050723- HOME SOLUTIONS PODCAST

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Episode Transcript

(00:00):
Buying a home and selling a homeshouldn't be stressful. Renters, homeowners,
and investors in southern Arizona worked withthe Win three team powered by e ESP
Realty because they match buyers with sellerslike the e harmony of real estate buying
or selling. This is where you'llfind what you are looking for. This
is Home Solutions on K and ST. It's the WIN three team powered by

(00:22):
EXP Reality. Now Bob zach Meyersbecause I'm going on the Day This Place
show. Good morning, and welcometo the show. I'm Bob zach Meyer
of e XP Realty. I'm joinedby Jerry Sunt of Cross Country Mortgage.
Morn and Jerry. Morning Vibe.How are you. I'm good. I'm

(00:44):
good, as you know we were. I was in Las Vegas last week.
We did the show remote you werehere, but I wasn't. But
there's a lot of news that hascome out, and the one thing we
didn't do last week was talk aboutthe local market numbers. I mean,
I can pull it from anywhere,but we just had a lot of other
stuff to talk about. What hashappened in the last two weeks with inventory

(01:06):
in Tucson, so we had totalhomes for sale on the last week of
April, actually a second last weekApril was two thousand and twelve, and
I said, this is the weekwe're going under two thousand. Well,
we are now at nineteen hundred andfifty total listed everything on the market for
sale, and when you break itdown into single family homes, the nineteen

(01:30):
fifty drops to one thousand, sixhundred and thirty three single family homes everywhere
three thousand square miles. So thatgoes all the way from Red Rock to
south of Green Valley, from almostto Benson and all the way out to
Aho or you know. It's it'sa huge area. And we have sixteen

(01:51):
hundred and thirty three houses for salein three thousand square miles, so like
one house every two square miles.That is that is just getting two love
is what that is. It's veryvery low. So let's talk about price
point fifteen houses under two hundred thousand, So that has stayed amazingly resilient.
I mean that number back in Marchseventeenth was the same. If I look

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at two hundred and fifty thousand dollarshomes, we are down to thirty five
houses under two fifty which includes ofcourse the fifteen under two hundred, and
then this is the big change underthree hundred thousand, and we go back
to right before Thanksgiving, we peakedat four hundred and five houses for sale
in Tucson under three hundred thousand dollars. That four oh five is now down

(02:36):
to one hundred and twenty eight.And it's funny with many first time home
buyers, Yeah, that is they'rekind of like, that's what they want
to buy around, that's their range. Sure is, you know, they're
looking at two seventy five to threehundred, and when you think about that,
there's only one hundred and twenty eighthomes to meet that demand. That
is just a very low number.And when you look at hey, wait

(02:57):
we had four hundred and five,the supply of homes under three hundred has
dropped by sixty eight and a halfpercent, so more than two thirds are
gone. And that's just since Thanksgiving, so you know, about six months
ago, I mean a few moreweeks will half six months. And then
under four hundred thousand, we arenow down to six hundred and seventeen homes

(03:20):
under four hundred, So that's apretty big jump from three hundred and four
hundred. There's almost five hundred homesdifference in there, but still out of
When you look at the total inventoryof single family home sixteen thirty three,
only six hundred and seventeen of thoseare under four hundred thousand, So that
means a thousand houses north of fourhundred thousand and only six hundred and seventeen

(03:43):
under And that number just from twoweeks ago dropped by seventeen. So the
one thing that we noticed, youknow, earlier in the year, I
was we were at a few weeksbecause I tracked this every week pretty much,
we were at fourteen houses a daygoing away on the MLS, and
this last two weeks we actually droppedby one point nine houses a day,

(04:05):
So slowing down. I mean,the good news is more people are coming
on the market and there's less buyers. We've said that all year. There's
fewer buyers than there were in thepast. But it's so important to price
your home right, and that's youknow, a lot of people don't like
the number that I'm giving to them, and it's like this isn't you know

(04:26):
the old days where just put itout there and you know we'll get a
baiting war. And even if youhave the nicest home, I mean the
absolute nicest home. I just soldone of those, and it was I
was certain we were going to havemultiple offers. Well we did. We
had two, and the highest wasactually it was over asking price, but

(04:46):
it had some baggage with it.What is the baggage? They had a
house that they needed to sell.God, it was contingent and contingent,
and also the buyer was coming infrom out of state and had never personally
been in the house. Those aretwo big red flags for me. I
mean, if I do you takethe bird in the hand or the one
in the bush, It's like,oh, look, i'll pay you more

(05:08):
money, but I haven't seen thehouse. That's a huge risk. They
fly in and walk into the doorand it's like, well I don't like
it. Now what have you do? You took a good quality buyer that
was highly qualified, and you toldthem to pounce hand for pie in the
sky. That you know. Andthat's the other thing about bidding wars.
And we saw this even last year, when you know, the market was

(05:28):
crazy and things would sell for twentythirty fifty thousand over asking price. What
often happens with those higher offers isthat they come in and they you know,
people's intention are what they initially offered, and if you have to use
somebody else's offer to drive them higher, human nature wants to get that money
back, and they chip away atit with the inspections and they ain't come

(05:49):
back just hitting for the fences,you know, like I want everything replaced,
and they're trying to get you backdown. And especially you know buyers
from California where they do things alittle differently, they're like, yeah,
I just take thirty five grand off. I mean here, it doesn't work
like that. You can say Iwant all these things fixed, but you
have to give the owner the opportunityto fix the things. You just can't

(06:11):
slash the price with that. Oryou could say option B, you know,
pay this much toward my closing costsor lower the price by this much.
What you can't do is give thebuyer cash at the closing table,
because that's it's it's it's an inducementto purchase exactly not allowed. So what
about the high end, Bob?So let's look at the highend, because
I keep hearing the high end insouthern Arizona is on fire, you know.

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You know, we actually in thelast two weeks when from one hundred
and ninety five two one hundred andeighty five houses over one million dollars,
and just back on the middle ofApril, actually this week, a month
ago, we were at two hundredand six, so we actually lost twenty
one houses, which is more thanten percent of the inventory on the million

(06:58):
plus properties, which is kind ofsurprising. But you know, the people
that the people that are in amillion plus houses aren't as affected by the
economy as people that know very muchjobs and especially you know, the part
that I think is the where welost a lot of the California buyers was
in the six hundred to eight hundredthousand dollars range, and those homes are

(07:24):
sort of languishing. The higher endare flying off the shelf, the lower
end are on fire. But thathigher price point is people are real skittish
about that. I mean, youcan see it just by looking at the
difference between three hundred thousand dollars homesfor sale and four hundred thousand dollar homes
for sale. You go from onehundred and twenty eight to six hundred and

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seventeen. Yeah, because up byalmost four hundred percent. And then how
many people in Tucson, Arizona gotcut out in that hundred thousand dollars move.
Now a year ago, they wouldhave been able to afford that house
because interest rates are so much lower, and now a bunch of those people
that would have bought that home can't. Yes, that is that is very
true. It's it's funny. Themarket seems to be slowing and and what

(08:13):
I mean by that is that thereis the number of transactions and just I
think it's clearly a function of inventory. You know, when you when you
have fewer and fewer homes on themarket. The way this continue to drop,
there's you know, there's just notgoing to be enough buyers. Even
though there's people who want to buy, they just don't have anything to buy.
Right And the official numbers for themonth of April will be out from

(08:37):
the MLS next week, So nextweek's show we'll talk about, Okay,
what how did we do? Andwe saw it just progress from December being
horrible, I mean the worst Decembersince we've had in nineteen ninety six,
and then we went to the Januarynumbers where hadn't been that low since twenty
ten, which was the bottom ofthe recession. And then the March numbers

(09:01):
are February numbers came in and theywere good, yeah, but then March
was like fourteen hundred homesales and wewere tied with twenty nineteen. Yeah.
So so it just it's kind offunny how we went ninety six to two
thousand and ten to twenty seventeen totwenty nineteen, and I think, you
know, in twenty nineteen was thelast normal year that we had. So

(09:22):
for sure, twenty nineteen was thelast normal year pre pandemic. But there
was I know from our office,and I just you know, the number
of units that we close as inthe month of April, it was a
blockbuster for month. It was agreat, best month we've had in a
year. So I think the Aprilnumbers that come out right are going to
be really good. I think themain numbers that come out would be great.

(09:43):
I So I think from when you'relooking back thirty days, I think
it's going to be very strong.I'm right now concerned about forward, moving
forward, and and we're going totalk about this. We're going to delve
into this more through the show,but I'm getting the sense the consumer is
tapped out, yep. And I'vegot five articles to talk about today that

(10:03):
that's some of it is. Youknow, people are just reaching capacity.
And this is where if you overpricea home, people are the most educated
buyers that we've ever had. Justwith all the tools that are available on
your cell phone sitting in the drivewayof your home, they can look up
every help that's sold in the neighborhoodand all the data that you used to

(10:24):
have to go to a real estateoffice. The one thing that you can't
get online. You can see whatother homes sold for but knowing the market
conditions and this will bring extra moneyin that won't. I mean, that's
the thing that these automatic valuation siteslike Zillo and Trulia and you know a
host of others, they just havepure data. This home had this many

(10:46):
square feet and it's sold for thisprice. Well you didn't mention that it
was north facing, has shade allyour all year round, and it has
straight on mountain views. I meanthat obviously has more value than a house
that's you know, facing sound andhas sun all day long blasting through the
living room windows. And your masterbedroom. Most bedrooms are built in the
back of the house, so that'sa big thing in Arizona. Is orientation.

(11:09):
Sure, I mean I've seen fiftysixty one hundred thousand dollars difference in
orientation with the same floor plan.No, that makes good sense. So
what are some of the articles weare going to talk about. We got
about a minute to go before ourbreak comes up. So here's the headlines.
Mortgage rates remain relatively steep compared torecord lows. Okay, we knew

(11:31):
that we need that. Annual homeprice growth falls to ten year low.
So the growth that they didn't sayshrink, they said grow, it's still
growing. Low inventory hampering would bebuyers housing choices. Yeah, well we
see that in our numbers. Thenlook at the supply. I mean under
three hundred thousand, one hundred andtwenty eight houses for sale. Equity rich

(11:54):
homes dwindle during Q one. Sodwindle that's a pretty strong word. It
makes it sound like there's just ahandful left to have equity, and that's
totally not true. But again,headlines grab clicks, right, and that's
what it's all about anymore, isa number of people clicking on the headline,
and then the last one's share ofcost burdened homes reaches nearly eighteen million

(12:16):
nationwide. You know one trend thatI've seen over the last few months.
I'm getting a lot of calls forpeople that have a ton of equity in
their departing residence and they want todownsize, and they how do they go
about doing that? So they haveeither no mortgage or a small mortgage on
the new house that they buy.And you know, you do it by

(12:37):
doing an equity line or bridge loanon the departing residence so that gives them
ability to pay cash or a largedown payment on the new house. But
I'm finding that to be a bigtrend. So I think that's something that
is a clear sign that people arelooking to, you know, have reduced
their purchasing power. All right,we'll talk more about that right after the
break. This is Tucson Home Solutionson K and ST. He makes buying

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and selling homes easy. He'll dothe work so you won't have to stress.
This is Home Solutions with the Winthree team powered by exp Real to
Day. Here's the Win three teamleader, Bob zach Meyer. Good morning,
and welcome to the show. Iam Bob zach Meyer of ESP Realty
and I'm joined by Jerry Sunt ofCross Country Mortgage. Jerry is your go
to guy if you want to navigatethis housing market. And you know,

(13:24):
Jerry, the rates, everybody sawthe headlines. They went up last week.
That's what the Fed charges the bankswent up. So what is the
FED rate now, Jerry? Soas of Wednesday, the FED funds rate
is five and a quarter five anda quarter. So you know, last
week we talked about a bank inCoral Gables, Florida that sent out a

(13:48):
letter to every person that had alanwith them saying, if you sell your
home, do not pay us offmarket to the new buyer with the low
interest rate that you have. Somost people think, well, why would
they do that if they can getsix and a half on the street,
Why would they be letting someone transfertheir three and a quarter loan to someone
else? And the answer is becauseback then the FED rate was zero zero.

(14:11):
They ain't got a fixed rate,thirty year loan at zero percent interest.
But guess what it's tied to thatcollateral. So if that collateral pays
off, they have to pay thatloan off to the Fed, get back
to the free money, and nowthey have to go to the window and
pay five and a quarter to turnaround and give us a loan at six
and a half. Still a heck, I'm a nice markup on money you

(14:33):
never had. But it's way bettermarkup to get three and a quarter or
three and a half on money youpaid zero four. So you know,
again with with with the Fed raisingrates again this quarter, there's a lot
of ripple effects that we don't thinkabout. And you know, there were
three banks that you know now goneon the First Republic did go under.
They did over the weekend. Chasebought them last weekend, and it just

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you know, yes, it madeheadlines, but it's oh, everything's gonna
be fine. Everything's gonna be fine. Jamie Diamond came out and said,
oh, you know, the worstis over. I think that wasn't the
exact quote, but it was somethinglike that, this stage of the crisis
is over. Well, we haveto remember as the Federal Reserve pushes up
the FED funds rate, what that'sdoing to banks is it's taking out deposits

(15:16):
because everyone's going into CDs or they'regoing into money market accounts that are paying
a much higher yield than checking andsavings. Right, so if bank profits
are dropping through the floor, theyare, and you know, another bank
came out on Friday with that,you know, saying, hey, there's
going to be some worry here,and it's it's a combination that they've been

(15:37):
on long term maturities, they haveto liquidate those at a loss, and
be they've got the deposits. Thatis a way for them to you know,
go ahead and lend out at ahigher rates when their deposits are drying
up. It's it's causing a realissue. So there's a lot of ripple
effects that happen. Because the FedFederals are raised rates a quarter now,

(15:58):
the million dollar question is are theygoing to go again in June? Are
they going to pause? And it'sdata dependent. The CHA chairman pal came
out very hawkish and basically announced thatwe are going to continue fighting inflation and
get it down to two percent andyou know that is our main priority.
And so that was a hawkish termlike we may continue to raise rates.

(16:18):
But then he did come back andsay that, you know, it is
data dependent, and then data thatjust came out the jobs report and share
that information. Wow. Yeah,So the job report that came out Friday,
So going back to mortgage rates,they actually improved this past week up
until Friday. And then what happenedFriday is the jobs report came out and
it was estimated that the US wasgonna generate one hundred and eighty five thousand

(16:42):
jobs in April, and it actuallycame out of two hundred and fifty three
thousand. The unemployment rate dropped tothree point four and it was supposed to
tick up to three point six.Wage inflation number came in higher than expected,
and so it is basically showing thatthis economy is roaring. You know,

(17:03):
yes, I'll bet the number ofjobs being created are lower, but
it's still the overall that this isa very strong employment, you know economy.
There were what about the last jobsreport there the revision, and that's
where the silver lining is is thatthey then they revised the last two months

(17:23):
by one hundred and forty seven thousandjobs lower, lower, so it moved
them the average. So the averageor the three month average going into this
past month was twenty thousand jobs createdper month. Now with the revisions,
it's two hundred and twenty two thousandjobs. I believe two hundred and twenty

(17:44):
two thousand jobs being created perm onehundred thousand jobs less a month. How
do you miss by that much?So then it goes to what's the accuracy
here and if you apply that sameformula moving forward that they're going to be
there's gonna be that big of avariance. That means only one hundred and
four thousand jobs were created last month, right if they adjust it downward,
which almost always they adjust it downward, So why would they come up with

(18:07):
the high number to begin with this? So yeah, So again, now
it's a wait and see game.You know, the big inflationary data point
that the FED looks that comes outon Tuesday, which again in the real
estate and mortgage world, we've allbeen waiting for May tenth. Yeah,
and you know Tuesday is a day, so we'll see if inflation really is
starting to get contained. If not, you know, this may be a

(18:30):
longer run. I don't see anyonenot predicting lower mortgage rates later this year.
It's just I think a lot ofpeople were hanging their hat that would
happen starting in May, and Ithink now it may be pushed back to
a third or fourth quarter. It'son the horizon, but it just may
not be as soon as we hoped. And it's a you know again,

(18:52):
it's a wait and see game atthis point. So during speaking of that,
you know, like, what aremortgage rates? Well, there was
a new study that came out fromlending Tree on May second and said the
nationwide average payment for a new mortgageis now twenty three hundred and seventeen dollars
a month. That's the average.So average Joe working at a job,

(19:12):
divide that by four weeks six hundreddollars a week. So every day that
you go to work, you haveto make more than one hundred dollars that
week just I'm sorry, one hundreddollars that day just to pay your mortgage
at the end of the month.So I mean, man, what if
you work, you know, let'sgo an easy math. Ten dollars an

(19:32):
hour job, you work an eighthour day, you made eighty bucks gross.
Your house costs on average over ahundred How does that work? I
you know, that kind of tolook at that at a macro view,
I am really getting the sense theconsumer is tapped out. We are right
on the edge of consumers being tappedout? How do I come to that

(19:53):
conclusion? And you know, youand I talk about every week how the
number of credit cards being shoot isat a record high, and that the
utilization of those credit cards. Yeah, and and so it's that you look
at the car loans the I thinktwenty percent of all car loans being issued
last month or over one thousand dollarsa month. And you start looking at

(20:15):
the price of gas and what itcosts of driving. We're going into the
big driving season, and the gascauses higher costs to deliver food, to
deliver clothing, to read your electricmeterum and everything. Gas affects everything,
and just on a seasonal basis.The price of gas typically goes up right
around Memorial Day weekend because the yearbecause people head out for for the summers

(20:37):
and they they're driving for a vacation. So UM, any rate, when
you look at the overall, theat all, where the consumers just being
hit from all sides. You know, we go back to the Fed funds
rate of five and a half orfive and a quarter. Remember prime rate
now is eight in a quarter.So if you're getting an equity line of

(20:59):
credit that's a ten percent between nineand ten. If you're getting nine,
that's like a deal. Wow,I mean wow, who would have thought
a year ago? I mean,and then you look at the the the
price if you're buying a used car, what that interest rate is, and
this is if you have a seventwenty seven forty credit score. Then you
look at credit cards, which arenow probably north of between seventeen and twenty

(21:21):
two, if not higher percent.You know, commercial loans if you're trying
to buy, if you're a commerceif you're a small business and you're trying
to a commercial loan, which alot of small businesses rely on commercial loans
to be able to buy their goodsand services to resell or manufacture whatever.
And you look at the cost forthat that business, it's now at a
level where it just I think we'regetting to that point of where the something's

(21:45):
got to give, right, andI believe that we're going to see it
in the next month, and you'regoing to see some where things are going
to start ratcheting down because I thinkthe consummer's just kind of done and the
job support that came out when youlook at the one area, one industry
that really is still just record hotas hospitality and and so that is where

(22:08):
a lot of the big percentage ofjobs was created as hospitality. So it
goes back to traveling and h andservices. But manufacturing was low, construction
was flat. So I don't know, I just get this sense. And
so I started doing a steady boblast week. Is I'm just you know,
when I look at a credit report, I'm so used to just studying

(22:30):
what a person's debts are for debtto income ratire and how we get them
to qualify and what we can doto move around to get them to qualify.
But now I'm starting to look atwho's pulled their credit in the past,
in the past six months, howmany credit inquiries? Yeah, And
it's like I'm looking at the report. I never used to look at a
date or be rare like oh youhave a Capital one credit card? Oh,

(22:52):
And I never looked at when wasthat taken out? Right? And
you know, it's just, oh, that's a debt and we have to
count that in the debt to incomeRACI show. Now I'm looking at when
that card is issued, and I'mstarting to see a lot of late twenty
twos in early twenty twenty three,brand new credit cards exactly. And so
I see that and i'm, youknow, it's it's it's something. I'm
I'm in a monitor because that tellsme that consumers are now borrowing to live

(23:18):
a lifestyle. Sure, and they'remaintaining the same lifestyle, pretending the economy
didn't change, and they're about tohit the skids, I mean the top
of the limit when that credit cardgets maxed out and they can't get anymore.
And now I'll keep in mind thatthose credit cards are like twenty percent.
So you go run up ten thousanddollars worth a dead on your credit
card. You just introduced two thousanddollars a year of interest on your budget

(23:41):
that you couldn't afford it to beginwith. And now there's two thousand extra
dollars to buy that by twelve months, you just like one hundred and sixty
six dollars a month more. Iyou know, I did a VA loan
for a borrower, a close friend, and he was, you know,
they had fixed up their house andput all the upgrades on credit cards,

(24:03):
and they gotten themselves into some creditcard debt. And when I added up
the savings by doing a cash houreven ants, even though it didn't make
sense to do it when I froma they had a two point seven five
percent rate, right and now they'regoing to six percent. It didn't make
sense from just that piece, right, But from a savings monthly cash flow,
they save four thousand dollars a month. Oh my goodness. Yeah.

(24:26):
So I mean the bragging rights likeI got a two in a quarter.
You know it isn't worth it ifyou're carrying that high interest debt. No,
No, in the whole equity lineof credit, you can keep your
first, but then have a highersecond. The second in theory would be
much lower than the first, Soyour blended average would be less than the
average of the two rates, right, correct, And so I think,

(24:47):
And I'm getting tons of calls forequity lines of credit right now, so
I again, that's another signal tome. People are using their house as
a piggy bank to pay for otherthings, or as a as a as
an ATM to pay for other things. And you know at some point that's
got to stop. Yep. Soyou know what, Jerry, we are
coming up on a break. Thisis two sound home solutions on k and
ST. I'm Bob zach Meyer ofe XP Realty. I'll be back with

(25:12):
Jerry Sunt of Cross Country Mortgage andwe're going to dig in deeper and talk
about what is really happening out therewith this economy and the higher home prices,
higher mortgage rates, higher fuel pricesand all of that. We'll be
right back. Thanks for listening.This is two sound Home Solutions on K
and ST. He doesn't want tolist your home, he wants to sell

(25:33):
it. This is Home Solutions withthe Win three team powered by EXP Realty.
Here's the Win three team leader,Bob zach Meyer. Good morning and
welcome back. I am Bob zachMeyer of e XP Realty and I am
with Jerry Sunt of Cross Country Mortgageand Jerry is your go to guy.
And right at the tail end ofthe last segment, we were talking about

(25:56):
the rates and Jerry said they actuallyhad gone down last week, and tell
the job's report came out and sowhat are rates now, Jerry, like,
an average person twenty percent down,seven forty credit score, what are
we looking at? They're exactly wherethey were last week, So I mean
it's they're sitting in the mid sixes, and so that is they did improve

(26:18):
this past week, but then theywent back up on Friday. Again.
The market is so volatile right nowbecause it's you know, are we do
we have our arms around inflation ordon't we? Right? One data point
says we do. Then you havea jobs report that again on the surface,
looked looked really hot right and inflationaryfriendly per se, and was going

(26:41):
to drive inflation higher. But thenyou know, you look at the revisions
from the last couple months and it'slike, well, maybe wait and see
the numbers this month will be telling. The big report that comes out on
Tuesday is a year over year number, and this is when inflation started to
peak last year, was in Mayand June. So as compared to year
over year, it's going to showa big reduction in inflation. Or should

(27:04):
in theory, Yeah, because beforethey were running off next to none and
then boom, it went through theceiling. So that's where um, that's
why I think a lot of peopleare hanging their hat on on Tuesday for
being the catalyst to move rates lower. I just I think we're we're not
going to see mortgage rates. Idon't know if this report on Tuesday is
going to be the catalyst to getit started. I do think it's coming,

(27:26):
but it may be you know,later this summer before we start seeing
lower rates. Um. I dobelieve that when they come down, it's
going to come down quick. Andit's really good news. And I say
that only because I just I personallysee and what I talked to to people
out there, and you know,I'm one of those people who go to
restaurants and I talked to the youknow, the servers and how you know,

(27:48):
is it full all the time?And how are you know people spending
you know, or they spend lotsof money on on on you know,
wine or drinks, and then theyused to or they kind of that's a
good little pulse, isn't it.All those kind of things going to the
dry cleaner, going to you know, all those those uh somewhat luxury items.
I call it per se and umand just to get a sense and

(28:08):
I'm I'm seeing that I think we'rekind of on the cusp of where the
consumer is saying, I'm kind oftapped out. Wow, So what are
the waite staff seeing? As faras I asked that question too, you
guys been busy, you know,and like yougo sit at them like sas.
We like to run around the cornerof the river and Cammell and just

(28:30):
go to Sace and sit at thebar and talk to the bartender. And
it's house business, you know.And you can get a lot about the
economy just looking around. You goto a restaurant, is there a waiting
list, I mean for an hourto get into the restaurant. That tells
you the economy is roaring strong.But when you can walk up and just
walk in and sit down and eatwithout any kind of a weight. And
of course we just had most ofthe snowbirds go back home now. And

(28:52):
finally, I mean literally, Iwas in North Dakota for a funeral last
week and there in its snowed twofeet like like a week earlier. So
there's still snow in the ditches andall of the ponds like flying in or
they're still frozen over, and it'slike, oh my god, this winter's
lasting forever. Well, you knowa few tailtale signs of the economy.

(29:15):
That is number one, when youwhen you go out, restaurants are still
busy because when you look at eventhough the cost of food has risen,
right, you know, the toeat out as compared to eating at home.
I don't know if one's that vastlymore expensive than the other. But
when you look at our people evenmaybe they're going out of dinner and they're
not drinking, you know, they'renot they're having a beer with dinner or
a glass of wine with dinner.And if they are having glass of wine,

(29:37):
are they were in the cheapest glasswine on the menu or they are
in the most expensive So it's thosekind of I think are kind of tales,
tailtale signs that people are are rainingit in the you know another were
right now. When you look atthe hospitality in southern Arizona, it's going
to be very busy at the momentbecause the University of Arizona, you know,

(30:02):
graduations next week yep, yep.They have a lot of out of
town people coming in. And thenyou've got the high schools that start,
you know, the following week goingthrough almost Memorial Day. I think that's
after Memorial Days when you know you'llyou'll see, you know, the restaurant's
really kind of quiet down, wow, and and tourism will will will slow
down. But overall, I justthink again again, my little corner of

(30:25):
the world. I think the consumeris getting to a point where they just
there's no more room to to hide. There's nowhere those nowhere else to get
money that is at at at acost effective rate. And this is what
the Federals are wants, right.They wanted to push the borrowing costs to
a level where people don't spend,right, That's that's the point. And

(30:48):
I think they're they're they're there.Wow. So Jerry, my brother,
came here and lived into so manyof the people that listening to this program
know him and actually helped me sellhousesfor eleven years. And he retired and
moved back to South Dakota. That'swhere he went to college in Rapid City,
South Dakota. And his son graduatedschool this Friday. At college,

(31:12):
and he chose a different path thanhis older sister. His older sister went
and got a four year degree inbioengineering. I mean, it's just like
a super high tech high and it'sreally hard to find any job in that
field that isn't in the big pharma. And she doesn't want to participate in
big pharma. So here's a personwith an extremely advanced degree that is basically

(31:37):
working changing her career path because ofwhat he you know, the job opportunities
are. So her brother Luke,he went to a technical college, a
two year tech school. Yeah,graduated with a degree in automation control and
SKATA which is programming like machine languageand stuff. So he got a job

(32:02):
starting out with a two year degreeat seventy thousand dollars a year. Pretty
great with two year degree. Histotal debt because he went in state in
South Dakota and he got a scholarship, which is basically a lot of states
do this, Like you can goto Alaska, they will pay one hundred
percent for your any college you wantto go to in the United States.
You just have to come home andwork in that state. So he has

(32:25):
three years that he needs to stayin South Dakota and work for this this
company. But I mean his totaldebt, he's under twenty thousand dollars total
spending two years and he had wellhe doesn't have student loans, Okay,
So I mean that is what away to start out life. Just think
about And I told you last week, I mean my sister in lawn or

(32:47):
husband, they their kids were startingcollege, and they were still paying on
that student, right, right,So you know this is just you got
to make different choices, and thisis, you know, kind of interesting.
I will be back in North Dakotanext weekend for a one hundred year
anniversary of the building that all mycollege classes were taught in. And I

(33:13):
actually have a scholarship program that Istarted back in nineteen ninety two that has
never funded. And all the yearsI worked at Raytheon, I would put
in a thousand a year and theywould match me, and it's just been
growing and growing. But I'll tellyou what's really interesting. How I funded
that program was I bought a condoin nineteen eighty two, and back then,
before the eighty six tax laws changed, you could depreciate your rental real

(33:36):
estate over a five year period oftime, right, So I fully depreciated
a bit to offset the money Iwas making in the oil field, working
one hundred and twenty hours a week. And I went to sell it ten
years later, it hadn't appreciated thatmuch and I was actually going to owe
more money than taxes. I wasmaking a net walk away from the sale.
Yep. So I started a collegea scholarship program. I donated the

(34:02):
condo to my college. They cameand owned it five minutes and sold it
to the person I'd lined up tobuy it. They walked away with a
five figure check. I walked awaywith no tax liability and a tax deduction.
And now it's just it's grown intosomething that's going to fund education.
But the coolest thing is you cango to the North Dakota State College of

(34:24):
Science and live in a dorm,eat in the commissary, go to all
the classes and everything. The costfor an entire year of college is thirteen
thousand dollars. Wow. So atwo year degree is twenty six thousand dollars
if you finance the entire thing,including your food and your lodging and everything.
And like we said, you canhardly even rent an apartment for that

(34:45):
much money. So let alone geta college degree. So that's where I
will be next week. But let'stalk about housing. Hawaii thirty six hundred
and ninety six dollars a month isthe average person's house payment in Hawaii.
That's a mortgage payment. California fallssecond, thirty three ninety nine, Massachusetts

(35:05):
three thousand and twenty one dollars.So what are the cheapest places West Virginia
seventeen hundred, Kentucky seventeen eleven,and Michigan seventeen forty two. But still
seventeen hundred, that's the cheapest housing, you know, average average mortgage payment
in the United States. And man, that's just throttled me. I had

(35:29):
no idea that even like affordable placesin the Deep South aren't cheaper than that.
I know it's a and you know, you wonder how people like it
in how they make ends meet that. I was talking to my nephew and
he lives in Washington State and hewas telling me that he because he takes
Uber a lot, and he said, you would not believe the educative workforce

(35:52):
that are Uber drivers. Could rememberof the high tech industry has laid off
a lot of employees. So innorthern California, Washington, etc. They
and so you know, you're youtalk to your Uber driver, he may
have, you know, a master'sdegree, a PhD. And it's just
because they got laid off from thesehigh tech jobs. He's well paying jobs

(36:12):
and they're trying to make ends meet. Sure because of these expectes or how
say people aren't reaching a budget shortfall. I mean, what a great thing
to you know, you can deliverpizzas, you've always had that ability,
but uber you work when you wantto, You turn the app on and
your phone boom. You're starting toget calls. Within a few hours,
you made one hundred dollars. Youshut your phone off, You're done,
and you got the hundred dollars youneeded to make the budget shortfall. Other

(36:36):
people are using Airbnb, you know, and renting out rooms of their house
and offsetting the cost of their mortgageand stuff. So that's one thing that
we have a distinct advantage in thissnapshot in time over previous generations, where
you don't have to be local towork for somebody. You can work from
afar. You can make money.I mean, if you find a really
cool gadget online like and you youcan go out and actually put it in

(37:00):
your shopping basket, start running adson Facebook for that gadget, and every
time somebody buys it, you havethat automatically connected to the supplier that ships
it and everything, and you're outof the loop and you're just making I
know people that are making literally fivefigures a month selling other people's stuff and
never even touching it and knowing it. Yep. So I mean that there

(37:20):
are so many ideas, and I'lltell you artificial intelligence the one thing I
got out of that conference in Vegaslast week. Artificial intelligence is everything I'd
like to hear more. We shouldtalk about that. And also, if
anybody calls me and I have avery short brief hello, and I don't
say I used to always say Hi, this is Bob. Well guess what.
They can emulate your voice from thatphone call and make it sound like

(37:43):
you and call all your family membersfor money. So we'll talk more after
the break. This is Tucson HomeSolutions on K and ST. This is
Home Solutions with the Win three teampowered by EESP Reality on K and ST.
Here's the Win three team leader,Bob zach Good morning and welcome back.

(38:06):
I'm Bob Zachmeyer of XP Realty.I'm joined in the studio by Jerry
Sunt of Cross Country Mortgage. Thisweekend, we just came out with this
six zero one nine four East PaddockPad d O c K Court. Now
this is up by Saddlebrook and itis not in Saddlebrook, so there's no
age fifty five limitation, but itis a twenty sixteen square foot home two

(38:28):
bedrooms and a din, which isplenty big enough. It just does not
have a closet. A lot ofpeople use one bedroom of the home for
office, so this is like athree bedroom, two bathhouse, but unfortunately
the MLS says we can only callit a bedroom if it has a closet
and a door, so it islisted as a two bedroom. I think
this is a very good value.It's on the top of a hill.
You've got straight on mountain views forabout forty miles and it is a totally

(38:52):
upgraded house built in twenty fifteen,lightly lived in pristine so if you want
to check that out again. Itis listed at three hundred seventy nine five
hundred dollars. This is a bargain. Zero one nine four East Paddock Court.
You know, before the break wewere talking about several things. The
biggest thing is the cost of homeownership. So they define a cost burdened home

(39:15):
where the actual cost of the mortgageand utilities is more than thirty one percent
of a person's gross pain makes sense. Twenty one and a half percent of
owner occupied households in the US arenow cost burden, which means it takes
more than thirty one percent. Imean, almost every house in major California
cities is cost burden because it's overfifty percent. Hawaii, California, and

(39:37):
New Jersey have the largest share ofcost burden homes and they're at an average
statewide of twenty nine point nine percent. The least cost burden homes are in
West Virginia, Indiana, and NorthDakota, which is fourteen point nine to
seven percent. Of those states havepeople that are spending more than thirty one
percent. What do you think aboutthat, Jerry? With technology, like

(39:58):
we talked about when you can workfrom anywhere during COVID because the big cities
all had lockdowns, we saw thisfreedom and people working remote go through this
and ceiling and now a whole bunchof those employers are calling them back because
they're finding that there's productivity problems andTeamWorks better when everybody's together and then when
they're all apart. That trend isclearly happening. I don't think it's not

(40:19):
reversing course one hundred percent, butyou're starting to see employers calling people back
to work. I mean, fora while there employers were calling people back
to work, and employees were saying, Okay, I'll just go to work
somewhere else. Yeah. But asthat shift is the economy slows down and
people need that job, they'll begoing back into the office. I just
think that will be something that turnsout in the next few months. Sure.

(40:42):
The good news is Arizona is noton the high, not on the
low. I like it when wedon't show up on the y. Yeah,
we're not too hot, not toobecause when we're too low, everybody
starts moving here and then we alreadyhave horribly low inventory. So now let's
move on to the next one.Equity rich homes dwindle during the first quarter.
Okay. According to ADAM Data,forty seven point two percent of mortgage
residences in the United States were shownto be equity rich during the first quarter,

(41:07):
so almost half of the people areequity rich. Overall, the portion
of mortgaged homes decreased from forty eightpercent in the fourth quarter to forty seven
point two percent, so that's pointeight of one percent difference. The small
equity downturn indicates how a decline ofhome prices across the country has started to

(41:27):
affect homeowners following a decade long realestate boom. It's still going up now.
They're saying the equity that people theaverage homeowner has almost fifty percent equity
in their home. Show me anothertime in history wherever that was the case.
The sad part about it is peoplecan't tap into it without paying a
serious premium. Exactly, so,homeowners across the US continue to sit in

(41:50):
a far better position than they werejust a few years ago, with historically
elevated levels of wealth built upon theirproperties. However, the recent downturn in
the market is chipping away at thatbounty that they reaped from a decade of
price surges. And we saw themedian home price unto some go from three
eighty five to three fifty for threeof the last four months. And we'll
see what it comes out next weekwhen we get the numbers from the MLS.

(42:14):
But according to ADAM Data, twohundred and thirty eight thousand homeowners in
the whole United States are in somestage of foreclosure right now, two hundred
and thirty eight thousand, and wehave a population of three hundred and thirty
seven million. It's a small,unbelievably small and I think a lot of
people are going to need to tapat equity and even though they don't like
the rate, when your bills aremore than your money, I mean,

(42:37):
that's the first piggybank that people turnto as their house. So it's funny.
I predict we will see a surgein cash out reefinances if rates get
to the mid fives two reasons.One that will bring affordability or help will
bring affordability back in line, soyou'll get more buyers trying to buy the
homes, which will then push upprices slightly, ye, not dramatically slightly.

(42:59):
With that, I think at thatthreshold, people will be at a
point where, yeah, I've gotthis three percent rate, but I've got
fifty thousand dollars in other debts thatI just can't pay anymore. Right,
all four go that three percent ratebecause they won't do it for a six
and a half, but they'll doit for a five and a half.
And I don't know why, I'mwhat my calculation is that it's a sense

(43:19):
that I think people will do thatbecause I mean, their alternative is they're
going to be paying ten percent onan equity line of credit. I just
think the amount of debt that peoplehave created over the last year is going
to become such a large percentage ascompared to their first mortgage that the equity
line of credit will no longer makesense and they're just going to combine them
all into one. Sure, Andthat's if and when rates fall to a
mid five and jerry them think yougot to be careful with taking out an

(43:42):
equity line on your house. Isthere is a difference. Most people think
that, oh, if it's amortgage on my house, I can deduct
it on my taxes. But ifit was a cash out refi and you
didn't put money into the house,like if you renovated your home and spend
the money on that, then that'sdeductible. But if you used it to
go buy a new car to aCPA and find out if that's deductible,
that interest, it may not bedeductible like you think it is. But

(44:06):
here's the thing. Remember we justsaid two hundred and thirty eight thousand homeowners
are in some stage of foreclosure,but ninety two percent of them have equity
in their homes. So how manypeople is that in eight percent of two
hundred and thirty eight thousand people,sixteen thousand people in this country are upside
down. That's unbelievably low. Let'smove on to the next one. We
got a buzz through all the newsand we got a lot of stuff to

(44:27):
talk about. Low inventory hampering wouldbe buyers choices. You know, we've
been talking about that since Thanksgiving time. More and more homeowners are staying put,
choosing to stay in their current homesdue to the market conditions, something
called the lock in effect, sothey can avoid paying a higher mortgage rate
or paying an inflated price for adifferent house. According to realtor dot Com,

(44:50):
they had an April Housing Trends report, the lock in effect is having
some serious consequences on the real estatemarket. In April alone, active inventory
girls slowed the second month in arow, as newly listed homes fell by
twenty one point three percent. Wow, so I have twenty one percent fewer
houses coming on the market. Butthough there's a downturn in buyers, there's
a bigger downturn in inventory, andthat's why we're starting to slide. Now

(45:14):
the slide has slowed, and likeI said, we're down to one point
nine houses a day. Disappearing,but we're still losing homes on the MLS,
and it's definitely sorted by price point. A lack of new sellers and
homes for sale is limiting buyers choices. Many sellers are likely future buyers as
well, which is why a majorityof would be sellers are feeling locked in

(45:35):
because they can't find a home tobuy or they don't like the payment that
they're going to have if they didfind a home to buy. I actually
have coached many people that listen tothis program. They called me in March
or even February, and so wewant to sell our house, and I
said, you know what, goout and buy your new house immediately,
because we're still in the winter lolland you know this is the time to
be buying before the summer rush hitsthe spring rush. Let's wait. And

(45:58):
I know it's going to be uncomfortablefor you to make two house payments for
a couple of months, but believeme, it'll pay dividends. You're going
to buy it a discount and sellit a premium. And that has turned
out to be true for many ofmy clients, and they are just thankful.
It's like I can't even find myhouse for sale anymore. I had
somebody that moved from here up toScottsdale and they're saying that their house just
from when they bought it two monthsago is up almost one hundred thousand dollars.

(46:20):
Wow, to find the same amenitiesthat they found at that time.
Yeah, sure, And that wasa pocket and they were able to actually
find an open door home that theywere sitting on just bleeding. And it
appears, I mean, I knowthere's some hocus pocus going on of what
they actually paid for the house.It isn't as much as you think.
Look, they paid this much andI bought it for that much. It's
like, no, that's not reallythe way it works. But that's what

(46:43):
got recorded. But there was alot of extra repairs and stuff built into
that price that they didn't pay for. Bottom line, to get top dollar
out of your home, This isa quote from the National Association and Realtors
realtor dot COM's executive news editor.To get top dollar from their home and
set themselves up for success, allsellers need to make sure their home is
in the best possible condition and showswell. That could include making upgrades,

(47:07):
investing in necessary repairs and painting thehome. So I've told people that when
they came to me earlier, you'vegot a couple of months. Let's trick
it out and make it very highlydesirable. As we get into higher house
prices, Jerry, the people thatown a more than four hundred thousand dollars
home, you're running out of bluecollar workers that make that much money.
Those tend to be professional to greed, people who tend not to be as

(47:30):
handy to fix. Make sense,right, So that person wants a move
in ready house, and they willpay more for that painted house than the
one that they have to paint themselves. When you run out of the handyman
type people are the do it yourselfersat that price point. And one last
thing, the annual price growth fellto a ten year low. Still growing,
but you know, the last coupleof years were not by any stretch

(47:51):
of the imagination. Normal US homeprices increased three point one percent year over
year from March of this year toMarch it last year. On average across
the US, three point one percentappreciation, pretty close to what the national
average was since World War Two.Yes, that's right. In March,
average appreciation was four point six twopoint one percentage points higher than it was

(48:13):
in February. Core Logic forecast theannual US home price is going to appreciate
between now and March of twenty twentyfour by four point six percent. Okay,
that is all the news we havefor you this week, and I
have another one that just came outnew this weekend. Eight six five one
East Rightstown Road. This property islocated Tankaverde and rights Town, right where

(48:35):
the road splits. If you're goingeast, you just keep going on Rightstown.
And it is a three car garage. It has a workshop, it
has a storage shed, it's gotmore space than you've ever seen in the
lot. Is point eight seven acres, five bedroom, three bathroom home with
a concrete driveway. This house isreally set back far from the road and
it's all concrete driveway all the wayin, so I mean you could park

(48:58):
literally a dozen cars there. Plusthe entire lot is fenced and there's no
hia, so you could put whateveryou wanted to in the backyard. So
if you're a contractor, if youhave a camper, if you've got anything
that you know, there's a doublegate to be able to get into the
backyard and a huge, huge amountof space. The gentleman selling the house
is actually a car collector. He'sgot several older cars parked back there that

(49:20):
will be gone shortly anyway. Thisis an awesome dwelling built in nineteen ninety
six, twenty six hundred and fiftythree square feet. The address eight six
five one East Rights Town Road.So give me a call if you're interest.
I'd love to tell you about them. Thank you so much for listening.
This is Tucson Home Solutions on KNST. I'm Bob Zachmeyer. I'll be
back again next week with Jerry Suntacross Country Market. You can reach me

(49:43):
at five to zero three one foursold, and you can get Jerry Sunt
at five two zero three seven zeronine five seven six