Recession Market Update

Steve Trang: Shout out to Steve Trains. Jump on the Steve Trains. We real estate disruptors.

Steve: Hey, everybody. Thank you for joining us for today's very special episode of Real Estate Disrupters. Today, we have my good friends, Lizzie Hoefer with Cross Country Mortgage, the number one Hispanic loan officer in the country, and Tina Tambor with The Crawford Report, the resource for housing data in Arizona. They're both in Phoenix, and today's special episode will be about what's going on in today's housing market, what they're seeing, and potentially, where we're going. I am very lucky to call my friends, so when I reached out to them earlier this week, they said they were both happy to come.

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Lizzie Hoefer: Ready.

Steve: Alright. So we'll start with Tina. You're probably getting this question all the time is what the heck is going on in our housing market?

Tina Tambor: What the heck is going on? Well, a number of things are happening, and it's actually something that started last year and is has now been accelerated because of interest rates. So the minute interest rates started rising, above 3.1%, which was the December for Freddie Mac, the acceleration of that cost buyers has pulled out the traditional home buyer more so than they already were pushed out after we dropped below the affordability measures, traditional affordability measures of Greater Phoenix in June. So June, we kinda said, this is gonna get risky for investors because the minute you can't flip that home to somebody who can afford it or you can't rent that home to somebody who can afford it, what the risk is to you is at some point, we're gonna see a diminished return. Okay?

So investors took over or started to take over a lot of the market share, and regular owners, owner occupants were pushed out for the affidavit value that's recorded here in Arizona. Normal percentages were about 70 to 75%, 76, somewhere in there for owner occupant. By the end of last year, that number was 64%. And by April, it was 62%. And so that means that they have not been in the driver's seat, really.

Steve: Mhmm.

Tina: And and the risk factor, again, who's been pushing prices up? Investors. And so investors are who have been taking on that risk. And the risk is not necessarily lost for those who have, like, purchased, say, before six months ago. It's it's really more of a less than desirable return.

Lizzie: Yeah. So she's talking about home appreciation, so future value.

Tina: Yes. So future value basically based off of last year's purchases. So what we're seeing now is much of the supply increases that have happened, most of them are being spurred by investors and builders. The builders who did not have a need for the MLS literally three or four months ago are now finding that their demand has diminished to the point that they are now putting their new homes into the MLS. So that's part

Lizzie: of it.

Steve: How many of those, 14,000 are from the builders?

Tina: I don't have the number exactly, but I know they went from about 11% of listings, which would be your luxury new homes, yours always in there, to about 13% of Yeah. The overall, market share of active listings. The other part is, about 10% iBuyer, which mean open door and Offerpad. They have seen a massive acceleration Yeah. And what they have active versus how many are actually under contract.

Lizzie: They said

Steve: they wanted to dominate the market, and I think,

Lizzie: Yeah.

Steve: They've succeeded in dominating the the listings.

Tina: Yes. And then you have another aspect of it, which are the second homeowners, the, LLCs. If we just look at LLCs, which, by the way, are not necessarily institutions because I have an LLC. I'm sure many people do. So just because it's an LLC doesn't mean that it's an institution, but we do see about, another, like, 15% rentals.

Yep. So what we're essentially long story short, we're seeing a lot of investors dominating the supply.

Steve: Mhmm.

Tina: They are the ones that are feeling it the most. Yeah. Regular homeowners are the least affected by this right now.

Steve: It's, interesting you said, you know, like, a lot of the funds or whatever they're buying these houses. I had a chance to go to the IMN conference, and, all these fun, CEOs, right, are on stage, and they're talking about what they're doing, what their, their plans are for the future, and the reason why they can pay these outrageous prices.

Lizzie: Mhmm.

Steve: And one thing that they said on stage that really, you know, shocked me was they made the bold claim that the American dream is over. Right? The American dream of owning homes is over. Like, we're gonna be like Europe, you know, in five to ten years. I thought that was pretty bold statement.

Lizzie, what are you seeing?

Lizzie: Well, hi, everyone. Super happy to be here. You know, we are definitely seeing a market shift. I do wanna just say that shift is it is a cyclical thing that happens all the time in every type of investment, stock market, real estate market, economies, and so it isn't something to be super fearful of. I know that in my childhood, I had my parents talking about their fears of their parents' fears of the Great Depression.

And what we are experiencing right now with everyone talking about housing crap, like, crashes and a real estate crisis is PTSD from the great recession. So, like, I just wanna start off and say, yes. Like, as somebody who's works in real estate, I am definitely seeing a shift. We are down in mortgage applications. Interest rates have risen two and a half percent since the beginning of the year, which is you know, that means, like, a a buyer who's looking at, you know, getting the same monthly payment has lost about 25% of their purchasing power.

So we're seeing a a significant impact in the number of applications and closings. But for me, as somebody who's worked in this industry for twenty years, I've seen this happen multiple times in my career, and there's nothing that leads me to believe that we are on the precipice of a housing crash. And I just wanna state, like because, you know, one of the comments that I made earlier was, like, hey. This is what she's talking about, is that there's a lot of information being thrown out there about values. And a home value is very different than a market price.

And a market price is set by real estate agents that have opinions anywhere between 520% different depending on the agent that you talk to and the comparables that they are researching and what they believe they're gonna price that home for and what a consumer is willing to pay to get that home today. So a year ago, people were willing to pay over a 100% of a listing price to buy a home. Today, like, I'm seeing more people buy, like, 90%, 97%. A lot of times they're paying list price. Like, I'm not seeing these dramatic price reductions.

And I still there's still a substantial amount of people due to the increases in wages and the strong employment that can still afford homes. Like, one other clarification I'd really like to make is that the affordable housing issue that people are talking about isn't necessarily, like, that there aren't enough people that can afford the American dream. It's that there isn't enough lower priced houses for people that make under the median income. So we do have a problem in, like, is there affordable houses? Mhmm.

Right? But can people still buy houses? Absolutely. And they're still buying them at 6% interest rates.

Steve: Yeah. So I think one of the things that's interesting is the you're talking about the median price point. Right? So, like, median below first time home buyers, that should be fine. But right now, if you've been looking at houses for the last three, four, five months, and you've been waiting for all these listings to finally be available when you're competing against these cash buyers, and they're available, but your interest rate is significantly higher.

Lizzie: Yep.

Steve: Like, what's happening to those buyers?

Tina: So if I could make comment on that. It's not that the the only people really I'm gonna say is freaking out about this is the industry.

Lizzie: Yes.

Tina: Most people, if you're a buyer and you are needing to buy a home, this is actually awesome. It's really awesome. I mean, everybody's been like, I'm waiting for a buyer's market. Well, congratulations.

Lizzie: You're back.

Tina: We're almost there. But, unfortunately, it comes with higher interest rates. Unfortunately, it comes around a peak of price. But what it also comes with is very negotiable sellers. So, basically, what you're gonna see is people real estate agents putting their remember the escalation clause that we pulled off the shelf from 2005?

We're putting that back on the shelf to collect dust. We're pulling off all of the tools that we used to use back in the day, over a decade ago. Hello? Enter the two one buy down.

Lizzie: Like a two one buy down adjustable report. Right?

Tina: Yes. All of those things are in play now. And the sellers are willing to if you know, think about it. If you're a seller and you're coming to you're not looking at taking a loss, you're getting a less than expected return on your investment. Your most sellers are not losing their down payment.

They're getting a less than expected return on their initial payment. So if they have to give up some of their equity, many sellers would rather give it up to somebody who's gonna live in the home than an institution.

Steve: And so elaborate on the two one buy down? Because I think that's something that we understand, but not necessarily everybody.

Lizzie: So a two one buy down is a temporary reduction in interest. So it comes at a pretty significant cost. It's a couple points, and it cannot be paid for by the buyer. So the real estate agent or the seller has to pay for it. But it's, like, essentially, if the rate is 6%, you could buy it down for the first year to 4%, the second year, 5%, and then the remainder of the twenty eight, you know, twenty eight years of a thirty year term would be paid at 6%.

Now what's awesome about that, in particular, along with, like, maybe some shorter term financing, is that there's a lot of industry professionals that believe that because, like, the government is, trying to slow down the economy the economy again. And so if you do a two one buy down, if you enter into a shorter term arm, there's a high likelihood, I'm not clairvoyant, I can't guarantee this, that you'll be able to refinance later on at a lower rate.

Tina: Right. We don't do predictions, obviously, but I think it's a reasonable expectation given history since the nineteen seventies when we've seen a spike in interest rates. It's often followed at some point by a sharp spike down, especially if you're towards the end of a recession. So that's a reasonable expectation to have that sometime between now and the next year or two or three from now, you're gonna have the opportunity to refinance. And so that whole idea of, you know, marry the house, date the rate rate.

Lizzie: Oh, yeah. I've never heard that, but I'm gonna use

Tina: that. Going around on online somewhere, but it's true, where you you get to buy the house and then you adjust your payment over time as you refinance. The thing with the two one buy down that some lenders don't like is that the clients forget.

Steve: Could you point your mic up more just a little bit? Sorry.

Tina: Like that's Yep. The clients forget. So they need to be followed up with the product.

Steve: I guess for yours, it's a point more towards the month. Sorry. Okay. So So so you guys both feel, not know, but feel like interest rates are gonna go down in the next year or two. You don't think it's

Lizzie: Yeah. So, like, in in all fairness, I think that what is happening right now to interest rates is that there is nobody wanting to purchase mortgage backed securities as an investment long term because there is a high likelihood that they'll be bringing rates down. And that's a very, very strong indication for people that are watching the market that says, like, like, when you're deciding on making a an educated guess, because this is, like, what we do when we're investing. Right? We're making the best hedged guesses.

But, like, if you know that investors don't wanna buy, the only cons customer is the US government at this moment. Rates are gonna be super volatile like we've seen. So and,

Steve: But you think that there are people that are wanting to buy mortgage backed securities or waiting because they think the interest rates are gonna be lower?

Lizzie: Yeah. Like, once the market is more stable, you have more investors that wanna enter into the market. The problem is that a return on a on a mortgage is, like, three years of payments. Mhmm. Like, it sucks right now for most mortgage companies.

Right? A lot of mortgage companies, like, are in a really unique position. It's very expensive right now to get the lowest rate possible. If they sell the lowest rate possible at that peak of the market, there's it's so many products. And they give you so much yield for those products.

And right now, they're being very stingy with those things because all of the agencies also know that there is a high likelihood of them bringing interest rates down. And so mortgages right now are probably the most expensive I've seen in my career. Yeah. Not the highest interest rates I've seen in my career, but the most expensive. Can

Steve: you elaborate the difference between expensive and rate?

Lizzie: Yeah. So, like, I've I've worked in the industry since 2002. So interest rates at that time were anywhere between, like, seven and nine percent. And so I got to see them come down from there to, like, five and a quarter was, like, historically low rates. And then I've seen it trail all the way down.

And a mortgage back then, I mean, wasn't close to $300,000. Like, it just wasn't. And you didn't have to pay as expensive of a cost. Like, I mean, it's not unheard of to see, loan estimates with one to two and a half points, like, discount points right now to get a competitive rate.

Steve: Got it.

Lizzie: And so that's what I meant by, like like, the loan amounts are greater, the cost to get that interest rate is higher, and in general, interest rates at 6% are not historically low anymore.

Steve: Got it. So, you made the comment that it seems like the industry is freaking out more than buyers and sellers.

Lizzie: Yes.

Steve: So, I think, I mean, you're talking to buyers every day. What are, you know, your buyers telling you when they're when they're house shopping?

Lizzie: We've seen a very large increase in cancellations because people are very uncomfortable with the monthly payments. It's a sticker shock. We deal with lots of buyers. And and but I will definitely say that, you know, like, there's a lot of misinformation from real estate agents.

Steve: I I think a lot of misinformation is probably an understatement, but continue.

Lizzie: I know. And it's hard because, like, consumers get informed by what they see online, like, via the news. Like, there was this headline that was so annoying. It circulated, like, 20 times. Interest rates plummet to 5.3%.

Lowest drop in, like, twenty years or whatever it said. And I'm like, you guys, yeah, because two weeks ago, in two days, interest rates were, like, 6.625%. And so, yes, that is a steep decline. But guess what? That 5.3% interest rate that the news reported is already one week old based on the Freddie Mac interest rate survey, and it's no longer plummeted.

And then you just can't base your facts on that. And, like, most real estate agents don't know what's going on. Like, I talked to someone today, and they're like, Lizzie, we're headed for a crash. Values are going down. And I'm like, woah.

Woah. Woah. I'm like, values are not going down. Well, how can you tell me? I I this house is selling for under appraised value.

And just so you know, guys, seasonally, there are times of the year when homes will not, like, appraise, and there's homes times like so for instance, I know March and May are the most difficult times for a home to appraise because the preceding six months are the slowest times in real estate.

Tina: Right?

Lizzie: It's like you get Christmas, January, February, and that's what they base home values on. But then you have people who are willing to pay higher prices then because there's more competition, and that's market price. Right? So market price is what somebody's willing to pay today. Now a home might be worth 390,000, which is, in this case, is what happened, but that home sold for $3.60.

It was listed for $3.70. Obviously, that real estate agent didn't list the house for $3.90. Again, like I said, there's that huge variance between opinions of value. It's like the appraiser and the real estate agent looked at the same information, and they didn't sell it for $3.90. Right?

Now that buyer didn't lose $30,000 in equity. Do you know what I mean? Neither did that seller. They didn't even know they had that equity.

Tina: Well, I think what the sellers are experiencing and what the realtors are experiencing is that we have seen a shift. So, again, since last year, we have seen the traditional home buyers pull out or be pushed out essentially by these investors, by a lot of institutions. You've got the institutional flip investor as well, the Open Doors, Offer Pads, and, of course, Zillow before they pulled out as well. So you had these corporations that were willing to pay significantly more than the than the consumer. So they started driving the bus, Okay.

In a sense of this price appreciation, that's where the risk came in. So the market, as of today, you know, flash forward to the last, technically four months, but really becoming extremely noticeable in the last four weeks. Because institutions, as the interest rates pushed out more and more traditional homebuyers, the institutions and the cash investors were the ones in control. And when they realized it, they pulled out waiting for prices to come down. And some of these institutions even pulled out of their escrows, just relinquished their earnest money, and said we're gonna sit on the sidelines for a while and see how this all plays out.

Steve: So the the the funds that are buying these properties, you're saying even as Yeah. Four months ago, they were starting to see, oh, crap. We're the ones Yeah. Buying all the houses. We need to pull back.

Tina: They were the ones well, we've been telling them this for a year that they are the ones pushing the prices up. I mean, who would have thought that in Greater Phoenix, in the latter half, in the slowest period of time, the the last half of the year is typically a decline in demand. From the peak, which usually hits us right around March, April, May, and what's under contract all the way to December, it's a gradual decline. Well, right after June, all of a sudden, Zillow and Opendoor decided to have a clash of the titans in Greater Phoenix, pushing prices up, saying we're gonna take over the market, and then they then they got to win. Whoever won got to take the trophy of most losses in 2021 Yeah.

Which I believe Opendoor won that for the year of 2021, and Zillow won for the year their entire career of flipping from 2018. But, anyhow, aside from that, the thing is that that that created a a perception that demand was just going crazy. But what happened is those companies had to sell to, guess who? Somebody on the other side because they're not holding properties.

Steve: Right.

Tina: And when the the general population is pushed out, guess who they were selling to? Institutions. And so when institutions pulled out, they are now having to turn their attention, them and the builders, are now having to turn back to the same people that they pushed out and kicked to the curb for the last year or so. Saying, hey. We'd really like you to come back now.

And what if we pay down your interest rate? What if we pay your closing costs? I mean, this is actually the time where you got that 3% down FHA buyer that needs a little bit help. Mhmm. You can walk them down a runway right now and auction them off because they are they're golden.

So

Lizzie: I actually wanted some clarification on that statement. So because, like, I am not seeing that it is a buyer's market at all. Like, I am still seeing that my clients are paying asking price. I don't see a lot of closing costs at all. I still see bidding wars.

And and I know that it's gonna come. Right? So but there is this other thing with, like, and and I've heard this for a long time, and so I just I'm really, really interested to know is right now rental prices are, like, the highest they've ever been because people have fled, you know, traditional purchasing. They've now gone to the rental market and rental prices are surging. So there is a still large demand of families that need houses.

Right. And it was my understanding that for the last, like, fifteen, twenty years that we had underbuilt for population size. And so I've always tried to tell people that, like, yes. It's way more buyer friendly right now. Like, way more buyer friendly.

But it like, I don't think we're even close to 2018 conditions where it was flipping, you know, where it was like I mean, like, you listed house for $3.90. You maybe bought it for $3.50, and they paid your closing. Like, I don't see that in my experience or my information, and I still think that we are in this position where it's like a math problem at some point. Where, like, people need the houses, but there isn't enough of them.

Tina: Well, here's the thing. We have, you can have your population continue to grow and have your demand drop. But when we

Lizzie: when we

Tina: look at yeah. So when we look at the housing market, first and foremost, we look to see, do you have enough homes for the population that's here? And I believe that our homeless population tells us no. Okay? Even during the 2008 crash, we had zero problems with homelessness.

We have a big homeless problem right now. So there's part of that question. We also have, an allocation problem, as my friend Tom Ruff would say, in that we've had a lot of our supply pulled out by short term rentals, and they're only available for tourists. Now that's a whole another discussion about what's going on with Airbnbs and VRBOs. We're not gonna get into it today.

But the thing is this, when things become unaffordable, the way you see vacancies arise even when you have a population growth is, a term called household formation, that that, measure of household formation. When you see household formation shrinking, that means people are moving in together. The landlords might be getting the peak of their rent, but they are now having, their own what's the word I'm looking for? Concessions, if you will. They are accepting multiple roommates.

They are accepting pets if they are getting their rent. Now the minute a lot of these other units come available, the build to rent whole thing, when they start coming in and they're already starting to become open and competing with additional with the landlords on that scale, then, we'll see how that goes. Because we're kind of in the throes of this shift right now, and everyone's kind of, you know, wondering when how long is this gonna take to recover? How long is this gonna last? And meanwhile, we still have the tornado going through the town people.

We have to wait. Yeah.

Lizzie: We have to wait for it to

Tina: You know, the tornado being interest rates right now. We have to wait for this period to be over before you can actually look at the damage. And so what the interest rates have done is they pulled the emergency brake on the housing market, and it's on purpose. Because the federal government is trying to bring down the inflation rate. Now when you look at what is what's the calculation for inflation?

Rentals. Rent the rental equivalent of your home is a 40% weight on the inflation rate. So if you bring down the cost of housing, it's a math problem. Once that inflation rate comes down and the rentals get into, you know, whatever you call wherever they're looking for. I don't know.

It's we're kinda at the whim of these cats right now. But the thing is is that that, that is their main goal. And so they're attacking the big piece of the pie.

Steve: Was it necessary, though, to, like, pull the brakes that hard? Like, could they not have eased into it?

Tina: Ask me how to do it, and I would've told them my suggestions that you No.

Lizzie: The the thing is that, like, the cost of goods and services are kind of out of control. Like, we have the highest inflation that we've ever seen. And the thing about it is that, like, this is how I also know we're not headed into a crash. Mhmm. Is that real estate?

I think it makes up, like, more than 25% of the overall US economy. Mhmm. Like, in terms of the number of verticals that it impacts. And so because it is a large driver of what's happening, it is the fastest measure and the fastest way to correct, right, our economy. But it also is like one of those things that's like a a train.

Like, once they've corrected it, you have to, like, wait for the whole thing to go around. But I believe because I know population Mhmm. Issues and the undersupply of just general homes, that once they lower interest rates, we're gonna be right back to

Tina: Yeah. So to that point, to give a visual of what the interest rates do, they pinch the hose, if you will, of demand. And so that pinching creates, you know, what you could call it shadow demand. Because, you know, I'm just looking at my own, which I hate to use the word shadow, but

Lizzie: it is a trigger word.

Steve: But I do don't know if there was this whole thing in 2013 and 2015 about

Lizzie: this To 2020 and

Steve: Shadow inventory that never existed.

Tina: If we're yeah. So anyway, aside from that. And I'll I'll talk about a little bit of your feeling about why we're not in a crash and my feeling why we're not in a crash, and let's define crash for one. What was my train of thought? Anyhow, the thing is that, I lost my train.

So I hate

Steve: Well, I guess, so other thing we're talking about, right, is, like, they could I mean, having Jerome Powell, the the Fed chairman, come on and say the housing market needs a reset is a pretty bold statement versus, like, hey. You know, housing's a little out of control. Maybe we need to slow it down. Maybe we can need need to buy fewer mortgage backed securities versus, like, hey. We need Well,

Tina: okay.

Lizzie: So that was actually not the issue. Truthfully, they just didn't understand how housing works. And Yes. If I had been in charge

Steve: central bank.

Lizzie: They did not they said that they literally don't understand how inflation works the other day.

Steve: That was just also terrifying.

Lizzie: But the thing is that a a good housing market, it was too weighted in favor of people with cash, like investors. And, like, it should have been, like, we give you this amount of tax break to sell your home to a first time home buyer.

Steve: Mhmm.

Lizzie: Or we like, those are the types of things that should have happened to keep occupants in the homes to make it a more

Steve: stable price. The homeowners to sell it to home, occupants. Primary versus selling to anybody.

Tina: That's right. So if they really wanted to slow down the market, if I could give two scenarios of the two thousand five bubble, which was the precursor to the two thousand eight crash, versus the last year and a half or so of our new price appreciation versus, you know, where we're going now, is that the Wall Street money. Wherever you see a lot of Wall Street money, you are going to see excessive risk. And back in 2005, Wall Street was investing in mortgages. And that's where all of that credit all of that credit that was available created, more pressure on loan officers to lend and all kinds of crazy programs came out.

I mean, we're not gonna go down that road, but it was a lot of high foreclosure risk loans. Okay? So Dodd Frank came along and basically put the kibosh on a lot of that type of activity. I think they might have did they take prepayment penalties out as well?

Lizzie: No. It's just a non QM.

Tina: It's okay. So the thing is that since Wall Street kinda got out of mortgages a little bit more on that end, we stabilized and then they started putting their money directly into the houses themselves Mhmm. Becoming landlords. Then Open Door came into our lives in 2015. Offerpad came into our lives in 2016.

They went public in 2020. Okay? The minute all that Wall Street money started coming in, guess what? That mark that model got super risky. And Opendoor and Zillow and all those guys started pouring money into it and pushing those prices up beyond the affordability of the local person.

So if you wanted to stabilize the market, if that's what they should what they should not do is take out the regular person spending their own money, being more conservative in their purchases.

Steve: So they had a goal and they did exact opposite to accomplish that goal.

Tina: What they did is they took out the one conservative buyer and left the crazy person at the party pouring drinks for everybody.

Steve: Yeah.

Lizzie: But they're like, they have what's so annoying about policy though is that, you know, we had this imaginary first time home buyer grant programs that were proposed in Congress now, like, two

Tina: years ago that had made no sense that would have

Lizzie: At that time, it makes no sense. Sense. That would have At that time,

Steve: it makes zero sense.

Lizzie: Yeah. And it would make it wouldn't have improved anybody's, like, competitiveness against somebody who's paying a $100,000 over.

Tina: Mhmm. Exactly.

Lizzie: You know? And so it's really annoying. Right? Because I believe that this rapid acceleration, like, two and a half points on is is so aggressive, you know. And I think that it'll take a second because it like, there's what's really difficult about working in real estate is you have a six month lag on expectations.

So for, like, the next six months, sellers will still think it's, like, well, I want 60 offers on my property. Do you know what I mean? Or, like, people still think interest rates are at four percents or 3%. And so you just have to wait it out. And then there's so many people in the industry right now who think that they're just gonna make so much dollars because the last two years they did.

And it's like, we have to wait out for the lack yes. The new the people who shouldn't be in the professionals to get out, and we have to wait, like, six months for expectations to change.

Steve: We had that great thing, right, with COVID where everyone got paid to stay home and right? So they actually I don't know how many licensed realtors we had that year, but we were paying people to stay home.

Tina: Wanna talk about it. I'm sorry. But you know?

Steve: Well, those are the realtors that are gonna be struggling

Tina: Yes. Right now.

Lizzie: But yes. That's cool. Everybody who just got in thinking that this was an easy way to make money. Like, real estate

Steve: is easy to make money in real estate.

Lizzie: Well, even if you're He's he's you know what? He says this with zero expression so people might actually believe you. No. Yeah. Being in real estate is like being on professional crack.

Like, you're just highs and lows.

Tina: Well, let's talk about real

Lizzie: quick though. To your point

Tina: I love us.

Lizzie: To your

Tina: point about those of us who lived through the two thousand eight crash, a lot of veterans of that time are going through a period of PTSD right now.

Steve: Oh, sure.

Tina: Because of the the rapid response. So I I I compare it to a trust fall. Okay? As an analyst as an analyst, we have looked we have analyzed that 2005 through 2008 to the nth degree. We know exactly what caused that.

We know that we have a lot of different things happening in this market that makes it unique all by itself. But what we do have that we didn't have in 02/1967 is a strong base of stable homeowners with stable loans and stable equity. And that is what's going to catch us. And but in the meantime, we have to fall through all of the risky stuff. 18% of everything in the MLS right now was purchased January or after.

18?

Lizzie: 18? That's

Tina: a lot. Percent of everything that was in the in the MLS as of last week, that's my last week number, was purchased this year. So you have to get through all of these desperate sellers. So what we look for when we say, say, okay. Well, we

Steve: Desperate sellers as in, like, we're talking, like, Open Door or we're talking, like, other flippers.

Tina: Builders. Flip people who have been engaging in the most riskiest form of real estate, which are wholesalers, which are flip investors, which are, builders who might have been overbuilding a little bit or got caught because they were selling to investors, some of them.

Lizzie: Mhmm.

Tina: All of those people are the most motivated. So what happened back in the crash, because of all of those risky loans, people couldn't get out of them. We created a lot of desperate sellers. The only seller we have today that's an owner occupied traditional seller is somebody that's just disappointed they're not getting an extra $10,000 of equity. They're not having to dip into, like, I paid more for the home than I can get.

You know? So it's totally different scenario. I

Lizzie: I don't experience that many unhappy sellers though either. I I really truly don't believe that people are aware of, like, that person that could have sold their house for $3.90. It's like

Steve: No. But when they list their house on the market, it's like, I can't believe it's been, like, two days, and my house hasn't sold yet.

Tina: Well, they're looking at my neighbor. No. I know

Lizzie: that was literally it was like, this home is sat on the market for five days. What is wrong with this cycle? I've only had one showing.

Tina: The conversation is more like, my neighbor four months ago listed and sold for this amount of money. They had a line around the corner. They had 57 offers, half of them cash, and they sold for over list price. Now here I am four months later, why am I not having that same experience? And you're like, let's have a moment of silence for that market.

Okay. Let's just have well, let's just appreciate that we had it and go through all of our five stages of grief because it's not coming back. Okay.

Lizzie: But, like, what are they really missing out on? Like, somebody who bought a year ago and sells their house today, like, I think the national average was $65,000 increase in equity. Right. I mean, that's like

Steve: what they're missing out on is not having the multiple offers, not having people waive their appraisals Yeah. And so on. So let me ask you this, Lizzie, because you're again, like, you're on the front lines on the mortgage side. Right? Like, before they even make an offer, they gotta talk to you.

Lizzie: Yeah.

Steve: Right? So right now, are they telling you, like, hey. You know what? I need to take a pause.

Lizzie: Yes. We've had a ton of people take a pause. Mortgage applications in general are down. Like, it I mean, I I think it was like 34%. It's down.

It's I like it's it would be ridiculous, ridiculous, guys, to not acknowledge that. But I will also say that we had record, like, record number of applications. Like, I used to call it mortgage armageddon because

Tina: I felt like it was just, like,

Lizzie: flying at me every five seconds. So it's like, it it's all relative to the time period that you're in. Mhmm. Like, it's all like yeah. Like, you know, I remember the headlines, like, was it right when forbearances were off?

It was like like double digit increase in foreclosures. It's like, yeah, from zero to 10 is a double digit increase. You know? But it's like it's relative for how you see it. Yeah.

And a 2% increase drops 25% in someone's purchasing power. Yes. People are gonna wait. They're gonna try to rent. But what ends up happening is literally, like, it's, rents rentals are always a lagging indicator of what just happened in housing.

So, like, I have seen lots of people, like, bidding wars on a rental. Like, I know you said that renter landlords are being more flexible.

Tina: So many of those anymore.

Lizzie: I still am seeing people be very aggressive on trying to get a rental property right now.

Tina: Just, in the MLS, the rental stats, from June when affordability was still good, frankly, the landlords were about 71% of all the leases that went through the MLS, successfully closed leases, were at lease price. Awesome. But actually about 79% were at or over lease price. But today, that number is not nearly as high. Today, for the month of June, which is typically a high month for rentals, you're only looking at about 54% are at are at list

Lizzie: for rentals.

Tina: And another 4% might be going over lease price.

Steve: Though because they're really being aggressive in their pricing as well or no?

Tina: Yeah. Because we're looking at the last well, actually, a lot of them are I go I have been using the original lease price. So there are lease price reductions happening, and there are negotiations. And right now, the gap between the asking rent and the successfully closed rent is about $95 a month. And that happened that gap started right after June.

So this isn't anything new. Rentals in the MLS, which, let's be honest, that's the last resort for landlords. Nobody wants to put their listing in the MLS. Okay? Because, a, it takes forever.

B, they have to fill out all kinds of you know, they have to follow-up and tell us what they actually got in rent. That's the only place we can actually tell you they're not getting what they're asking for.

Steve: So but going back to to you, Lizzie, like, they're saying they're taking a pause. I mean, they have to be taking a pause for a year then.

Lizzie: They do. And they take or six months or they go to live with family or I've had a lot of clients, relocate out of state because now a lot of employers are allowing them to work from home. Mhmm. I I'm I'm interested in looking at that rental statistic, not that I don't totally believe you. But there's been a lot of national headlines that are talking about, like, the surge in rental prices.

And, like, just, like, if these people exit the home buying market, they they have to

Steve: They're the most qualified renters in history.

Tina: Yes. When you hit a peak of rent price, okay, we have seen a 13% gain in and now, mind you, the MLS does not typically have a lot of the low end rentals. Okay? If you're going in the MLS, you are usually on the higher end, single family, a lot of single family in there. So it's not the entire pie.

And it doesn't include apartments. Yeah. But it it does give us a window into what's happening. Sure. We had a 12% increase in the MLS active listings for rentals in three days because of one investor.

I don't know who their property manager was, but they must have had carpal tunnel entering about 300 to 400 new rental listings in a three day period into the MLS. And so as a result, we are up almost 50% from January to just as of couple days ago in that inventory. And I took the highest count of listings since we've been counting actives in the MLS for rentals going back to 2018. So we are now surpassing the regular normal rental inventory that we were used to in 02/2018 '19 pre pandemic. So that tells us that all those institutions that were buying rentals like crazy for a lot of money, now we're putting them on vacant at their higher prices, but they may not be getting that higher price because people cannot the market can't bear it.

Lizzie: That's interesting. Yeah.

Steve: I have a theory. I'd love to get both of your takes on it.

Lizzie: Yeah. Mhmm.

Steve: Right. So right now, we got, you know, people taking a pause. Right? They're looking at this like, holy crap. You know, please give me more listings.

Okay. You've given me too many listings. I'm gonna, take a pause. But I think that once we clear, you know, these people that have kinda given up, we got new people getting married, having kids, moving here to Arizona, which is, I'll have to get a reminder from you how many people are moving here every single day. But we have fresh set of eyes who don't have the comparisons.

Like, man, like, this sucks. Like, last year or last month, I qualified for 400, and I qualified for three sixty. Right? Like Right. We don't have those people that are really disappointed.

They come in with a fresh set of eyes. Right. Are they not going to just get our demand right back up?

Tina: So that I don't know. Well, here's the thing. By the time we get the migration to information in, it's already a year old. So whatever I tell you is from last year and it's kinda, you know, I won't know until July, about last July. So so you have to kinda take that population migration data with a grain of salt and realize that it's old data, but it's still good data.

Some of the migration reports from the moving companies, one of the things I noticed about last January when I think it was, it's I'm trying to remember the moving company. I wanna say it's something like North American or not Atlas. Anyway, one of them asked a lot of demographic information. What I've learned from tracking that report every year is that we are losing more of our retirees. So we are seeing fewer retirees moving to Phoenix because of the cost of living, but we are gaining a lot of younger people being relocated because of work.

And that statistic actually changes our incomes significantly because a fixed income retiree is going to register as a low income individual even if they have a high wealth. But the working family will increase that that median family income. So case in point, before before this year, the census, which by the way was a dumpster fire. It's the 2020 census. I won't go into it.

But anyway, our estimated family income was 79,000, but the new updated one was 88,800. Yeah.

Lizzie: Which is a lot more than mine.

Tina: Pretty huge jump. And and that tells me as well that you may have people that are working here remotely for companies outside of the state, even though we have people relocating out on the other side. Yeah. But you have people that might be working for a San Francisco company living here, and that income was delayed in getting to us because of the rapid relocation issues and twenty twenty issues for those companies having to register with the states that their employees were going to in order to get that income for taxes. Right?

So there's a lot of that that I think is still happening.

Lizzie: I think what's really difficult to, like, predict with migration or just like you know how, like, people always estimate, oh, well, all of these new corporations are coming here. It's it's just that it's it changes all the time. Like, for me, I have felt that the the census data, it never is on track. Like, it drives me insane when you're like it was it was 79,000, but before it was 79,000, it was 64 that I was like

Tina: Yeah.

Lizzie: This is not right. I'm like, I qualify people all the time. And I deal with first time homebuyers. I can tell you that they make more money than this. And what I think is interesting is that they've said that in like, incomes have increased almost 6% from last year.

Like, that's a pretty significant increase in people's affordability. And, like, one thing that, you know, because I was, like, super nerdy. Like, back in, like, 2005, affordability was, like, in the 40%. Like, it was just not affordable then based on the price of the home and someone's actual income.

Tina: When was this?

Lizzie: Back in the housing boom.

Tina: Oh, yeah. Like, got

Lizzie: down to 47. Was, like, really terrible. And so but it no. When you're just looking and what I'm talking about is, like, the mortgage payment to someone's income. Like, the housing ratio.

Got it. Right now, we're, like, 29%, which is very in line with people can afford homes.

Steve: Yeah.

Lizzie: You know, so, like, when we're talking about, I still think that Arizona is relatively affordable. We're not, like, the cheapest. Mhmm. But I still think it's a very attractive place for people to move to. I think just immigration migration that they were talking about, because I think our Gen z population is actually smaller in The United States than our millennials.

But, like, with migration is is expected to be 10% larger.

Steve: Yeah.

Lizzie: And so I just think that there's so much opportunity for people to purchase here in this marketplace still being affordable with great salaries.

Steve: Yeah. So as long as so that goes going back to my, you know, hypothesis is that, yeah, if you've been trying to buy for the last three to six months, you basically say screw this. But if today you decide to go look for houses, like, okay. Like, you have nothing to compare it to. You can't see, like, well, this house I'm looking at right now is way worse than what I was looking at two months ago.

Lizzie: Mhmm.

Tina: Right. Well and the interesting thing too is that, just to four months ago when we were in aggressive seller market, that is the perfect time for what we call dump your junk. I mean, you get really

Lizzie: My nonwortable condo.

Tina: Yeah. The fixer upper homes. Sellers don't have to fix their roof. They don't even have to clean up the dog poop in the backyard. Right?

They don't have to do anything to sell their home or house. Right? Depending on what

Lizzie: how low you are on that,

Tina: on that scale. But now now as we are coming out of that, we have actually come out of that market completely, and we are entering into a balanced, possibly a buyer's market in a matter of weeks at this point. This is now the perfect market for your not so perfect buyer. So on the other side of the scale, you have a buyer that's been, you know, kicked in the gut for two years or so now. Now they are able to come to the if they can still shoulder the rate, right, they can get sellers to pay for a lot of things.

And the quality of home that is available because of the supply increase, is much higher and the the willingness of the sellers to do repairs is much higher now.

Lizzie: So

Steve: So I think I was reading, the coffee report. Mhmm. And what we see is, like, we've been going a hundred, hundred and a half, 101% Yeah. Of a sell price to list price. And now your, Crownper is predicting potentially 9 we're going back to 98 percent, 97% plus We're

Tina: already at 99.

Steve: 3% concessions I know. Plus home warranties.

Tina: So this is what happens in the last part. So here's what happens during your shift. There's three things before sale prices end. The first stage is price reductions. So we saw fourteen weeks ago, we started to see price weekly price reductions moving up, and they're up over 500% in a fourteen week period.

So that was the first stage. The second stage is days on market. Like, oh my gosh. It's a whole two weeks now. Woah.

But it's gone up over the last seven to nine weeks now. That has been inching up an extra day, extra day, extra day, extra day. The third thing, when you get towards the peak of price, the third thing is the cost to the seller. You might get your price, but you are paying something underneath that price. And when seller concessions no longer work to get your home sold, then your sale prices start to come down.

That's why it takes so long, three to six months, to see the result of today's market in the actual numbers.

Steve: And I'm not.

Lizzie: So sorry. Just because, like, I think it's just so important because I think this is where everyone gets it. Mhmm. Like, again, like, people list their house. Like, your house might be worth, let's say, $300,000.

Right? Mhmm. Most people will list that house because it they bought it, like, six months ago, 300,000. They'll list it at $3.20, or they'll list it at $3.10.

Tina: And Which no one would have done in 2018, by the way,

Lizzie: to go on. But my point is that they, like, they list it for higher than what most people think that it's worth. Mhmm. And so does that actually impact the value of your house, your sales price? And and I think that that's, like, what people get stressed out about is that if I buy this house today, is it gonna be worth less in a year from now?

Tina: We don't do those predictions.

Lizzie: But Because you'd yeah. Because you're talking about just market price.

Tina: If you are only gonna hold your home for a year, this is not the market to buy.

Steve: Never buying.

Tina: This is not the market for that.

Steve: So you were talking about, you know, the price reductions. And this is the thing that really aggravates me, you know, talking to other people in our industry.

Lizzie: Mhmm.

Steve: They're freaking out. Like, look at all these price reductions. Like, price reductions are irrelevant. Right? Everyone's been testing the market.

Like, if you asked me five years ago, hey, Steve. I wanna sell my 300,000 house for $3.30. It's like, I'm not your I'm not your agent. But if, you know, six months ago, Steve, I want you to list my house for 300 for $3.60. Let's roll the dice.

Let's see where this goes. I have no idea Absolutely. What's gonna happen. Yeah. Right?

And now so everyone's freaking out with price reductions because everyone is rolling the dice.

Tina: Well, let me tell you. Like, this is the market that pros are made in. And, and I've said it before, and I

Lizzie: say

Tina: it again. When you have an excess a seller market like what we've just been through, it does not take a lot to be successful. Even a turkey can fly in a hurricane. We all know this.

Lizzie: We were all turkey people. We were all turkeys. We didn't know who's a turkey and

Tina: who's a real bird. But I'm telling you that this marketplace going into a bal a a balanced market, certain models, business models will not work. And we've known this historically forever, that we've been in a seller market for so long that these, flip models are very, very risky when you go into balance. So you have to really know your trade. You have to be very good at knowing what your timelines are, what your holding costs are, and you have to get below that market value because if you make a bad decision, you cannot ride appreciation every month and make up for it.

You have to be smart now. And so that means that business models like the corporate iBuyer may not do so well because they require volume, because they're working off of algorithms and they require the volume to offset their risk. Mhmm. Well, if you don't have the volume and you're accumulating inventory and you're having to do price reductions now, that's, that's very telling. And and as they move through that inventory, we have to wait for all of that inventory, all those desperate sellers, if you will.

We have to move through our desperate sellers and get to the other side, and that's where our base of stability is.

Steve: So I know that we do have to respect Lizzie's time. She has to be somewhere.

Lizzie: Oh, sorry.

Steve: So No.

Tina: It's okay.

Steve: I got a few quest questions here from online. So Haru wants to know, how is rent relief ending going to impact the market? I don't think we really have that in Arizona. I think that's more of a California thing.

Lizzie: I don't know about that. I'm sorry.

Tina: I'm I'm unaware. Are you talking about, the I mean,

Steve: all those people that

Tina: getting paid by the government to keep their tenants in there.

Steve: Yeah. I think that or, like, they weren't be they weren't allowed to be evicted, and now they're finally allowed to be evicted.

Lizzie: I thought that was over a year ago.

Steve: No. I think that just ended in California.

Tina: There are definitely evictions that have been happening.

Steve: Yeah. So then another question

Lizzie: I don't think we know.

Steve: Yeah. During 02/2021, weren't the majority of the buyers, wealthy buyers, buying second and third homes that further exacerbated inventory due to unavailable building workforce?

Lizzie: I think that a lot of people purchased second homes, and they saw that an accelerated amount of people were purchasing. And they made it way more expensive early on for those types of buyers. I mean, the majority of people that we help are first time homebuyers, and so I don't know a 100% the answer to that question. I know I know industry wide, they increased the cost of second homes. Mhmm.

And I do believe that a large percentage of the inventory that was lost was because people retained their primary residence instead of selling it when they were vacating it.

Tina: Okay. Yeah. Well, I can I can comment a little bit on that? So the thing with second homes, in Arizona, when you purchase, you have to file an affidavit of value. Okay?

And tell the government, are you gonna be a second home, a landlord, or owner occupant? We don't have a category for short term rental, and we don't have a category for flip. Okay? So there's a little bit of gray when it comes to second homes. For example, Open Door is a second home that they throw themselves in the second home.

Oftentimes, the short term rentals, if they're gonna plan to live their six month in a day, they throw themselves in the owner occupied. But some of them put themselves in second homes. Sometimes they put it in, rental. So it's really kind of a mixed bag. But let me tell you what happened to what happens with second homes and let's just merge it in with with short term rentals, if we will, that there is a risk of vacancies.

When we look for what could cause properties to decline, we look first and foremost at what will cause a vacancy. Vacant homes, the longer they're vacant, the more the price comes down. Whether they're vacant for rental or vacant for sale, doesn't matter. So second homes, especially outside of the greater Phoenix area in some of our, you know, Show Low, Lake Havasu, or even parts of Scottsdale where you have a lot of short term rentals, those are risky because when we go into recession, the first thing to go out of people's budgets, when gas goes up, food goes up, they're not going out. They're not taking vacations.

So short term rental industry is seeing a bit of tightening up, and they have a lot of competition. Some people are gonna hold on with white knuckles until the Super Bowl maybe. But, the thing is that, you are seeing some vacancies in second homes. Also, what happens when people are feeling very rich, cryptocurrencies went through the roof last year.

Steve: Not right now.

Tina: People are feeling very rich and they're getting lots of commissions or lots of returns on their investments. They start to, this happened in 2005 as well. They start buying second homes all over the place. When they start feeling less confident that they can maintain those homes, they start putting them up for sale. And we have seen second homes, also go up.

So another statistic for what's active in the MLS right now, 55% of everything that's active is vacant. Meaning, it's vacant either because it's a new home, it's vacant because it's a flip, or is it vacant because it was a short term rental, or is it vacant because it was second home for somebody? Yeah.

Steve: Or they're selling their rental properties.

Tina: There's not yeah. And the thing with crypto and the reason why, you know, you because you're working for first first time home buyers, a lot of that market was fueled by cryptocurrencies going crazy in the latter part of 2020 out of the blue and then sustaining through 2021. And so now you've got this massive downturn, so fewer people are making returns on that investment. So, we might be getting more to a normal market.

Steve: I would say fewer people are making returns. I think a lot of people are losing a lot of

Tina: that. Yeah. I didn't wanna it's blood in the streets.

Steve: They're giving it back, all those returns.

Lizzie: I mean, it was never real anyway.

Steve: Well, it

Lizzie: depends on who you talk to.

Steve: Agree to disagree. Anyway, so Lizzie. Right? I I am a a first time home buyer. Yep.

Right? I I call you, and I was like, Lizzie, I am really worried about what's going on.

Tina: Mhmm.

Steve: What are you telling those buyers?

Lizzie: So I tell people that you buy when your budget says it's ready when you have a real housing need. Right? So, like, you know, there are times in people's lives when they should not be homeowners. When I bought my very first house, I was 23 years old. I needed my brother to help me afford the payment.

I bought it on a two year arm, interest only because I anticipated getting a raise in two years. Okay? I didn't have a whole lot of assets and I should never have purchased that house. And in fact, it made my life so stressful. And I wish somebody had said, you know what, you're better off renting.

In fact, I was better off renting. I was paying a, like a thousand dollars less for my rent. And so in that circumstance, if you find yourself there, no. But if your budget is in line, if you have assets, if you understand that a real estate purchase is an investment, like, intended to give you a place to live, like, it is security, then now is as good a time as any to purchase. Real estate doubles every twenty years, and that's even true for the great recession.

Like, if you bought a home in 2005, that property is almost doubled in value. And there is nothing like that, right, that you can find in any other kind of investment. Most people, even in a market like now where it's shifting and appreciation they're projecting is gonna be somewhere around 3% next year, Right? Even at that, right, you will still get a 100% return on your cash investment about one and a half to two years. It's like, again, there's just nothing else like it.

So that's what I'm telling first time homebuyers is what I'm telling most people. Buy when your budget says it's ready, when you have a real need in housing, and you're prepared financially.

Steve: And you have a tool to help people figure out when's the right time to buy.

Lizzie: So I have a budget guide right now currently on my website, but we are rolling out an app called Smart Sense. It hopefully will be launching January. So I'm really excited about that, and it's just a tool to help people, be able to budget and set long term goals for finances.

Steve: Yeah. And then you were saying, your thesis as to why the market's not going to crash. We were kinda touching on it earlier. I don't think I got a chance to have you finish that statement.

Tina: That's okay. So, well, first, I wanted to define what is a crash. Because if you talk to me and some of the the veterans of real estate, we go directly to 2008 and you're like and I'm sitting here going, so you think our property values are gonna drop 55% back to $200,000? I don't think we're gonna have to go that far before affordability gets better and that some people get, back into the game. So is it possible that we could go into a mild buyer's market for a brief six month period?

Potentially? Yes. And in buyer's markets, you get less than the rate of inflation for your annual return. If we go to say let's just hypothetically say we go to 0% December to December. By the end of this year, you have 0% annual appreciation.

We're exactly at December pricing. That's a 15% drop in price. That is a correction. That would be correcting a frothy market that was most likely just really frothed up by investor activity and not based on population growth, not based on affordability, not based on a lot of our basic economic factors that would tell us that that's sustainable. We've known that this was not sustainable for a while.

But correcting back to December pricing is not a crash, but it is a wonderful opportunity for some people to get in there that want to hold their home for a while. Like, long term investment is where it's at today.

Steve: You're saying if December is the same as December, that'd be a 15% correction? No. So they hear that correct? 15% correction.

Tina: 15% correction. And I'm not predicting that. I'm just saying that that's probably a reasonable expectation. Because most of what's been pushed let's just talk about pricing for, like, payments. From December to June, the payment for a 1,500 to 2,000 square foot home went up $900 a month.

We all know that that's not sustainable. We all know that that pricing is not being driven by population. That's being driven by investors. So the majority of people who are gonna lose over the next six months are not going to be our normal population. It's going to be them.

And I'm sorry. It was hard to shed a cheer over that. Okay? But for the people who did buy in that period of time, if they hold on to that home and interest rates go down and that hose does this Mhmm. Guess what happens?

That demand comes back. If the hose is released quickly, we could see a surge. If it's released slowly, we could see a nice trickle back of demand coming back. And it depends on how many homes we have available at the time. It depends on all kinds of things.

But what we do know is this, interest rates do not stay high or low forever, and these markets do not last forever. Our seller market did not last forever. This market will not last forever. The longer you hold your home, pay down on your you build your equity over time, even if your home does not appreciate a dime, you have acquired equity just through your payments. And, and that is something to be accounted for.

A lot of people don't think where am I gonna be three or five years ahead. They're only looking at next year, and that's really not the place to be if you're buying homes right now.

Steve: So my last question for both of you is this is not talking to the homeowners or the people looking to buy, but really, you know, the peers. Right? The realtors, title companies, loan officers. Sales volume as far as units sold. Yes.

How much because we, you know, we were at 10,000 at some months. Right? And not sales in a month. Where do you see sales volume going in the next for the rest of the year?

Tina: Depends on how much we can educate our people, frankly, to get the mindset.

Lizzie: I mean, it's struck I mean, we're we're down significantly over 30%, and I think that's very standard for the industry at large. You know, I've been through these types of markets. And what I've been telling everybody that works with me is that this is the time when you have to do double the marketing. You have to market for current, Right? The current needs of people, and then you market for the current needs six months from now.

You know, I'm talking about recession news. I'm saying, hey, guys. Unfortunately, it's still seller conditions at the moment. Like, I hate to say that, but it is 97% of list price seller conditions. It's like Give me, like, four weeks.

Great. But in a month from now, we can talk about that then, but we still have to, like what am I gonna say? So sorry to wait a month to buy your house. Do you know what I mean?

Tina: You would now because the thing is that by the time the measures to your point Yeah.

Lizzie: By the

Tina: time the measures come around, you're already late to the party. Yeah. Because that's sales prices are a result. They're not they're not the indicator themselves. So, yeah, to your point that, you know, as an industry, we don't let's be honest.

We don't care about the price. We honestly don't. The only people who care about price are the seller and the buyer. We need transfers of property to be happening. And to sustain our appraisers, our our, you know, our inspectors, the title, the lending, all of those employees that all work with each other to help transfer sellers transfer their property to a buyer.

And we need to have that demand line stay up. I don't care if supply goes up. We need the demand line to stay high. So what we need to your point, it's gonna be a slog. But for the next six months, our industry has a big job to educate all the buyers that it is a new game.

You do not need to go over list price. You do not need to waive all of your rights into the contract now. You are in the driver's seat. I know you weren't four months ago, but now you are, and now we need to get you back in the game.

Lizzie: So prospect, prospect, prospect. Yeah.

Steve: So, 30% drop, maybe. I've heard some people say maybe 50% or more.

Lizzie: It's, like, 30 to 50. Yeah. Like, I yeah. 20, I thought was I mean, we're seeing a 30% drop, but, I mean, it's the

Tina: current I've

Steve: seen a 25% drop in title opens.

Tina: Current measures are 20%. What's in escrow compared to this time last year is a 20% drop. As far as

Lizzie: where we are indicator though. In terms

Tina: of what would be normal for this season, we are looking at a 13% below normal for for what we should expect for the month of July.

Steve: So, we gotta wrap up here. So if someone wants to get a hold of both of you, I'll start with you. How would someone get a hold of you?

Tina: You have to hunt me down like an animal. I'm sorry.

Lizzie: I'm really sorry. You actually do.

Tina: You're like, I mean, I don't have an assistant. So, you can email me, and I might answer you a couple of questions.

Lizzie: The Cromford Report, though. So, like, if you look at the bottom of the screen, it's like info@theCromfordReport.com is how you would contact Tina. She definitely benefits from you guys subscribing to this if you're a licensed real estate agent. Yeah. Like, she's a wealth of knowledge, guys.

Steve: Yeah. So Crawford Report Thank you. Subscribe. It's so valuable. I mean, I get to look smart because of the Cromford Report.

Right? I get to educate. I get to wake up every morning and look at the daily observations so that I look smarter. So Make

Tina: sure written by my partner, by the way, Michael Orr, who's a mathematician from Oxford. He founded our system. And, between the two of us, we maintain that.

Steve: Yep. And then if someone wants to get a hold of you.

Lizzie: Yep. So I'm all over the place. So you can type Lizzie Hofer, oh, it's with two f's, guys, into the Internet, and you will find my web page. You'll find my YouTube page. I'm Lizzie Irvine on Instagram just because I like to, you know, mix it up.

But I have tons of helpful tips on how to purchase, on how to budget, on great investment strategies. I try to be very active on there all the time and would love your, love for you guys to reach

Steve: out and follow. Yeah. Wonderful YouTube channel and, the most knowledgeable loan officer. So when I have an issue, I'll call you.

Tina: She's awesome.

Steve: So if you guys get value again, guys, again, please like, subscribe, share, comment, and we'll see you guys next week. Thank you guys for watching.

Steve: Shout out to Steve train. Jump on the Steve train. We real estate disrupt us.