What’s The Real Estate Market Doing Right Now

Steve Trang: Everybody. Welcome to today's episode of Real Estate Disruptors. Today, we've got Tina Tambor with The Kraff Report in the Phoenix market who specializes in real estate market data. I'm on a mission to create a 100 millionaires. The information on the show alone is enough to help you become a millionaire in the next five to seven years.

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Tina Tambor: Yeah.

Steve: Alright. So we had you here for the first time a year ago when the interest rates went kinda wonky.

Tina: Yes.

Steve: And everyone was kinda freaking out.

Tina: Mhmm.

Steve: And then we had you on q four, last year as well because interest rates didn't go down anymore. They just kinda

Tina: stuck around. Peaked at around 7% in October, and then they kinda hovered in the sixes. Yeah.

Steve: And then since that time, a few things have changed. So I remember around this time, I got stuck with a few properties I bought, prior to June, And I sold two of them at a significant loss and one at a small loss. Now the way the market responded was different than how we thought it would respond Because we thought this market was gonna keep going down, but it didn't. So I sold to these properties what I feel like was the bottom of the market, and it kinda turned back around. Mhmm.

So what have you seen starting in q three of last year into where we are today, which is q three, which has been about a year.

Tina: We are again. Yeah. Almost there. Almost, at the '3 now. So one of the things that started off, the market started to shift dramatically really right around February.

And when I say the market, I mean our market indicators. Right around February, March, we started to see weakening in the Cromford Market Index. And the Cromford Market Index, when it starts to go down very quickly, right after March, it started to do that. That's typically assigned to short term hold investors to not acquire any more properties and just sell what they have and wait. That's typically the the sign.

That's not what we're seeing right now. So since then, it came down. We went into a brief little baby buyer's market in the month of December

Steve: For a week.

Tina: Kissed it, and then started moving. I like bounced skipped right off of it and then started rising again. Not in a strong seller's market, but just, a stabilized market where the prices started to move up again. So what we've seen is from that peak of price in May, we dropped about 12 to 13% overall dollar per square foot boys wise to, 12%. That was the drop, and that's considered a correction.

Since then, we are up at 8%. Yeah. So year over year, right now, if we're just looking at monthly sales dollar per square foot, we're just about even with August.

Steve: Yeah. Essentially. We're about even with this time last year.

Tina: Yes. This time last year. So August. So and we're only halfway through August Right. At this point.

So we've seen a recovery in price. It is not skyrocketing up now Mhmm. Because in the meantime, during that whole time, we saw rates kinda dip below six and a half for a bit, but a few things happened with FHA that did also help out the marketplace. First, FHA increased their loan limit to 530,000

Steve: Mhmm.

Tina: Which put them in another bracket for home sales. They also typically run about a quarter to a half point below conventional rates. They also allow a little more in seller concessions, so buying down the rates was a little bit easier in some cases. And,

Steve: I

Tina: think there was one other thing they did. Those were the main things. Yeah. They did also come out with a a forty year loan modification for people who went, you know, or struggling with their loans or whatever. But that kinda created a lot of hype Mhmm.

A lot of calls, even though it wasn't anything to do with people being able to purchase with a forty year mortgage. But in a way, it was a a nice bait and switch, if you will, for lenders.

Steve: You got a lot of people talking.

Tina: Got a lot of people talking. Got FHA noticed. Mhmm. So what we've seen is over the year, last past year, for sales under 600, we've gone from 10% market share FHA to 22. Mhmm.

So FHA has definitely come out as cash buyers have pulled out, so it's creating this opportunity for first time homebuyers and regular people who have been kicked to the curb Yeah. Over the course of the last couple years.

Steve: So you you really specialize a lot in the the data, the analytics, which is absolutely critical. Right? It's the reason why the news channels call you, right, when they need an opinion. You also work with a lot of realtors and present to them. Yeah.

What is the feeling right now when you're talking to realtors?

Tina: Well, I'd say there are a lot of mixed feelings

Steve: Mhmm.

Tina: Amongst realtors. First of all, there is the realization that the industry as a whole is not doing very well because both supply and demand are below normal.

Steve: Mhmm.

Tina: Demand is still higher than supply, which is the upward pressure on price. Thank goodness, I guess. So for a seller and buyer, the question whether or not you should buy a home is pretty easy. If you can weather a 7% rate at least in the short term, then you can expect the property value to at least be sustained and or gradually move up.

Steve: Mhmm.

Tina: So for them, it's they don't see much difference between now and 2018 except the market rate.

Steve: Right.

Tina: But for the industry, we had grown to a very large percentage of people in the industry had entered in within the last two to three years to accommodate the large percentage of closings we were having. So when that buyer dropped off and no more new listings and all of that locked in effect, all of those things, I'm just speaking so we're bored. So we're bored? The energy's been kinda bored. No properties to take pictures of, no new listing, very few new listings, lowest new listing count in well over twenty three years.

You know? You've got fewer the fewest sales. I mean, sales volume, month over month could be anywhere from 2,014 levels to 2,009 levels, which are, you know, pretty low considering how many people are in the industry to compete for those transactions. So on that level, everyone's waiting for the real for the mortgage rates to loosen up a little bit so that both sellers and buyers get off the fence together, and we just have more stuff to do. That's generally how agents feel.

But on the other side, there's this this one saving grace, if you will, that we don't have foreclosures, we don't have short sales right now. And saving grace for the industry as a whole, maybe not so much for your wholesalers

Steve: Right.

Tina: Or anything, but there are countries like Australia, Canada, and The UK that do not have long term fixed rate mortgages. They only have fixed rates for five years.

Steve: Yes. Unfathomable for me.

Tina: I know. So what we're seeing in those countries is in complete opposite of what we're experiencing is on top of all of their potential recessions coming in, on top of their inflation, they are now also seeing sellers who are having their loans reset from

Steve: They have to do something. Mhmm.

Tina: They have to do something. So that what that creates, and we've discussed this before. If you're gonna look for a crash

Steve: Mhmm.

Tina: You need to have one key factor of a crash for housing, and that is a desperate seller

Steve: Mhmm.

Tina: And lots of them.

Steve: Well And so all the rates are reciting.

Tina: That is creating desperate sellers in Australia. And not only that, can they not afford their mortgage, but now they're looking at rents, and they can't afford those either. So it is a real problem out there. And so I think the one saving grace we can have here is, like Switzerland, like The Netherlands, and some South American countries, we have a long term fixed mortgage rate that most people have as opposed to 2,007 before the crash.

Steve: With adjustable rates.

Tina: Yeah.

Steve: It's interesting though that the other countries don't have that. Because I know, like, in in Southeast Asia, they don't have it, but I just thought that was kinda like an Asian thing. Whereas, like, oh, well, we don't borrow, so why would we need mortgages?

Tina: Right. Asian countries typically don't like debt any type of debt Right.

Steve: But Australia, you said UK.

Tina: Uh-huh. And Canada.

Steve: I mean, so those are all, like Yeah. From the monarchy.

Tina: Right. Yeah. So in those terms, those countries, all three of them are seeing not only property values come down very quickly, but, I guess for us in The United States, the reality is at the end of most people's working lives, the most wealth they have is in the home that they live in. It's kinda like their retirement. So I guess

Steve: Forced savings.

Tina: Exactly. So the one saving grace we have right now in the housing market is that that wealth that people have built and accumulated within their homes, they are not losing. Yeah. They're not losing that they're not losing their credit. They're we're not having to go back to all the clients we looked in the eye two, three years ago and sold them homes and say, I'm sorry.

Now you're short sale. Now you're foreclosure. We don't have to do that. So anybody who lived through the foreclosure crisis is, you know, grateful along those lines. Yeah.

But it also means that for wholesalers, short term hold, investors, it's a lot more work. There's no easy, you know, easy to spot, distress It

Steve: definitely does feel like a lot more work. Wholesaling today in Phoenix requires a lot more effort for a lot less return

Tina: Yes. Than

Steve: it has been the last few years.

Tina: Well and that's because that model usually works in sellers' markets. Right? And our seller market is quite weak right now, and you could kinda say, you know, based off of the last three years, it almost looks like balance. It's one sixty. One ten is a seller's market.

So we're just barely in a seller's market. The the equivalent, I guess, or similar scenario for wholesalers and flip investors would be 2,014. That was our last balance market. Yeah. So our monthly closings of properties bought and sold within a six month period, is just about in line with 2014.

So if we were to go into a stronger seller market, you would start to see more of that. Yeah. And you also have the iBuyers have scaled way back. I know they're still out there, but they're not

Steve: They had to scale back. You know, like, if there's any if you guys are listening, right, if you work at one of these giant funds and you're successfully raising capital even though your company is losing billions of dollars, like, I'm hiring. If someone can help me raise a lot of money even though we're not profitable, like, you're hired.

Tina: Yeah. I know. It takes a a true talent to do that. Yeah. And, you know, what's interesting about that is I I talk with a lot of realtors who get into these conversations on LinkedIn and Facebook, and you might, you know, find yourself in a conversation with somebody who is active in Wall Street.

So it could be a financial planner. It could be, a private investor or, you know, whatever. And they will bring in all kinds of reasons as to why The US housing prices are supposed to or should be coming down or why this is not a good time to buy a home. And a lot of the justifications I noticed that they use are things that have no impact on our prices.

Steve: Like, for example, what would those be?

Tina: Multifamily. Mhmm. You know, I think a lot of times when financial planners come in and they say, oh, this is a good time to buy a home or it's not a good time to buy a home, they're often looking at, like, REITs. They might be looking at stock prices for companies that buy homes, like, you know, invitation homes or Opendoor, things like that.

Steve: Those are horrific indicators.

Tina: They're they're not indicators at all, frankly. They might even look at commercial, you know, thinking that commercial leads into residential and it's actually the opposite. Right. Commercial follows residential. Right?

And or they might be looking at, you know, Australia or UK. You know, there's all kinds of these justifications for people saying it's we're next. It's the next one to fall. The only desperate seller we had was open door and offer pad last year. And once they got through most of that inventory They got

Steve: through a lot of it.

Tina: You know, it was pretty much over.

Steve: There is a there was this one off of, Chandler Boulevard and closer to 101. Right? It's right next to the shopping center. I always drove next to it when I went to go get my massage. Mhmm.

And I wanna say for, like, eight or nine months, that open door sign was right there. It's crazy. I mean, like, how have they not gotten rid of this property? So they finally finally got rid of it. They got finally got through all of their their inventory.

But, you know, they're a little battle tested.

Tina: Yes. And, the thing is is that you can't use things like multifamily developments, apartment complexes, anything like that is not a precursor for single family home property values. Commercial having problems, not a precursor for us. Stock prices for Opendoor, Dior Horton, Invitation Homes, whoever, is not a indicator of future prices. It's already an indicator of their decisions during the past downturn of prices.

Right? So that's past performance, not future. And, you know, other countries are just other countries. I I think that there's a bit of indicator overload Mhmm. For a lot of people.

Steve: So what are the indicators we should be paying attention to?

Tina: Actually, strictly supply and demand. That's what we do. We Mhmm. You need to know the history of your of your city for one. You need to know what are we normally for this time of year.

So that's why we use our comfort market indexes. So we have our supply index, our demand index, and the combined market index. And right now, the market index has been flat for two and a half months. And that's important for short term hold investors to watch because if it does come down like we said before, you just stop acquiring and you wait. You sell what you have.

But right now, it's just steady as she goes, but it's not a strong seller's market. So that's the thing about flip investing is that it really only works in a seller's market.

Steve: Mhmm. And

Tina: if you're in a weak seller market, then you can't depend on that appreciation rate to fix your mistakes. So So you have to make sure you have a whole big gap, a big, you know

Steve: So I would disagree in that

Tina: little bit. Section. Yeah.

Steve: So because I started right back in o seven, and I got to kinda witness how these guys operated back in the day. Mhmm. So if it was a buyer's market, it wasn't that you couldn't do it. It's just you needed a much larger margin.

Tina: That's right.

Steve: Right? So if you're gonna buy today at, like, $75.70, 75% in o seven through o nine when I thought wholesaling was just bad Mhmm. These guys are buying, like, 45, 50% of market value. So it still made sense.

Tina: Yeah. You have to wait till the sellers lose all their hope, though. So it's probably, you know, late two thousand eight, maybe.

Steve: Oh, but that's the buyer's market. Right? Like, in a buyer's market where you're seeing, like, this neighbor's sign go in the yard, this one's letting his house go to foreclosure, that guy's letting his house go to foreclosure is, like, I might as well something.

Tina: The foreclosures started to increase in 2007. Yeah. And and they ended up peaking right around 2010. Yeah. I mean,

Steve: I remember showing houses in San Tan Valley, and, like, it wasn't like how many houses had signs in the yard. It's how many houses didn't have signs in the yard.

Tina: Yeah. The irony is this, that that buyer market was over by 2009. So the thing is the time to get into flip when the flips really started to to profit Mhmm. Wasn't during the buyer's market.

Steve: Mhmm.

Tina: Those were very difficult flips. You had to really know what you were doing.

Steve: Mhmm. And you

Tina: had to have a very good gauge of how much month over month those prices were gonna drop, and that was a very difficult thing to do. What they ended up doing, which was the best thing to do, is rent them out and wait it out. Mhmm. But come the 2009, 2010, first time home buyer credit came in, we actually went into a little baby seller market.

Steve: Mhmm.

Tina: Then they ex and expired. We went into another little little dip there. Nothing too terrible. But 2011, if you had just tracked all of your acquisitions and your sales based on the comp for market index, you would have found yourself acquiring at the beginning of a seller market, the beginning of an appreciation Mhmm. Thing and selling right before it, peaks and goes down.

So we've we tracked this over the last twenty three years.

Steve: Yeah.

Tina: And it does work. And so what we can say is that right now, the Cromford Market Index is in a weak seller market, which typically is indicative of maybe a five to 8% annual return from last year. We're probably gonna start seeing that hit right around November

Steve: Mhmm.

Tina: December. But it's not strong, meaning that, you know, when I say you still have to be smart about it, you still have to be smart about it. Like, you can't just throw dumb money out there and hope that, oh, well, we're appreciating. So if I make any mistakes, I

Steve: think we

Tina: can make it up.

Steve: You actually have to pay attention on the flip.

Tina: You do. You actually have to negotiate way as low as you can, of course. It's a different completely different environment because just a couple of years ago, that was not necessarily, the hugest concern. Yeah. You know?

Steve: Can you speak speak on the flip activity and guys, you know, that you're watching? Like, we're speaking in Phoenix. Yes. We're not speaking nationwide. We're speaking in Phoenix.

Tina: Only Greater Phoenix.

Steve: Right. Which from from what we've seen as well, it's kind of an indicator for the rest of the country. Whatever happens in Phoenix and California, it just kind of blows east.

Tina: You know, I'm not sure if we're going to be the the canary in the coal mine like that going forward, mainly because we have really diversified our economy now. And we are still continuing to grow in areas that could cause our our wage growth to grow faster than the country, especially in do you know we're gonna be building spaceships in Mesa? I guess you figured that out.

Steve: I didn't know that.

Tina: We've got a ton of jobs. There's actually a wonderful article that was, based on Arizona Commerce Authority data of the fiscal year twenty twenty three growth in terms of companies coming here, expanding, or moving into our area, and it was all high-tech manufacturing, batteries, semiconductor

Steve: Yeah. I mean, they're they're going crazy with with TSMC.

Tina: Yeah. They get the biggest. They get all of the eyes on them, but the interesting thing is it's not all about them. Like, there is a lot more happening.

Steve: Leader, but every once you've got that guy there it's not like you know, when when we saw this expansion back in the day. Right? Like, oh, there's a Starbucks going up, and there's a Walmart going up. Like, they're developing this area.

Tina: I know. Apparently, there's a Costco going up in Buckeye. Everyone's super excited about that.

Steve: Yeah. It's a great it's a leading indicator.

Tina: Home prices must be going up there pretty soon.

Steve: Well, we know that people are investing there. We know that.

Tina: Yes. Yes. Well, you know, here's the interesting thing is that there are a lot of these undercurrents

Steve: Mhmm.

Tina: That, as an analyst, I can't always see them. So I have to have conversations with people like you. I have conversations with lenders and realtors. You find out all these little undercurrents that might be happening. First of all, Buckeye is now out of a balanced market, back into seller's market.

Steve: Really?

Tina: Mhmm. Buckeye. Buckeye actually has a very good number of contracts going on every single week. Or Interesting. Yeah.

And so or yeah. Week. So the thing is that one of the downsides to Buckeye is that they've gotten a lot of bad press about water. Right? However, Buckeye is also in a census tract that is eligible for federal grants to help people get into homes.

And so builders can take advantage of that. And because they have a lot of new construction, they have, a little more inventory. They have more opportunities to sell and and and utilize those grant programs.

Steve: Well, Buckeye Buckeye took it squarely in the jaw because I remember, like, last year when things started going down, I was like, I don't care. We're still buying. Right?

Tina: Yeah. Yeah.

Steve: But we're still buying. It's like, okay. We gotta deal on Buckeye. It's like, not Buckeye.

Tina: I know. Yeah. Buckeye was and that's the thing with the outskirts. Is the outskirts of town, they're the first ones to go into buyers' markets, the last ones to come out. So to see Buckeye actually come out finally

Steve: Is a positive sign for the rest of the

Tina: A little bit. Although we're still seeing a little bit of, yeah, in and out of in Queen Creek, in town of Maricopa, and Casa Grande, those those areas. Maricopa popped back into balance. Casa Grande is moved into balance, actually. And but Queen Creek got us really bad.

Okay. Came out of seller's market too. But those are the only three, and there are no buyer markets in our valley at all. So Buckeye coming out and another little town to keep an eye out is Waddell. And, again, it's new home construction.

It's also the planned infrastructure, for freeways, improved roads, all these things that really help for long term investing, not necessarily short term. But for long term investing, you can get in early on some of these areas and hold and ride it, if you will.

Steve: Let's talk about the what you're seeing as far as Flippers goes. Right? Mhmm. So do you see a trend starting in June to August as far as flip activity in the Phoenix market?

Tina: Absolutely. June, flip activity dropped 60% or probably 66% In one month. Easily. No. From the peak Mhmm.

Of your activity, which would be right around May Mhmm. Where all the iBuyers are all in there. Remember?

Steve: Mhmm.

Tina: And all the way down to about now, which would be, by the beginning of this year. So it was a straight down drop off in successful flips. And so when I'm looking at that report, there are a couple of things that happened. It's not that people weren't buying with the intention of flipping. It could just be that they were buying and finding that it takes longer than six months.

Mhmm. You know? So when I increase my days, you get a few more. But for the most part, when we see that six month range that we look like for short look at for short term holds, it dropped right away to what we would expect for a balanced market.

Steve: Mhmm.

Tina: It went from high there and

Steve: then High to a balanced market.

Tina: To a balanced market area. So we went from about 1,500 flips, successful flips, meaning they held them for six months or less.

Steve: 1,500 over the course of six months. In one month? Or

Tina: One month. So our peak month was 1,500 sales where those sales had only been held for six months or less.

Steve: Got it.

Tina: And now we're looking at about 400

Steve: Okay.

Tina: A month.

Steve: I see.

Tina: And so that's that's a pretty steep drop off. And when you look at it historically, that's where we were in 2014. And in 02/1516, '18 through '19, you start to see that flip activity increase. Remember, Open Door came into our lives around 2015, offered '5 to 2016. Zillow came in, joined the party, I think.

Let's say Zillow came in 2020?

Steve: I wanna say 1819, but, yeah, it was somewhere around there. Yeah.

Tina: Yeah. Maybe you know what? It might have been 2019 because remember they had that horrific one where they they got scammed. That guy just, by the way, got do you remember the scam?

Steve: Oh, wait. Which one?

Tina: So well, we'll just digress briefly. Zillow, when they first started doing flipping and doing the online offers,

Steve: they

Tina: had an imposter. So there was a home that had gone into probate, but he passed away. And somebody assumed that guy's identity online, and they went to Zillow, asked for an offer. Zillow said fine. And they the whole thing was practically virtual.

And he sold that home, and he didn't own it. And turned out that they ended up cleaning the home out, had all of the family heirlooms were gone. The daughter found out, and, yeah, it was needless to say. It was a big deal. The only saving grace they had to catch the guy was that in California, they haven't you have to have everything notarized with a fingerprint.

Oh. So they got a fingerprint of the guy who signed, and they found him, and they just convicted him. And so that was Zillow's foray into, you know, welcome to the real estate.

Steve: Right? And that's real estate. This happens to new investors. They buy properties that aren't really owned by this. So they go into contract.

We've done it. We've gone under contract with homeowners Mhmm. That weren't really the homeowners. Yeah. Entitled is like, hey.

Who's this person?

Tina: Mhmm. Mhmm. There's a lot of it happening in land now too where people are

Steve: Even worse than land.

Tina: Yeah. Absolutely. There's like, yeah. Just because they're criminals doesn't mean they're dumb. So they're very smart.

Yeah. And it's it's a constant. And and the more you try to as Opendoor is trying and Zillow is trying, the more you try to eliminate the the safety gaps, right, that have been placed in the state. The safeguards. Yeah.

Yeah. The more you try to eliminate eliminate that to streamline or make it faster and more convenient, the more risk you open up to fraudulent activity. Right. So, and they've dealt with that, of course Sure. Many times.

But back to where we were, 2015 through 2019, we saw that activity, more and more flips happening on on a monthly basis, and, really went crazy right after COVID. Yeah. Yeah. That's when all the iBuyers got drunk, if you will. Drunk on Wall Street money.

So

Steve: I mean, there was a lot of money to be spent. So we saw activity go from 1,500 a month to about 400 a month Mhmm. In December. Where is it sitting right now in 03/2023?

Tina: Same place.

Steve: Same. So it hasn't gone up?

Tina: No. It hasn't gone up, which just basically means, like, just like everybody else, the wholesalers are competing for fewer transactions that will qualify for their criteria that they need to make money. So there's a heavy amount of competition, not only in fix and flips and short term holds, like wholesaling, but also with realtors competing for those listings.

Steve: Well, I can say, like, that's one of the things that's frustrating for me as a wholesaler. Right? It's, like, the market is, for all intents and purposes, normal. Mhmm. It's the new normal.

It's not like it was a couple years ago.

Tina: Right.

Steve: But it's stabilized. Mhmm. At least it feels that way to me.

Tina: Well, right now, it's a bit it's a little boring. Boring,

Steve: which is stable.

Tina: That's right. And But

Steve: it it's

Tina: a blessing in some cases.

Steve: So for a buyer, they're not getting all their closing costs paid for, and they're not necessarily getting a below asking price. They can, but that's not no longer a necessity. Whereas that's not last year. It was you had to go below market, and you had to give concessions.

Tina: Right. Well okay. So there there are still concessions. As long as our rates are as high as they are, you are going to have two one buy downs, three two one buy downs in our lives. I would say as long as the rates are over 6%, you're probably gonna have that.

And as long as we have equity in homes that

Steve: But what I mean is tap into. Buyers and sellers are playing ball.

Tina: They are.

Steve: It's not a buyer's market. So

Tina: Right.

Steve: The frustration for me as a as a wholesaler Mhmm. Is that the flippers are still underwriting deals like the world is falling apart. But the reality is we live in a boring market Mhmm. Which is actually something I prefer because a boring market is a predictable market.

Tina: Yeah.

Steve: You can make decisions Mhmm. That are reliable.

Tina: Right. Yeah.

Steve: And so for us, we have to take down more deals. I'm borrowing more money just to wholesale these deals because the flippers are playing scared.

Tina: They're playing scared. Like

Steve: They're just assume they're they're betting Yeah. They're buying deals based off the market going down.

Tina: Okay. So they're being very, very, very conservative.

Steve: Conservative.

Tina: Yes. Okay. I can see that. Absolutely. Well, there's a lot of let's face it.

There are a lot of opinions online.

Steve: Sure.

Tina: And, you know, a lot of YouTubers out there, you're probably one of them.

Steve: I am one of them. I am one of them, but I'm not I'm not screaming the sky is falling. No. No. I'm not the most optimistic.

Tina: Well, I mean, unless you scream the sky is falling, you're not gonna get the the views. Right? You get

Steve: the eyeballs.

Tina: Yeah. You won't get the eyeballs. You won't get the comments telling you how crazy you are.

Steve: Right.

Tina: You know, all that stuff. But there's been a lot of apocalyptic, and there still happens to be that too. Like, there's still a lot of people out there that pull down stats and say, because of this, this, this, and this, you shouldn't buy a home today. Many of them I find are financial planners, which I just assume you don't get paid on. If I buy a house and I don't buy a stock, you don't get paid.

So I'm gonna Yeah. I can understand. I'm not gonna want me to buy a house.

Steve: For me, I are very quickly going down the the ladder of trustworthy industries.

Tina: Yeah. But, you know well, it's really interesting to see the content that's put out there, actually. So, there are another, you know, another angle that people are coming in from is the struggle of the short term rental industry

Steve: as well. Speak on that because, like, I'm not paying attention to it. Honestly, the reason why I don't have so many Airbnbs is because you scared the crap out of me many, many years ago in

Tina: one of our masterminds.

Steve: So I just never bought an Airbnb. Right? I probably left a lot of money on the table.

Tina: Probably. But right

Steve: now, I'm feeling pretty good about myself. Oh,

Tina: good. I'm glad.

Steve: Because you said once things go down, it's gonna hurt real bad.

Tina: Yes. That's true. You don't wanna have a house that you cannot have vacant Alright. You know, for a

Steve: lot of other free If you can't cash flow it on a regular rental, it's a riskier play.

Tina: That's right.

Steve: So what is going on Airbnb? Why is everyone freaking out?

Tina: Well, I I don't think they're freaking out across the country.

Steve: I They are here.

Tina: They are here because we did get quite saturated. I think what happened and just for the record, I do not have data for Airbnb. Alright? Or Anagotel. IPO.

Steve: This is anecdotal.

Tina: Yeah. Well, it's a little well, unreasonable expectations, but it's I look at AirDNA. That's and I don't pay for it, so I don't have all of the information. But I what I look for is vacancy rates,

Steve: you know,

Tina: or occupancy rates. And I can say that the occupancy rates in the Greater Phoenix area in popular areas like Scottsdale, Paradise Valley, Phoenix have been lower than their competing neighbors in areas like, say, California. You know? So California occupancy rates have been better.

Steve: So What's a what's a good occupancy rate? Just for comparison sake.

Tina: For the year, an average for the year, 77%. You know? I'd say anything over 70% is good. We have been in sixties, in the low sixties in some cases. In some areas, it depends on where what you're competing or comparing to.

So say for instance, Surprise has a very good occupancy rate in the seventies, but they used to be 80 or 90 percentile. Right? So you're seeing, Who was

Steve: doing Airbnb's in Surprise?

Tina: People going to see their parents, I suppose. I mean but, you know, Surprise is close to where the Super Bowl was, if you remember. That's true. So this year, we had the Super Bowl, and this is what happened. I believe people bought Airbnbs with the expectation that there will be a lot of demand because of the Super Bowl and golf and cars and horses and baseball, all

Steve: of

Tina: that stuff Yeah. On the spring. But specifically, the Super Bowl, like, the they were buying properties surrounding the stadium

Steve: for spring. A long good long term plan.

Tina: Well, if it depends on the price they paid. But what happened, what they didn't expect was the number of pop up Airbnbs that came out of nowhere Mhmm. That nobody expected to see. So for example, now we're gonna get into an anecdotal story.

Steve: Mhmm.

Tina: My niece, who is 27 years old, had a number of her friends secretly Airbnb their apartments out and made, like, $5 in a weekend. Mhmm. And they undercut a lot of the people had who had gone out and bought homes with the expectation that they were gonna make way more than that. And, they got,

Steve: you

Tina: know, a flood of excess supply from these, you know, onesie, twosie, weekender

Steve: Mhmm.

Tina: You know, tenants that decided to make a little extra money. And I think what happened was that their expectation for occupancy was was dashed. Yeah. And so what we've seen in long term twelve month leases now is a switch over. Right after the Super Bowl was over, we saw a very sharp increase in areas like Scottsdale for twelve month leases available in the MLS.

Yeah. And it started off in Scottsdale, and then it bled eventually into the rest of the area. So we we've got the same spikes going on in Southeast Valley, and in parts of the West Valley as well.

Steve: And it just never made a lot of sense to me to have a Airbnb in, like, regular areas, like Mhmm. On the golf course, on the lake. Right? Walking distance to some landmark makes a lot of sense. Right?

Tina: Right. Yeah.

Steve: Walking distance to, what what's Kierlands or the Kierlands? Like, walking distance to Kierlands. Right? Like Mhmm. That makes sense to me.

Tina: Right. Yeah.

Steve: But in a regular neighborhood, it's never

Tina: well, there's there are all these different again, the Airbnb or short I hate to call it the Airbnb market because it's Short term

Steve: rental market.

Tina: The short term rental market has a lot of different places you can specialize in.

Steve: Yeah.

Tina: You know, you've got the thirty day rentals. You've got the nurses. You've got

Steve: We got the mid term rentals and this and that. Yeah.

Tina: You've got all that stuff. You got furnished. So Generally speaking, though, the some people are of the opinion that because the short term rental market in Phoenix was a disappointment that we're gonna see this flood of people selling their short term rentals, and that's gonna cause prices to come down.

Steve: So I did have a conversation with a friend in the last seven days who lasts in the last twelve months has bought 16 properties to be Airbnbs or short term rentals.

Tina: Mhmm.

Steve: And he's losing money on all 16.

Tina: Oh, when did he buy?

Steve: I guess sometime in the last twelve months.

Tina: Oh, okay. Yeah. Alright. In the last year. I can see that.

Steve: I was like. And he's when I say losing money, not as far as what he bought and what he's selling it for. But what he can rent it for now as a mid to long term rental Mhmm. Like a third of his mortgage because he was buying them underwriting them Mhmm. As short term rentals.

Tina: Yes. And that is that brings us to why we had predicted years ago that in areas like Scottsdale and for popular areas, you were gonna start seeing homes valued not based on what a normal person would pay for it or rent it for, but what the ROI on a tourist would have been.

Steve: Right.

Tina: And that is, again, as we've talked about over and over again, the shortest hold, whether you're holding it to buy and sell or whether you're holding it short term on a lease basis, that is the riskiest form. And if you cannot purchase it at a price that allows you to go twelve month and still at least break even on it, that's gonna create some stress, and not everybody was picking up on the fact

Steve: that

Tina: a lot of the appreciation that was happening in the luxury market was based off of ROI.

Steve: Right. Well, and that's like I said, that's what you said in one of our masterminds. Like Yeah. Okay. So there's a lot of risk here.

I don't have to worry about this. I'm not I'm not gonna focus on this. I'm gonna do something else.

Tina: Yeah. Yeah. Well, I'm glad you did. But, I mean, I know you probably could have made a ton, but, again, that comes at a cost. And the the key piece would have been for you to sell that before every but, you know, nobody ever not everybody gets that timing perfect.

Steve: We always we we tend to hold things for too long.

Tina: Yeah. Yeah. I know. We could go one more month. But but overall, there's a the there's a fault Mhmm.

In the theory that the short term rentals market's gonna bring down everybody else's values.

Steve: Oh, that that's there's not enough supply of those North

Tina: American Yeah. It's only gonna be the excess supply. Yeah. It's not gonna be the basis, the the core Yeah. Market.

Steve: So we were talking about the flipping data. So flipping is pretty consistent, about 400 a month Mhmm. Between December until today.

Tina: Yeah. Ish. Okay.

Steve: The iBuyers. Yeah. So I coach a lot of wholesalers, flippers across the country. Mhmm. And one of the great benefits to me in being a coach for them is I get to hear the objections.

I get to hear what the conversations are like in the living room. Mhmm. And what now we're seeing in the last couple weeks is a pickup of, hey. They're comparing us against Open Door again. It's like, oh, looks like these guys are having at least one last hurrah if or if they're not coming back.

Tina: Well and I don't know exactly because I don't get I'm not privy like like you are to what their offers are.

Steve: They're not great offers. They're actually not stupid offers anymore. This is how I qualify. They're no longer stupid offers.

Tina: Right.

Steve: Right? They're beating our wholesale offers by four to 5%, which makes sense if you're borrowing it from some teacher's fund. So it's basically cash. Mhmm. Right?

So and you don't have to pay a realtor and you do like, their numbers act their underwriting actually makes sense now. Mhmm. So if you're only beating if you're beating a wholesale offer by 5% and it doesn't cost you anything to borrow, that number sounds about

Tina: right. Mhmm. But how many are they winning? And that's the thing. See, I the way wholesalers work, they're kind of a shadow activity.

I don't get to see them because there's no recorded document that shows their activity.

Steve: I don't know. I mean, like, I was actually kinda shocked yesterday Mhmm. When I was going through public records. Our wholesale company is all over public records, which it really shouldn't be. I'm wondering why that is.

Tina: So well, is there it has to have there has gotta be a document that's filed.

Steve: So there's some memorandums out there.

Tina: Okay. So memorandums

Steve: But Those

Tina: are clouds, though.

Steve: Those memorandums, there was releases. There were some warranty deeds. Mhmm. But I just didn't expect to see, like, pages of our wholesale company. So I gotta go figure out why that is.

Tina: Yeah. But they the memorandums don't come to me.

Steve: They don't come to you, but I am noticing Monsoon picking up some of them.

Tina: You're erroneous. Why Monsoon is picking them up, and you can thank MV Realty for that. Mhmm. Yes. MV Realty is why that is happening.

Steve: So let's definitely make sure we talk about MV Realty about the iBuyers. And then let's not let's make sure we don't get sued. But, yeah, let's talk about the iBuyers, and then we'll talk about MV Realty.

Tina: Okay. Yeah. I mean, I'm not I'm not gonna bad mouth them. I mean, I I just know it's been publicly

Steve: Stated.

Tina: Stated and recorded in our public records.

Steve: Alright. So iBuyers, as far as yours as far as you're aware, they're still kicking, but they're not picking up or going down.

Tina: The iBuyers, while they might be out there kicking tires and poking around and throwing out offers, at least through June, which is where I've I'm up to date through June, their market share is extremely low. Our investor activity or market share has dropped from, for iBuyers, as much as 6% market share all the way down to just less than a percent. Really? Yeah. It's very little.

And we do identify. We can we can pull out Open Door and Offerpad and all those guys. It's very, very small. Overall, when you add iBuyers and Landlord, aft David's value, we're just going off aft David's value, from the peak of 27% market share, which is very high

Steve: Insane.

Tina: We are now at 12% for landlord, which is on the low side of normal. So pre pandemic level of investments, that's about 12 to 15% is what we would expect.

Steve: So we're talking about landlords. Are you talking about including the hedge funds?

Tina: It's how they fill out the affidavit of value, which means, you know, there's there's no hedge fund, sorry, category. They can only say owner occupant, second home, landlord, and then we pull out or we in our company, we pull out the iBuyers separate ourselves because we can identify them. But, it just basically means I'm gonna be a landlord. I'm gonna put a tenant in there. I'm gonna have a second home, or I'm gonna

Steve: own it.

Tina: And so what we've seen is now the owner occupant percentage or market share is now above normal

Steve: Mhmm.

Tina: For the overall makeup of who's buying

Steve: Which is great, considering.

Tina: Which is great. That means stability. It means boring Right. Right?

Steve: Not a

Tina: lot of big bold movements because when the regular owner occupants are driving the bus, you're gonna see stability in housing. When our crazy rich friends come to the party, funded by Wall Street

Steve: Funded by the Wolf of Wall Street.

Tina: Yeah. Yeah. Exactly. That's when you're gonna start seeing, you know, unsustainability Yeah. Come in.

So the fact is that most of the investments are now on the low side of normal.

Steve: I buy activity is down. Okay. Mhmm. So you brought up MV Realty

Tina: I did.

Steve: Which is a hot button for a lot of different people.

Tina: I'm sure I've got PTSD or something for some people.

Steve: Oh, yeah.

Tina: It's crazy.

Steve: So what's MV Realty?

Tina: MV Realty is a company that started out of Florida.

Steve: Mhmm.

Tina: And they started this program called, I think they called it the homeowner benefit

Steve: Of course, the homeowner

Tina: something. Yeah. I forgot what they called it. Exactly. Because I I haven't talked about them in a while, actually.

But, essentially, what it was is they would pay people, say, I don't know, $1,500, $800, $700. And in return, that person would sign a promise that they would list with MV Realty at some point in the next forty years if they chose to sell.

Steve: A forty year listing agreement.

Tina: Yeah. But the problem is this, it wasn't actually a listing agreement. It was a promise to sign a listing agreement that they didn't actually see.

Steve: Mhmm. They

Tina: don't know what the price is gonna be. They don't know any of the the, you know, any of the things that they would be agreeing to. They're just promising that they are going to sign it, essentially. And what they would do is they'd have that notarized and and filed as a memorandum or a cloud.

Steve: Mhmm.

Tina: Right? And, essentially, what it is for the state of Arizona, it's a private covenant. And in there had specific words that says runs with the land Mhmm. Which means that if I signed that and I passed away, then if you were my beneficiary, you have to use MV Realty now. Or if I do use MV Realty as my listing company and I sell it, the buyer then has to use MV Realty still when they sell.

And so it was a covenant that ran with the land, and it shows up as a cloud for us. But in other states, it would show up as a lien, and it would hinder people's ability to get refinances, reverse mortgages, if they were going into distress to modify their loans. And if they forgot that they ever signed it, then it would show up in the middle of the escrow, and they'd be over a barrel. And the cost to get out of it was, of course, 3% of what NV Realty deemed your property value to be. Yeah.

So, it was there's nothing being done in Arizona

Steve: Yeah.

Tina: About that at this stage. But there had been about seven states where the AG's office has, instigated. And the federal government, by the way, has put a cease and desist on using the robocalling aspect of that business.

Steve: What? They

Tina: were robocalling.

Steve: Oh, got it.

Tina: And so the FCC got involved and put a cease and desist order on the companies that were facilitating the MV Realty robocalls.

Steve: I I don't know how this isn't, like, a class action lawsuit yet.

Tina: Well, because, I guess, the attorneys general are on it. So you're looking at North Carolina, Pennsylvania, Massachusetts, Ohio is the newest one. I'm trying to remember all of them. Florida, obviously.

Steve: Mhmm.

Tina: Florida was the first one out of the gate. But I know there's about seven sit seven states so far have instigated

Steve: the connection. Covenant. We don't really talk about covenants. Right? Is that the CC and R

Tina: we're talking about? So CC and Rs are, they're covenants as well, but they they're more like covenants

Steve: with

Tina: your HOAs.

Steve: Yeah. You know? City.

Tina: Yeah. But this is a private comp covenant between two individuals. That's what they call private covenants. And in Arizona, the only way to get out of a private covenant to have that retracted is if all the parties agree.

Steve: Mhmm. Well, it has to be a bilateral agreement.

Tina: Mhmm. That has to have all all parties, like, where the majority party. So if you only have two, if you disagree and they agree, it's nothing's happening.

Steve: Right. I mean, it's it's no different than, like because I know you and I have talked privately about, like, memorandums. Right? You may not be the biggest fan of them. But I look at memorandums the same exact way or a purchase contract between investor and homeowner the same exact way.

Like, a realtor won't let go of a listing agreement Mhmm. Requires both parties Right. To agree to release.

Tina: But in this case

Steve: But the covenant is kinda crazy because that's not even an agreement. It's not a legal agreement. That's it goes another level.

Tina: Yeah. It it goes another level because it stops title. Yeah. Stops everything. And the difference is, again, the runs with the land side

Steve: Right.

Tina: Things because that means that nobody's gonna insure that title. Mhmm. And it also interrupts the lender as well. Lenders won't accept it either. Yeah.

Now refinances, you have to take it off. There's all kinds of rigmarole. It creates a lot of problems. And the main thing I think about it was they're not asking to buy the property. So you guys are entering into a contract that says, I am buying this property.

Right. Right? They're not buying the property. No. So they're not actually doing anything.

And a lot of times, people are having to pay them for doing literally nothing.

Steve: It's an IOU. For yeah. It's an IOU for 1,500 Mhmm. But you have to pay me 3% of your purchase price or the evaluator.

Tina: And if I'm not your realtor and somebody else is your realtor, then I still need to get paid this amount of money for me to release it. Yeah. And the thing is is they're not illegal yet.

Steve: Yeah. I don't know how. I mean, we have we can't have payday loans here anymore. Mhmm. Which I still am on the side of the payday loans, but that's a whole different story.

You can't do I know we don't have any usury laws in Arizona. Right? Or, like, excessive to interest. We don't have any excessive interest laws in Arizona, but it's just they do have it in a lot of other states. Right?

Tina: They do. And I'm but I'm not an expert on that stuff.

Steve: So I mean, this feels like excessive interest. Right? $1,500 upfront for 3% of the purchase price later on feels like excessive interest.

Tina: Yes. Yes. It feels that way. But I think where where the FCC has been coming from and where a lot of the state's offices are coming from is who they were targeting specifically. And with the robocalls, they had from the Florida now this is I'm not saying this as if I know.

This is what the Florida lawsuit stated specifically. I read the entire lawsuit online. You can go find it if you want to. But what they stated was that they were targeting people who were elderly

Steve: Mhmm.

Tina: Who didn't speak the language

Steve: and

Tina: didn't know what they were signing. They didn't have, anybody explaining the documents. They just had a notary come over. Nobody explained the documents to them. They were unrepresented.

Steve: Mhmm.

Tina: And, also, you had people in financial distress. Yeah. And so they were in I lost the

Steve: oh, this is very different than a lot of what Yeah.

Tina: It's not it's not very different, but because of again, this is a covenant. It's a promise to do something in the future. It's a promise to sign a contract that you've never seen.

Steve: Is that what a covenant is? It's a promise to sign

Tina: a contract? That's what their homeowner agreement was

Steve: Mhmm.

Tina: Is that I'm promising to sign a listing agreement with you sometime between now and forty years from now if I decide to sell, but I don't have no idea what that listing agreement says. Yeah. And so

Steve: A blank. Promise. It's a blank check.

Tina: Pretty much. Yeah. And so, it's a it's slightly different from what wholesalers do.

Steve: Yeah. Interesting. Okay.

Tina: So looks like it. It, like, acts like it, but it's not.

Steve: So, obviously, we can't hold you to this. Mhmm. Right? But, like, everyone's predicting interest rates are gonna go down or stay flat. I don't see too many people saying interest rates can go up.

Tina: Right. There are some people.

Steve: There are some people that say flat.

Tina: Some people feel that they're gonna go, closer to eight.

Steve: Yeah. So, like, what are what are you looking at, and what is what you're looking at leading you to believe is gonna happen down the road?

Tina: Well, as you know, I actually I let other people be wrong about real estate real estate market rates. Typically, I don't like to, make any specific predictions, but I will give you a reasonable expectation.

Steve: Yeah. Okay. Well, so last time we were here, you were saying you're looking at CPI a lot.

Tina: Is that You're looking at CPI a lot. What we're looking at right now what I'm looking at Mhmm. And say we. I'm looking at now we're going in my personal opinion, not, of the Crawford report. Yeah.

Just me, is the interesting piece of this whole thing is that if we go into a recession, rates come down in recessions.

Steve: Mhmm.

Tina: Right? So we are looking at things like the labor market for one. The labor market is the last domino to fall. The labor

Steve: market is absolutely insane.

Tina: If you see unemployment for any reason go up a half a point, and consistently go up, of course, not just for one month, then that is what the National Bureau of Economic Research, who gets to call recessions, that's what they call a bona fide, evidence of a weakening economy.

Steve: K.

Tina: So when that happens, which is usually the last thing to happen, that's when they call recessions.

Steve: Mhmm.

Tina: So sometimes recessions happen before or I'm sorry, mortgage rates come down before that, but or sometimes during a recession, it'll come down. But almost in every recession I've looked at, rates have always come down.

Steve: Mhmm.

Tina: And right now, we're in an inversion. So you hear a lot of inversion talk, which basically means your short term treasuries are now higher than your long term treasury. You get more on your interest for a three month or a two year treasury than you do on a ten year treasury. That's the inversion. And when the short term rates go up, you can see the Fed funds rate goes up in response to it to try to get higher than that.

But what we're seeing right now is the Fed funds rate is higher than the two year treasury, but they are not convinced that the treasury is not going to go up more. So we're really at this turning point right now.

Steve: Mhmm.

Tina: The thing about that is once the Fed stop raising the Fed funds rate and the two year treasury, once that starts to come down, that'll go down first, that's when the Fed funds rate comes down. So when that happens, and I guess many people believe that's gonna happen in next year

Steve: Mhmm.

Tina: Right after that is typically when we see a recession. So here's the funny thing. Funny meaning weird, not If you are a pessimist

Steve: Mhmm.

Tina: And you believe that we are going to go into a recession, that we're gonna have some unemployment, and maybe it's gonna be a soft recession, maybe it's gonna be short or long, whatever, but you think we're gonna go into a recession, then you also believe that rates will come down.

Steve: Mhmm.

Tina: If you are an optimist and you think we're going to have a soft fall, if you will, where we're gonna see, the labor market stay strong, we're not gonna have to deal with unemployment, blah blah blah, yay, Then you actually believe rates are gonna stay high. Mhmm. So, it's kinda like this this confusion, if you will, where we kinda want the rates to come down, but we really don't want a bad recession. But I believe from a housing standpoint that we have already gone through our recession. We've already come a long way.

Mhmm. By the time we hit the recession, we'll be like, just get over with and get on with our lives.

Steve: I mean, a lot of us have been waiting for it. It's like, I watched Hot Tub Time Machine again.

Tina: Right? Movie.

Steve: And you remember, like, the part where the guy loses his arm. Right?

Tina: The the Washington. Yeah.

Steve: The Bellhop loses his arm anyway. And the whole time, the Rob Cordrick or whatever his name is, he's like, he's waiting for the guy to lose his arm. Like, come on. Like, when's it gonna happen? Right?

Like, this is such a tease. Kinda happy with this recession. Like like, every time you look at this labor market, like, how is the market still doing good?

Tina: Right.

Steve: It begs like, beggars believe, like, it just doesn't make sense.

Tina: It's the last to respond. If you actually look at the labor market to respond.

Steve: But, like, you look at all the stats, like, everyone's credit card's maxed out, or at least it seems like everyone's credit card's maxed out.

Tina: Making more money, though. So it's it's all relative. I suppose the delinquency rates on credit cards are not outrageous right now.

Steve: Yeah. But the card my understanding card payment delinquencies are up.

Tina: Cars are. Yeah. So yeah. So we have hints.

Steve: Right.

Tina: Right? We are just not there yet

Steve: Mhmm.

Tina: In my opinion. In 2007, we had the lowest unemployment rate until we had the highest unemployment rate. Yeah. 2010. Not saying that that's gonna happen, but one of the things to understand about recessions is that home prices don't necessarily come down at all.

Mhmm. And the recession from 2001 to 2002, home prices were flat. Mhmm.

Steve: The

Tina: 2008 to 2009, obviously, housing was the driver of that recession. So housing prices were down.

Steve: Recession. That was that was technically a depression.

Tina: Yes. They call it the great recession because they don't wanna cause it a depression because they had one, I guess. But in 2020, in that recession, which was like a blink of an eye, prices went up. Mhmm. So there is no tried and true formula for stating what housing prices are going to do other than looking at how conservative was lending up until that point.

And the fact is that our lending has been extremely conservative, so I'm not expecting, any housing price adjustments

Steve: Mhmm.

Tina: From whatever resulting recession we might have. But what that will mean is that there might be some opportunities in that time

Steve: frame. Yeah. We keep waiting for it. It's not happening. I mean, like, I was so excited when COVID happened.

It's like, alright. Like

Tina: We're not expecting foreclosures or short sales either.

Steve: Yeah. So well, short sales are funny. Right? Because Matthew Potter. Right?

He's someone that's, we do a lot of business with. Mhmm. And he's getting short sellers for us all around the country. Now not in Phoenix.

Tina: Mhmm.

Steve: But it is crazy the amount of short sales that are happening

Tina: around Most of the short sales I'm gonna gather have been owned for a short period of time.

Steve: Short period of time. Yes.

Tina: So they could be people who got in to try to get into vacation rentals and it didn't work out, or it could be people that thought they were gonna be there longer and it didn't work out. But I don't see an avalanche. At least in Greater Phoenix, we watch and there's no

Steve: There's so much equity. You can't have an avalanche.

Tina: Yeah. There are too many choices. Somebody I mean, you just hint to somebody. You might go into foreclosure. You're gonna be bought.

Like Mhmm. They'll they'll just take over your mortgage payment. No. There's really very little risk of foreclosure short sale right now. Right.

Steve: Anything else interesting we haven't talked about as far as the real estate market, things to look out for?

Tina: Oh, the thing to, like, warning signs

Steve: or aware of? Like, what are you seeing around the corner, or is it just it's just gonna be boring for the next six months?

Tina: I think it's gonna be boring until the next Fed's meeting, at the September.

Steve: Mhmm.

Tina: You know, uncertainty always causes a bit of treading water. I feel that a lot of our buyers and sellers are just kind of in a holding pattern.

Steve: Where they've opted out of the market.

Tina: They're just in hold they're in a holding they're watching. Mhmm. Trust me. They're there. They're like circling.

You know? But the, you know, the longer our rates stay where they are, what we've seen are a lot of our analytics have just stopped moving. Supply has stopped dropping over the last six weeks, so we've seen a stabilization there. The Cromper Market Index hasn't really moved for two and a half months, so we're seeing a stabilization there. The mortgage rate hasn't moved in two and a half months, so no.

Nothing moving there. And, we still have two one buy downs, three two one buy downs. 40% of sales are still going with a concession to the buyer, but you also now have 23% of sales going over asking price. So there's a little bit of a meeting in the middle like we had said before. I'd say, I guess, it's a blessing because the more things stay the same, the more people start making decisions based on that.

Steve: Right. And

Tina: if it starts to move again, you might pause all you know, stun the bunnies again.

Steve: And we're

Tina: just gonna watch to see what happens. The one thing people ask me a lot about is is the election. So typically speaking, elections have no impact on housing unless they do something wacko and manipulate the mortgage rates. If they choose to do that, I'm sure we'll have a, like, boost.

Steve: Mhmm.

Tina: But I'm not sure there's no guarantee that that will happen. But the only aspect of housing that the elections affect is luxury. Yeah. Luxury is the only one that, like, leading up to, an election, they might hold off on decisions, might slow down a little bit, and then after the election and the unknown becomes known, they start making decisions again. Yeah.

And, headlines never fail. The the month of an election is always November. It's always the shortest month with a holiday. There's not gonna be a lot of closings that month. But guaranteed, there will be a journalist out there that will compare October to November and say, look at that.

Sales came down month over month. It's clearly because of the election. The wrong person Yeah. Wrong person won.

Steve: Someone needs to make a

Tina: Then they're inaugurated in what is it? January? February? January. And housing miraculously recovers like it does every spring and comes back, and it's clearly always because the right person was selected.

Steve: Clearly.

Tina: So we

Steve: Regardless of who it is, it's fine.

Tina: It doesn't matter. It's just it it's just the way the seasons are. On election day, the seasons are in the fourth quarter. That's always the best time to be a buyer. Mhmm.

It's always the slowest period of time. And then right after inauguration, that's when our seasonally, we pick up again like crazy. So if I were to try to put any correlation to the housing market pricing or supply and demand, there really isn't

Steve: Yeah.

Tina: Anything with the elections.

Steve: Gotcha. So basically, boring.

Tina: Boring. I know. We're just a big old oil tanker. It takes too long. That's another thing with elections.

It takes a long time. You have to be in a just like with the mortgage rate increases, you have to be there for a long time sustained for it to have any measurable impact on the marketplace. And with elections, by the time you might have any impact, it's already it's already over.

Steve: I love I love boring.

Tina: Yeah. You

Steve: can run a reliable business on boring.

Tina: Yeah. Yeah. Right. It's I personally, you you're not really interested in what I have to say when it's boring because it's, like, fifty first dates. You know?

But

Steve: you you can predict what's gonna happen. Right? It's this Mhmm. Up and down. Now you go Volatility.

Volatility and uncertainty. And when it's uncertainty, like, the buyers are backed out. The sellers don't know what they're gonna do. It's now the right time to buy. It's now the right time to sell.

Mhmm. There's all these questions. Reliable or boring is reliable, and you can do a lot of smart things when

Tina: they come home. Yeah. Absolutely. Yeah. And I'll go take a vacation.

Steve: Yeah. Cool. Perfect. Well, thank you so much.

Tina: My pleasure.

Steve: Yeah. Thank you guys for watching.

Tina: We'll see

Steve: you guys next week. Shout out to Steve Trane. Jump on the Steve Trane. We real estate disrupt us.