Video Closed Captioning:
good morning good afternoon, good evening
folks, Michael’s uber one rental at a
time we are so lucky today to have the
only anna kelly with us for a
the fourth interview and discuss how you
doing anna I’m doing very well, so good
to be here, thank you very much for doing
this was a topic I was hoping to
sneak in, and I’m glad we have time for
it you are ready, I’m ready, so I believe
there’s a perfect chance that
residential real estate transactions
fall in two critical parts of the market, let
I explain first and foremost I think
refinances
of residential properties will likely
fall
very soon in excess of 75
it was just reported this morning by
mortgage bankers association they’re
already down 54 years on the year, I think
that continues to grow
ultimately to 75, and you and I both know
that means less money sloshing around
the system yes
the second one, I don’t think anybody is
talking about
I believe the sale of the move up the
buyer the first time homeowner even the
move up buyer going luxury, I think
there’s a very good chance for the next
three or four years because I think
rates are going to be rising for that
the time they may, they’re slowly rising but
rising nonetheless
I believe real estate transactions which
last year were 6.14 when you added new
homes they were 6.9
could fall
a million million and a half maybe 2
million units because people will just
stay put
or they’ll keep it and rent it or
one rental at a time, right you move in
it becomes a rental you go somewhere
else so I think there’s a really
I believe there are two things that nobody’s
talking about refinances are going to
fall 75
and
transactions
are going to fall 20
and this means we may need to get
used to low inventory, which today feels
crazy but maybe that’s the future we
can you know we continually have
low inventory because the move-up buyers
stuck
absolutely I agree with you. I think that
that could be a real issue, you know, just
to put into perspective, I bought my
house in September of 2020, so it’s been
a little over about a year and a half
2.6 interest rate 2.6
the average 30-year fix today yesterday
I think it was 4.03 with 0.4 in
points
you know that’s a huge difference
already 1.4 difference in a year and a
half if you go up another percent 2
investors, you know, those who can afford
a home in that range is probably going
to go, you know what, my house is nice
enough I’m good enough unless I have to
relocate
they probably stay put they remodel
their home and they don’t try to lock-in
a rate that’s significantly higher than
what they already have
so they don’t move and that too
your point reduces inventory, so it
reduces supply the rates you know the kind
of reduce
demand and you have you know more of an
equilibrium, but you’re still going to
have I think a seller’s market if you
don’t have a lot of supply
yeah, I think there are a couple of things
so I have a lot of real estate agents
real estate brokers mortgage brokers
follow the channel, obviously
and I i i think some lean times are
ahead so these are times to
you know get on your game market really
maybe try to find investors because
again i think a lot of real estate
agents that i’ve worked with they help
people get in the first home then they
keep sending them christmas cards
because they want to get the move up in
four five six years
i think that
i i really do i really start to think
real estate transactions fall 10 to 20
for two or three years
and i think there’s a lot of people that
aren’t ready for it
there’s a lot of commission that won’t
be paid there’s a lot of uh you know
mortgage fees that won’t be earned
and um
but and that’s probably starting to
happen michael it’s already starting to
happen because of limited supply so
you’ve got you know all these poor
buyers agents who who bring their
clients in and they’re outbid on house
after house after house they’re doing
all this work and not getting paid until
you know they’ve done three or four
times the work to find somebody so i
think you start to see some realtors
drop out of the market that weren’t um
you know that weren’t already really
really strong
and you know that that limited supply
and interest rates together is really
going to cool things off i don’t know
that you have um reduction in prices
though too much because of the lack of
supply at least in in a lot of markets
but it’s going to take a couple years
for so for you know in areas at least
where a lot of people are moving for
building to catch up to allow more
supply to come in and right now with
inflation costs of everything up and
interest rates going up you know getting
a construction loan and and being
builders being incentivized to build
without you know a ton of um ability to
raise those prices really could slow
down construction as well and it could
be a few years before you really reach
equilibrium of supply and demand
yeah i i really do think there’s going
to be less people wanting to sell the
move up buyer there will be more and
more people that follow one rental at a
time where they buy one keep it buy
another one move on
wall street build for rent i’m hearing
more and more about that i think it was
pulte homes or maybe it was beezer homes
one of those that just said that more
and more percent of their build is going
billed for rent
right um
i just i think there’s going to be less
transactions and unfortunately
less transactions does not mean lower
price it just
right those are not connected things in
fact they could be reversed right less
transactions mean higher price because
you know hey you’re gonna you’ll sell
but you’ll sell it some premium number
right
yeah yeah i agree with you and i don’t
think there’s going to be this mass wave
of foreclosures either you know a lot of
people think that that’s going to happen
but people got their loans at low
interest rates so even if they’ve had
forbearances you know the government’s
trying to get these lenders to work out
with them and if they’re in a low rate
and they were to you know in 08 people
walked away because they were under
water and rates dropped so they were in
high interest rate mortgages and rates
dropped so they could just walk away and
buy something cheaper now you’ve got
kind of the opposite where rates are
going up and it might be better to just
get caught up on your mortgage not let
it go and go try to find something more
expensive so i think supply is a real
issue for for a while um especially if
rates go up you know a percent percent
and a half two percent
yeah what i would tell folks if you’re
looking to buy your owner occupied home
it’s
it’s it’s not i don’t have good news for
you i think it maybe get a little better
in the summer
uh as you get we get back to a more
traditional market where people move in
the summer because life still happens
you still get transfers you still have
divorces you still have health issues
but
there’s just a lot of that i don’t know
what i got i wonder if the numbers have
to be out there
right in 6.1 million homes
what percent of those were move up
buyers i bet you it’s 25 30
which would be 1.8 million if that gets
cut in half that’s a million homes that
don’t go anywhere so right right the
other thing that i see you know
happening and we’ve already heard
rumblings of it i actually saw that the
program was here on the non-qm
commercial side but now it’s backed away
is the 40-year mortgage you know so if
if rates go up and it becomes
unaffordable and even prices come up and
lenders come out with first-time home
buyer you know 40-year mortgages those
pro those homes and that kind of
first-time homebuyer price range those
median priced homes in your area they’ll
keep trading but the ones that are you
know more expensive is where you’re
going to have the slowdown yeah
yeah never boring lots of stuff going on
and this again this reversion in the
interest rate the cost of money as jason
hartman says uh is something we haven’t
experienced for 40 years so we’re
learning together so
lots and lots of fun anna how can people
find you great you can find me here
every week you can find me on facebook
linkedin and instagram at anna kelly rei
mom and if you’re an accredited investor
and interested in multi-family investing
syndications you can follow me at
greaterpurposecapital.com
thank you very much anna thank you
michael