WEBVTT 1 00:00:01.760 --> 00:00:06.440 Welcome to Mortgage Talk with Mark Harriston, the program that not only talks about 2 00:00:06.480 --> 00:00:10.560 mortgages, taxes, and interest rates, but Mark and his guest talk real 3 00:00:10.679 --> 00:00:14.839 estate trends and your home. He also answers your mortgage questions to help you 4 00:00:14.880 --> 00:00:20.079 make the right financing or refinancing decisions. Now here's Mark, everybody, and 5 00:00:20.160 --> 00:00:24.160 welcome back to Mortgage Talk with Mark Harriston. And I am your host today, 6 00:00:24.320 --> 00:00:27.120 Mark Harriston, and I'm really glad to be back on the radio with 7 00:00:27.199 --> 00:00:31.519 y'all to share some information today that you're going to really find a value. 8 00:00:31.559 --> 00:00:35.560 It could be of great value. I've got a special guest friend of mine 9 00:00:35.640 --> 00:00:39.560 named Chris Jacobs to be with us today. And I've known Chris for a 10 00:00:39.640 --> 00:00:43.600 couple of years now and I really follow him from AFAR on Facebook and some 11 00:00:43.640 --> 00:00:48.439 of the things he posts about the market. He's sort of our local savant 12 00:00:48.600 --> 00:00:55.759 as far as as far as real estate figures and market trends and where we 13 00:00:55.799 --> 00:01:00.039 are and where we're heading. And I really want to welcome Chris and I 14 00:01:00.200 --> 00:01:03.719 can't wait to hear what he has to say today. So tell us about 15 00:01:03.759 --> 00:01:06.200 you, hey, Mark, thank you for inviting me on today. You've 16 00:01:06.200 --> 00:01:11.680 got Chris Jacob. I'm with Portico Real Estate, been a real estate practitioner 17 00:01:11.920 --> 00:01:19.120 in Austin, Texas now for about seventeen years. Started really like we met 18 00:01:19.159 --> 00:01:22.280 on Facebook because I started writing about real estate in the middle of the pandemic, 19 00:01:22.359 --> 00:01:23.680 right, you know, the world had come to a standstill, and 20 00:01:25.200 --> 00:01:26.280 well, I was at home, thought well, let me write about what's 21 00:01:26.280 --> 00:01:30.879 going on. Awesome, and here we are today, and I've been around 22 00:01:30.879 --> 00:01:34.439 a long time myself, and I find your information to be more helpful than 23 00:01:34.480 --> 00:01:37.760 anybody that I see out there. So yeah, and you know, the 24 00:01:37.959 --> 00:01:42.640 stuff I write about was really kind of came about because as we entered the 25 00:01:42.719 --> 00:01:47.079 pandemic, there was no real time update in real estate. We knew that 26 00:01:47.760 --> 00:01:51.519 everybody needed to stay home. Everybody trying not to kill your neighbors, you 27 00:01:51.519 --> 00:01:55.959 know, or your family or your family. You know, you're stuck at 28 00:01:56.000 --> 00:01:59.519 home. But I'm sitting there going I could be a part of the narrative, 29 00:01:59.640 --> 00:02:00.760 or I could be a passenger in a narrative, And I said, 30 00:02:00.760 --> 00:02:04.760 I wanted to be a part of the narrative. I started looking at how 31 00:02:04.799 --> 00:02:07.759 can we do these reports? How can I do the research? What do 32 00:02:07.879 --> 00:02:14.400 the analytics look like, Yeah, I pulled into my statistics that I barely 33 00:02:14.400 --> 00:02:17.479 got through college with. And you study that in college, well, you 34 00:02:17.479 --> 00:02:21.680 know you have an economics degree or I have economics, and you know you 35 00:02:21.719 --> 00:02:23.479 have your your minor in economics, and you had to get through your statistics. 36 00:02:23.560 --> 00:02:28.759 And I'll be honest, I struggled with statistics. Yeah. It's tough, 37 00:02:28.840 --> 00:02:31.280 man, It's really tough. And what was interesting was is it was 38 00:02:31.319 --> 00:02:38.879 intro to statistics that got me. I took it four five times. What 39 00:02:39.000 --> 00:02:45.080 I mastered it this What I struggled with was the concept of manually doing it 40 00:02:45.560 --> 00:02:47.719 because once we got past the intro, oh it's all done in Excel, 41 00:02:47.759 --> 00:02:51.520 it's all done in analytics software. Really, all you need to know is 42 00:02:51.520 --> 00:02:53.800 how to interpret it, right. You don't need to know how to figure 43 00:02:53.800 --> 00:02:57.759 out or your your deviation. The computer does it all for you. Just 44 00:02:58.080 --> 00:03:00.759 how to interpret it. Yeah, so I I kind of took that. 45 00:03:00.879 --> 00:03:04.080 Let me use my interpretation skills and economic skills. Let's start looking at from 46 00:03:04.120 --> 00:03:08.159 a macro theory on where are we going, what's happening and whatnot. So 47 00:03:08.199 --> 00:03:14.000 wouldn't you consider real estate macro and micro Absolutely? You know, I talk 48 00:03:14.039 --> 00:03:15.919 about Austin. Yeah. And when I talk about Austin, talk about the 49 00:03:16.039 --> 00:03:22.639 MSA Metropolitan Statistical area that's Travis County, Hayes County, Williamson County, Cadwell 50 00:03:22.680 --> 00:03:25.639 County, Central Texas basically. And I'll be honest, you want to know 51 00:03:25.639 --> 00:03:29.360 what's happening in my neighborhood, I have no clue. I'd have to go 52 00:03:29.400 --> 00:03:32.159 in and look. But I could speak to it on a macro because real 53 00:03:32.240 --> 00:03:38.319 estate is hyper local. Yes, amen, you know what happens here is 54 00:03:38.360 --> 00:03:42.400 a lot different than what happens Let's just go on one to eighty three and 55 00:03:42.479 --> 00:03:49.840 two ninety Lamar and Konig essentially essentially two different markets. Yeah, and you 56 00:03:49.840 --> 00:03:53.960 know I'm a more macro person, but I can get micro if it becomes 57 00:03:53.000 --> 00:03:55.120 the task of do we need to sell a home? Do we need at 58 00:03:55.120 --> 00:03:58.840 home? When you're when you're practicing as a realtor, when I practice as 59 00:03:58.840 --> 00:04:01.479 a realtor, I can totally to get into the granularity. Absolutely, But 60 00:04:01.520 --> 00:04:03.599 the reality is, if you asked me, I don't know, Well, 61 00:04:03.599 --> 00:04:09.039 I've got a property in Westlake a rental property, uh in Westlake Hill or 62 00:04:09.080 --> 00:04:11.560 not west of Hills, but in Lost Creek. And then We also went 63 00:04:11.599 --> 00:04:14.240 a couple of properties out in Lakeway, and those are two, although they're 64 00:04:14.240 --> 00:04:16.639 fairly close together, they're two two different markets, two different markets for sure. 65 00:04:17.000 --> 00:04:19.040 You know, I've been I got a dollar the tax manager. Your 66 00:04:19.120 --> 00:04:24.079 number one expence is a landlord. The tax property taxes are your number one 67 00:04:24.120 --> 00:04:27.879 expenses. Oh my gosh, Yeah, what's up with that. Don't even 68 00:04:27.879 --> 00:04:30.959 get me started on that one. That's yeah, I'm hoping we have some 69 00:04:31.079 --> 00:04:34.439 some reality with our in Travis County. Obviously, this is where I'm going 70 00:04:34.480 --> 00:04:38.720 to speak to because that's where you live, That's where I live. You 71 00:04:38.759 --> 00:04:42.160 live close to the station, actually I do. I'm just it took me 72 00:04:43.399 --> 00:04:45.519 six or seven minutes to get over. H Yeah, it was beautiful, 73 00:04:45.519 --> 00:04:47.959 great area. I was just here, like, oh I live. I'm 74 00:04:47.959 --> 00:04:53.639 like totally I'm there. I don't even have to like commute far right right. 75 00:04:53.759 --> 00:04:57.519 Yeah, So, you know, the state was not the state. 76 00:04:57.600 --> 00:05:03.360 The market had changed significantly year and we went from hyper crazy to kind of 77 00:05:03.399 --> 00:05:06.600 slow, and right now we're trending at what could be considered some of the 78 00:05:06.600 --> 00:05:12.399 slowest marketplaces we've had in Central Texas in twenty five years. Do you study 79 00:05:12.439 --> 00:05:15.240 the country too, because I have broke friends around the country and their markets 80 00:05:15.240 --> 00:05:19.879 are different, totally different. So I do follow I do, so I 81 00:05:19.959 --> 00:05:25.399 do have no data feed for one hundred and ninety one hundred and ninety hundred 82 00:05:25.439 --> 00:05:29.480 ninety four markets. I do kind of follow it because you know, as 83 00:05:29.519 --> 00:05:31.680 investors and some of you guys, I didn't lead into this. I worked 84 00:05:31.720 --> 00:05:36.319 predominantly with investors. I work with economic modeling for them, and as we 85 00:05:36.360 --> 00:05:40.959 all know, mainly single family are into a lot of multi family, single 86 00:05:41.000 --> 00:05:44.120 family. I've dabbled with multi family. Okay, I'm gonna be honest, 87 00:05:44.120 --> 00:05:46.759 I prefer the single family. There's half the headaches compared to duplex, or 88 00:05:46.839 --> 00:05:49.600 the quarter of the headaches compared to a four partus. Right, you know, 89 00:05:49.600 --> 00:05:53.920 it's less an apartment much as an apartment. That's a whole other animal. 90 00:05:54.399 --> 00:05:57.079 And you know, some of the things we work with our investors is 91 00:05:57.759 --> 00:06:00.800 investors have a life cycle. You know, when you're young, you want 92 00:06:00.839 --> 00:06:04.120 appreciation. As you're aging towards retirement, you want to focus on cash flow. 93 00:06:04.800 --> 00:06:09.160 So you know, being now that I'm I'm touching fifty, I'm not 94 00:06:09.240 --> 00:06:12.319 quite fifty, I'm just starting to sixty four. So well, I'm starting 95 00:06:12.319 --> 00:06:17.000 to see my investors. Yeah, I'm starting to see my investors turning sixty, 96 00:06:17.360 --> 00:06:21.279 right, their investment priorities change. Sure, So now the question becomes 97 00:06:21.319 --> 00:06:27.879 do we reposition out of our single family assets and into do we go into 98 00:06:27.920 --> 00:06:31.160 a read do we go into a DST? With those routs are real estate 99 00:06:31.199 --> 00:06:36.120 investment trust they're traded like mutual fund, They're like a mutual of property. 100 00:06:36.279 --> 00:06:41.639 And then there's a Delaware State Trust DSTs, which are a really neat product 101 00:06:41.680 --> 00:06:45.240 that we're we're doing a lot of studying on and working with clients because a 102 00:06:45.279 --> 00:06:48.439 Delaware State trust is really kind of unique in the sense that if you're an 103 00:06:48.480 --> 00:06:54.639 investor, you have a single asset you're an owner in, but you don't 104 00:06:54.680 --> 00:06:59.720 have the headaches of being the sole investor. Okay. So what's cool is 105 00:06:59.720 --> 00:07:03.360 when you invest in a DST, you actually get to see the tangible asset 106 00:07:03.759 --> 00:07:08.600 okay, that you were invested in. So it's kind of crazy because right 107 00:07:08.639 --> 00:07:11.480 now, or last time we were looking through the portfolio last month, there 108 00:07:11.480 --> 00:07:15.759 was two buildings on Rainy Street that were up for DST investments. Interesting and 109 00:07:15.800 --> 00:07:16.959 they have you know, you might be need to be a qualified investor. 110 00:07:17.000 --> 00:07:20.639 There's a minimum capital. There may be a debt servicing component, but it's 111 00:07:20.720 --> 00:07:24.759 it's a neat product for investors as they kind of, hey, I still 112 00:07:24.759 --> 00:07:27.519 want to be in real estate. I still want to maintain that benefit of 113 00:07:27.519 --> 00:07:30.959 being in real estate. I want my next generation to have that step up 114 00:07:30.000 --> 00:07:34.600 basis right, I'm passing in those the next generation can choose to continue to 115 00:07:34.680 --> 00:07:38.879 Can you use a ten thirty one exchange to get you can on the ds 116 00:07:38.879 --> 00:07:42.279 That what I thought, and that's what's hardly really kind of cool. So 117 00:07:42.680 --> 00:07:46.120 we really kind of sidebarred here. I'm not a tax professional. For the 118 00:07:46.160 --> 00:07:49.079 record, we should go on the thirty minutes. Yeah, you could totally 119 00:07:49.120 --> 00:07:53.639 go forever. So the DST is a neat product because you get ten thirty 120 00:07:53.680 --> 00:07:57.639 one in as you're entering the end of your life cycle and remove all those 121 00:07:57.680 --> 00:08:03.480 headaches. A good example is a client right now who had five roofs taken 122 00:08:03.519 --> 00:08:09.959 out with the hailstorm we had three weeks ago from Rushy Creek round Rock from 123 00:08:11.079 --> 00:08:16.839 Wells Branch North round that. She had a pocket of homes there and the 124 00:08:16.879 --> 00:08:20.959 hailstorms took out five roofs. And while we started digging into the policies and 125 00:08:20.120 --> 00:08:28.800 they had a diminished value policy because most investors being chased into these you get 126 00:08:28.800 --> 00:08:33.000 your useful life. What's left paid out, not the actual replacement costs, 127 00:08:33.039 --> 00:08:35.480 because policies have gotten out of control, so we now have to pay for 128 00:08:35.519 --> 00:08:39.519 five roofs cash because they were at the end of end of life. And 129 00:08:39.799 --> 00:08:41.840 if yeah, you're an investor, you're looking at like, I need to 130 00:08:41.919 --> 00:08:46.279 check my policies that I did that on my own investmentes. I called my 131 00:08:46.279 --> 00:08:50.840 my agent, going, do I have actually I read that exactly, do 132 00:08:50.919 --> 00:08:54.960 have cash value or appreciated value in my investments? And some were good, 133 00:08:54.960 --> 00:08:58.200 some were bad, some had no other options. But you know, this 134 00:08:58.320 --> 00:09:00.759 investor kind of looks at it, going, now, maybe the writing on 135 00:09:00.759 --> 00:09:03.879 the wall that it's time to get out of day to day operations and move 136 00:09:03.960 --> 00:09:07.919 more into the check shows up every month, and that's what the DST does 137 00:09:07.919 --> 00:09:13.000 offer investors. Awesome. Yeah, well that's something we didn't really play on 138 00:09:13.080 --> 00:09:16.639 exploring today now, Yeah, totally, but I love it. That might 139 00:09:16.639 --> 00:09:20.080 be time for another conversation someday. Absolutely another time, But let's talk about 140 00:09:20.120 --> 00:09:24.200 the market here in Austin, Texas or Central Texas. Yeah, Central Texas, 141 00:09:24.320 --> 00:09:28.320 because you know, like I said, I've followed you around on some 142 00:09:28.360 --> 00:09:31.120 of the things you've been doing as far as information to realters, and of 143 00:09:31.120 --> 00:09:35.759 course I'm a mortgage broker, but I need to learn that stuff too. 144 00:09:35.879 --> 00:09:39.039 So tell us a little more about what's happening right now in the fall of 145 00:09:39.080 --> 00:09:43.000 twenty twenty three. Well, the fall of twenty twenty three is turning into 146 00:09:43.080 --> 00:09:50.519 an interesting moment in real estate. So what we're seeing in Central Texas is 147 00:09:50.720 --> 00:09:54.799 we're seeing and this really kind of surprised me this fall, given all the 148 00:09:54.240 --> 00:10:00.840 circumstances marketplace, we're seeing pending sales increasing over twenty twenty two, really, 149 00:10:01.159 --> 00:10:03.559 and that's so encouraging, it's really encouraging. But when we peel that onion 150 00:10:03.600 --> 00:10:07.159 back, because you know, every market's got a different layer, sure, 151 00:10:07.679 --> 00:10:15.399 we're finding that they're predominantly biased towards new construction versus resales. Is because the 152 00:10:15.440 --> 00:10:18.799 financing packages. Financing packages, you know, the bottom of the bottom of 153 00:10:18.840 --> 00:10:24.840 the bottom line is consumers when they are first time home buyers, when they 154 00:10:24.879 --> 00:10:30.399 are entering the marketplace in home ownership, that payment is the most important thing 155 00:10:30.480 --> 00:10:33.080 that they have every month. That's right, that's right. And if you 156 00:10:33.120 --> 00:10:37.879 go into a consumer well we're sorry. Interest rates have changed every it was 157 00:10:39.080 --> 00:10:41.840 every point in movement, and interest rates affects financing by about twelve percent, 158 00:10:43.200 --> 00:10:46.960 eleven twelve. Yeah, it's a big one. It's a big move. 159 00:10:46.080 --> 00:10:50.879 And if you consider we've gone from three to eight, three to eight inside 160 00:10:50.039 --> 00:10:54.240 twenty five months less than that, yeah, year and a half, it's 161 00:10:54.240 --> 00:10:58.919 a it's a scary shocking. It's a shocking. Yeah, it's a big 162 00:10:58.919 --> 00:11:01.919 shock. And if you kind of think about historically, and we're going through 163 00:11:01.919 --> 00:11:05.879 this growing pain in Austin right now. So I don't know if we're you 164 00:11:05.919 --> 00:11:11.240 know, I had this conversation last night with a great investor out of Boston. 165 00:11:11.720 --> 00:11:15.799 He's got fifty doors in central Texas, and he's like, are we 166 00:11:15.879 --> 00:11:18.759 truly losing value at the lower end of the market or are we truly just 167 00:11:18.799 --> 00:11:24.600 seeing an absence of higher and home sell That's a good question, and it's 168 00:11:24.639 --> 00:11:28.360 a great question because we think back to the Great Recession. Terrytown just became 169 00:11:28.399 --> 00:11:31.159 a ghost town. Nothing sold. Yeah, and it's like, well, 170 00:11:31.200 --> 00:11:35.480 did they lose value or were they just holding onto houses? Well, they 171 00:11:35.480 --> 00:11:39.919 were holding onto houses, they weren't being foreclosed on. Those sellers were like, 172 00:11:39.000 --> 00:11:41.799 we can wait for better times. That's right, Well wait, we'll 173 00:11:41.840 --> 00:11:46.960 wait. Yeah, And I think what we have coming off of the this 174 00:11:48.000 --> 00:11:52.559 is where every homeowner in Central Texas needs to put their hat on and think 175 00:11:52.799 --> 00:11:58.200 objectively, is if you bought or forget when you bought, if you refinance 176 00:11:58.240 --> 00:12:01.759 your home or finance your home from twenty to the early twenty twenty two, 177 00:12:03.759 --> 00:12:07.720 about almost a two year period, almost a full two year period, those 178 00:12:07.759 --> 00:12:11.240 mortgages are assets. Yes, yeah, they absolutely They are not a liability. 179 00:12:11.960 --> 00:12:16.480 And I have two mortgages under three percent myself. Who cares what the 180 00:12:16.559 --> 00:12:20.639 values do because the death servicing is so cheap. And it's an interesting proposition 181 00:12:20.639 --> 00:12:26.279 because we're taught that mortgages are liabilities. Mortgages are you know, if you 182 00:12:26.320 --> 00:12:31.519 listen to Dave Ramsey, pay your home off as fast as possible. But 183 00:12:31.639 --> 00:12:37.879 right now, these sub three mortgages are priceless. And I believe that when 184 00:12:37.919 --> 00:12:43.600 we look back, because hindsight's always twenty twenty twenty to twenty twenty two ill 185 00:12:43.600 --> 00:12:46.039 regards to what values is done, will have been the prime buying season in 186 00:12:46.080 --> 00:12:50.840 Central Texas. And what we're experiencing right now is just the hangover that was 187 00:12:50.919 --> 00:12:56.960 caused through the sentergy in that period. And yeah, some values are down. 188 00:12:58.120 --> 00:13:01.000 You know, my personal residence, if I downe to pen paper, 189 00:13:01.000 --> 00:13:05.600 I'm probably down a couple hundred grand from the peak, from the very peak. 190 00:13:05.679 --> 00:13:07.200 And the peak was probably early twenty twenty two, would you say, 191 00:13:07.600 --> 00:13:11.519 yeah, late twenty one, something like just thereabouts. Let's call that the 192 00:13:11.639 --> 00:13:16.240 Q one twenty twenty one Q two. Yeah, right, yeah, that's 193 00:13:16.279 --> 00:13:18.080 right, you know that. But it is what it is. It is 194 00:13:18.080 --> 00:13:22.039 what it is. You know, I've got a great rate. I don't 195 00:13:22.080 --> 00:13:26.960 have a sub three, but half of I'm half of what it is today, 196 00:13:26.360 --> 00:13:28.519 Oh for sure, you know, and I kind of I'm one of 197 00:13:28.519 --> 00:13:33.279 those like I didn't believe it throwing money at refinancing and refinancing because it was 198 00:13:33.360 --> 00:13:35.080 just like, all right, how long are we left in the house? 199 00:13:35.120 --> 00:13:39.679 What is recovery period? And we're sub four? Who cares? Right exactly? 200 00:13:39.840 --> 00:13:41.639 You know, that's a great rate. You can get a ten year 201 00:13:41.720 --> 00:13:45.720 trade, you get a one year treasury right now on an investment at five 202 00:13:45.759 --> 00:13:48.320 and a half percent, that's right. You know, ninety days are pushing 203 00:13:48.399 --> 00:13:52.120 six. Yeah, I mean it's it's it's pretty interesting times. Well, 204 00:13:52.240 --> 00:13:56.080 it's really interesting and you know, we talked about where does Austin go from 205 00:13:56.120 --> 00:14:01.320 here? And the question becomes are going to continue to lose value? We're 206 00:14:01.360 --> 00:14:03.919 not going to continue to lose value, I feel in the and that goes 207 00:14:03.919 --> 00:14:07.159 back to that micro conversation. Does goes back to the micro conversation. So 208 00:14:07.279 --> 00:14:11.960 I feel like we get two liptus tests as to what values you're doing in 209 00:14:11.000 --> 00:14:16.320 Central Texas, and one that I push out there for everybody is average values. 210 00:14:16.559 --> 00:14:20.000 Well, average values, that's not a term we hear very often. 211 00:14:20.279 --> 00:14:22.440 We hear a median. We'll hear median, and there's two schools of thought 212 00:14:22.480 --> 00:14:28.600 on median versus average. Meeting tells you it ignores the luxury sales. It 213 00:14:28.600 --> 00:14:31.679 tells you kind of where the true marketplace is. And I kind of look 214 00:14:31.720 --> 00:14:35.519 at the average, going, well, really, what's the average sales doing? 215 00:14:35.559 --> 00:14:39.679 Because that's the net value of the marketplace. But also on my side, 216 00:14:39.720 --> 00:14:41.639 I have a little number I don't share with people, and it's the 217 00:14:41.679 --> 00:14:48.399 dollars per square foot and that helps eliminate some of the luxury swings and others 218 00:14:48.399 --> 00:14:52.279 and helps us normalize on our square foot Those numbers are down about twelve percent, 219 00:14:52.720 --> 00:14:56.600 okay, which is reasonable. That's very reasonable, considering the cost of 220 00:14:56.679 --> 00:15:00.200 money is sixty percent more than it was. Yeah, yeah, a year 221 00:15:00.240 --> 00:15:03.840 and a half or two whatever the present it is. It's a lot. 222 00:15:03.960 --> 00:15:09.080 Yeah. So I empathize tremendously with the concept of losing value, but at 223 00:15:09.120 --> 00:15:15.279 the same time that payment can never be replaced and it's unlikely that I see. 224 00:15:15.360 --> 00:15:18.039 I couldn't agree more. Man, That's why I'm holding on my hot 225 00:15:18.080 --> 00:15:20.360 properties. I'm not trying. I'm not selling these things, you know, 226 00:15:20.519 --> 00:15:24.000 And I kind of work with these you know. I've got new time investors, 227 00:15:24.120 --> 00:15:26.399 We've got people who want to be investors. And I believe this, 228 00:15:26.399 --> 00:15:31.639 this this marketplace we are in are going to create a new generation of investors 229 00:15:31.480 --> 00:15:35.279 that didn't know they wanted to be real estate investors. That's right. And 230 00:15:35.399 --> 00:15:37.879 these inexpensive mortgages, they're going to want to upgrade at some point, They're 231 00:15:37.919 --> 00:15:39.960 going to want to do things. Well, they're like, well, I 232 00:15:39.960 --> 00:15:43.759 can't get rid of that loan, right, I'm going to put a runner 233 00:15:43.799 --> 00:15:46.279 in the house. And now you have two properties. You've got one that's 234 00:15:46.519 --> 00:15:50.840 providing cash flow and you've got one subsidizing your next house. Yeah, I 235 00:15:50.919 --> 00:15:54.159 just I just talked to client this morning about that they live in around Rock. 236 00:15:54.200 --> 00:15:56.879 They right, they're free and clear, so it's a little bit different 237 00:15:56.919 --> 00:15:58.720 conversation. But they want to move up, They want to keep their properties 238 00:15:58.720 --> 00:16:03.240 around. Absolutely, why not keep it and let it like cash flow and 239 00:16:03.240 --> 00:16:07.639 subsidize your next home? Absolutely? So I think, you know, in 240 00:16:07.679 --> 00:16:12.519 the near term, I think we you've got. The question becomes is who's 241 00:16:12.559 --> 00:16:18.320 in the marketplace and won't lie? And right now I think our biggest ones 242 00:16:18.360 --> 00:16:22.080 are new college grads graduating, wanting to get out of apartments, You're getting 243 00:16:22.080 --> 00:16:26.200 married, starting a family's first time buyers, first time buyers. It's a 244 00:16:26.200 --> 00:16:30.240 tough time to buy. But the reality is is if we sit down and 245 00:16:30.399 --> 00:16:34.080 objectively look at what was a cost to own a home, September of twenty 246 00:16:34.399 --> 00:16:40.039 twenty three was the most expensive period ever to buy a home this century in 247 00:16:40.080 --> 00:16:44.519 America in terms of price or in terms of death servicing. Death servicing, 248 00:16:44.799 --> 00:16:47.960 so your down payment and then your monthly payment, that's right, taxes at 249 00:16:48.000 --> 00:16:49.279 all, in taxes, this is the most expensive period it's ever been. 250 00:16:49.639 --> 00:16:53.120 So I stand by my old adage in Austin, yesterday was the best day 251 00:16:53.159 --> 00:16:56.440 to buy. Today's the next best day. To buy. Yeah, that's 252 00:16:56.559 --> 00:17:00.720 right, and then that tomorrows is gonna be more expected. I couldn't agree 253 00:17:00.799 --> 00:17:04.680 more man, And I want to speak to a little bit around inventory levels 254 00:17:04.720 --> 00:17:07.039 because a lot of friends of mine around the country say they don't have a 255 00:17:07.079 --> 00:17:11.799 lot of inventory where they are, and that could be in California possibly, 256 00:17:11.920 --> 00:17:15.119 or it could be in Colorado or got friends and even in Dallas. But 257 00:17:15.440 --> 00:17:18.039 what do you see our inventory levels here? So we're we're blessed and honestly 258 00:17:18.079 --> 00:17:22.160 with a lot of inventory. Right now, we are sitting on about four 259 00:17:22.160 --> 00:17:26.519 and a half months of supply, which means if we had no new listings 260 00:17:26.519 --> 00:17:30.440 at the marketplace, based on our current rate of consumption, it take us 261 00:17:30.680 --> 00:17:34.359 about half a year a third of a year to everything to supply absorbed. 262 00:17:34.400 --> 00:17:37.559 Okay, and how many units? How many properties? Would you say? 263 00:17:37.640 --> 00:17:41.599 That is about ninety seven hundred single family homes if I remember in the Austin 264 00:17:41.720 --> 00:17:47.079 MLS in the well in the five county area, and I use a hybrid 265 00:17:47.279 --> 00:17:51.720 of data, so that is there's in the five county area, there's three 266 00:17:51.799 --> 00:17:57.480 mlosses. Okay. So yeah, so that's probably yep, six times over 267 00:17:57.519 --> 00:18:04.400 what it was of the peak during what's interesting is we've got infinite amount of 268 00:18:04.400 --> 00:18:08.880 inventory compared to just eighteen months ago. And even when we go back and 269 00:18:08.880 --> 00:18:14.039 look at okay, where were we post dot com bust in Austin, we're 270 00:18:14.039 --> 00:18:17.640 still doing better than then. You know, we look at post Great Recession, 271 00:18:17.880 --> 00:18:22.359 We're still doing better than then. It's just the cost of interest for 272 00:18:22.599 --> 00:18:26.000 mortgage lending has gotten. I mean, it's doing what it needs to do, 273 00:18:26.359 --> 00:18:27.200 yeah, and it's going to work itself out. But when you talk 274 00:18:27.279 --> 00:18:32.839 nationwide, you go and look at that, I think it was ninety seven 275 00:18:32.920 --> 00:18:38.119 percent of marketplaces or trading above pandemic peak values. Wow. And that is 276 00:18:38.160 --> 00:18:42.000 really a function of the lack of supply. And it goes back to why 277 00:18:42.000 --> 00:18:45.160 do I need to upgrade? I got two and a half, I've got 278 00:18:45.160 --> 00:18:48.400 three, I've got three to three quarter and you're telling me it's going to 279 00:18:48.440 --> 00:18:51.880 be eight. Yeah, I'm okay. Here, honey, you want a 280 00:18:51.880 --> 00:18:53.799 new bathroom that's cheaper than moving? Yeah, honey, you want a new 281 00:18:53.880 --> 00:18:56.799 kitchen cheaper than moving? That's right, that's right. Yeah. And according 282 00:18:56.839 --> 00:19:02.759 to the Mortgage Banker Association stat I assume it's true. They said that over 283 00:19:02.839 --> 00:19:06.119 fifty percent of purchases in the second quarter of twenty twenty three were first time 284 00:19:06.160 --> 00:19:08.200 buyers. I totally believe it, and I did too, because we see 285 00:19:08.240 --> 00:19:11.400 a lot of on my end, a lot of our clients are first time 286 00:19:11.440 --> 00:19:15.839 buyers well, and I believe that. We go and look and if we 287 00:19:15.839 --> 00:19:21.599 look in Austin, thirty five percent thirty three point five percent of pending sales 288 00:19:21.599 --> 00:19:25.440 in the last year have been new home build uh huh. And what we've 289 00:19:25.480 --> 00:19:29.519 seen the new thirty five percent thirty five percent. So if you think about 290 00:19:29.559 --> 00:19:33.720 that, new build traditionally hovers in the eighteen to twenty one So is those 291 00:19:33.759 --> 00:19:38.240 marketplaces changed? And you've seen this As a mortgage lender, sure you can't 292 00:19:38.279 --> 00:19:41.279 compete with the builder. No, no, not now, No, there's 293 00:19:41.359 --> 00:19:45.759 no way. And builders are cash flow. They're just working on cash flow. 294 00:19:45.759 --> 00:19:48.599 They're focusing on can we keep the doors open, try and keep the 295 00:19:48.680 --> 00:19:51.440 lights on, trying to keep our debt servicing away for better days, you 296 00:19:51.480 --> 00:19:52.400 know, but let's sell something what we can. We've got to get to 297 00:19:52.440 --> 00:19:56.519 the other side. And what's been really interesting with new builds is we're seeing 298 00:19:56.599 --> 00:20:00.559 them pivot, just like they did with the Great Recession, just like they 299 00:20:00.559 --> 00:20:04.559 did with Post dot Com. Is they're building stuff people can afford. Yeah, 300 00:20:04.680 --> 00:20:10.200 and I look at that as a a investor, just like it's good 301 00:20:10.240 --> 00:20:12.640 to see people being homeowners because we don't want to go. It would be 302 00:20:12.680 --> 00:20:18.440 horrible to see the United States migrate to like some European countries like Switzerland, 303 00:20:18.599 --> 00:20:22.119 Yeah, where eighty percent of houses are owned by corporations, right right, 304 00:20:22.440 --> 00:20:26.440 Well here, you know, it's still the American dream. You can own 305 00:20:26.440 --> 00:20:29.079 a home. Absolutely, you can go out and get it. It may 306 00:20:29.079 --> 00:20:30.680 not be the perfect home. And even though I don't participate in the in 307 00:20:30.720 --> 00:20:34.599 the new home mortgage world because they have their own lenders typically and they have 308 00:20:34.680 --> 00:20:37.960 their own financing packages, you know, there's certainly nothing wrong with buying a 309 00:20:38.000 --> 00:20:42.079 new home. Now, the downside of that potentially could be if you have 310 00:20:42.160 --> 00:20:45.960 to move for the next few years, you may be stuck with your competition 311 00:20:47.119 --> 00:20:49.400 being built. That's right, So that's true, that's something to consider. 312 00:20:49.759 --> 00:20:52.720 That's the big risk with new builds. Yeah, well, a resale that 313 00:20:53.079 --> 00:20:56.400 they alreays built out. And yeah, if it's like like I tell everybody, 314 00:20:56.400 --> 00:21:02.079 if you pull into the neighborhood and all you see is it's going to 315 00:21:02.160 --> 00:21:04.559 be a while before it's gonna be a wild it's just gonna be a while. 316 00:21:04.559 --> 00:21:07.240 But if you could pull into a new home community and you're surrounded by 317 00:21:08.759 --> 00:21:12.079 built out neighborhoods like Cedar Park, if you can find a new first start 318 00:21:12.079 --> 00:21:15.839 home in Cedar Park, that'd be a great place to do it. If 319 00:21:15.839 --> 00:21:18.960 you're looking at elegant, I might be a little guarded in my opinion. 320 00:21:18.000 --> 00:21:22.559 They're going, hey, this is a ten year old. It's maybe a 321 00:21:22.559 --> 00:21:26.039 fifteen year old. But even Maynor, like, let's look at Maynor. 322 00:21:26.799 --> 00:21:30.640 Maynor and the Great Recession took a beating. They got beat up really bad, 323 00:21:32.359 --> 00:21:36.400 and it took them eight years to recover those values. But they did, 324 00:21:37.519 --> 00:21:38.759 and it's like, wow, Maynor can do it. Anybody can do 325 00:21:38.799 --> 00:21:41.839 it. Yeah, it just takes time. And with the way Central Texas 326 00:21:41.920 --> 00:21:47.240 is growing, you know, real estate is a long haul investment. It's 327 00:21:47.279 --> 00:21:49.960 not a short term liquid investment. And that's the way people need to look 328 00:21:49.960 --> 00:21:53.039 at it. Yeah. Yeah, it's also the infrastructure. You know, 329 00:21:53.039 --> 00:21:56.440 it used to be a hassle get the manor not so much anymore with two 330 00:21:56.519 --> 00:22:00.599 ninety. No, it's what you get off two ninety and you have one 331 00:22:00.599 --> 00:22:03.119 stop light and you're in Maynard exactly versus all the stoplights that used to be 332 00:22:03.880 --> 00:22:07.480 all the way down there. It was terrible. So what brought me to 333 00:22:07.519 --> 00:22:11.519 Austin in two thousand was applied materials. Okay, And I drove that two 334 00:22:11.640 --> 00:22:15.880 ninety road for seven years. Every day it was it was light, the 335 00:22:15.960 --> 00:22:18.039 light, the light, Oh my gosh. Well and then they started putting 336 00:22:18.039 --> 00:22:21.799 more lights on and that just made the commute that much worse. Yeah, 337 00:22:22.240 --> 00:22:26.000 and now I drive by there and I go. Seventeen years ago I left 338 00:22:26.000 --> 00:22:30.039 my job. Yeah, and here I am today talking real estate on a 339 00:22:30.119 --> 00:22:32.519 radio show. I love it. I love it. I love it. 340 00:22:32.599 --> 00:22:34.480 I love it. I'm loving it. Well, tell me more. What 341 00:22:34.519 --> 00:22:37.680 else you got do you want to share? Before we got to get off 342 00:22:37.720 --> 00:22:40.759 here, We got a few more minutes before before we uh, before we 343 00:22:40.799 --> 00:22:44.039 move on. Let us if somebody wants to contact you, tell us how 344 00:22:44.039 --> 00:22:45.640 to do that. So my name is Chris Jacob. I'm with Portico Real 345 00:22:45.720 --> 00:22:51.559 Estate. My cell phone is five to one two nine eight three three one 346 00:22:51.599 --> 00:22:56.200 three two. I've got a little Facebook group called housing Report. Are you 347 00:22:56.240 --> 00:22:59.799 just type housing report in your search bar, there'll be a little squiggly line 348 00:22:59.799 --> 00:23:04.039 on that's my group. Come join us. There's almost six thousand people in 349 00:23:04.119 --> 00:23:10.720 there. We talk real estate, we converse, we talk about the hiccups 350 00:23:11.079 --> 00:23:14.279 where the market's going. Kind of like this about a larger scale, but 351 00:23:14.319 --> 00:23:17.880 on a larger scale, it's kind of that's how I met you. Yeah, 352 00:23:18.480 --> 00:23:22.000 and yeah, that's that's Are you still doing some Facebook lives? I'm 353 00:23:22.039 --> 00:23:25.400 still doing some Facebook lives. We do those about every other week. I 354 00:23:25.480 --> 00:23:27.000 just did one last week. Because you know, I'll be honest, I 355 00:23:27.480 --> 00:23:33.240 made a comment about a year ago and someone said we're going to see four 356 00:23:33.279 --> 00:23:37.519 percent rates in Q one and being economics my background in Q one of twenty 357 00:23:37.559 --> 00:23:41.559 twenty three, okay, we were going to see this. This was middle 358 00:23:41.599 --> 00:23:45.279 of Q three, twenty twenty two, right right. And I'm a firm 359 00:23:45.319 --> 00:23:48.920 believer in the government tells us exactly what they're going to do. You just 360 00:23:48.960 --> 00:23:52.200 have to listen. And if you had listened to Jerome Powell at the Federals, 361 00:23:52.319 --> 00:23:56.039 or if you had listened to yelling things weren't looking so hot. No, 362 00:23:56.599 --> 00:24:00.799 And I honestly did a knee jerk comment to someone saying we're going to 363 00:24:00.839 --> 00:24:04.440 see fours in Q one twenty twenty three, going, we're going to see 364 00:24:04.480 --> 00:24:10.680 eight percent before we see four and unfortunately we saw eight percent. That's where 365 00:24:10.680 --> 00:24:14.359 we are. But now, yeah, and it's It was a sombering moment 366 00:24:14.359 --> 00:24:18.319 because I didn't wake up and want to you know, project we needed eight 367 00:24:18.319 --> 00:24:19.920 percent, right. I just was like, oh, I'll say something just 368 00:24:19.960 --> 00:24:23.160 as ridiculous, right, right, I was. I'm actually a little surprise 369 00:24:23.279 --> 00:24:26.319 rates for where they are. But again, it is what it is. 370 00:24:26.359 --> 00:24:29.839 Well, you know, we could talk about that real quick, because that's 371 00:24:29.839 --> 00:24:33.680 just something I find really fascinating. So I didn't study mortgage backed securities until 372 00:24:33.720 --> 00:24:37.880 last summer. Yeah, started learning about the cupon, started learning how they're 373 00:24:37.920 --> 00:24:41.839 traded, right, And one of the things I learned was the mortgage backed 374 00:24:41.839 --> 00:24:45.599 security and the ten year Treasury have been in a forty plus year dance. 375 00:24:45.880 --> 00:24:48.400 Absolutely, year, absolutely, and it was usually about a two percent spread 376 00:24:48.440 --> 00:24:53.720 at one point and eighty bitsy bits. I usually used two just from X 377 00:24:53.799 --> 00:24:57.519 it easy, and we're covering like three and three and I know it's way 378 00:24:57.720 --> 00:25:02.759 above. It's above. And it's kind of weird because the question is why, 379 00:25:03.319 --> 00:25:06.000 and everybody believes we're having a recession, but we've yet to see a 380 00:25:06.039 --> 00:25:11.480 recession. Right, And so I believe these underlying investors are front loading those 381 00:25:11.519 --> 00:25:15.160 mortgages expecting rates to go down. That's what I'm thinking too. And I 382 00:25:15.200 --> 00:25:18.039 think as soon as we see interest rates stabilized, and when I mean stabilized, 383 00:25:18.039 --> 00:25:22.079 we get back to that one hundred and eighty bits. Yeah, I 384 00:25:22.079 --> 00:25:25.160 believe Austo will blow up again. I do too. I think that it 385 00:25:25.200 --> 00:25:27.920 won't take much. It won't take much because if we just drop one point 386 00:25:27.920 --> 00:25:33.000 one point two points, that's a thirteen percent cheaper mortgage. And as soon 387 00:25:33.039 --> 00:25:37.319 as the markets return to a more normal also just gonna shoot up. That's 388 00:25:37.319 --> 00:25:41.000 why I tell everybody today is still the cheapest data buy real estate in Austin. 389 00:25:41.079 --> 00:25:44.640 I couldn't agree more, you know. And everybody says survived to twenty 390 00:25:44.640 --> 00:25:45.680 five, thinking well, twenty five is are going to be a year? 391 00:25:45.720 --> 00:25:48.319 I said, no, thrive right now. There's potential right now, there's 392 00:25:48.319 --> 00:25:52.240 opportunities right now, there's there's one hundreds of opportunities. And I talk with 393 00:25:52.319 --> 00:25:56.039 investors every day and you know what, we may not be doing something today, 394 00:25:56.720 --> 00:26:00.480 but we're preparing ourselves for tomorrow. Yeah, that's right. Even if 395 00:26:00.480 --> 00:26:03.880 you can't be a first time home buyer today. Be it interest rates, 396 00:26:03.920 --> 00:26:06.599 be it sales price, be it the three and a half percent down payment. 397 00:26:07.799 --> 00:26:11.240 Things will get better, things will change, and just be aware of 398 00:26:11.240 --> 00:26:12.920 what the market's doing. It ebbs and flows, man, it ebbs and 399 00:26:12.960 --> 00:26:17.640 flows. And you cannot time the valleys and you cannot time the peak, 400 00:26:17.720 --> 00:26:19.240 No, sir, We try to do it. And like my advice I 401 00:26:19.240 --> 00:26:25.920 gave last week was there's a lot of volatility and rates. Lock by yeah, 402 00:26:26.000 --> 00:26:29.240 and if it floats down, relock, yeah, exactly, Just refinance 403 00:26:29.279 --> 00:26:32.640 it. Just refinance it and go from there. All right, Well, 404 00:26:32.279 --> 00:26:33.759 we got to wrap this thing up. Man. We could keep going for 405 00:26:33.799 --> 00:26:37.400 the next several hours, but I can talk all day. Guys are going 406 00:26:37.440 --> 00:26:40.559 to throw us out of here pretty quick. So sir, thanks again Chris 407 00:26:40.599 --> 00:26:44.039 for sharing all that, and to your listeners, to our listeners, we 408 00:26:44.079 --> 00:26:47.119 appreciate you being with us and see you next week. Yes, sir, 409 00:26:47.160 --> 00:26:49.359 thank you for bringing me on. You're welcome. This has been Mortgage Doock 410 00:26:49.599 --> 00:26:55.359 with Mark Hairston. Mark is a mortgage advocate with Texans Mortgage Source LLC, 411 00:26:55.759 --> 00:27:02.400 offering personalized mortgage solutions, fast customized quotes, great rates and service with integrity. 412 00:27:02.640 --> 00:27:07.119 Contact Mark at Markhirston dot com, Mark Hairston dot com. You can 413 00:27:07.160 --> 00:27:12.079 call our text mark at five one two seven eight nine sixty nine sixty seven. 414 00:27:12.240 --> 00:27:17.759 That's five one two seven eight nine sixty nine sixty seven and come back 415 00:27:17.799 --> 00:27:19.039 next week for more mortgage talk