The Expert Podcast

…When you see this headline you're probably thinking well this must be 2020 2021 When there was a lot of feeding frenzy on houses maybe even early 2022, but now that the rates have gone up and the market is slowing down, you might think this has to be old news Well it's not. This is actually from October of 2022. Where they're still home buyers that are facing. Bidding wars high prices on homes And now on top of that, you have higher interest rates. This article mentioned 6.7% rate. The rate is now over seven and we'll probably be eight or 9% within the next six to eight months So what gives what's happening? And. What are the prospects for the future home buyer? Well here's the problem…Home buying. Is not going to be dependent on prices going down. Everybody wants prices to go down except for the current owners of course, but home prices are not going to go down substantially Here's why. There are new ways being invented to live in homes…The traditional buy a house get a 30 year mortgage. is really unsustainable even for current buyers for the majority of current buyers We'll talk about another subset That's continuing to buy homes even with high prices. But there's a lot of people that can't really afford the mortgage payment on an average house at seven or 8%. You know four or $500,000 house. At seven or 8%, by the time you figure taxes insurance is going to be. Five or six grand. For house payment. Well that's going to be beyond the affordability of many many people Some people can still buy those but many people. So what's going to happen is there's a lot of wall street type hedge funds that are coming into the market that are creating new ways of living in homes. One of them is. Strictly just renting a house, but there's other fractional ownership and hybrid ownerships 40 year mortgages Other ways of buying a house. In the same way that cell phones are not really owned anymore homes are going to be the same thing. Back in the eighties and nineties and early two thousands you bought a cell phone you paid a few hundred bucks You got a phone. And the story right And you paid your monthly fee for your service now. how many of you have cell phones that you actually own that you paid? Actual cash for the phone. Most of you are on a plan where the phone price is actually a monthly fee. It's kind of like rent to own…Or financed. There's not really. An option to buy a phone for cash you can, but if the phone's going to be a thousand or $1,500, most people don't want to come out of pocket that much for a cell phone, especially when you're going to replace it in two or three years. So this type of ownership is migrating to real estate. The other problem is there's still enough buyers willing to pay. The higher prices for homes and the 8% mortgage or pay cash There's still enough people for the inventory. That's the problem. There's still a shortage of inventory. And even if 20 or 30 or 40% of the buyers can't afford the inventory the other 50 or 60%. Can afford it and are willing to pay 700,000 for the house and 8% mortgage and have a $7,000 mortgage payment There's still enough of those buyers out there that are taking up. The inventory at the very low end two and $300,000. that are maybe not quite as dream home style as some of the, the mainstream houses. There's more opportunity. So if you're a buyer. Looking to get into the market and you think there's a bidding war in the house and you can't find homes there's homes that are available They just may not be the type that you're initially looking for. So you have to make a decision. Do you want to keep renting? Do you want to jump in and pay six or 7,000 a month for a mortgage payment? Or do you want to. Lower the standards you're looking for in a home get something that's two or 300,000 at least get into homeownership. You'll save some money over your rent. And then maybe in the long run build up some equity to trade later because it may be that the door's closing. For new home buyers are first home buyers to get into a house. Before homeownership becomes a. thing of the past where it's not a mainstream part of life anymore. We'll do another video a little bit later this week about how that door is closing and how homeownership might be either now or never for the majority of American consumers.