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It’s Rush To Reason, with your host, John Rush. Presented by Hi5 Plumbing, Heating and Cooling, where every call ends with a high five.
All right, hour three, Rush To Reason, Denver’s Afternoon Rush, Klz560. Thanks for joining us that time of the month, where Kurt Rogers from Affordable Interest Mortgage joins us. A lot to talk about today, because of the events of yesterday, the Fed cut the rate a half a point, which you and I had talked last month, we were sure it was going to at least be, and I think everybody was, a quarter.
Would it potentially be a half? Well, it actually was a half. So the question I’ve got for you, we talked a little bit about this on Monday, but given that they did the half, and they’re saying could be another full half a point by the end of the year, what does the mortgage market do in response to that?
I think you’re going to start to see people that have been wanting to buy a home, or refinance their home and pay off debt. They’re going to start, that interest rate is getting closer to what they have. So when the debt consolidations, they’re now going to just maybe have picked up $100 to $150 a month on a debt consolidation.
People that want to buy are now going to be able to step from that $450 to $505.25 range. From the $5.50 to $6.50 range. They’re going to be able to start moving up and finding those homes.
So I think we’re going to start to see, it’s not going to happen overnight, but it is going to happen in the next…
Because as you always say, they start factoring in interest rate changes on the front side, which they did in this case. Here’s a question, did they factor a full half a point in the mortgage rates? So were they pretty much on target with the Fed?
No, they factored in a half.
Okay, so they did.
Because about 14, 15 days ago, our rates started dropping. They’ve dropped a half to three quarters of a point in the last two to three weeks. So the market had an understanding that that was going to happen because of certain factors.
And it came in. So our rates have already been dropped.
So say they’re… Fed’s talking about a couple of other rate drops by the end of the year. Where do you see rates being at mortgage wise by the end of the year?
Right now, you’re at 6% to maybe 5.75 on a conventional. On an FHA, and this depends on FICO and low in the value, but on an FHA, you’re at five to five and a quarter. I think you’re going to see those rates maybe come down an eighth to maybe another quarter.
The Fed’s, I believe, are going to lower a quarter in November and a quarter in December. The only thing that I think can change that is depending on what happens to the unemployment numbers. If they stay steady, that’s what I think you’re going to see.
Right. Okay. By the way, I can’t argue with any of those.
We talked about this in the past. I anticipated them lowering things much sooner than they actually did. I think they were a little late to the game.
That’s just my opinion.
Yeah, they could have moved a little bit earlier to help prevent some of the unemployment. The Fed’s job is to keep money flowing. So, they may have kept it a little bit too long, but they’re now pushing.
Maybe that’s why they went to the half. It sends out the first signal. They’re going to consistently go forward and pay attention to it.
They’ve got us down in inflation at 2 to 2.5 percent. And as long as we stay in that number, I think they’ll consistently lower rates to a point. I got many phone calls today and yesterday.
Well, where do you think rates are going to end up? 3, 3.5 percent? I’m like, no.
We’re not going to go back to that time. When rates have to be that low to incentivize people to buy or refinance, we’ve got bigger problems on the other end.
Okay. We got time for another question here before we change. The NAR ruling and a lot of what was going on, we talked about that last month because things were just happening as we spoke last month.
I personally haven’t seen a ton of changes in the real estate world, although I think those changes are still coming. The reason I say that, Kurt, is I just still think there’s a lot of monkey motion going on in the real estate world. There’s a lot of realtor still in denial that these changes have even come.
They’re trying to figure out ways around it. Some real estate organizations are even breaking the law and how they’re handling things at this point, which I think there’s going to be a reckoning to come on some of those things. Bottom line, I still think changes are coming in the real estate world that some real estate companies, agents are in denial of.
I won’t disagree with that idea with them. There’s a mass majority of them that have accepted it. They’ve learned ways to work around it.
It is not the end all in the real estate industry, meaning which it’s not going to dry the industry into nothing. There’s still plenty of opportunity there. It’s now you’re just going to have to be a little bit more accountable for the amount of work that you do.
And the money has to be more even across the board. We are seeing some realtors that, I’ve got a whole team of them. I’ve got about a half a dozen realtors that as a buyer’s agent, they’ll tell you right up front, they’ll sit and work with you on their compensation to get you through.
So we’ve tried to develop a group of people that understand it and will make it work to make it easier to buy a home. But there’s others that, like you said, no, I’m going to keep doing it. And right now, because of their base, they’re able to do that to some.
But when the market heats up, that’s going to change.
I think you’re right on that.
Because I think sellers are going to not want to give, which now is going to force them to work the other side.
I think you’re right on that. I think some of the inventory today, tell me if I’m on the right track here, but I think some of the inventory that’s out there today still been working off the old model. So that inventory is there.
It’s already been listed. Some of what they’ve already factored into the costs and so on is the old model. I’m with you.
I think as new homes come on the market and people start figuring, oh, wait a minute, I don’t have to just automatically pay this 2.5% buyer’s broker fee when I list my home. I have some options on that now. I can do that differently than what it’s been done in the past.
I think it’s going to change things moving forward for new sellers.
It is because many people that I have that are looking for homes, and I’ve got about a half a dozen people on pre-approvals. One of the things I explained to them, you cannot look at a house, do you sign a contract on the compensation you want to pay your buyer’s agent. Okay.
They’re not quite aware of that. I said, now, do you think that that buyer’s agent is going to want to show you a home after you come up with compensation unless he knows that that loan is approved. So the whole way that the beginning of this starts out is different to the way it used to be.
So that’s going to take about another six months for the agents and the buyers to understand that.
Okay, walk us through, because we have time. Well, you know what, let’s do this. Let’s take a break and then come back and talk about, you know, walk us through if you’re a buyer and you’re working all that compensation in, walk us through on the mortgage side how that potentially works or doesn’t work.
Correct.
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This is Rush To Reason on KLZ 560.
All right, we are back. Rush To Reason, Denver’s Afternoon Rush, KLZ 560, myself, Kurt Rogers, Affordable Interest Mortgage. By the way, Kurt’s number, if you don’t call him directly on anything we talk about today, and by the way, our line here is open as well, but you can call Kurt directly 720-895-0500.
You can also call us and ask a question directly right now, 303-477-5600. So we’re a home buyer. Somebody listening is.
Could be a new buyer, could be just somebody looking to make a change. How does all of this new buyer’s compensation arrangement affect the mortgage sides of things or does it?
It actually puts the buyer back in control if you start to think about it. Because before the buyer would go to an agent, they go look at a home, then they come back and try to get approved to give them a pre-approval letter. Well, that’s changed because the buyer was always at submission of the seller and whatever they determined they wanted.
To a degree, that’s still there, but the buyer now, in order for the seller to consider them, because of the way it is, they want to make sure that the buyer has the ability to pay for the home and to pay the buyer’s agent’s compensation. Because they’re not going to want to. So what’s happening with buyers is when they call their agent, say, let’s go look at the agent, and say, whoa, whoa, whoa, let’s sit down and talk.
We have to go through a contract. That’s like signing a contract to take a car for a test drive at a dealership. It’s totally, it’s completely different.
So understanding what your responsibilities are, when you make that commitment to that buyer’s agent that I’m going to pay you X, part of that means you’re going to pay it right from your own pocket, or you’re going to get a piece of it that comes from the seller’s agent. Well, think about that. You haven’t even started to look at a home.
How do you know where that money’s coming from if you don’t know what you’re approved for? So, buyer’s agents and sellers are asking for a real pre-approval instead of… Well, yeah, we’ve got your…
Some flaky things.
Yeah, some just answers to some questions. They want a real one, which puts you back in…
So, let’s use real numbers. You’re looking at a $500,000 house.
Yes.
And you got to put 10% down, so it’s $50,000. So, now you’ve got a mortgage approval, in this case, of $450,000. But let’s say that the $500,000 house you’re looking at doesn’t have any compensation for the buyer’s agent, and that buyer’s agent now wants…
Two.
Two percent.
10 grand.
So, they want 10 grand. Where’s the 10 grand come from?
That’s the question. A lot of people have to start to understand different ways of getting it. There are lots of different ways you can put that in the loan, but that’s where you need to sit down and see what you qualify for.
I have a client…
And what if you don’t qualify for anything more than the $450,000?
Because of what’s changed. So, what happens if you go out now and you’re not qualified and ready for that, you may go out and find that $550,000 beautiful home and you can’t buy it because you haven’t figured out how to get to the money. So, it is so critically important now to do the pre-work up front, get the real pre-approval that’s good for 90 days.
Otherwise, you don’t know what your top dollar is, right?
Right. And you don’t have to tell the buyer’s agent where the money is coming from, or you don’t have to tell the seller. You know through your broker, mortgage broker, how to find the money.
And there’s several different ways of doing it.
Okay, so that’s one of the things that definitely has changed. Because in the old days, the way that worked is the house was offered for 500. That side already figured out what they were going to do with the buyer’s side and the seller’s side in the whole nine yards.
That 500 was kind of a total package deal. You had 450. You knew you had to bring 50k to the table to buy that home.
You’re 10% down in the way you went. That’s all different now, right?
That’s completely different. I mean, it could still work that way.
I mean, the other side is doing that.
Right. But what happens if they’re not and you can’t find it?
So in this case, let’s say that that 500k home is for sale. All they’re paying is their regular agent, 2.5%. Right.
But they’re paying it.
Yeah. The seller is going to pay the seller’s agent. So the seller is paying their agent 2.5%.
But they’ve agreed to give nothing to the buyer’s agent.
Right. And you don’t know that before you go out. So how do you make it work?
Okay.
And those are things, those are questions that need to be answered prior to getting with an agent. Where’s the money going to be if they say no? If they say yes, take it.
But if they say no, how do you still get that house that you want?
So in this particular case, you could say, okay, I’m going to offer you the 500K, but I want you to compensate my buyer’s agent 1%. That could be an offer, right?
Yes, it could be. You can get a portion of the compensation for the buyer’s agent from the seller or from the loan or from the buyer.
Ultimately, it’s still coming out of your pocket.
It’s still coming out of your pocket one way or the other.
No matter what, right?
And too many agents right now are thinking that seller concessions can pay the buyer’s agent fees. It can’t. If a seller wants to give $10,000 in concessions for you to buy their home, none of that can go to the buyer’s agent.
The agent can’t take any of that.
Can’t have any of that.
Okay, and why is that? Is that a law?
That’s a law because it’s called APR, overcharging a customer, too much money up front.
Okay.
It can be put in the seller, but you’re not charging the borrower.
Okay, so by law, you cannot take any seller concessions on a home and give to your agent?
No.
Okay, so that has to be all figured out on the front side some other way.
And some of the agents that are trying to fight this system are telling people to go out and put $10,000 or $20,000 on their credit card. Now think about this.
Oh, that’s not gonna work.
Well, you already know the problem. If an agent…
Now I know the outcome of this one.
If an agent says you will just put $10,000 or $15,000 on your credit card, one of the things when you sign in the contract with the lender is that you’re not borrowing down payment.
Which essentially you are in that case.
Which is exactly what you do it. And you have to count that in the debt.
It’s not different than going out and buying 20 grand worth of furniture before you close on the house.
Yeah, or buying a car for 50.
It’s still screwing things up. Am I right?
Right. But the realtors don’t understand that. They’re getting the customers to believe that that can happen.
You can’t borrow money for down payment from anywhere.
I’m not against agents because there’s a lot of great agents out there. But here’s my struggle with some agents. I saw some posting from agents in the last couple of days.
Hey, Fed just lowered rates. Now is a great time to buy. Well to me that says, number one, you’re not a mortgage broker.
Number two, you don’t understand that a lot of the rates that are out there, this has already been factored in weeks ago, not just yesterday.
That’s surprising.
And it’s like, wait a minute, you’re supposed to be a sharp agent. But I, as a novice, know that those rates, granted, I know you, Kurt, but I already know that those rates have already been factored in with what the Fed just did yesterday, at least 10, if not 14 days plus ago. So the reality is, you’re now posting something that has already been known, you’re late to the game, is the way I look at that.
Do you actually think that the stock market’s not paying accordingly to the market? I mean, they know what the Fed’s are gonna do, so they’re ahead of the game. They see the same numbers.
So for those of you that are realtors listening to me, that may have even posted some things like that the last day or two, here’s my recommendation to you, delete those posts. Because you’re really not helping yourself any, because you’re actually showing your lack of wherewithal when it comes to how the mortgage world works, which I know that’s not your forte. But since it isn’t, don’t go there.
That’s my point. Don’t go there. Now, you could have come out three weeks ago and said, hey, guess what?
My mortgage broker told me that now is a great time to buy because the feds are probably going to move rates down and the mortgage world has already made some adjustments along those lines and there’s some great rates out there right now. That would have been okay.
That would have been smart.
But when realtors come out yesterday, the very day the feds lower the rate and then say that, I just think to myself, either you think everybody in the world is dumb or you are. One of the two. I don’t know which one it is.
dude, I’m paying attention.
But one of the two. And I even read some of the comments that some folks put on some of these realtors’ posts that basically said things that I just said, and I’m thinking, you don’t want to go down that path. I mean, that’s just, number one, that’s a marketing 101 faux pas.
Don’t do that.
That’s correct.
Don’t go down that path.
And the DOJ is looking for those things. The DOJ is watching for those agents that are, buyer’s agents that are trying to double dip and find ways around the system. They’re not going to go for it.
No, there’s actual real estate companies, not necessarily agent, but companies that are breaking the law, and here’s how they’re breaking the law, folks. They are listing every one of their properties that they have in a particular area on a website with their buyer compensation rates listed on said website. That’s illegal.
They’re not allowed to do that. But they’re doing it anyways.
They’re trying to get away with it.
It’s illegal, folks. Now, whether they get caught or not, they will get caught. I’m going to tell you that right now.
The DOJ and others will come down on them at some point because that goes against the entire ruling that they just agreed upon, that the NAR agreed upon. You cannot have even a secondary website. You can’t do it in the MLS, and you can’t have a secondary website listing what your buyers’ agent fees are going to be on that particular listing.
It’s not allowed. You can’t publicize it.
Am I right? Correct. And what some of the buyers’ agents are doing when they’re out looking at homes, they’ll get accustomed when they’re looking at homes.
Before they ever go show the home, they’re calling the agent to find out what the comp is. Now, the agent can tell them the comp if there is one. That can be done.
If they’re a smart agent, they’ll say, make us an offer.
That’s correct.
Right?
So, there’s a lot that’s changing in that. And the consumer needs to be aware of it and walk into it with everything pre-approved. It makes it much easier to go through the process.
When I say, folks, again, and please hear me out when I say this, this is a little bit outside of the mortgage world, but for those of you that are in this world thinking about buying houses and so on, please listen to me when I say, the standard answer from the seller’s agent should be make me an offer, because here’s the deal. What if, for example, the seller’s agent, so I’m selling my home, Kurt’s my agent. I’ve already agreed, you know Kurt, I really don’t want to pay much in the way of a buyer’s agent unless I absolutely have to, but you know what, I’m willing to go to 2% if I have to to get this deal done.
Kurt’s like, okay, fine, 2% it is. Well, let’s say that all of a sudden, Kurt gets a call from Charlie, the agent that says, hey, what are you offering on this particular house when it comes to the buyer agent compensation? And Kurt’s standard answer is, well, you know, make me an offer.
I’m not going to give you that information, just make us an offer. Well, what if Charlie’s offer comes in and it’s 1%, Kurt?
I’m taking the one.
We’re going to take the one, right? Because now I, as a seller, am 1% ahead.
Saves the seller money.
So why would you, being my representation, tell Charlie, the agent, that it’s 2% when his offer might have been one? Why would you do that?
I don’t know.
There’s my point, folks, with how some of this is now starting to work and where you really need to be working with smart agents that understand what I just said. Otherwise, in some cases, you’re going to be paying more money than you need to.
It’s going to change the industry now. Like you said at the beginning, many agents don’t believe so.
No, they’re bucking this. They’re fighting it. They don’t want to admit these changes have come.
They want to keep doing things. It’s always the way it is with change, because some people don’t like change at all. And they’re going to try to keep things the way they were as long as they possibly can.
And many of them, it’s still a buyer’s market. The demand is far higher than the supply.
Absolutely.
So you need to be aware of what’s going on going up front to try to save as much as you can. Because now it’s in your pocket, not in the seller’s.
All right, we’re going to talk about rates too in a moment. So don’t go anywhere. If you got a question for Kurt, by the way, please give us a call.
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All right, we are back. Rush To Reason, Denver’s Afternoon Rush, Klz560, Kurt Rogers from Affordable Interest Mortgage. Kurt’s direct line, by the way, 720-895-0500.
Okay, one thing, and you reminded me of this during the break, so I want to make sure I ask this. Some of the buy down rates that people have done in the past when rates were much higher than they even are now, how do these changes affect them now?
When people, let’s go back a year and a half and rates were like 7, 7.25, and I actually have a customer that I talked with yesterday, they started at 7.25, had a 2-1 buy down. So the first year, they were at 5.25, which was saving them $1,600 a month. The second year, they went to 6.25.
Well, they’re in their second year, their rate now is going to be about 6%. So where the buy down comes into play, at the beginning of the buy down, the seller is paying the buy down money. So the difference in those payment is being put in a bucket.
So after the first year, in this case, there’s about $8,000 left in that bucket. So this customer can refinance their home, not come to the table with a dollar, because that money’s still in the bucket. Money’s still in the bucket, pay the closing cost, skip two payments and have a payment now that’s gonna be $800 a month less than the loan that they currently have.
Okay, that’s huge.
Yeah, and there’s a lot of those folks out there now that are starting to look at that.
Okay.
Now, let’s take it to the next step. Let’s say you’re out looking at a half million dollar home now. Try to get it to one by now.
Because you know they’re gonna drop.
So if the rates are, let’s say, five and a half, five, seven, five, you’re now gonna get a loan of three, seven, five. So in a year from now, it’s gonna be four, seven, five. Well, when the rates go down there, you can kind of do the same thing, cost you nothing.
I see.
So paying attention, you’re actually gonna qualify for the higher one, but never pay that payment, and never have to worry about refinancing. It’s already built in, it’s done.
Because that bucket of money is already there to do the refi.
It’s already been put together at the very beginning of the deal.
So that is a legal, fair buyer or seller compensation, right?
That can be done and that works just great.
Okay.
And you can do that up to 95 percent loan of value.
Okay.
So this really, if you’re looking at buying a home, and you can qualify for the payment, this is a great way to have a much lower payment when you first start out with a home.
Yeah, that’s huge.
First time home buyers, this could work very well for them.
Okay. So for a lot of you listening, two things. One, if you want to do one of those types of loans, talk to Kurt.
Number two, let’s say you did one of these a couple of years ago, and you’re in that world or even did one a year ago, and you’re in this world and you’re looking to do a refi because you can save money. Well, by all means, call Kurt and get it done. Don’t be waiting.
Get it done now.
Yeah. I’ve got customers that are saying, well, if I wait, I’ll get a better rate.
Maybe.
Yesterday, besides the rates going down a half a point, the standard conforming loan amount was raised from 766,200 to 803,500.
Okay.
So it went up 4.75%. The average appreciation on homes this year is 4.75%.
So a conforming loan is now 803,500. Okay.
That allows you to get the better rates at that. So because of that, so if your home is appreciating it 4% a year and you wait six months on a $600,000 home, you’re going to pay how much more money? So even though the rates lower, you’re still paying more money and you got to come up with more down.
Waiting isn’t the solution. Finding the right loan that fits it, whether you do an FHA to where you can stream limit, you do a 2-1 buy down, there’s ways to work both ends now because of what’s going on. And not many people are strong enough to understand, or smart enough to understand those loan programs.
Okay. Now, is that something that should be coming from realtors or should that be coming from the broker itself like you?
I don’t know that realtors could talk about it correctly. It should come from the mortgage broker. The mortgage broker should listen to the customer and say, it’s not my job to pick your loan.
It’s my job to tell you what fits for what you want.
So these are your options.
These are your options.
So here’s your bucket of loans to choose from that would work well for you. We can approve you for X, Y and Z.
Yes.
You just have to decide which one are you gonna pick, X, Y or Z.
I had a conversation with a guy today and I gave him three options. He said, I never knew about those. Said, it’s your money.
Find out which one works best for you. Rates in the low fives and high fives, two one buy downs. He got the whole gamut of what those are.
He now can make the right decision for him. Because no matter what loan it is, I’m going to make the same money.
And since you’re still even on a three two buy down, you’re still qualifying at the end payment, which is the highest payment. So it’s not necessarily that you can go buy more home. It’s just in that first year, especially that home cost you a lot less, right?
Many first time home buyers, when they’re out there, they say, well, I can handle this payment of 2,800. If you’re a first time home buyer, there’s more to it than that. Forget the homeowners and taxes.
Oh yeah, there’s just always stuff. New home.
Brand new home. There’s a whole lot.
You gotta buy garden hoses and all kinds of junk.
This allows you to have the money to do those things you want to do.
There’s all kinds of junk you have to do.
All kinds of stuff.
Been there, done that.
Yep, we all have.
Lots of stuff that you don’t even think about. You’re at Home Depot more than you think. Let’s just say that.
And mama will find them.
Oh, yeah, if you go buy a new home, you’ll be at the big box stores, Home Depot, Lowe’s, whatever it is. You’ll be there every week for a while.
You’ll become friends. My Home Depot, they all know me by name.
So, in this case, you’ve got some cushion to go do those runs because your payment is now gonna be five, six hundred dollars a month less.
Minimum. Normally, it’s anywhere from eight to nine hundred.
That’s a lot. A month. That helps really get you dialed in on that home in that first year without feeling like you’re strapped for cash.
Or take some of that extra money that if you were to go the normal way and pay off your credit cards and quit paying $20, there’s so many other things you can do. We’ve talked about that in the past.
OK. So bottom line, folks, give Kurt a call, get all of your options. And I’ve said this for years.
And I guess because of being self-employed, I learned at an early age, I had to do all of this on the front side. In other words, I always had to go to the mortgage broker first, no matter what, even before knowing Kurt. Just my standard practice was being self-employed.
I’ve got to know where I’m at before I go do anything. So I’ve got to know up front, what can I do, what can I qualify for, be approved for, not even qualify for. But I need to know lock, stock and barrel.
How’s this going to work for me? Then I’ll figure out how and what house I’m going to buy when it’s all said and done. So I’ve always gone the mortgage broker route first because of what I’ve always done for a living.
I didn’t really have a choice, Kurt, because no matter what a realtor said, oh, I get you approved. No, you can’t. Sorry, you don’t know me.
You don’t know what I do, what my background is. I already know how this part works. I probably know more about it than you do.
Not trying to brag, but I know more about it than you do because being self-employed, not having a W-2 changes all sorts of things around when you go to apply for loans on any level. So I know how this works. I’ll handle that myself.
In fact, most of the time with me, it always was, here’s what I know I can do. Start sending me homes, or I want to look at homes that are in this range because I know that’s what I can do. I already knew on the front side.
I just always thought that was kind of standard practice, but I’ve learned from you that no, that’s not the case. Sometimes you’re the last person they call.
I kind of used the analogy. Years ago, people used to go into a car dealership and not know where the money’s come from. Talk to the finance department, right?
And they’ve learned, as we call it, the box. Most people don’t go to a dealership anymore and like to go to the box, as they call it.
The hot box.
To find out. They want to know, I’ve gone to my bank, I’ve gone to my credit union, do the same thing with a mortgage. Get the money set to where you have an idea, you’re talking more intelligent before you go to the house.
You’re really, too, at the end of the day, you have more leverage when it’s all said and done, because you now know exactly what you can and cannot do. And there’s no ifs. All of the ifs have gone away.
That’s the conversation you and I have when we get to that number.
That’s a done deal at that point. Am I correct?
That’s correct. If you say, well, what if I find this? I say, well, then we have to do this.
Well, what if I do this? You have to do this. You know those answers before you ever walk in the door of a house you want to buy.
One thing that we didn’t throw in the notes, but I’m still curious about right now, what are appraisals doing right now? Are most of them coming in at roughly what houses are selling for? Are they below?
Are they above? I mean, where are we at on that end of things?
21% of all homes are selling for over asking price. 29% are bought by first time home buyers. 22% are bought cash.
Wow, that’s a big number.
Those are numbers that just came out this morning. Those are big, those are people just writing the checks. Now that’s a lot of seniors just writing the check.
Sure, sure, or people from other states that had big money selling their other house or whatever the case may be, right?
Homes that have some upgrades. You have wade that does, yeah. Homes that have upgrades are bringing the money or more.
The average appreciation of Colorado is 4.75%.
Okay.
Now, that doesn’t mean all homes are going to bring more money than what they’re asking price, because if that home has no upgrades, I’m seeing appraisals that have, homes that have no upgrades compared to homes that do, they’re losing $40,000 to $60,000 in value, because they haven’t done the upgrades. So upgrading the home is important to get the maximum dollar, because people at these rates, even these rates now, don’t want to buy a home for 500, 500,000 and then spend 50 to get it back.
They want it all done. It’s not even a money issue in a lot of cases, Kurt. They just don’t want the hassle factor.
That’s right.
They don’t want to be displaced. They don’t want to have to wait to move in. They don’t want to live in a bunch of dust and debris and so on.
They want turnkey.
That’s right.
Really.
And if they are, they’ll bring the money.
At the end of the day, they want turnkey, right?
So depending on the home is going to depend on your value. Other people said, well, I’ve heard that home values are going to go down. My simple question is, if the rate’s been 7, 7.5, and the demand is higher than the supply, what do you think is going to happen when the rate’s 5.5?
There’s more people buying, the demand is going to get higher, prices going up.
I’m putting my thumb up in the air that you guys can’t see this, but I’m putting my thumb up.
They’re going to go up. It’s just the opposite.
It’s going to go up, not down.
They’re not going to go to 10 to 12 percent, but they’re going to get off four.
Right.
And for those that are, because there’s always naysayers. I follow some of these folks on social media. There’s some social media folks out there that for the past 12 plus months have been calling for a housing market crash.
Hasn’t happened yet. There really hasn’t even been many crashes countrywide. I mean, there’s some pockets where some housing prices may have adjusted some, but there’s literally been zero housing crashes in the country, even pockets of housing crashes.
It hasn’t happened.
The issue in Florida with the condos, that’s got nothing to do with the housing market. That’s the HOA issue.
That’s a whole different thing.
That’s why they’re losing money. They’re not affecting the market.
Yeah, I’ve heard different social media guys talk about Phoenix. Phoenix is going to crash. All of Florida will crash.
The panhandle of Florida is going to crash. I mean, on down the line, I go, and it’s like, first of all, none of what you’ve said has come true. I still don’t…
could there be some adjustments throughout the country, or pockets, areas where real estate changes comes down some, et cetera? Kurt, that’s always the case.
You have big layoffs with Amazon or something.
That’s always the case. If you get a certain amount of population, the growth, they leave, whatever the case may be, well, of course, you’re going to have some issues along those lines. But by and large, as a country, we are still housing poor.
We don’t have enough.
It’s going to take years to get caught up.
Period. And really, folks, until one or two things will change, and in my opinion, Kurt, I’ll get your thoughts on this, but one or two things will change is a huge spurt in building, which builders are a lot smarter than they used to be. They don’t want to build unless they know they’ve got a for sure sale.
So I don’t see builders over building. And I know some would disagree with me on that, but you’re not seeing it yet. And I don’t think you’re going to.
You’re not going to see builders run headfirst into this and just start building, building, building. They want to see those homes pre-sold before they get them finished and done and handled. Because they want them closed the minute they’re finished.
Am I correct?
I agree. You’re going to start to see more homes being built, but it’s not going to almost double.
No. And there’s buyers for those homes. Yes.
So that’s one thing that will change that. And you’re still not going to get enough built where that’s an issue anyways. The other thing that could affect housing prices down the road, it’s not yet, and it could down the road, is as some of the older baby boomers start selling their homes, and some of them have more than one.
Let’s say they get to the point where they have to go to assisted living. And they’ve got three homes. And I’m not exaggerating when I say this, some have.
Keep in mind, though, it’s not a for sure deal that all three homes get sold. One may get sold, and the family may decide to go ahead and keep the other two.
And rent them out.
Or there could be retreats, they could be cabins, they could be any number of things. So just because boomers age and start going into assisted living, the primary residents may get sold, but the other homes they own probably won’t actually. Am I right?
That’s correct. I’m dealing with that right now with the customer.
So the reality is despite what some quote unquote experts say, just because boomers age out doesn’t mean there’s going to be a plethora of homes coming onto the marketplace.
No.
That’s my thought.
No. The builders, the indications that I’m seeing is the builders are very excited about the rates dropping. They’re going to start looking at putting numbers together, say, okay, we’ll increase production by maybe 20% or 50.
They’ll buy the land, start the permits and that. But you’re talking a year to year and a half before that gets anywhere.
And folks, for those of you that maybe don’t believe what I’m saying, I have exam- I live near a particular development that I’ve been watching, whereby they’re putting in about 30 or so homes. The bottom dollar price is 2.4 million.
They go as high as 2.6 million. And they are selling them like no tomorrow. Kurt, there’s no slowdown on that end of things.
And how they’re buying them and paying for them and all of that, I really don’t have any idea because I don’t know that inner workings of things. My point is, are they selling those? Yes, they are.
They’re not sitting.
They’re not.
Average day in the market is 28 days.
These are homes that they’re kind of an option. There’s about six different options you can buy in this particular neighborhood, but they’re selling them and they’re putting them up as we speak right now. We got about five minutes.
Go ahead, Bob and Thornton. We got five minutes. Go ahead.
Well, shortage of homes. It’s really a shortage of homes is very local. I’m going to give you some examples.
If you want to go to Detroit, Buffalo, New York, Erie PA., Rochester, Syracuse, lots of places in lower Illinois, Indiana, you can buy houses for nothing. Matter of fact, Detroit and Buffalo are plowing over houses.
There’s so many empty houses there. Nobody wants to live there.
Right.
Yeah, like you said, there’s going to be some pockets of that happening, although that’s the minority you’re not finding that countrywide, not even close.
But you’ve always had that.
Yeah, and again, some of those areas you’re talking about, Detroit, Detroit’s been that way for 20 years.
Yeah. There’s just areas like that. Yeah.
Yeah, well, you want a house? Go to where they are.
Yeah, well, the problem is no one wants to go there. Myself included.
That’s why they’re selling sold-out.
And that’s why places like Colorado continue to go up in value.
Right. But some of these places have places that you can live in. Oh, they need work.
Yeah, live in is probably a loose term there.
Well, anyway.
Yeah, no, I won’t argue that, Bob. I’ll let you go. No, I mean, yeah, there are pockets like that, Detroit.
And Detroit’s been that way for 20 years. southside Chicago. I mean, yes, there are places in the country where, yes, you can definitely go and find housing.
The problem is good luck finding a job, good luck doing anything else while you’re there. You know, the crime is high. And by the way, these are typically, I’m not trying to get political here, but these are typically Democrat run cities to where they’re just run to the ground.
And if we’re not careful, you know, the Denver city itself could end up in the same situation. The suburbs won’t, you know, our suburbs, by the way, no matter how bad things get, just because of where they are, we’re a long way from anything like that happening in Colorado.
How long you’ve lived in Colorado?
My whole life.
Okay. I’ve been here since 79. When’s the last time you saw a housing crash because of the economy?
We saw a dip, and I lived in boulder at the time, in 2008. There was a little bit of a dip, even in boulder County during the 2008 recession because everybody got hit. But even in boulder County, that lasted about, I don’t know, six months, maybe a year max, and prices were right back up where they were and they’ve done nothing but climb ever since.
Like I said, I’ve been here since 79. In the mid-80s, we had the gas problem and the homes settled, they didn’t drop.
Right.
Colorado has always been one of those areas. It just continues to grow. When you’re buying a house, you want it to be depreciated, but when you’re selling it, you want it to be appreciated.
Right.
Don’t get both.
Very true.
So this market is going to stay strong. Four percent, five percent is the national average. That’s normally our low.
We run around seven, eight percent. That’s going to continue to go because the type of lifestyle we live in.
You’re not going to, you know, those of you here in Colorado, the transplants that have come in, even some of you that are really thinking, what do I do? Do I buy? I read all these different things that are out there.
Keep in mind, a lot of things that you read that aren’t localized, that have a national sway to them, I guess you could say, be careful of those because some of those are including things like Bob just mentioned a moment ago. The reality is that’s not happening in Colorado. So don’t let some of those national articles sway you.
In other words, you know, some people are renting versus buying. You’re still better off putting money in your own pocket than you are somebody else’s. Because that’s always been my feeling.
Agreed.
So, all right. Disclosures, any?
NMLS 217-147, regulated by Dora, equal credit lender.
And as again, we said earlier, if you’re somebody that’s in one of those 321-buy-down loans, please give Kurt a call today. Find out what he can do for you. If you’re interested in buying a home, that might be a good loan for you to get started as well.
Lots of options when it comes to mortgages. We could literally spend an entire hour talking about all the different types of mortgages that are out there. The reality is, it is not, and it hasn’t been for a long time, by the way, it is not a one size fits all.
Don’t let anybody tell you that it is. Every single person and family has different circumstances, and your needs could be very different than even your neighbor or other family member that just bought a home.
When you go to a mortgage broker, they should give you more than one option.
And if they’re not, call Kurt. Just call Kurt anyways.
I’d appreciate that.
That’s the best thing to do.
There’s more than one way to get to your end means, and you need to know him, whether you choose him or not. You need to know him.
Absolutely. Kurt Rogers again, Affordable Interest Mortgage 720-895-0500. Kevin Flesch is next.
He is our legal eagle. If you need anything when it comes to either civil or criminal, please give Kevin a call today. He is my attorney.
Call him again directly, 303-806-8886.
Here’s why you need personal injury attorney Kevin Flesch on your side. He understands the way the jury thinks. In the context of a personal injury case, you’ve been hurt by someone else’s negligence.
The idea is that you’re going to try to recover so that you can get back to where you were just prior to that incident occurring. What that really means from a jurist perspective is that you’re going to be asking them to award you money. So when we talk about fairness, we’re talking about six people that you don’t know.
Those six people view the evidence and make a unanimous decision that will decide what the fair value is. When you’re the one who’s hurt, you have a good idea of what you think it’s worth. The question is, can you persuade those other individuals whom you don’t know and were witnesses to believe that’s what the case is worth?
Kevin Flesch understands the way the jury thinks. Call now for a free consultation, 303-806-8886.
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He is my doctor and he’d love to talk to you as well. Dr. Scott, 303-663-690.
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It’s time to leave your safe space.
This is Rush To Reason on Klz560.
All right, that’s about it for today. Got about 30 seconds left. Tomorrow, Andy’s movies will be Speak, No Evil, and Transformers 1.
And in honor of Transformers 1, which is the prequel to all of the Transformers. So in honor of that, Movie Rental Hour will be Robots and Androids. Yes, Andy and Richard will still do their NFL picks.
So if you want to do Robots and Androids, please get those texted in 307-282-22. Again, 307-282-22. And I’ll add those into our list.
But if you need anything again, when it comes to the mortgage world, please give Kurt a call 720-895-0500. Have a great night. Rush To Reason, Denver’s Afternoon Rush, Klz560.