. It's a prime time to lock
in the home price, whether you're a first time home buyer or looking to move up. Yes,

(05:18):
mortgage rates are higher now, so is a perfect time to marry the house and date the rate.
Sure, it's a cliche, but it's meaningful. Lock in your home price now and when rates drop,
and I believe they will, you can refinance. There are also strategies to secure tomorrow's rates

(05:40):
today, but that's for another episode. Thanks for tuning in to episode 196 of the Martini
Mortgage podcast called real estate reality chat. If you have questions, I'm here for a confidential
no judgment call. I'm Kevin Martini and you can reach me at 919-238-4934. Now before I wrap this

(06:09):
episode of the Martini Mortgage podcast up, I have to make those legal folks happy. So I am Kevin
Martini. I am a certified mortgage advisor and producing branch manager, animal S143962
with the Martini Mortgage Group at Goldstar Mortgage Financial Group Corporation, animal S3446,
equal Cylinder, the primary purposes podcast series is to inform, entertain, and educate the

(06:34):
information opinions and recommendations presented in this podcast series that's not constitute legal or
other professional vice opinions or endorsements of any kind.