The Brad Weisman Show

A Deep Dive into the Current Real Estate Climate w/ Pete Heim

October 12, 2023 Brad Weisman, Realtor
The Brad Weisman Show
A Deep Dive into the Current Real Estate Climate w/ Pete Heim
Show Notes Transcript Chapter Markers

Imagine if you could understand the real estate market better than ever before, unlocking the reality of rising interest rates and their impact. That's exactly what we're promising in this riveting exchange with my good friend, Pete Heim.  We'll shatter misconceptions about current rates versus the 3.5-5% rates and explore how a combination of low inventory and higher interest rates can dramatically shift the property market.  And if you're sitting on the fence about investing in real estate, waiting for lower rates, we have some compelling advice for you!!!

But we're not just focusing on the present.  We're also journeying back to revisit the 2008 financial crisis and its profound effects on the real estate market.  We recall some shocking tales of sellers coughing up $60,000 just to free themselves from their homes. Fast forward to today's scenario, we examine the current inventory levels, low foreclosure rates, and the role of new construction and investors in contributing to low inventory.  And to top it off, prepare to be amazed by a success story - a humble townhouse, initially listed at $154,900 with no kitchen, selling for OVER Full Price, with ten cash offers.  Join us for a conversation that offers invaluable insights and tips for anyone remotely interested in real estate.

#peteheim #bradweisman #thebradweismanshow #realestate #realestateandyou #marketupdate

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Welcome to The Brad Weisman Show (formerly known as Real Estate and YOU), where we dive into the world of real estate, real life, and everything in between with your host, Brad Weisman! 🎙️ Join us for candid conversations, laughter, and a fresh take on the real world. Get ready to explore the ups and downs of life with a side of humor. From property to personality, we've got it all covered. Tune in, laugh along, and let's get real! 🏡🌟 #TheBradWeismanShow #RealEstateRealLife #realestateandyou

Credits - The music for my podcast was written and performed by Jeff Miller.

Speaker 1:

Hello, this is Brad Weissman. You're listening to Real Estate and you we are back with a repeat guest. This guy just won't go away. We actually might even change the name of the podcast, just so he maybe goes to the wrong studio and we don't have to worry about chasing Matt here. Pete Heim, how are you doing?

Speaker 2:

man, man I look great man.

Speaker 1:

How are you doing? I feel the love. I love busting your butt, I love it.

Speaker 2:

You never folks, you never know what he's going to say do you, that's right, you don't. Because there's been no rehearsal.

Speaker 1:

No, we never rehearse.

Speaker 2:

People are probably thinking maybe you should rehearse, maybe that's the problem with the show, or think about what you're going to talk about ahead of time. Yeah, exactly, exactly.

Speaker 1:

We kind of never know. No, we chat a little bit. You have your little pad of paper over there.

Speaker 2:

Oh, I do, oh, yes, I do.

Speaker 1:

So you know, the biggest thing that's obviously in people's minds right now is the interest rates. I think is, and I think what we need to look at is what's that doing to the market? Is it doing anything to the market? I like the little sneak that Hugo did there. You see that.

Speaker 2:

He thought he was sneaking, but he really wasn't.

Speaker 1:

Yeah, yeah. So what is it doing to the market? Is it making changes? Are we losing values? You know what's happening, so what do you see out there? It's up. I know I'm acting like I don't know, because we actually went through this, but I just can't believe that prices are still going up.

Speaker 2:

Yeah, and we say this almost every time. So I'm kind of sick of saying it yeah, what is that what? Do we say we're comparing our market to the unicorn years, the anomaly that happened, and I really don't like doing that. Now that we're out of that, though, I think, like by next year, that's going to be a nice little memory and we're going to get into some real life. Real things, real numbers.

Speaker 1:

Well, the rates are definitely a little higher, though. It jumped over a 20-year average now, so we can't ignore that. It is definitely up higher. And the reality is this if we didn't have low inventory, it wouldn't be good. No, it wouldn't be good. It wouldn't be good. We'd definitely see some plummeting of values and things like that because of what it's costing. But one of the things I wanted to bring up that I was talking to somebody, one of our classes here at Keller Williams, and I think what we have to do with the public, or with people to help educate, is that we have to get out of our heads the 3.5 to 5% interest rate. Just eliminate that from your mind. If you're a new buyer, it's highly unlikely kind of like when you're in a plane. In the highly unlikely event that we plummet into the ocean, you're going to need this thing under your seat. So it's highly unlikely that we will see a rate from 3.5 to 4.5% anytime soon. So we need to stop using those numbers to say, oh my gosh, if I would have bought back, then it would only be this payment. Well, you know what that's gone and we all know the reason that's gone is because when they tell you when should you buy real estate, the answer is now Always now. Yesterday was now Tomorrow. It's going to be now, it's now, it's just now. Right, and we're not saying that because we're realtors. No, we're not. That's just financial, that's just any financial person, I mean anything. It should be now. It should be now, so let's go back. So now, if we're going to show a difference of payment, let's just say a $300,000 house what I think we should start showing and I should have done this numbers before I brought it up but, I, didn't Okay, but we're going to ask maybe Mike Bauer or somebody like that to do this for us or Jack or something like that. Say, okay, what is the difference between five and a half and seven, and seven and a half for a $300,000 house, 5% down. That's what I think we need to look at. Okay, because the reality is it might go, or it will most likely go, back down to five and a half, six percent at some point in the next two to three years.

Speaker 2:

That's right, right, and it's a couple.

Speaker 1:

you're talking a couple hundred bucks, yeah but if you started three and a half, that's the wrong Delta, that's a place.

Speaker 2:

That's the wrong Delta. It's the unicorn thing, exactly it's. Just don't do it.

Speaker 1:

All you can do is piss yourself off. Yeah because you're gonna be.

Speaker 2:

You're gonna be mad that you didn't buy then, and you should have that's right, right, and you're gonna have to and you're gonna just succumb to the fact that you're gonna rent the for the rest of your life at Increases and no control and all that stuff. Yeah, exactly. So at least you get in something and fix a payment. Yes, exactly, fix your payment. Rents not fixed.

Speaker 1:

No, it's not. And and here's, and that's the same when we always say it's not fixed for one thing and also the money you're putting out is going nowhere, nowhere, yeah it's going to our children's college education, yeah, so thank you very much. Yes, thank you appreciate that. Thank you and good night for a good night, I'm thinking you go as she goes, he goes, so he's happy now because he's a homeowner.

Speaker 2:

Yeah he's like yeah, I'm not renting anymore From Guatemala to Berks County, that's right. I tell you what.

Speaker 1:

Welcome all.

Speaker 2:

We were laughing about that. I didn't want to say it. I'm glad you did he's allowed to say anything you want. If you saw his shirt, you'd think you understand why he's a light green.

Speaker 1:

He's got a light green shirt for Newcastle. I mean one. You can't, can't, go any wrong with that?

Speaker 2:

That's right. Looks like guacamole to me. Yeah, yeah it's funny.

Speaker 1:

So yeah, so going back, so just rates everything. So tell me some of these numbers, because I was blown away when you told me some of these numbers.

Speaker 2:

Yeah, so we're active at 403 today which we'd hover around that for mark. Take out the city, take out the new construction. Resale in the county is 262.

Speaker 1:

Okay, that's good. We were in the 170s at one point for that we were. I remember that.

Speaker 2:

so it's a tad up, yeah, which is good. Which is good? Absorptions at point nine still amazing yeah. Days on market, three weeks Yep after. These are averages.

Speaker 1:

Yeah, you know, I saw somebody make a mistake on something recently with this. It said point six and the person then said so we have a six month inventory. I'm like no, no six is less than a month. Yeah, I was, I was, I didn't. I didn't get a chance to correct the person. But point six is not six months. Point six is Less than a month, you know so if you're that person. I'm so. I don't remember who it was, but I did see that go back to math class, yeah anyway, because we're all about numbers on the show.

Speaker 2:

Oh, absolutely, yeah, that actually bothers me right here.

Speaker 1:

Look, so we have an eight, we have an eight ball. We have an eight ball right here.

Speaker 2:

See that point six Anyway yeah, so the average price right now, with the city included, is 284, 245. Okay, at the same time last year that was 264, 129. Well, so, but yeah, you take the city out 318 509 right now. Last year it was 294. We just figured it out was public seven point four percent seven point four percent growth growth Appreciation sorry year over year. Now I'm talking. No wait, I'm talking year to date.

Speaker 1:

You're the date.

Speaker 2:

Okay, that's from January 1 to today. We are at seven point four percent appreciation.

Speaker 1:

Yeah, it's amazing. Well, you saw everybody. We predicted exactly. We said five to seven. We did five to seven, seven point four, so we might be wrong.

Speaker 2:

Could eight, I don't know. It could go to a and everyone's gone. Yeah, how?

Speaker 1:

is that happen? I don't know how. I said how is that?

Speaker 2:

happening.

Speaker 1:

Yeah, the rates are where they are well, I'm gonna tell you how it's.

Speaker 2:

How is it happening? Tell me that we have graphics. I think I forgot them. Oh, you did. I did Okay, okay.

Speaker 1:

You go put those up. It's all magic, it's all done with magic these days.

Speaker 2:

It's, it's really about the inventory and yeah, and once again we're just gonna keep saying it, but here's the reasons for the low inventory. Yeah okay, lack of new construction builds over the last 14 years. We're not talking. We're not talking. I saw that 22 or 23, 14 years of low construction starts.

Speaker 1:

What was 14 years and what was that? Was that? What year was that? I wonder. How many years to the math?

Speaker 2:

Yeah, you guys remember 2008, 2008, baby, you got it and that shut those poor guys down like no tomorrow.

Speaker 1:

Many of them, not a lot of them, this area never came back.

Speaker 2:

Yep, yep, so they're starting to build it back? Yep, however, that's really one of the three reasons why inventories low? Yes, not many new construction options? No, I agree. Mortgage rate lock in effect. What's that called is the mortgage rate lock effect is that they're locked? Yeah, like 65% of the mortgages out there in the United States are under 4%. Yeah, and people are frozen on that? Yeah, okay, so that plays in a role inventory down if you need a mortgage. Yep, most people are going. I am going to pay double on my interest rate and that freezes some people Okay, not everybody.

Speaker 1:

Yeah.

Speaker 2:

And the third one is people actually are staying in their homes longer. Did you see that one?

Speaker 1:

Yes, I did. It's much longer.

Speaker 2:

It's nine, it's almost 10 years.

Speaker 1:

I remember we, for when I first got a business it's just not too much longer after years. It was, it was, believe or not, it was five to seven years, I think it was five, seven, which is crazy. And now it's like what? Seven to ten? It's nine, point three no way, see, that's another reason, right there. Yeah, that's why we have less inventory because, think about it, if people are moving less, you know you're gonna have less inventory. Yeah, so put all that together with the building for 14 years, we're in the negative for building as far as keeping up with population. You know I. This is why, when people come to me and say you know, they'll comment on on my Facebook and say I think you're wrong about that. It's gonna start. This is gonna be the bubble. It's gonna be. This is not gonna change until we have more homes, that's it. It won't change. Nothing can change because we still have more people than we have houses.

Speaker 2:

Yeah, you know, I had a client ask me about a very rare foreclosure I just saw. Oh, I'm not if you saw the same one, it's pending now how is?

Speaker 1:

anybody foreclosing today.

Speaker 2:

All right, and I looked up the the owner and it was. It was Bank of America, and, and I was like I'm gonna. America's foreclosing. Yeah, no, well, that was the owner. So they obviously the owner foreclosed got you and I and I I researched how far back they actually went to the foreclosure and it was before COVID oh wow, wow so the banks had this property that long. I mean four years. Does that mean that?

Speaker 1:

they couldn't, they weren't allowed to sell it. Yet I don't know that's crazy.

Speaker 2:

I thought that was weird because the actual foreclosure date was pre-COVID. Oh wow, and they just sold the property and which keeps telling me no one's foreclosing freshly right now.

Speaker 1:

I don't know how, In fact, we should do. If you are in a situation right now where either A you lost your job or you're getting divorced, or whatever the situation is, please talk to a realtor before you go the route of walking away. Don't put up your hands and just walk away.

Speaker 2:

Yeah, you can have a mark on your record now for a while and there's no money there.

Speaker 1:

The only time you walk away is when there's no money there and you're outside down. And even then you try not to, but if you have to, you do it. We had that, we didn't have that 2008,.

Speaker 2:

It started and 9 and 10 is the effect of that, and we had clients come into the closing table. Sellers now come into the closing table of 50, 60 grand to get out from under their house. We are completely flipped over.

Speaker 1:

I remember those days. I remember people writing checks.

Speaker 2:

Yeah, I do remember that my record. I remember God love them. It was 60 grand. Yeah, it came to the closing.

Speaker 1:

Can you imagine that?

Speaker 2:

Yeah, coming to the table $60,000 just to get out of your house.

Speaker 1:

You would have better off just throwing the keys on the table. Yeah, exactly, that's a lot of money. Yeah, a lot of money, but they were good people. But that's the thing is, we don't have that now, now we have 60,000 in equity you know in that situation and don't let it foreclose.

Speaker 2:

Brad, that was great advice, because there's absolutely no way you can't tell me that the house is upside down.

Speaker 1:

Yeah, he must be getting an important phone call. What do you think? You got a call, go ahead, you can take it. Oh, wait, wait. Well, guess what His wife is due?

Speaker 2:

So yeah, so no wonder he's the answer on the phone.

Speaker 1:

I'd be answering the phone too. Yes, Hugo's expecting another child.

Speaker 2:

That's right.

Speaker 1:

I forget Boy or girl, I forget Another boy, yeah, another boy, another boy, am I allowed to say this stuff, do you mind? Yeah, no, that's fine. We're pretty open on this show, pretty open.

Speaker 2:

We're ready to go help deliver.

Speaker 1:

We'll go, I delivered my last one on the bathroom floor. He has, he has.

Speaker 2:

I don't recommend it, but sometimes you got to do what you got to do.

Speaker 1:

See, this show is all about real estate. It's all about having your baby inside your own real estate. Oh, my gosh Looking back on.

Speaker 2:

It was a wonderful experience, but at the time it sucked. But did you drop?

Speaker 1:

Chris on his head, your son. Chris, I think he Is that what happened, I thought so yes, oh, so poor Chris, poor Chris, yeah, poor Chris, that's what we got.

Speaker 2:

So, going on the vein of the foreclosure thing and why this crash won't happen again, I have We've been talking about this crash isn't going to happen, right, it's up to you.

Speaker 1:

So, if it happens, our show's done, it's done, that's right. We will stop for the show. Actually, if it happens, I quit yeah exactly.

Speaker 2:

Yeah, I'm done, but no, it is updated. We've been saying why the crash wasn't going to happen and it's an inventory thing. We have a graphic on that. It's a 3.3 months nationally of supply, which, nationally, is really good. Yeah, we have 4 points and stuff like that. What did I say? Point nine was our absorption, so we're point nine. The average in the nation is 3.3, which means Brooks County again, great deal. We have an awesome place to live.

Speaker 1:

Well, and you got to think too, like you're nothing against San Francisco, new York City, those are in the mix to make that average. That's true, you know what?

Speaker 2:

I'm saying and like some of the bigger cities are having a lot of issues right now that people are moving out.

Speaker 1:

They're getting moved out and what ends up happening is in this property sit and adds to the whole thing. We're bringing the average down.

Speaker 2:

We're bringing it down, dude. That's awesome. Yes, if you're going to be substandard on something, that's the one you want.

Speaker 1:

That's right, good old Brooks County. Oh, special, yeah, that's right, it's good, it's good.

Speaker 2:

The second one was the new construction we talked about earlier, low starts and the foreclosures. I mean, I think it said so far this year no, it was. Oh, yeah, it was up to August. It was August to August. Okay, what was it? 300,000 nationally? Yeah, that's what was. And if you look at the graphic, there was a period where it was moratoriumed.

Speaker 1:

Yeah, yeah. So that's why it was down to nothing, almost nothing.

Speaker 2:

So again, if it goes like this and comes up a little bit and over here it's like woo, it's way up here when it was in the millions.

Speaker 1:

Yeah, and. I said, the news will say it doubled from last year. If it's 150 last year the 300, the foreclosures have doubled since last year. That's fake news. Yes, exactly.

Speaker 2:

But no, listen, guys, that's national. Brad and I were just talking about the like, the rare foreclosure we just saw in multi-lays. I can't tell you the last time I saw one. It's not, it's just not happening, it was pre-COVID had to been.

Speaker 1:

Yeah, here's a and this just shows you how. How there's so many investors too. This is another reason why we have low inventory. We have investors that are out there buying up. Thank goodness they are. So listing I just got okay. It was a situation where there's there's really no kitchen in the house. The kitchen is gone. Okay, it's gone. And this is a townhouse in Y-Missing right. Put it on the market at 154.9,. I can tell you the list price. I won't tell you what I actually got. I got 38 showings, 10 over full price offers, cash. So that shows you how many. And I put in the listing that must be cash because there's no kitchen and I'm not. When I say there's no kitchen, there's no kitchen.

Speaker 2:

No cabinets, no, nothing. There's nothing.

Speaker 1:

it's completely ripped out there was a water issue when the person left and it just it got in the whole kitchen. So but think about that. And they made out 38 people that were ready to buy cash on an investment property. We're talking flippers. Oh yeah, so this property ended up getting considerably over full price by four of the offers. What's why I'm missing and it's as is. It's all that, actually. Yeah, it's amazing Totally amazing right. You had 10 cash offers 10 cash offers ready to go, Did you?

Speaker 2:

hear that people Did. You hear that that's incredible. So that shows you there's a lot of money in the investment side of things too.

Speaker 1:

Oh my goodness, yeah. So once again, don't let your house foreclose, that's right. This person still had equity in the house, right? You know, even the kitchen's gone or whatever, there was still some equity out there. That person could have said oh my gosh, no kitchen, I gotta go.

Speaker 2:

That's right. Well, they had to go. He's on the kitchen wall, you can't put. Yeah, you can't put he's on the counter either.

Speaker 1:

Well, there's somebody, a banker called me, a lender called me, and said, hey, do you mind if I put any highlight sheets on the counter? I said that's gonna be really tough to do because there's no counter. So that was kind of funny, that's great. But I said thank you anyway. But yeah, so no, that just shows you.

Speaker 2:

And the seller's thrilled.

Speaker 1:

Seller's thrilled and the buyer's thrilled. Absolutely.

Speaker 2:

Because now they got a project they can work on and flip it or do whatever.

Speaker 1:

It's awesome. Yeah, rent it or flip it, whatever, probably rent it actually yeah.

Speaker 2:

And another point, though, on that is you still can overprice your home today. Oh, absolutely can. If it's overpriced, it'll set, yep, okay. So just make sure your realtor does a good job doing analysis for you, cause stuff will set.

Speaker 1:

Marketing price is way different than the sales price Exactly, and that's a very, very important. So that's a good good stuff there.

Speaker 2:

Anything else you have no.

Speaker 1:

All right, you want to ask the eight ball anything? Yeah, what do?

Speaker 2:

you want to do.

Speaker 1:

What do you want to ask? You go oh. Why don't we say, oh, is she going to have the baby today?

Speaker 2:

Is she going to have the baby?

Speaker 1:

today it says guacamole. I don't know why it said that.

Speaker 2:

It's that pregnancy craving thing.

Speaker 1:

I guess that's what it is. I don't know why it said that Better go home make some guac. It said no. It said no, so we'll see. Maybe it won't be today, who knows. But what? If you want to know when your baby is going to be born, you just call us. We'll use the eight ball. This is our new way of doing things, pete, and we don't deliver anymore. People go no, he normally goes to deliver. But this time you have a catcher's mitt, that's good, that's good. Salad spoons too, that's good, excellent, excellent. Thank you so much for coming in, pete for getting us up to date. By the way, real quick. This is the 150th show for real estate in you. So, Hugo, thank you. Thank you, Confetti coming down. You can't really see it. It's just it. Just it looks that way, but no 150th show, Thanks for being here for the 150th.

Speaker 2:

It's awesome, very cool Honour man, seriously.

Speaker 1:

All right, there we go. Pete Heim, back in the studio getting us all up to date on some real estate here, delivering babies using the eight ball. Whatever we're doing, this is what we do. All right, that's it. We'll see you next Thursday at 7 pm. All right, take care.

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