WARNING: Real Estate Transactions to FALL 20% and Refi Demand to Fall 75%. What Happens to Markets?

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

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