The Buzz - Coffee and Real Estate - Ep 1
Cameron :
Hey, welcome to the Buzz. It's Coffee and Real Estate. Just wanted to give you guys an update on the market here in Central North Carolina. And talk a little shop and hopefully make things a little bit more clear. So,
Josh:
Yeah,
Cameron :
Welcome to the show.
Josh:
It's gonna be fun and epic <laugh>. Anyway yeah, guys couple things that we do want to do is we just wanted to kinda share a little bit about who we are, where we came from family, all that fun stuff. So kind of start us off,
Cameron :
Well, I can start spouting nerdy facts at you about the market, you know, which, but it does make a lot of sense. Like, why would you believe us? Yeah, right. Why, why should you listen to this? So yeah, I love that. Market is shifting, you know, rising interest rates, inflation, blah, blah, blah, blah, blah. But none of that really matters if we don't know what in the world we're talking about. So I would love to, to hear kind of the synopsis of your story first, and then I'll jump
Josh:
In. Yeah, that sounds good.
Josh:
So guys, I wanna start off with my story. Just how I got into real estate, all the fun stuff there. So I was a lender for about eight years. Been kind of a jack of all trades my whole life. Worked in various, all over the place, landscape and real estate, so forth. So hairdresser for a little while in there, as comical as that is. Yep. But anyway yeah, so both of us really have felt kind of this prompting of the Lord to go into real estate. And for me, I was in the banking world for about eight years. I was doing training for mortgage loan officers and and it just kind of propelled me, if you will, into knowing more about real estate. And from that place on, then I started just kind of investing little bits at a time. And so I went and I took my real estate school passed my test on the first try, which I was like, Hallelujah you Cause didn't wanna do that again. Yeah. And that's
Cameron :
Not an easy thing to do. No,
Josh:
It's definitely not. And and so yeah, we just kind of like launched out dual careered. It I worked at Truliant for eight years and, and about seven years in that year marker, I was like, Going to get my license. I got my license. And then from there we just kind of went into, let's see how this is gonna work. And felt the Lord just tell me at one point Josh's time to go. You need to get it time to do this!
Cameron :
Our, I remember where I was standing when you called me <laugh>, because, you know, we were, we were friends already and I was in real estate a year before you were, and you called me and you said, I'm talking to my boss tomorrow to tell them that I'm going full time in real estate out of Truliant. And I, it was, that was a crazy time for you because you were working 40 hours a week as banks Yes. Showing houses nights and weekends Yes. And running a pretty decent little business doing it, but like, you had to jump from one freight train to another freight train. That's right. And yeah, so I, I had it a little bit, little bit easier. So I, I went outta straight outta college and it was 2008, 2009, like jobs were not around. And I ended up working at a car dealership for a year, which I hated and didn't make any money, but I realized kind of in looking back on it, like I was selling a depreciating asset.
Cameron :
Okay. Big words for you bought it, and then the value went down and, and I kept feeling this urge of like, I wanna be selling somebody that's a, a good investment. Right. Like, I wanna be able to believe in what I'm actually selling. Your Dave Ramsey kicked in <laugh>. Yeah, it did. It did. And so I got a job offer to basically be like a filler. Yeah. You know, like there's a, there's a, there's a building construction company. They have an agent that's in their model home, but their agent has to take a couple of days off <laugh>. And so I was gonna come in and basically like give someone an info packet and say, I don't know. I don't know. I don't know. The agent will be back tomorrow. And that was how I started in real estate. And that was in, I guess I was in late 2008.
Cameron :
Yeah. So I started actually car dealership in oh seven to mid oh eight. I started in residential real estate sales, though I didn't really know it. <Laugh> in the, I have no clue. <Laugh> sales in late oh eight and then worked there until, gosh, 2016 really was when I got my license. Yeah. And kind of tapered out of that job. So at that point, I had gone from, I know nothing <laugh> to, I'm basically taking somebody from handshake hello in a model home all the way through contract color selections, build process all the way to the closing table, which was really cool. Yeah. And I guess I initially, I felt like it was gonna give me this huge head start into real estate <laugh>. I would say it's like 15% head start, because really, I, I was only versed in one product.
Cameron :
I only knew that company, those neighborhoods. Yeah. And all of a sudden when you're walking in a home that's not brand new, that has problems, you know, you've never seen this home before and you're supposed to be consulting on it. Yeah. That changed the game a lot. Oh yeah. And so it was a huge learning curve even after that. But yeah. So technically residential real estate sales since 2008, but really in the full-time real estate world since about 2016. Yeah. and so it was interesting because when you and I both came in mm-hmm. <Affirmative> 20 16, 20 17, it was in this the beginning of kind of the meteoric rise of everything changing. Yeah. And so, you know, I remember coming in and you were representing buyers and it was starting to get a little bit Yeah. Hard to find homes. Yeah. And you were having to present a little bit more competitive offers to win a home, but it still was, oftentimes it wasn't multiple offers, you know, it wasn't that type of thing.
Cameron :
And then, gosh, I mean, here, I mean, just to scale back a little bit, So we have Raleigh, Durham, Durham Chapel Hill right here. If you're looking at Central North Carolina, we have Greensboro, Winston, High Point right here. And we have Charlotte and all of it's huge metro area here. Mm-Hmm. <Affirmative>. And we're sitting right here. So Raleigh for the last few years has been in the top three in growth for, for mid-size metro areas in the us. Charlotte has been at about number five, number six. Yep. And then you got Atlanta down here, which is exploding, which is just a little farther in this corridor. So we've been sitting in this zone of like, super growth. Like every other day we're getting distribution centers, headquarters coming into this area. And it's been nuts, which has been great for real estate, but it's also caused it to become increasingly hard for buyers. Yeah. And then, you know, Covid hit and we were like, Okay, we've been waiting for the correction for
Josh:
15 years, <laugh>. Yeah.
Cameron :
It was already overdue when Covid hit and we had a two week correction. Yeah. You know, and then it just got bananas. Yeah. And so yeah, just kind of a, a a, a really brief short history of where Central North Carolina has been in real estate is, you know, it was here, here, here, and now it's been here, and now we're finally starting to see, I mean, I wouldn't call it cooling, I
Josh:
Would say the plateau. Right? So you, you, we've been steadily climbing and now we've just kind of hit the, you know, all right, this is the new normal.
Cameron :
Right. But I don't feel like that I've even seen prices flatten or drop. It's just, I mean, historically over the last 50, 60 years, real estate will go up in value two to 4% a year. Yeah. I mean, it's, it's, it's, it's the slow steady, and there's really only one time in all of real estate history since they started measuring these things where values went down across the board in the, in the entire us. Okay. One time. And that was the great recession in 2008, 2009. Yep. Other than that, even during recessions, even during the mid eighties with the oil embargoes and the super high inflation, all of that, it just level or it would creep up 1%, 2%. Okay. So at least in this area, don't hold your breath for, you know, the market crash. I mean, we're doing data research all the time. I haven't seen anybody besides the YouTube loos who are saying that this particular area is gonna have a crash. We've just seen a slow of the actual growth back down to historical normals. I mean, which is where you wanna be anyway. Sure.
Josh:
Well, it's like you said, put it in the Josh Jones LeMans terms. Kim's got the, the calculated piece of it. What I'm seeing typically is, you know, when I started, and gosh, when was that? 16, 17 something that rates mm-hmm. <Affirmative> when I started then, you know, we were seeing, you know, slow growth, you know, 3%, 40% markets. But, you know, if you made an offer on a house, you were coming under list price. Mm-Hmm. <Affirmative>, you know, or maybe you were asking for closing costs. A lot of times that's what we were doing was asking for closing costs. Yeah. helping new home buyers and stuff like that. And then it slowly got to this point where we start seeing, all right, well now we're coming in five or six grand over list price. And then it was like, Oh, now it's 10 or 15,000. Oh,
Cameron :
I remember, I remember I thought that I was totally shafting my buyers when we had to come in $11,000 over this price. I was like, We are selling our souls to the devil to try to get this house. And, you know, that was then, that was in the beginning,
Josh:
<Laugh>. Well then we had that one in Melbourne where it went $40,000 over the price. We were like, Oh my gosh.
Cameron :
We were representing the sellers.
Josh:
We
Cameron :
Were the list price. It wasn't 40, it was 50 50. We listed at 360. The thing, the thing went for four 10. But in addition to going $50,000 over list price, the, the buyers put a 40,000, $40,000 due diligence. Okay.
Josh:
That's crazy.
Cameron :
And, and we'll, in future podcasts, we'll go through the technical terms and explain what those mean. But in a, in a nutshell, that is non-refundable risk money. Yep. That if the buyers backed out for any reason, I mean, let's say they did an inspection and the foundation was crumbling and they backed out, they'd lose $40,000,
Josh:
40.
Cameron :
Now, thankfully that didn't happen. They closed and the $40,000 was credited back to them at closing, and everybody was Okay. But that was nuts. Yeah. And that was, that was like March or April. So that was right. As the interest rates were starting to, I mean, they were still down in the 3% rate. Yes. 3% rates. That was when the, the most of the nuttiness
Josh:
Happened. Well, and I think the thing that was crazy about that was that one, that was the first we ever had that much in due diligence. Mm-Hmm. <Affirmative>. So we were kind of like, how do we ne navigate this? Like, do we navigate this a little bit more than we would in a $3,000 or $5,000 due diligence? Right. It's like, I want the certified check, I want this, I wanna make sure that we have it in hand before we change status. Like it was just, it was a big change for us as market. And then, you know, and that only lasted six months Oh yeah. Of that kind of timeframe. For sure. And then, you know, we've had, I think we've had three in that same neighborhood. And the next one was, you know, five grand I think over, and then with a $10,000
Cameron :
I think. Yeah, yeah, yeah, yeah. Yeah. It went, it, it dropped. Now, I mean, when we started, we were at $500 due diligence. Mm-Hmm. <Affirmative>, you know, there was not a whole lot of skin in the game if somebody could back out. And they basically lost 500 bucks, which not that much for real estate, but, you know, so it escalated from there. And so it went, you know, $500 to $40,000 and now it's dropping back. I mean, we just had a house going, a contract for a buyer yesterday. So he looked at probably a dozen homes. He made an offer on one of them and got an outbid. So not too, too bad. But we put an offer in on this one. It was kind of a special situation because it was a double wide, really nice condition. I mean, have been fully remodeled, updated everything but a double wide Yep.
Cameron :
On a couple acres of land out in the county. Yep. And, but here was the caveat. So U S D A, which is typically what you'd use on a rural housing loan, cuz it's, it's, it's a, it's a, a rural loan. It's a hundred percent financing. They wouldn't do a mobile home, they wouldn't do a manufactured home. Yeah. They only work with new. And that was the first time I'd run into that. So note, note to self, no SDAs on existing mobile homes. Well the, so, so that next, that loan option, then the <laugh>, So the people who bought it had just purchased it within 90 days before and they had flipped it. They basically remodeled the whole thing and turned around and sold it. Well they bought it with an FHA loan.
Josh:
Oh.
Cameron :
So an FHA loan.
Josh:
Just a double whammy. Yeah.
Cameron :
So, so give the, give the guidelines on the fha. Sure.
Josh:
So I mean, just my lending background. So when Cam called me, he was like, Hey, I got this double wide, I'm looking at it, blah, blah blah. I was like, you need to make sure you can get it financed and with the financing types that you want. So I knew he is going to U SDA A and I thought, ah, I think there's some stipulation there with what you can and can't do. And then, and we've had multiple conversations with, you know, double eyes with other transactions and then also talking with other lenders. And it was like, there was a 10 year window at some points and then there was, you could only do it if it was this way or that way mm-hmm. <Affirmative>. And so it just got funky. Yeah. And so we just called around to our lenders and found out that, you know, really the only option was really going conventional.
Cameron :
It was, and with this FHA having this weird 90 day like restriction, like you couldn't have an FHA loan and then have another FHA loan on the same property within 90 days. Yep. Well that made it crazy. And so we ended up being able to negotiate. We rearranged some things, got into conventional financing, the buyer was happy with it. We ended up doing, I think it was a $8,000 due diligence on it. So it wasn't not too, too, too bad. Especially with it being fully remodeled. We felt really good about we were able to get up in the crawl space and all that. Yeah. And so he was okay with risking eight grand. We went into, we still were owe a little over list price, but for the first time, and I don't know how long Yeah. We were able to negotiate in some celebrate closing calls. Yeah.
Josh:
<Laugh>. Which, which, which is laughable because we haven't had that in at least two or three years.
Cameron :
Yeah, yeah. Three years. I mean, I, I was even like joking with the agent. Like, I don't even remember when's the last time I
Josh:
Sent for this.
Cameron :
We could, Yeah. When could you submit an offer with seller paid closing costs has been very rare. Yeah. So that was kind of crazy. But I, thankfully we got him under contract. Yeah. I was just on the phone with him 10 minutes ago. Scheduling inspection. So yeah, that was, that was nice. Cause it felt like a little bit of a market shift. I know. Oh, totally. I know manufactured home's a little bit special case, but yeah, it like, I felt like there was a little bit of breathing room for buyers mm-hmm. <Affirmative>, which really helped because buyers, I mean they really have been selling their birthright to get a
Josh:
House. Oh, totally.
Cameron :
Hey, we won't ask for any repairs. Hey, we won't. We'll come up with extra cash for low appraisals. We'll come in, you know, ungodly amounts over list price. Yep. There's 17 offers on every house. It just, it was not healthy.
Josh:
No <laugh>. It was totally not healthy. And then the thing, it's crazy, we, we had another one that to kind of caveat off of that is mm-hmm. <Affirmative>, we were 20,000 on our list on the actual offered price under list, under list $20,000, which never happens. Which ne I haven't had happen. Well,
Cameron :
It needed, it needed some work. Yeah. Not a ton of work. It needed
Josh:
Some work. Yeah. I would say it was cosmetic. It was an older home, kind of felt like, you know, the grandma's house that she's passed away and the kids are selling it off kind of deal. Yep. And and so, you know, I needed pain and needed carpets and flooring and so forth. Mm-Hmm. <Affirmative> just updating. But you know, it came in really strong. 20 really strong for us. $20,000 under list with like a $1,500 due diligence, which I haven't seen that at all.
Cameron :
I mean, when you said you were submitting out, like there's no way they're gonna accept
Josh:
That. And the agent was like, Please send me an offer. You know, it'd been a market. Now I will say this, it's been market for 90 days, something like that. And it had been under contract a couple times.
Cameron :
Yeah. Which you, you don't see much this on market for 90
Josh:
Days either. So. No. So it, it definitely had, its kind of caveat of, of space, but you know, it, it's the difference in negotiation, difference in looking at, okay, what can I get? Right. You know, they had no offers. They hadn't had any show ins. They were just, you know, kind of stal making and I'm pretty sure they were gonna do a price drop anyway. Yeah. And so we just kind of beat 'em to the punch and and so they accepted and the the crazy thing was I'm like super excited. I'm like, man, this is great. We're finally the scene shift in market, all this kinda stuff. Yeah. Well, what comes with shift in market is the rates change. Yes. And so, well
Cameron :
Wait a minute. So also you only had to get $1,500 due
Josh:
Diligence. Right. $1,500.
Cameron :
So at least it was a little bit lower risk. I mean, $1,500 is a lot of money, but a little bit lower risk from what we had seen. Exactly. So then what happened?
Josh:
So we go into the lending aspects of it. So, you know, they were going va they were very specific on wanting to stay with their lender. And so it was like, alright, fine, we'll go that route.
Cameron :
And they had, I mean, they had a prequalification level pre
Josh:
And everything pre Yeah. We had a prequalification letter from the lender and everything. Yep. Now caveat, pre-qualification versus pre-approval are totally different.
Cameron :
So, so take them, take just a minute and go into that because that I didn't understand that. Sure. It's like, what is the difference between pre-qual and, and actual pre-approval.
Josh:
So you have your pre-qualification. Pre-Qualification means that, hey, we've pulled your credit. We've, we've seen what you have put in the application. Okay. So whatever you put in the application is what they're looking at.
Cameron :
They're kind of trusting your word for it.
Josh:
Right. They're trusting your word for it. Yeah. Which we know a lot of times we fabricate some details sometimes
Cameron :
Or honestly don't know.
Josh:
No, true. That too.
Cameron :
It doesn't necessarily have to be, you know lying intentionally. Yeah, sure.
Josh:
Yeah. So, you know, they may say, Hey, well I make this much per month, or I make this, you know, hourly and this so many hours of work or whatever. And sometimes that's off. And so what ended up coming up was this particular buyer was a temp. He worked for a temp agency. Mm. And so, because he worked for a temp agent, which, you know, when I talked to him, he's like, Oh, I'm in computers. I do this, I do that. And I was like, All right, cool. We should be fine. Yep. I didn't think they asked the temp question. And, and so we went under contract. And, and normally kind of give you an idea, the reason why we like preferred lenders is because they get back to us within a day or two in, in some cases 24
Cameron :
Hours. Yeah. So we don't necessarily make a penny off of That's right. Like some sort of transaction like, Hey, I want you to, to talk with Bob because Bob is gonna cut me up $200 gift card at the end of this. That's not how we work. But if we find a lender or a co hopefully a couple of lenders that are honest, they do what they say they're gonna do. That's right. They have a high level of integrity. They have a good team. Like I don't care what company they work for. That's right. That's who I'm looking for. That's
Josh:
It. Yeah. And that was huge because, you know, I, they, they stuck with the lender they were with, and we were under contract already delivered due diligence and, you know, we're getting ready to schedule inspections. And I called that Byron and I said, Look, this is what we're thinking about doing. What are your thoughts? And he said, Well, I just got a call from the lender and they're telling me to hold for a second. I was like, Hold for a second. What do you mean hold,
Cameron :
That's not a good sign.
Josh:
That's never a good sign. And and so I dug in deeper and deeper and deeper. I got him connected with our preferred lender, Don mm-hmm. <Affirmative> mm-hmm. <Affirmative>. And I said, Hey look I wanna make sure that, you know, there's no snags anything that's gonna come up that we don't know about. And so within 20 minutes, I, I had gotten a phone call back, Hey, you guys putting nap in? All right, cool. Two hours, three hours later he's like, I got the app. I'm looking at it. This is the reason why they're having a snag is because he is a temp. Yeah. Because they don't classify it as a job that is consistent. They look at it as like it's temporary. It could go away very quickly. Gotcha. Which honestly, in some cases this state, you can fire anybody for any reason. So it's really <laugh>. It's a small valid, but Yeah. But at the same time it like, that's still
Cameron :
A restriction for a lot of
Josh:
Lenders. It's a huge restriction for lenders. And had I had, I known he was a temp, I would've pulled that quicker. But just because my lending background, I knew that that would be an issue. Yeah. And so we sent him to I think five different lenders. Yep. I mean I went unconventional, we went different options, everything. The only thing that we could find that would potentially work was going through state employees. And so we put 'em through there, they ran through the gamut and within, I don't wanna say three or four days, we had an answer back. And they basically said, you know, because the debt to income has changed because the rates went from 5% to 7%, his debt income had raised over the 43% threshold or whatever. Oh. And so it booted him out and and ended up causing an issue for us being able to move forward cuz the agent was okay. Like, they were like, Hey, make this work out. Which was amazing. Which they
Cameron :
Were desperate. I mean they were like, Hey, if we need to drop closing back 30 days, we'll do it like
Josh:
Totally on board. Yeah. So it was, it was a whole different kind of element that we hadn't experienced yet. Yeah. And so going through that process was like, man, this is an eyeopener of, these are the reasons why we have preferred lenders. This is why we go through this process. Right. Is so that we can protect our client. And when you're working with an a, you know, with a lender that you're not maybe familiar with mm-hmm. <Affirmative> and they don't know you and you don't know them, there's just not a ton of communication in the same elements. Yeah. And so that, I think that was the big thing for us is we didn't have that communication piece. You know, if I sent an email or a text or a phone call or whatever, you kind of get some, I'll let you know Right. Kind of stuff. Right. Whereas like Don, I could call him in 30 seconds, he's gonna text me about, Hey, I'm in a meeting, I'll call you in an hour. Right. You know, and I'm gonna know something that day. And so that's huge. I mean I think that's, that's one added value. Yeah. That, you know, like if I can hand you to Don and I can literally not have to worry about it. Yeah. That is such a game changer for me.
Cameron :
Well and I appreciated it because your lending background even like I, I would not have even had the, the wherewithal to go to the other four lenders. Yeah. And you're like, well, you know, we got this option, we got this option. And and of course none of them ended up working out and we had to terminate the contract and I hated it and we ended up losing money. Yeah. I mean the buyer ended up losing money, but it, it still was, I really appreciated you because your lending background, you knew three or four other options that might work. Yeah. And I think I would've taken the first No. Or maybe the second. No. And been like, well that's all I know what to do. So. Sure. It was cool that we were teaming up as well because you brought a lending expertise in that particular situation that at least gave our buyer a lot higher percentage of saving the deal. Sure. unfortunately didn't happen. So if you work for a temp agency,
Josh:
<Laugh>
Cameron :
Get on permanent before you shop for
Josh:
A house. I will say this though, there are a couple, the options that we talked to, all of them were okay with doing the temp. Now they could not go the VA route. Okay. They could push them conventional. Gotcha. The issue was is that we'd need 3% down instead of a hundred percent finance that.
Cameron :
So it was a higher down payment. So there are options for temp is what you're saying. There are. It's just higher down payment and then you need to make sure debt income is low. Yes. So pay off the debt. Yep. Make sure that, that you don't have a lot of debts you're running
Josh:
With. Yeah. Cuz we had three options. State employees was one of 'em. We had unconventional that this guy's done some amazing stuff for us in the past and he did like a two week close on a 500,000 ounce. It was like, snap done.
Cameron :
That's amazing.
Josh:
And I was like, the world, how'd you do that? And I honestly, when I wrote the contract, I was like, You better get this done in two weeks. <Laugh>. But I mean he was literally, he was done date early. That
Cameron :
Was back a few months ago. That
Josh:
Was, Yeah. I mean we literally, I think it was four days fore closings and he's like, All right, we're we're clear closing. I'm like, You did that in like a week and a half. That was awesome. It was nuts. So he was the one that I contacted, he connected me with two other lenders Okay. That he said were unconventionals that we could try. And everybody said Yeah, we can do the temp, the temps not the issue. The the ray of rate I gotcha. Is what killed us. So it
Cameron :
Was three things that was down payment, debt to income and temp. Yep. It was like three nails that were all in the coffin to take
Josh:
That one down. Yeah. Cause the initial, they wouldn't do it because of the temp. Okay. Whereas everybody else was like, Nah, we're good. So had we had, I known and you know, the communication piece of it I think is huge is that we make sure that we're talking through this and it was a learning experience for me. It was also a learning experience for the, the client. The client's still looking and we're gonna find something else, but it, it, it dropped him down dramatically on what he could afford. You know, we're sitting here, Oh, we can afford this and now we're down here. But you know, that rate thing is huge, you know, and I will tell you anybody, especially if you guys are looking for a house, if you're going into it and you're going, All right, we're going to buy a house at $300,000 before you make the offer, talk with your lender and make sure the rate didn't dramatically change. Cuz it literally changed the day he called me and was like, Hey, they're saying that there might be an issue that was a day that the rates change from five to seven <laugh>.
Cameron :
Yeah. I mean we've had some huge jumps around in rates and I just wanna speak to that a little bit because people are really freaking out with rates. So first let's take a step back the last 60 years. So 1960 to 2020 basically a six or seven or 8% interest rate is normal. Mm-Hmm. <Affirmative>, that's normal. I mean, what we've been in the last 4, 5, 6 years of these two and three and 4% interest rates, abnormal, never seen ne I mean never seen back the, the roaring nineties in real estate. You had huge boom there. You had the mid two thousands. Those were all like upper single digits. Oh totally. Eight 9% interest rates that they were doing. So real estate markets certainly operate in six to 10% interest rates. We just haven't seen it in a long time. That's why we're gotten a sticker shock.
Cameron :
Yep. And so, but if you take that and you say, Okay, how do interest rates move? So interest rates shoot up like this very quickly like they're doing right now, very quickly. And then they gradually drop. And so what we're telling buyers right now is, hey, don't get married to your interest rate. Okay? Yep. I mean, you obviously have to be able to make the payments, but over the long term, and I say long term really probably just the next couple or few years. Yeah. We don't know exactly. But those rates shoot up and then they, and then they drop. So you can refinance out of what you're in into a lower rate. And so, but, but the house itself, you still gotta make sure the house itself works. That's right. Right. Cause it's not as easy to just sell a house in a year and a half or two years.
Cameron :
That's right. So make sure the house works, like marry the house, don't marry the interest rate. And we've had some really smart lenders that have keyed in on this that have gotten to see multiple business cycles and they've said, this is how it goes. So understand that you can go, you still go buy a house now, you still gotta be able to qualify for it right now. And I don't want to tell you to like, you know, cash in all your savings and have a, a payment that's too high that you can't make. But what I'm saying is long term, you're probably gonna live in this house and you're gonna see interest rates drop back down and that's when you're gonna have people refinancing in rates. Totally. So don't get so scared of buying, it's actually a great time to buy because a couple of things.
Cameron :
One, you do have a lot of people who's scared and so they've, they've pulled out of the market and all of those folks that were willing to go, you know, astronomical high for a 3% interest rate, they're gone. But you also are not gonna see, at least in this, I could be wrong, but nobody, no expert is saying that you're gonna see housing drop. So just understand that that's the long term picture of buying and it's actually a good time to, if you're ready financially, if you're ready, you still gotta be ready. But to, to begin seriously looking for a house because you, it allows you to refi later, but it still allows you to get a house before they continue to get more expensive. Now they're not gonna be significantly more expensive next year. Yeah. I mean, we really are seeing a plateau. So we're not talking 15%, 20% more expensive like we've seen the last two years. That's right. But don't wait for the crash is what I'm saying because it's, I just don't see it coming right now. I know everybody on YouTube is like, oh, but yeah. At least in this area, I don't see it
Josh:
Coming. Well and I think the main reason why people are one thing you gotta take into consideration, Okay, so anytime a house sells, it becomes a comp, right? Yeah. So if a house is a hundred thousand dollars and it sells for two 20 Yep. <Laugh>, which is what we're seeing now,
Cameron :
If it actually closes at that price,
Josh:
If it closes at two 20, it now is a comp for two 20. And so every house that's around that now Right. Rises in value. Right. So each one of those comps is go for six months and in some cases a year. Yeah. So if I have comp one, comp two, comp three, and comp three is the, you know, $69,000 house mm-hmm. <Affirmative> and I got the a hundred thousand dollars house and then all of a sudden we got this two 10, there's gonna be a variance. Right? Sure. But the thing is, is everybody's gonna start pressing towards that two 10. Right. And so every house now is gonna get listed for higher. Right. And so then we're gonna see is multiple comps. Yep. And then you're gonna have that rise. So unless there is a dramatic foreclosure Yep. Or there's a dramatic drop in pricing, like houses just aren't selling, they're going 10, $15,000 on our list. That's the only way we're gonna see this massive drop Yeah. And these price points and it's not gonna happen immediately. Yeah. It's gonna, like in real estate, everything is like a slow stair step down. Right. And so that's what we're saying turn
Cameron :
Turning the battleship.
Josh:
That's exactly right. Yeah. It's a huge rudder to move. Yep. And so that's what we're seeing is that, you know, little by little it's coming down if it, if it were to do that. Yeah. And and so you know, anybody that says, Oh, it's just gonna crash it, it's never gonna crash. Yeah. It's always a progression that you're gonna be able to see. And once you start seeing a trend, that's a whole different story. But we're not seeing that trend. I mean we, I think you said 70% of homes are selling over list price right now,
Cameron :
At least in our market under the 400. So not the luxury homes, but under 400, which is considered the middle class homes in this area. Yeah. 70% over list price. I mean, still. So even with the higher
Josh:
Rates. So if that's the case, then every house that's around there, let's say that the average is $10,000. Every house just raised $10,000. Yeah. Right? And so that, that's why, you know, when people start talking about the crazy, oh, it's the market's gonna crash and all this, I don't foresee it. And the only reason we had the crash in a, in oh eight was because we had a huge foreclosure market.
Cameron :
Well we had, we had criminal banking
Josh:
Practices. Yes. Totally.
Cameron :
Criminal banking
Josh:
Practices. Yes. Stock market dropped criminal background. I mean basically I, I was watching a thing on 2020 and they said, Man, if you can fog a mirror, we'll give you a loan. And that's basically how it went. They, I mean, they were refinancing houses, they were pulling cash outta houses and they would not do appraisals, they wouldn't do income checks. There was a lot of crazy stuff. Yeah. And then, you know,
Cameron :
None of that's the case now all totally. The laws were all put in place. Yep. None of that has happened. None of the lending practices are there. People are putting huge amounts of money down. That's right. They have total positive equity in their homes. That's right. So if everybody lost their job, not everybody, but if a large chunk lost their job, they could still sell their house and not they'd make a chunk of change. Right. The house, they make profit.
Josh:
That's right. Yeah. And that, that was the other thing is in, we saw that in 2008 where in the lending side of it, where people would come in like, I need to refinance my house. Yeah. Or I need to do this or I need to do that. The issue was, is that they'd come in and, and their house had dropped so much in value Right. That now they were upside down. Well they bought it overpriced. Right. Which I hear everybody say that now. But the issue is, is that we're in an organic growing market, not something that was falsely like
Cameron :
It's not, it's not artificial. Now, the interest rates were artificial. Yes. The 2%, 3% interest rates were artificial. Yes. But the, the, the growth in the market has been, at least in North Carolina here, it has been a supply and demand growth. That's
Josh:
Exactly
Cameron :
Right. It has been a businesses are coming into this area growth and, and that's real. Right. That's, that's gonna be sustainable.
Josh:
That's tangible. Yeah. And so we we're not gonna see that massive shift like we are now, are we seeing a change? Yeah, of course. But the Fed is doing that on purpose. Right. So they're personally raising rates so they can slow the market down. Sure. That's not so we can have a crash. It's to,
Cameron :
It's trying counteract it's trying to get the freight train back under control.
Josh:
That's right. That's exactly right. So I think that's a huge piece of it. You know, if you're going into it, like what Kim said, don't marry the rate, the rate's gonna change. I I mark my words in a year to two years. I'm marking right now in a year to two years, we're gonna see the rates go back down. They'll be back down probably. I they're not gonna be a 3% No, no, no, no. If they drop down into the four and fives, I would, I I think that's probably logical. Yeah. However, you know, I think we're gonna this 7%, 8%, whatever they continue to rise to, that's gonna come back down to some normalized market rather in the four to 6% range. Yeah. That's normal. Yeah. And I think we'll come back down to that in the first, in the next year to two years.
Josh:
Yeah. So if you're, you find the dream home that you like mm-hmm. <Affirmative> and it's the thing that you want. Yep. And you're looking at it from that perspective of, you know, I might have to suffer and pay an extra a hundred dollars a month on my payment or $200 a month or something like that just to get the house that I want. Yep. You may save 10, 15, $20,000 because there's not somebody competing with it. You're not overbidding on it. Mm-Hmm. <Affirmative>, you're not doing all these things. Mm-Hmm. <Affirmative>. So you might get the house that you want in a, in a, at a comfortable price. Right. And then turn around in a little bit and refinance it costs you maybe three, $5,000 and then all of a sudden now you're, you dropped two, $300 a
Cameron :
Month, say 200 bucks a month. Exactly. Yeah. So I think that's a way, there's a ton more to say. There's a bunch of nerdy stuff to say. <Laugh>, there's a bunch of fun stuff to say. We'll keep drinking some coffee. But thanks so much for joining us on this podcast. We look forward to giving you some more information on kind of the inside back stories of real estate. And yeah, it's been fun, man. Definitely. I enjoyed it. All right. Cool. See you next time. See you guys.
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