011925 - Home Solutions Podcast

Episode Transcript

Speaker 1 (00:00):
Buying a home and selling a home shouldn't be stressful. Renters, homeowners,
and investors in southern Arizona work with the Win three
Team powered by Epic Reality because they match buyers with
sellers like the e harmony of real estate buying or selling.
This is where you'll find what you're looking for. This
is Home Solutions on K and ST with the Win

(00:23):
three Team powered by Epic Reality. Now the Win three
Team leader Andy Keel, Hi.

Speaker 2 (00:29):
And welcome to the Home Solutions Show on canis T Radio.
This is your host, Andy Keel. I am with the
Win three Team powered by Epic Realty, and I'm joined
by Jerry Sunt with Cross Country Mortgage.

Speaker 3 (00:43):
Today morning, Andy, how are you.

Speaker 2 (00:45):
I'm doing great. How are you on this fine New
Year Sunday.

Speaker 3 (00:50):
Yeah, Oh, I'm doing great. Thank you nice.

Speaker 2 (00:53):
Well, we've got a few things to talk about today.
We've got some data that has come in from twenty
twenty five for year year end and December that I'd
like to talk about. And we have a few other
things that are in the news that we'd like to
discuss today and talk about some of the things that
are happening in the world, especially with the fires in

(01:14):
LA and what that means for insurance and a few
other things. So I'd like to just kick this off
with some data that we were able to capture for
December and twenty twenty four. And this is more of
the Tucson data where I draw a big square around Tuson.
I go out as far as Red Rock and go

(01:36):
down as far as Green Valley and out about as
far as Meskel and three points on the western edge,
and just try to get a broader view of the
Tucson market. But not going so broad as I get
the data from all of the MLS, which is pretty
much Pima County and the surrounding counties as well, so

(01:56):
it's a little bit more specific to our area. So
what's been happening with listings in December and sales in December, Well,
we've I like to break it down in the different
price ranges. So what happened in December the whole market.
We have four thousand, ninety five new listings, that's about

(02:18):
on par with what we were seeing in December, up
just literally four listings and single family homes. We had
three thousand, two hundred and fifty active listings as of
Actually this was as of the tenth of January, and
how many of those in the different price ranges. Well,

(02:39):
up to two hundred and fifty thousand dollars, we had
sixty single family homes up to one hundred thousand. You
can tell where this is where the market starts to
break open. Two fifty, well, this is under three hundred.
There's three hundred and sixteen active single family homes. Where
you can see just the difference between two fifty and

(03:00):
three hundred really starts to open the market up. And
then we have up to four hundred thousand, it really
opens up. There's fourteen hundred and ninety nine active listings
and up to a million, just about doubles twenty nine
forty eight. And then if we look at over a million,
there are three hundred and eight active listings, and that's

(03:21):
up a bit from last month, and year over year
we're up pretty significantly. We're ranging from about thirty four
percent increased number of listings for single family homes year
over year. Overall, even that price range up to about
three hundred thousand, we have forty six percent increase just

(03:45):
up to two hundred and fifty thousand. So again we've
been talking a little bit about this for a while,
but we do have it's shifting more to a buyer's market.

Speaker 4 (03:53):
It is, and I think you know where we're if
rates continue to increase, I think that's going to tilt
more towards a buyer's side, because you know, obviously simple
math is it'll be fewer buyers in the market, and
that means will be less competitions for housing.

Speaker 2 (04:10):
Yep. And then what actually sold in the month of December.
I was a little bit surprised by these statistics. If
I'm looking at the month of December, the total number
of sales in this area is one thousand, ninety one
and that's that's everything, so that's townhomes, condos, manufactured homes.

(04:32):
If we break that into just single families, we had
eight hundred and sixty seven, which that's up fourteen percent
month over month. So we actually had a pretty pretty
strong December fourteen percent increased sales volume over November. If
we go up to the look at just up to

(04:52):
two hundred and fifty thousand, we had forty five sales.
That's actually down two percent month over month. Up to
three one hundred thousand, we had one hundred and fifty
one sales. That's up three percent more sales than November.
Then if we go up to four hundred thousand, we
have a pretty significant increase. Four hundred and eighty homes
sold in December, up twelve percent month over month, and

(05:14):
then up to a million, eight hundred and thirty two
homes sold, and that's up sixteen percent again month over month.
And then interestingly here it's not a statistically significant number.
We had thirty six sales over a million, which is
actually down fourteen percent, But mathematically we had thirty four
in November, So I don't know actually why it's showing

(05:36):
negative fourteen percent because we had two more sales. So
correct me there, I stand corrected. But anyway, we actually
had a pretty strong November for sales. Were you experiencing
that from your side? Jerry with more.

Speaker 4 (05:47):
Yeah, No, I mean the market was strong up until
the second half of December, and that's when things started
to cool. And I also think, and again it's not
always about mortgage rates, but when mortgage rates started increasing
that it was about that time where seasonally, people you know,
are focus on the holidays. So I think that combination

(06:10):
is why we started seeing the slowing numbers towards the
end of December. Now, remember December sales are written in November,
so that was the December closings were for contracts written
in October November, and that was a very busy time,
almost more you know.

Speaker 3 (06:28):
More active than normal.

Speaker 4 (06:29):
But then after that second half of December is when
things started getting a little quieter. And they've maintained the
quiet and I think part of that is due was
of course to the holidays, but be you know, the
mortgage rates continuing to increase, which is really bucking what
so many economists thought would happen, you know, in twenty

(06:50):
twenty five.

Speaker 3 (06:51):
And we'll we'll dive into those those statistics here in
just a bit.

Speaker 2 (06:55):
Yeah, and I wanted to point out too, I was
actually very busy in December because I had multiple clients
that were trying to buy properties for various tax reasons.
I had one that was looking for a couple and
we were able to accomplish that with ten thirty one exchanges.
And then I had another client that was looking for
multiple properties that we were also able to accomplish because

(07:16):
he had a capital gains. We've talked about that in
previous shows, but we needed to close on a couple
of properties before December thirty first. Yes, so I think
that trend just the year end tax purposes might have
caused some of the market pop a month over month
from November. So I'm going to move on here, and

(07:39):
I'm looking now at the MLS data that was just
released for December and some pretty interesting things that I noticed,
And I'll get to this in a moment, but I
almost see a couple of things that feel like they're
almost in conflict with one another. For example, the market
pricing the media. The median price here for the again

(08:04):
this is MLS data. Now, the median sale price for
twenty twenty four came in at three hundred and sixty
four thousand, nine hundred dollars compared to twenty twenty three
that was three hundred and fifty thousand, So that's a
pretty significant increase year over year. And then if we
look at the average sale price, that is four hundred

(08:29):
and thirty four thousand, seven hundred dollars, and that's up
from four hundred and sixteen four to sixty six a
year previous. So if we look at that in terms
of dollars per square foot, the average went from two
hundred and nineteen dollars a foot to two hundred and
twenty eight dollars a foot here in as we close
out twenty twenty four. So market data is showing that

(08:52):
the prices are still holding pretty steady.

Speaker 4 (08:56):
Now they're holding pretty steady, but they're getting back to
the you know, the point zero three seven, three point
seven percent per year.

Speaker 3 (09:03):
We're getting eerily close to those numbers.

Speaker 4 (09:06):
I mean, it's a little bit above that, but we're
getting close to normality.

Speaker 2 (09:10):
Yeah, yeah, And what Jerry's referring to is if we
if we go back and look at a thirty plus
year history of what's the average appreciation rate, it comes
in about three point seven percent, so that we're getting
back to normal. So, number of sales in December according
to MLS nine hundred and sixty two, which is up

(09:32):
five point six percent from last year. The volume is
up about seven percent, price per square foots up about
two percent. Number of new listings are also up, so
we're getting more activity year over year. And then of
course the median sale and average sale price are both up.
And what's interesting here is the median days on the

(09:54):
market came in down eight from last year. So things
are actually that actually shifted a bit towards more of
slightly more of a seller's market, which I don't know
that I've not seen that quite as much from my side.

Speaker 3 (10:09):
Yeah, you know.

Speaker 4 (10:09):
I mean again, I look at this a bit rear view.
Whenever we look at at you know, statistics, it's a
month past, and you know, Andy, you and I are
always in the trenches every single day, and so we
see newer trends and we're going to talk about some
of these trends in the later on in the show
that are very interesting, like you know what, the deals

(10:30):
that are coming to you that are not quite as
attractive as they were, And when you start to see
things that become a trend, maybe that gives a a
it's not just a one off now now it's something
that maybe we're seeing some cracks in the foundation in
the housing market. And that's what I think we look for,
is what are the underlying trends.

Speaker 2 (10:51):
Yeah, I'm looking at another one here which I still
find this interesting. The days on market. The average days
on market GET for December of twenty four was fifty two,
down three from November, and the median days on market
is actually thirty four, So that tells me that that

(11:14):
also just tells me how important it is to price
price your property well, because if you price it, if
you price it where it needs to be, it'll probably
sell quickly. And that's why the median is, in my opinion,
a fair bit lower than the average. If it's priced well,
it'll sell probably in the first few days and pull

(11:36):
that median down. But if it's not, it could linger
for months and months and months, which is why the
average days on market is a bit longer. So I
want to just touch a little bit on some of
the other data here very quickly. The Northwest region is

(11:56):
coming in at the hottest one hundred and forty seven sales,
up twelve point two percent. Central came in second very strong,
up twenty six percent. North is up pretty significantly eighty
nine sales, which is actually up fifty eight point nine percent.
And then east Side is the fourth hottest section of Tucson,

(12:19):
up about ten percent. So anyway, we are coming up
on a break, so we'll be back in just a moment.
And this is Andy keel And with the Home Solutions show,
and we'll be right back.

Speaker 1 (12:30):
He makes fine and selling homes easy. He'll do the
work so you won't have to stress. This is Home
Solutions with the Win three team powered by Epic Reality.
Here's the Win three team leader, Andy Kio.

Speaker 2 (12:45):
So we were talking a bit about market stats in
the previous segment, and I wanted to continue with that
looking at some additional data. Here we are. I'm now
looking at some rental statistics and I will this that,
in my opinion, this isn't really the best data because
so much of the rental statistics aren't reported to the MLS,

(13:09):
because let's face it, most landlords don't use a real
estate agent and then don't have it go into the MLS.
So it's much more limited data. But I still like
to look at it because I think it bears a
fair amount of significance. Found this interesting. As of December,
the median rental price for a single family home is
eighteen fifty, which is down year over year. December of

(13:34):
twenty twenty three, it was eighteen seventy five. So it
tells me that the rental market is actually softening up
a little bit. And then I'm a little bit not much, yeah,
a little bit. The number of new leases is down,
according to mls. And again take this with a grain
of salt, because not everything gets reported. In fact, most doesn't.

(13:54):
But one hundred and fifty six leases apparently done in December.
That's down about thirteen percent from the previous year. And
again the median lease is down a little bit. What's
interesting that I saw here is the median days on
market for a rental is at forty. Ironically, it's harder
to lease your property than it is to sell it,
by the looks of that, right, If that isn't an indicator, now.

Speaker 4 (14:18):
You wonder, you know, our landlords and Andy, I know
you talk to investors all the time. Are landlords increasing
rents or are they just you know, when someone renews
or lease is coming up, Hey, we're going to keep
your rent the same, just keep the tenet in there,
which you're in impression on.

Speaker 2 (14:37):
That, you know, that's a great question. I mean, many
landlords will habitually try to raise rents every year, and
then there's another subset that are almost afraid to. We
generally do want to raise every year, but in years

(14:59):
like we try not to raise much and we're just
really trying to cover some of the increased inflation costs,
which we'll certainly be talking about shortly. As we know,
the taxes go up usually, and especially the last couple
of years, the insurance costs have really gone up. But
we're also trying to be competitive with the market. We

(15:21):
don't we don't want to start raising prices too much.
A we don't want folks to move, and we don't
want to be obnoxious about it. It still needs to
be fair and competitive with the market. So you know,
when we're looking at looking at the rental prices and
how we do that, we want to keep it a

(15:41):
little bit more competitive than what they could get with
the house across the street. So if they're paying fifteen
hundred and they can go rent something across the street
for fourteen hundred, we're probably too high. But if they're
paying fifteen hundred and the next best thing they could
rent is you know, sixteen or seventeen, it's chances are
they're not going to be moving unless there's a family
change or a geographic change where they have to make

(16:03):
that move interesting. So some of the other stats here
active listings now, and again we're talking rentals. If we're
looking based on price, anything over three thousand dollars a month,
there's one hundred and twenty three days average market time

(16:24):
if we break over three thousand dollars a month, makes sense, Yeah,
one hundred and five active listings. So that's kind of
the point where we're getting into the luxury market and
things really really slow down. And I'm looking at this
graph where if we go up to three twenty nine
to ninety nine a month, technically the average market time

(16:46):
is about fifty six days, and that's pretty consistent until
you break that three thousand dollars a month barrier, and
the fifteen hundred to nineteen ninety nine a month is
where the bulk of the activity seems to be. There's
one hundred and eighty eight active rental homes for rent
in that price range right now, and then drops to
ninety one when you get over two thousand to twenty

(17:08):
four ninety nine a month.

Speaker 3 (17:09):
So interesting, Yeah.

Speaker 2 (17:11):
Seems like that tends to be the sweet spot. Median
rental prices per month again, eighteen ninety five is what
we're showing here, And what's the price per square foot
on a rental well ending the year at one hundred
and twenty I'm sorry, a dollar twenty nine per square

(17:32):
foot is the average rental price. So and not surprising.
If you look by bedrooms, a four bedroom is about
twenty one hundred median, a three bedroom is eighteen twenty five,
and a two bedroom is about fourteen hundred. So that's
kind of our rental market in a nutshell.

Speaker 3 (17:54):
Very good.

Speaker 2 (17:55):
So, Jerry, what are interest rates doing?

Speaker 3 (17:58):
Well, they're not.

Speaker 4 (18:00):
But what they're doing, they're not doing what people predicted
they would do. So you know, again we're early into
the new year and we're already starting to push back
forecasts or tear up the the the forecast sheet. So
you know, I always look when when things change abruptly,

(18:20):
you always have to get laugh a little bit because again,
it is so difficult to predict where mortgage rates are
going in the near term. And this question I get
asked every day, and the reality of it is is
that the brightest minds on Wall.

Speaker 3 (18:35):
Street don't know where it's going every day, and it
really is lock and step with inflation.

Speaker 4 (18:40):
Well, you know what happened here this past week is
the job support came out and it came out gangbusters
better than what you know, all most analysis and economists
were predicting two hundred and fifty six thousand jobs were created,
the unemployment rate came down to four point one, and
it really showed a you know, a healthy jobs market.

(19:04):
Now you could say, well, a lot of those jobs
were part time or seasonal retail. True, we see that
every year, but it is still it was a strong number,
and it was it pushed back the Feds the anticipation
that the Feds will not be cutting rates until at
early as June, but maybe even as late as September.

Speaker 3 (19:27):
There's even some people calling that the Fed it may
have to raise rates.

Speaker 4 (19:31):
Remember we just cut rates a full point over since September,
so you know, wow, if the Feds had to raise rates,
which I don't think is going to happen, but you know,
there are people talking about that now. It's again the
idea that of slow and steady, that rates are just
going to come down on all borrowing costs is not

(19:52):
coming to fruition. And it's just simply because inflation is
hotter than expected and the the employment situation is tighter
or better than expected.

Speaker 3 (20:04):
Now will that change possibly?

Speaker 4 (20:06):
You know, most of the forecast expected rates to start
falling in the like right around March to you know
the end of first quarter beginning a second quarter, so
we still got a couple months before that happened, so maybe.

Speaker 3 (20:18):
It'll still That just tells us there'll be.

Speaker 4 (20:20):
A softening in the economy during those next few months.
But man, right now it is mortgage rates have moved higher.
They're back above seven percent, and there's talk that they
could be hitting seven and a half percent very very soon.

Speaker 2 (20:35):
Yeah, and again that's because I think last week one
of the big pieces of news that pushed the market
higher was a good unemployment report, and again, good news
for the economy is usually bad news for interest rates exactly.

Speaker 4 (20:48):
And you know something that the devastating buyers in California
is now being talked about how that will affect housing nationally,
And really it boils down to insurance. There is a
lot of private insurers that backed out of California over
the last few years. And I know we're going to
talk a lot talk more about this over the next

(21:09):
few segments, but that's having a big impact because people
are saying, well, insurance because even though it was isolated
in California, the damages, if you're a national carrier, you're
probably going to raise your premiums. You know, over the
country to cover those losses, and something this severe. A

(21:30):
lot of times losses can be you know, kept in
a regional area, but this was a big loss. So
if you are if you're an insurance company that had
a lot of exposure to California or to southern California,
your rates may be going up.

Speaker 3 (21:44):
And again that's.

Speaker 4 (21:46):
Just going to push overall expenses for housing even higher,
which again is inflationary.

Speaker 3 (21:54):
Which it'll be nice when we get to a point.

Speaker 4 (21:57):
Where where we say deflationary. But insurance is one of
those things. In the twenty twenty four one of the
biggest movers of expenses in the household was it was
insurance for both you know, auto and for home. And
it doesn't look like insurance is going to be coming

(22:17):
down anytime soon because the cost of construction is going
to continue to rise simply just because the cost of
labor is going to go up.

Speaker 2 (22:27):
Yeah, exactly. I just every time I look at the
inflation rate brick broken down by sector, every time I've
seen it in the last probably eighteen months, the leader
for that is insurance cost in double digits.

Speaker 3 (22:43):
Yeah. So you know it's.

Speaker 4 (22:46):
Interesting, right I you know, of the camp that I
don't think the economy is as healthy as it seems.
But you know, whenever we have an opinion, eventually we're
going to be right. It's about the timing of when
we're right. You can wrong for a long time before
you know, it's like, eventually the economy will turn. But
it's I just you know, when I talk to people

(23:07):
every day, it's I see that a lot of people
have are just you know, it's it's paycheck to paycheck now.
They they've spent their savings from the pandemic, and you know,
they've actually overextended themselves with credit cards and now it's
becoming much more difficult. And if it prices and if
inflation does stay sticky, uh, and we see that over
the next six months, I think that's going to have

(23:29):
a big impact on the on the economy.

Speaker 2 (23:31):
Yeah, I agree, And frankly, I don't see the inflation really.
I see it coming back under control. But the damage
has already been done. And if we even if we
get it back to normal, we've already seen that that
big bump over the last couple of years, and we
have that hangover of all the COVID money that was
put into play. And I think it was. For the

(23:55):
most part, I think we overdid it a bit, but
in the in the beginning time, there is just an opinion.
Of course, I think it was very necessary, and I
applaud the decision that the Federal Reserve really made the
borrowing easier and really loosened the purse strings back up
at the beginning of COVID, because it could have been
a very, very different thing. You remember those days, Jerry,

(24:19):
the beginning of COVID in twenty twenty, we actually had
a spike and interest rates up up from where we
were before the softening happened, and it was a really
painful and scary about forty five day period before the
federally intervened. But at any right, we are coming up
on a break here. So this is Andy Keel with
the Home Solutions Show, and we will be right back.

Speaker 1 (24:41):
He doesn't want to list your home, he wants to
sell it. This his Home Solutions with the Win three
Team powered by Epic Reality. Here's the Win three Team leader,
Andy Keel.

Speaker 2 (24:53):
Hi, and welcome back to the show. This is Andy
Keel with the Win three Team powered by Epic Realty,
and I'm joined again by Jerry Sunt with Cross Country Mortgage.

Speaker 4 (25:04):
You know, we were in the second half or second segment,
we were talking andy about you know, interest rates, and
now you know, we're seeing rates definitely north of seven
and thirty year.

Speaker 3 (25:15):
Fixed mortgages, I should say, and could be.

Speaker 4 (25:18):
Pushing back to seven and a half, which is the
highest we saw since last May. Will that affect housing
in the next few months. Maybe we're finally past the
point where we when there were such extreme going from
ultralow to you know, seven to eight percent, that was
a big shock to the system. Maybe we're just all

(25:38):
now accepting of that, that that is the new norm,
and maybe it'll be a strong housing season. I just
I'm skeptical of that because I do think it will
impact so many buyers and their ability to buy, which
now again rates may come down, and they are predicted
to come down towards you know, the latter spring, you know,

(26:00):
May June, but in the next few months this may
pause for a time period.

Speaker 2 (26:05):
Yeah, and that actually brings me into something I wanted
to talk about. With inflation and things being a little
less affordable. We actually have a client one of my
agentsies working with who is struggling a little bit. Her
story is she has been faithfully renting from the same
place for well over twenty years and the complex just

(26:29):
sold out to her words a California investor, and they
came in very quickly and raised her rent from twelve
hundred to fifteen hundred dollars a month, and that was
a pretty pretty significant increase. So she decided that it's
time to go out and look at something to buy.

(26:50):
So she was able to get a pre approval. This
was for about a two hundred and ten thousand dollars purchase.
And I wanted to clarify what that means a little
bit because we need to take a little deeper dive
when you're really trying to get the best possible property
for that type of situation. We really need to dive

(27:11):
into the numbers because you know, two ten doesn't necessarily
mean too ten. That could mean one ninety, it could
mean two thirty. And I'll let you explain that to
the audience here in just a moment. But she was
basically qualified for about sixteen hundred dollars a month payment
with an FAHA loan. And it's so important to really
fine tune these numbers because the number we're looking for

(27:33):
is the monthly payment not the purchase price exactly.

Speaker 4 (27:36):
I always tell people when I prequel them, and if
they're getting to the upper end of their range, their
payment can be no longer than X amount. And you
know a lot of times real tours want to know
purchase price, they don't want to know payment. But insurance
can vary, property taxes can vary, hoa's can vary, and
you know, if you have an HOA that you know,

(27:58):
let's say someone's approved for we say two hundred, but
then they look at a condo for that's that's one
ninety five, but it has a two hundred dollar HOAP. Well,
now they're not qualified to buy that because that HOAF
affects the payment and that's included in the dead to
income ratio.

Speaker 3 (28:17):
So so frequently, you.

Speaker 4 (28:19):
Know, I go into, well, the payment cannot be any
higher than X amount, and that's what we need to
look at when someone's out looking.

Speaker 2 (28:26):
Yeah, and it's really interesting because we were looking for
the East side of Tucson and it just radically varied
because there's actually some half duplexes that are available in
that price range that have no HOA and then we're
comparing them to things that had condos that had a
two hundred plus dollar a month HOA. And I mean

(28:47):
that what's two hundred dollars a month translate to from
a purchase price point of view, Jerry about forty thousand.

Speaker 3 (28:54):
Yes, that's about right.

Speaker 2 (28:56):
Yeah, so it literally could have that big of a
variance in range. So we really need to fine tune
taxes HOA because is she qualified for two twenty or
one eighty? Well, it depends, but that's why it depends.

Speaker 4 (29:10):
And you know, one thing that can be helpful, especially
with people first time home buyers is and again it's
something that people don't know a lot about, but it's
called the MCC tax credit where you get a tax
credit of two thousand dollars a year, but an underwriter
can use that as income and that will conceive it
can give a borrow about one hundred and sixty dollars

(29:31):
a month in additional income for qualifying.

Speaker 3 (29:34):
So there's these you know that may be a way
to get this.

Speaker 4 (29:37):
Particular buyer to be able to buy a little bit
more house or you know, if it has an HOA,
maybe it offsets it.

Speaker 2 (29:45):
Yeah, And again why it's so important to work with
a knowledgeable lender on these things, because when you're really
just that type, a few dollars a month in payment
means potentially all the difference in the world and might
mean being able to buy the right property, the right
home or not. Because if we're looking at things that

(30:06):
are two twenty and pushing that upper end of the range,
we might have to come in with the hard ceiling
of two ten and really negotiate more. And that's just Hey,
this is the best we can do. We're not trying
to come in lower be insulting to the seller, but
this is all the buyer can qualify for. I'd like
to change gears a little bit and talk a bit
more about the insurance situation and especially with all the

(30:30):
California wildfires and what is that doing to the insurance
and the pricing, not just in California but across the nation.

Speaker 4 (30:38):
Well, and you know, the California fires such a tragedy,
But there was an article Andy, I had sent you
about a week but ahead of that, before the fires
have broken out, and I said, you know, this was
something we really should be talking about, and it was
the hidden cost of increased housing, and it was a

(30:59):
deep dive into how the cost of housing is going
to go up due to insurance. And it was again
this was before the wildfires actually broke out, and then
you know, obviously the devastation happened, and it's like, man,
this what this article was talking about is exactly what's
going to come to fruition and that you know, you've

(31:21):
got some of the big national carriers that are a
if they were insuring homes in southern California had a
big concentration. They they you know, will they be able
to make it? Everything that I've read so far is
that yes, they will be able to make it. But
the idea of what will it cost to have insurance,

(31:44):
especially in the upper end homes or in a high
risk area, which now this changes the game of high
risk area? Who thought you know, part of the where
these fires broke out was all due to the wind.
It was just the perfect storm of how this aw
this devastat happened. And the cost from the billions of

(32:04):
dollars just to replace. But the housing, the cost of
housing is going to be shed over by all of
us because I think our insurance is only going to
go up due to this situation.

Speaker 2 (32:15):
My under my very limited understanding and talking to our
insurance carrier, which is State Farm. I know State Farm
and Nationwide actually pulled out of California altogether, I think,
at least as far as new policies go.

Speaker 3 (32:29):
Well, yeah, and it's funny not to look at things.

Speaker 4 (32:32):
We could say that, oh, we're not being sensitive to
the issue because it was a devastating, awful event that
has taken place.

Speaker 3 (32:39):
But from a business perspective, if you're.

Speaker 4 (32:42):
Trying to issue an insurance policy and you're saying, hey,
I need to charge more to cover my risk, and
regulation State Regulation says no, we're not going to let
you charge that. And they just said, well then fine,
we're not going to sure in your state anymore.

Speaker 2 (33:02):
Yeah, and I think what you're referring to, and I
could be a little bit off on the percentage, but
California enacted a law I think about two years or
so back that said the insurance companies are only allowed
to raise their rates x percent. I think it was
around five And with all the trouble happening out there,

(33:22):
the insurance companies said, we can't be profitable with only
raising this much. We have to raise more. So it's
the state trying to control a market again. And usually
when when you have a government entity trying to control
a market, it doesn't farewell.

Speaker 3 (33:36):
It never works out.

Speaker 4 (33:37):
So, you know, it's a very complicated, sad situation. But
we've been you know, we've seen this time and time
again with the floods in the South that we saw,
you know, earlier this year, and we keep seeing these big,
you know, devastations, and the takeaway is insurance for all
of us is going to go up. And how how

(34:00):
that directly affects housing is you know, we don't know
by what percentage or anything else, but it's as of yet,
but it will just make housing that much more expensive.
And the big takeaway is is that this is delaying
or deferring first time home buyers to being able to
buy their home.

Speaker 3 (34:19):
And what that.

Speaker 4 (34:20):
Does from a long term perspective is that they're not
able to build that wealth that for so many previous
generations have been able to do. Like you buy your
first house in your twenties and by the time you retire,
you know that house, you know, or multiple homes that
you've bought and sold over your lifetime, has created your
nest egg, you know, sixty five percent of your retirement

(34:41):
for most of us, and now that's just being pushed
back and they will not be able to to that
time value of money will not be able to work
in their favor.

Speaker 3 (34:52):
And what does that look like for their retirement? You know?

Speaker 4 (34:55):
Is it all about cryptocurrency? Is going to make up
the difference?

Speaker 3 (34:58):
I don't know.

Speaker 2 (35:00):
I have an interesting little item I pulled up here,
and I'm going to give you a quick quiz, Jerry.
I looked up just to see how how much of
a mass exodus is happening in California. And these numbers
are not just specific to the wildfires. I've looked at
these numbers over the years and they haven't varied as
much as you might think. But a little trick that

(35:22):
we've used is if you go to u Haul's website
and just look at a one way trip for a
various truck. So I'm going to quote a twenty six
foot truck from Tucson to LA. What do you think
that the cost of a twenty six foot truck costs me?

Speaker 3 (35:38):
I want to take a Center Bucks. I don't know.
I've moved out to California, so I don't know.

Speaker 2 (35:43):
So again, according to U Haul's website, a twenty six
foot truck would cost me three hundred and seventy four
dollars from Tucson to LA I want to take a
guess on what it would be the other direction.

Speaker 3 (35:55):
Three thousand.

Speaker 2 (35:56):
Not a bad guess, not quite that bad, but just
shy is seventeen one hundred a little over four times
more expensive. Sixteen ninety seven is the quote. So the
difference between a one way trip there and back is
sixteen ninety seven versus three hundred and seventy four. And
they use these algorithms to try to get the trucks
where they need to be, so they price where it

(36:18):
is so you can really get a feel for are
people moving into an area or out? So I just
I find that fascinating.

Speaker 4 (36:25):
But you know, another tibit we'll talk about after the break,
but airbnbs in southern California prices are going through the
roof because there is now demand people that have lost
their homes or been displaced or on evacuation alert and
they have to find temporary housing.

Speaker 2 (36:41):
Oh yeah, that's very true as well. So anyway, we
are coming up on a break. This is Andy Keel
with the Home Solution Show, and we'll be right back.

Speaker 1 (36:51):
This is Home Solutions with the Win three Team powered
by Epic Reality on KNST. Here's the Win three Team leader,
Andy Keel, Hi.

Speaker 2 (37:03):
And welcome back to the show. This is Andy Keel
with the Win three Team powered by Epic Realty. I
can be reached at five two zero nine five nine one,
and I'm again joined by Jerry Sunt with Cross Country
Mortgage and Jerry, if you'd share your number one more time.

Speaker 4 (37:21):
Sure five two zero three seven zero nine five seven
six and I have.

Speaker 2 (37:27):
A few announcements I'd like to start off with. Just again.
Wanted to note that if you are a real estate
agent or thinking of becoming a real estate agent, the
Win three Team is hiring, feel free to reach out
to me directly. Andy Keel again five two zero five
three nine nine five nine one. I'm always interested in

(37:48):
audience feedback, so feel free to send me an email
with any questions or thoughts for future shows. Me my
name again, Andy A. N. D. Y Keel k I
E L at the Win three Team dot com. That's
win the Number three Team dot Com. Feel free to

(38:08):
reach out and we also have a client appreciation event
coming up on February twenty second that will be at
the Hermitage No Killcat Shelter, which is a local not
for profit that's very near and dear to me. I
am actually on the board of directors for the Hermitage,
and we're just going to be doing a fun, family

(38:31):
friendly event there. Adopt a cat, just come hang out,
see the team, see see the kiddiecats. And we'll have
some fun things there, including a food truck and some
family friendly events. There'll be more to come on that.
That will be the afternoon of Saturday, February twenty second
coming up. And also I just have a very very

(38:52):
special show coming up February second. We will be talking
to Sharon Lecter and she is the co author of
Rich Dad, Poor Dad, as well as over twenty other
best selling books, the sequel to Think and Grow Rich,

(39:13):
which is called Outwitting the Devil. We're going to be
talking a lot about just financial literacy andious various topics
like that, So very special guests, you know, put that
on your calendar, please listen to the show February second.
That's going to be a very special one. So one
final thing I wanted to note. We were talking a
little bit about that last segment about our buyer that

(39:35):
was just really looking for homes in that tougher price
range and theory up to about two hundred and ten
thousand or so, and we're still working with her to
find something, but she's literally going on our website every day.
And that's the win three team dot Com and the
listening audience always has this ability as well. If you

(39:57):
want to go to our website and effectively we can
mirror an MLS search and really just look at what's
available out there on the open market. And we also
have a tool on there where we can get a
pretty good idea what your home would be worth without
having to reach out and call. So if you have
any interest in seeing what your home is worth or
what's out there, just go right to our website, the

(40:19):
Win three team dot com and you can do a
search on your own. It's pretty user friendly. So with that,
I wanted to talk a bit more. I think we
have some pretty exciting announcements with Lighthouse coming back, don't we, Jerry.

Speaker 4 (40:33):
We do so, Lighthouse version seven, and I think why
this one's particularly exciting is that when Lighthouse version six
came out, they said that was going to be the
last round.

Speaker 3 (40:46):
So, but they've come back in there.

Speaker 4 (40:48):
There is a round seven just because it's been so
successful as a downpayment assistance program, the demand is so incredible.
This next round, version seven, will come out in March.
So if you are serious about buying a house and
you're a first time home buyer to find as someone
who's not owned a home for the last three years,

(41:10):
you really need to, you know, get pre approved now,
get out and start looking because the funds. If we
look at the last few rounds of lfehouse, the money
and it's about twenty five million dollar trant has been
absorbed in a matter of in one case hours and
the others took Other rounds have taken only a few days.
So people are reserving these funds very very quickly. So

(41:35):
you really want to get approved, get out looking in
February so you can take advantage of the program when
it rolls out here in early March.

Speaker 3 (41:42):
Yeah.

Speaker 2 (41:42):
I don't think we can just stress that enough that
when that money becomes available, it goes very very quickly,
so you can't just say, oh, it's out there, let's
go apply. By that time, it's probably too late, isn't it.

Speaker 4 (41:54):
You've got to ben Yeah, you got to get out
looking mid February, get into tracked mid you know, by
end of February. And so that you have because you
have to have that contract in hand. You have to
have a signed contract to be able to reserve those funds.

Speaker 2 (42:10):
Now, is that is that an interest rate or is
that some down payment assistance or a combination of both.
How does that program work?

Speaker 4 (42:18):
More specifically, Yeah, the the interest rate has not been established.
That will be established in late February, So as soon
as we.

Speaker 3 (42:25):
Have that, we'll let you know. But this next round
is not the interest rate's not been defined as of yet,
but it is. It's four percent in down payment assistance.

Speaker 4 (42:37):
And now the drawback to the program is that you
have to you're not able to refinance that rate, or
you're not able to if you sell the home within
five years, you have to pay that money back.

Speaker 3 (42:51):
So you are you do have to keep that rate
for five years.

Speaker 4 (42:54):
But when you do the math, and you do you know,
if you were to use a three hundred and fifty
thousand dollars purchase price, you know, if you use four percent,
that's close to fourteen thousand dollars. And if you do
the monthly math, the rates on this program has always
been very aggressive and lower than market. So when you think, gosh, well,

(43:15):
I don't have the ability to refinance.

Speaker 3 (43:17):
What if I'm stuck with this rates and rates.

Speaker 4 (43:19):
Go to you know, three percent, Odds are they're not
going to go to three percent, not unless something terrible
happens in the economy. So if you just use averages
and say, oh, well, let's say the next round is
it's six percent and mortgage rates go to five and
twenty twenty six or twenty twenty seven, when you look
at the monthly savings versus getting fourteen thousand a free money,

(43:43):
it makes the comparison is not even worth discussing. It
is so much of that fourteen thousand dollars is really
really valuable. And the idea that, oh, I don't want
to use those funds because I won't be able to
reefinants is not typically prudent because all the numbers I've run,
it makes sense to take advantage of the money.

Speaker 2 (44:04):
Yeah, and the more we get economic data, the more
I'm beginning to just see that I'm questioning whether or
not we're going to see that that five percent we
were talking about recently, and hopeful for but you know,
there's no guarantees out there, and right now it's looking
like we're probably going to be in the seventh for
a fair bit of time, or at least high sixes.

Speaker 3 (44:26):
Yeah.

Speaker 4 (44:26):
No, I mean, you know, most economists peered back their
forecast to that. You know, when we look at you know,
the National Association of Realtors, to Mortgage Bankers, Association of
Wells Fargo City, US.

Speaker 3 (44:40):
Bank, a lot of these big entities.

Speaker 4 (44:43):
Their forecast was a thirty year fixed mortgages are going
to probably be right around six percent to low sixes,
you know, in twenty twenty five. Now, again, a lot
of these forecasts came out a month ago before this
big spike up that has we've just seen in the
last few few days weeks, so, you know, but back
in September, the forecast was rates were going to drop

(45:05):
to five percent, and people have paired back to six percent.

Speaker 3 (45:12):
So I do think you're right, Andy Is.

Speaker 4 (45:13):
I think we're going to be somewhere right around six
to six and a quarter on a best case scenario
sometime this year.

Speaker 2 (45:20):
Yeah, and anytime you can get some down payment assistance money.
I mean, the hardest part that I see is just
literally getting your foot in the door, getting that first home.
And I just saw that statistic we talked about a
few weeks back from Fred. The government website put out
the data that the net worth difference between a homeowner

(45:41):
and a renter. It just completely blew my mind. The
average net worth of a renter was ten thousand dollars
and the average net worth of a homeowner was many
hundreds of thousands. I forget the difference, but it was
like something to the tune of like thirty five times
more likely or better as a homeowner. Just that one
really surprised me.

Speaker 4 (46:01):
No, I mean, you know, the fundamental building block. There's
two ways to build wealth in this country. I mean
there's many, but the two traditional ways to build wealth
is real estate and stock market. And with that you've
got to be able to and when we buy real estate,
that doesn't need doesn't mean a person has to own
twenty different properties. They can own one, live in it
for a few years, sell it, take the proceeds, buy another,

(46:26):
live in it, take the proceeds, buy another, and they're
buying nicer, bigger homes each you know, go moving up
each time they move up in the purchase price, and
then by the time.

Speaker 3 (46:36):
They retire, they start to downsize and by doing so.

Speaker 4 (46:41):
It's just when you look at the time value of
money using a simple three point seven percent appreciation over
thirty or forty years, the numbers are staggering.

Speaker 2 (46:51):
Yeah, and it's just it really is just simple math.
If you buy an average or even a median price
home and two. So I think that we just said
that was in it's a little higher than this, but
let's just use three fifty for for a nice round number.
That equates to what about fifteen thousand dollars a year

(47:15):
at an average appreciation rate at three point seven that's
just for staying and paying and making your payment, the
value of the house goes.

Speaker 4 (47:23):
Up absolutely because remember you're investing money on Let's say
you've got a three hundred and fifty thousand dollars home,
and let's say you put you know, three and a
half percent down going faha, you know, your investment on
that is going to be.

Speaker 3 (47:38):
Twelve two d and fifty dollars. But the.

Speaker 4 (47:43):
Entire size of the asset is appreciating it that three
point seven percent. So the three hundred and fifty thousand
is what's going up not just your your investment, and
that's why your rate to return on your investment is
so staggeringly good.

Speaker 3 (47:59):
Yeah, just it.

Speaker 2 (48:00):
It's so valuable because you know, for that lower down payment,
you could have a first year appreciation that's well over
one hundred percent of your initial investment of you using
a product like an FHA loan or even like a
five percent down conventional So it's just it's staggering how
quickly that can go. And plus you're also getting the
principal paydown. So again, just the wonders of home ownership

(48:25):
and the benefits of using the leverage. There's obviously drawbacks
to that as well, but it can be a good
thing if done properly. So at any rate, we are
coming up at the end of the show. Thanks so
much for listening on this Sunday, and we look forward
to hearing having you back next week again. This is
Andy Keel and Jerry Sunt with the Home Solution Show.

(48:49):
Talk to you next week.