The Expert Podcast

# Arranged Podcast Script

And here's why it's a good time to get into any kind of a house. Another example of an expert predicting what's going to happen with the market - this is from December 21 time of this recording a week or so ago. Don't expect prices to fall. Three prominent economists and analysts on whether we're in a bubble and the answer they're saying is no.

And one of them is very interesting. This is a person who called the 2005 market bubble. Her name is Ivy Zellman. She called the crash in 2005, one of many people, and says doesn't predict the full-on bubble popping in the current market because it's a different environment. A bubble tends to be something that's inflated and can burst and that's not really the case here. It's not really inflated, it's just a change in the way that prices are calculated.

Look, this happened with the stock market back in the 80s. It used to be that there was a price to earnings ratio for stocks that was used for decades - 50, 60 years - and that was a multiple of whatever the company earned times a certain percent. That's what the stock was worth. Well in the 80s and into the 90s that ratio was thrown out the window and they used a different ratio now, higher one. And the reason why is because something changed.

First of all, the transparency and visibility of companies was more disclosed so there wasn't as much risk, there wasn't as much factor of loss built into the stocks. The second thing is the market for stocks went from only institutional to retail, which means more people are buying stocks. Same thing with the housing market - people are using houses in different ways. They're using as their home base.

When you have a pandemic that has created the need for people to work from home, they want to watch movies at home, they want to exercise at home, they don't want to be out as much. A house is much more appealing than an apartment because you have more space, you have more control over the surroundings, your yard, your driveway. With the electric vehicle demand increasing, people want to have a place they can plug in their vehicle, not just in an apartment. So there's a lot of reasons why the housing market is changing permanently.

It's not like in 2008 where there was too many houses. There were builders that were just building mansions all over the place and they had to sell them at a fast pace. And the lending industry was lending money to anybody - you could get three or four mortgages if you had any kind of a job and even if you didn't have a job you could get a mortgage no problem. That's different now. Mortgage underwriting is extremely conservative at this point so you're going to find that it's not going to put a lot of people in houses that can't afford it.

The other thing is a lot of times think it's good to buy when mortgage rates are low, which is right now. Mortgage rates affect the market a little bit but we don't really recommend using that as a tool. In fact, if the mortgage rate went up that would be a good time to buy because here's the thing: you can change your mortgage rate, you can't change the price you pay for the property.

If you buy a property for two hundred thousand dollars and you have a six percent mortgage, if you as long as you can afford that payment, if the mortgage rates drop in five years you can refinance and now you have a lower mortgage rate. You can't rebuy and buy it at a lower price. So sometimes an increase in mortgage rates is an opportunity to buy cheaper.

Again, the mortgage rates are low right now - you know they're in the twos and threes. That doesn't mean you shouldn't buy now because it's very likely that don't expect prices to fall according to the experts. And this is a time to take advantage of an increasing market and at the same time get a low mortgage rate which puts you in the driver's seat for appreciation and saving money on your housing budget.