The Negotiator's Market: Why Now Is The Time To Buy Before Rates Drop | Real Estate Market Update w/ Martin Perdomo

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Ready for a real estate reality check? The extreme market swings we've witnessed for years are finally settling into something resembling balance. In the notoriously volatile Bay Area, median home prices have dipped 4% to $1.3 million, homes are sitting for 30 days instead of 18, and only one in five properties faces a bidding war—down dramatically from the two-thirds that sparked frenzies in 2021.

This cooling trend creates a strategic window for prepared investors and homebuyers. While today's 6.58% mortgage rates have lowered typical monthly payments to $2,668 (the lowest in seven months), buyer demand remains surprisingly muted. The smart money sees this hesitation as opportunity. Sellers don't want their homes lingering for 40+ days, creating leverage for negotiating concessions, closing credits, and rate buy-downs that simply weren't possible during the pandemic boom.

What makes this moment particularly significant are the demographic shifts reshaping the housing landscape. Homeownership among 25-34 year olds sits at just 39%, while nationwide rentership has climbed to 36%—its highest level since 2016. Combined with JP Morgan's prediction of four Federal Reserve rate cuts by year-end, we're looking at a potential strategic sweet spot: buy with negotiating power now in a cool market, then refinance when rates drop. Remember the fundamental truth of real estate: when rates decrease, prices typically increase as affordability improves. Most consumers buy mortgage payments, not houses—meaning this window of opportunity won't stay open indefinitely. As I tell my students: words are loud, but numbers scream. And right now, the numbers are screaming opportunity for those willing to move while others wait. Follow me on Instagram @TheEliteStrategist for more market insights and strategies to navigate this shifting landscape.

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Episode Transcript

Speaker 1 (00:00):
The Bay Area is finally normalizing after years
of extremes.
More Americans are renting, asownership stalls and mortgage
payments are coming down, butdemand is still weak.
What's up, guys?
This is Martin Perdomo, wealthyAF, the Elite Strategist, here

(00:21):
with your weekly real estatemarket update, and we're going
to jump right.
In the Bay Area, one of themost volatile markets in the
country over the last five years, is finally cooling into
balance.
The median Bay Area home priceis $1.3 million, down about 4%

(00:41):
year over year 4% year over year.
The days on the market areaveraging 30 days compared to 18
at the height of 2021.
Frenzy, only about one in fivehomes is facing a bidding war
back from nearly two-thirds in2021.
In the highest cost metros likeSan Francisco and San Jose,

(01:06):
sellers have recalibrated.
If you're hunting luxury flipson long-term holds, have
negotiating room.
You have negotiating room youdidn't have years ago.
Cash buyers in particular aregetting price cuts instead of
escalating clauses.
First of all, I think it's waytoo risky to be buying in this

(01:29):
market.
Luxury flips up.
There is a market for it.
There is a buyer for it.
But if the affordable homes aresitting, luxury flips are
sitting even longer.
Right, with interest rates sohigh.
There is not a lot of buyersfor that.
There never really is a lot ofbuyers for that.
There never really is a lot ofbuyers on the luxury side,
because that's a smallpercentage of of americans that

(01:52):
can really afford those types ofproperty.
But I think for me, I'm not aflipper anymore.
I no longer flip.
However, those that do flip, Ithink that's really.
However, if that's your game andthat's what you're doing right
now, it's definitely a greattime because the data is telling
us.
Nationwide, the home ownershiprate in Q2 sat at 65.8%

(02:18):
Unchanged.
But here's the real story Inthe 25 to 34 age group,
ownership is only 39.
Now, this data here is by redfin.
It's a little bit skewedbecause I've heard I've heard
different data points in 2016 Ijust saw some data point, a
different data point that in2016, the average 30old in the

(02:42):
30-year-old bracket it was a 40%homeownership rate and that
today, 30-year-old bracket, it'sonly 14%.
So I'm not sure where this datais coming from, but we'll go
with it.
This is Redfin's data.
The rentership is climbing inmetros like Phoenix, atlanta and
Tampa, where affordability hasbeen absolutely crushed.

(03:07):
I can speak for Tampa.
That is correct.
In Tampa, roughly 36% ofhouseholds nationwide are
renters the highest share since2016.
For investors, rental demand isnot softening.
If you own single-familyrentals, you're is not softening

(03:28):
.
If you own single familyrentals, you're in the sweet
spot.
Multifamily, even strongerRentership growth means
occupancy rates will stay tightand rents will have support even
if home prices wobble.
This is why Blackstone andother institutions are doubling
down in single family portfoliosright now.
Now boots on the ground and I amsmall in comparison to the

(03:52):
whole market.
However, I am an activeinvestor in the market.
That is not my experience andI'm talking to you.
Know, I have two differentproperty managers in two
different markets and I'mconstantly talking to the
managers.
I'm constantly talking to thelenders Boots on the ground.
I'm on the ground.
I'm looking at my portfolioconsistently.
I got to tell you that that isnot my experience.

(04:14):
It doesn't mean that that's notthe data.
My experience as boots on theground is that rents are
softening in Tampa and up northand in the northeast and the
northeast region of Pennsylvania.
So for me to hear this and mystudents right, I have a bunch.
I have a community of studentsthat are actively buying and
selling and renting real estateand I have real time data with a

(04:38):
small, small portion, I mustsay it's a small portion.
We don't.
We don't have the whole marketcornered, but just from our,
from my perspective rents aresoftening.
We're seeing lots ofconcessions.
So I totally disagree with thispart from Redfin where Redfin
is saying that the rents arestable, and I don't agree there.

(05:00):
They are not.
They are definitely softening.
When you see rent concessions inthe market, if your rent's a
thousand dollars a and I'm goingto give you a month free if you
sign the lease this month whatdoes that mean?
That means that instead of memaking $12,000 a year in rent
from that apartment, I'm onlygoing to make 11.
So if I take that and divide itby 12, I average my rents are

(05:23):
soft, my rents are lower thanwhat they should be.
So I don't see that.
I'm not seeing that myself inthe market, even in Tampa.
Even in Tampa, where placesthat are unaffordable my
portfolio in Tampa we are doingconcessions and there is a lot
of developers and investors inthe market that are doing

(05:43):
concessions.
And if you're in the Tampamarket, you know this.
I'm going to take a guess, awild guess, and I don't know
this for sure, but I'm going tomake an educated assumption that
it's probably like that in theAtlanta market and in those
other markets as well.
Now let's talk aboutaffordability.
The average 30-year fixed rateis 6.58%, down from 7.08% in May

(06:08):
.
That drop translates into atypical monthly payment of
$2,668, based on the medium homeprice, currently the lowest in
seven months.
For context, the monthlypayment at this time last year
was $2,829, the average monthlypayment based on where rates

(06:30):
were last year.
That's nearly $160 a month lessin buyer outflow, but buyer
demand has not roared back yet.
Pending sales are still down1.2% nationwide year over year
and Redfin's report only amodest 2% uptick in tours.

(06:54):
It's definitely a step towardsthe right direction.
2% uptick in tours We'll takethat right.
I'm a real estate guy.
If you're listening to this,I'm assuming you're a real
estate person, or you want to bea real estate person, or you're
looking to buy real estate.
So this right here is leverage.

(07:15):
Retail buyers are stillhesitant, which means you, the
investor.
If you're an investor or abuyer, a regular homeowner, home
buyer can negotiate concessions, closing credits or even rate
buy downs.
So it's a great time to buy ifyou're prepared because you can

(07:40):
negotiate.
I don't believe that the marketwill stay this way for much
longer.
As interest rates come down andwe're expecting there's a 94%
chance based on JP Morgan thatthe rates will come down here in
September that there'll be arate cut and another three rate
cuts.
So we're expecting four ratecuts based on JP Morgan's

(08:02):
prediction, four rate cuts bythe feds.
If we get four rate cuts thisyear, that's an amazing thing.
When that happens, we are goingto see a warming up and heating
of the market.
I think that next year thistime so next spring, summer
we're going to have a hot market.
We're going to have definitelya hotter market than where we

(08:22):
are today.
So prepare if you can buy now,right.
If you can negotiate now, whenthe market is cool, you should
do that now and then refi later.
Most people if you're aninvestor remember most people if
you're a flipper most peoplebuy mortgage payments, not
houses.
So they look at the house first, or they'll look at what

(08:43):
they're approved for and whattheir mortgage payment is going
to be and then they'll go lookat houses in first, or they'll
look at what they're approvedfor and what their mortgage
payment is going to be and thenthey'll go look at houses in
that category.
People buy mortgage payments,not houses.
Sellers don't want their homesto sit for 40 days or longer, so
they are dealing today.
This is why it's a greatopportunity for you to buy.

(09:03):
So that's a wrap.
Here's the playbook from thenumbers.
This week, bay Area medianprice is $1.3 million.
Price is softening.
Seller's realistic Time tonegotiate in high-cost metros.
Caution if you're flipping,because if you're flipping in
luxury homes, just be careful,you're going to sit longer.

(09:24):
36% of households are renting.
According to Redfin.
This means that this generationis stuck at 39% rental demand,
at 39%.
Homeownership and rental demandis your long-term friend.
I am still very bullish onbuying and holding.

(09:47):
When rates go down, my assetswill go up.
It's just a fundamental, guys.
It is a fundamental you need tounderstand.
Rates go up, prices come down.
This is what we're seeing rightnow.
We're seeing softening of theof prices.
Rates come down, prices go up.
This is what you're gonna see.
It is fundamentals.

(10:07):
It's like supply and demand.
Rates come down, prices go up,prices go up.
Sellers demand goes down, right.
Rates come down, right.
Prices go up.
Rates come down.
Remember people buy mortgagepayments, not houses.
So when those rates come down,then sellers can ask for more

(10:29):
for their houses.
Right, buyers come in.
Demand goes up.
That pushes prices to go up.
So mortgage payments are 2668,your typical payment right now
lowest in seven months.
But demand is muted.
Use this moment to buy withleverage while others hesitate.

(10:50):
This is an investor's market.
The numbers prove it.
Words are loud, but the numbersscream.
That's this week's real estatemarket update.
If you want the numbers, thestrategies and my playbook for
navigating this shifting market,follow me on Instagram at the

(11:12):
Elite Strategist.
Stay sharp, stay strategic,stay wealthy.
Catch you next time, peace out.