Real estate market impact on the US economy

By the way it was never real until you actually sell right uh david said something interesting he said i’m 30 minutes west of philly Real estate market impact and nobody will lower their prices and no one will buy at those prices and everyone is stuck where they are and that’s kind of what i was saying like people aren’t going to be quick to lower their prices unless they’re a flipper or a builder and they have to sell and so that’s kind and they’re at that super low interest rate so that is something that people are considering yeah it’s going to be trapped equity guys.

I mean think of this you know we’ve talked about this before and we i’m sure you guys know i have plenty of friends out there that were in the three percent even less than three percent interest rate and they’re in the let’s call it them their home rose to a million bucks.

I have one friend in particular in seattle which is where i’m from their payment was like two grand higher for them to move laterally because of the interest rates and how far they went up so they’re like i’m not moving i’m gonna stay right where they are they’re solving to their their mortgage payment so they’re gonna they’re you know that equity that they thought that they had it’s going to start correcting exactly and that’s kind of what laura said she said even with the 20 price reduction the payment will still be unaffordable due to the higher rate.

Real Estate Market Impact

That’s exactly what like if you were in a home right now maybe some of you are and it’s a 300 dollar home and you know two point three percent rate 2.5 rate and now you’re looking at maybe moving into a 450 000 house at a you know six percent rate or seven percent rate that becomes a much bigger decision for your family unit as far as the price going up than it did before at that same rate yeah there and the other the other the other notable thing is one of the things besides the pandemic and the funding that happened during the pandemic that has been funding this economy are cash out refunds.

You think of the money that’s been sloshing around as a result to this and you know people were using their homes as an atm you know and so obviously we don’t know what financial situation they’re in right now but a lot of that money is cash out refi money and a lot of that money was used for reinvestment or buying trinkets like boats cars jets whatever so you know as I the first thing that will start to show up in the next six months or years are trinkets like you know you’re gonna start to see exotic car prices go down you’re gonna start to see jet prices go down you’re going to start to see.

You know what i would call secondary things second homes you know those are the first things that are sold off yeah belinda says the equity is trapped if you didn’t take out a heloc or some kind of mortgage that’s why the refinance when the money was so cheapwas such a good idea.

If you needed the cash because now your equity is trapped at this high rate yeah yeah so that’s why we that’s why we’ve been talking forever about fixed rate debt guys so you know you want people people that are you know in my space and a lot of residential that are mostly concerned are the ones that have floating debt the ones where the debt their debt payments have gone up in the last year.

You know think about that so if you don’t have the revenue or the income to cover that your expenses are going up at that pace based on the interest rate hikes then you know those are the ones those are the other ones that you got to be careful of yep and if you enjoy what you’re watching right now please hit the like button we love that gonna try to get over a hundred.

It helps out you know let more people know about our show i’d love to know what you guys think is going to happen in this last quarter like i really would love to know that don’t just listen to us but what do you think what do you think the fed’s going to not raise rates in the next you know three months or doRE you know do you think there’s going to be some corrections.

Real Estate Rate Corrections

I do you know but there are going to be markets that aren’t yep period well and turnbuckle said something interesting they said almost 40 percent of homeowners own their home free and clear and 30 percent locked in rates at 3 or less so they don’t expect the supply to increase significantly anytime soon there’s no incentive to sell and that is true unless you’re a flipper or you’re a builder.

I would agree with that yeah yeah that’s uh very astute yeah why would you like right well and mike said something interesting too he said a lot of homes on the market now are wish pricing.

So they will be delisted for more than 20 so you do have to look at that you know people were listing their home for whatever magical number that they wanted and a lot of times they were getting it so they’re still under this mentality that you know if their home should be listed at 400 they’re gonna list it at 440.

See what happens so you are going to see some we’ve seen some big declines from that and we’ve seen that remember that conversation we were having up in idaho with that this guy was a real estate had a real estate company he was great he listed a home for a woman that had done a nice rehab beautiful.

Leave a Comment