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REality
Welcome to the REality podcast--the best podcast for real estate agents. Join us each episode as we talk with industry experts and top producing real estate agents to peel back the curtain and reveal what it takes to make it in today's ultra competitive real estate business. This is real life, in real time, sharing real experiences of industry professionals to help both new and seasoned agents achieve their goals and realize their potential. Are you ready to take your real estate business to the next level? Let's get started now. Sign up for Gary's weekly FOCUS newsletter, delivered right to your inbox each Monday morning: https://mailchi.mp/e3771e6a2516/focus-email
REality
Real Estate in the Carolinas: Spring 2025 Market Insights
Spring has arrived, and with it comes a refreshed real estate landscape across the Carolinas. In this latest market update, we dive deep into what buyers and sellers need to know as we navigate the changing dynamics of 2025's housing market.
The headlines might suggest doom and gloom, but the reality on the ground tells a different story. Inventory has surged 20-40% across our markets, bringing much-needed balance without triggering a crash. This shift marks a return to healthier conditions where both buyers and sellers have meaningful opportunities.
Whether you're buying your first home, considering an investment property, or thinking about where you'll eventually retire, today's market offers strategic opportunities for those who approach it with the right information and guidance.
We are back Reality podcast, one of my favorite topics and one of my favorite guests and, most importantly, one of my very best friends. It is time to talk about the real estate market, quarter one, 2025. And a new addition to reality is quarterly update with Gary and Tony Jarrett, tj. How are you?
Speaker 2:I am doing well. I'm still I don't know about you fighting this pollen season. It's been fun. The spring market is here and you can feel it and you can see it.
Speaker 1:Well, as we all know that we record these. So I always like to say live reality podcasts. Well, it's live today for us, but it won't be live when you listen and we are the Wednesday after the last weekend in April and so we're a little late, but we like to wait for the numbers to get in.
Speaker 1:But this past weekend, you know, we had a big open house weekend and I think, as Tony said, it's our belief that the spring market, along with the pollen, has come with activity, and one of the things that we know is everybody wants to know about the real estate market. They want to know about what happened and TJ, most importantly they want to know what we think will happen. And I always joke that if we were actually that source, we probably wouldn't be a reality podcast. We would be on Squawk Box. But there you go, TJ. This is our version. Buddy, let's go. So I'm going to fire away at the topics that are on people's mind. We're going to give you a little sense of where it's been and a little sense of where we think it's going. So I'm going to start with one of the most important things, and that's active inventory. Give us an update.
Speaker 2:Well, active inventory is coming in strong, and this is. We did a deep dive in every region that we serve in the Carolinas. So one of the things I will tell you it's similar, very similar across the board. Every market. We saw inventory increase. More for sell signs, in fact, it was 20 to 40% is the range increase in all markets, which, quite frankly, is incredible. You know, the thing that we've heard for years through the pandemic is not enough inventory, not enough for sell signs. Well, that is definitely changing and changing quickly. In fact, we're seeing some of our markets getting to the fact that they're getting enough for sale signs, almost like 2019 pre-pandemic, and that's a very healthy sign for us to start seeing some houses come back on the market. In fact, I'll give you one example the upstate region in Greenville, south Carolina, saw its highest market for sale signs in almost 10 years, which I found fascinating from our RVP there. So it's really, really fun to see more for sale signs, which means more options for buyers.
Speaker 1:I think the other thing for us to think about, tony, and to remind everybody, is that markets that you're in as the listener, they're hyper local and Tony just gave a great example. Our company in the upstate of South Carolina is outperforming the market in new listings. So the market's good and we're better than the market, which I think is a really a telltale. Now, one of the things, tony, I'm going to ask you to provide a caution to our listeners and remember Reality Podcast was driven about talking to the agents. This is the four times a year where we absolutely want the consumer listening so that we can help the consumer understand from a very unbiased viewpoint, because you and I aren't out every day on a listing. So we're going to encourage our real estate professional listeners to push this out to your customer. Let us help you tell the story, because Tony is not making these numbers up. These are real numbers.
Speaker 1:Now here is where it gets tricky, and I know we talked about it in our first market update. Tony and that is the media may have a tendency to take that incredible growth in listings and draw the conclusion that we have shifted from a fairly dramatic seller's market to a buyer's market. Will you just explain that that's not exactly what happened and I'll be. A headline in Wall Street Journal, or a headline in the New York Times, which I've actually read, suggests that this data points to an outcome that is actually fiction, not fact. This data points to an outcome that is actually fiction, not fact.
Speaker 2:Well, I think you hit the nail on the head with the word headlines. There's so many dramatic headlines, and think about what sells newspapers and or any kind of media is usually negativity, so it's the attention grabbing it. So I think what my word would be is healthy. I mean, we are really back into health and we said this at our last quarterly report was we have shifted out of a, using your words, dramatic seller's market to a very, I feel, more healthy market. Balanced is another word I'd use.
Speaker 2:Now, if trends could continue, maybe we will dip our toes into some buyer markets in certain areas. However, right now and we'll talk about it deeper in a minute but sales if you list it right and you get the condition right and you really go my word, aggressive in the right way, you're probably going to get some attention from possibly multiple offers. That's not a buyer's market, that's typically a seller's market. That's typically a seller's market, but it's healthy. Again, I feel strongly that both buyer and sellers are sitting at the table and negotiating again, which we didn't see for a few years.
Speaker 1:So, tony, I just pulled up my finance app, which has stories right. So here's a headline. And here's a headline. It's from Market Watch. Now this is a headline for a national news story about the housing market. I just read one that said that March home sales pending were up. Again, here's the title Frustrated sellers are cutting house prices by tens of thousands of dollars as buyers grow more selective. Now I would say, as we discussed earlier, tony, the markets are hyperlocal. They're hyperlocal based on design, price point schools activities, point schools activities. And so I'm going to say to you and to our consumer in the Carolinas, like that's not happening here, unless they were so egregiously overpriced. So let's talk about price a little bit. Yeah, let's skip to price appreciation. I'll come back to days on market.
Speaker 2:Oh, sure, sure, yeah. So let's talk about price a little bit. Yeah, let's skip to price appreciation.
Speaker 1:I'll come back to days on market.
Speaker 2:Oh, sure, sure, yeah. So let's talk about your headline. Your headline, if I read it, would tell me prices are falling. I don't want to use the word crash, but it feels like we're crashing downwards. That's not happening. Now.
Speaker 2:We are seeing price appreciation in every single market we serve. The average is about 1% to 3%. If I took you back to 2018 to 2019, what do you think? The average price appreciation was then 1% to 3%, which is very healthy. So we had some moments where price appreciation got up to 18% to 21% that none of us ever seen in our life. Now we're going to 1% to 3% and the are related like prices are dropping. They're not dropping, they're deaccelerating. As a word, they're just not going at the pace they were, but we're still. If you think of buying a house as an asset, the asset is still performing. It's performing in a very healthy market.
Speaker 2:The list price to sales price ratio when we talk about price appreciation to your point about pricing it right across the board is between 97% to 98%. So if I list a property at $100,000, I should get $97,000 to $98,000. Gary, I think I've told you this before. This is my 35th year, 35 years ago when I was trained. Guess what ratio I was trained on for price appreciation. For list price, sales price 97 to 98%, and that's something. So if you price it right, it's good. Now the mountain region when you go there it's a little around 95 to 96%. But please note that when we talk about these numbers it's price appreciation when you price it right and you move it.
Speaker 2:What is a true stat that we're seeing in every MLS that one of the leading indicators is price reductions. But let's define price reductions to the headline. Price reductions is. We still see a lot of our sellers wanting to push the envelope, price it high just to see, and then they reduce it back to the market. Now, professionally, we would not encourage that behavior. We would encourage the right price to begin with, because first impressions matter in this real estate market and when you hit it right you're going to get the best terms. I don't know why this is true. I have no factual data to back that statement up, but I will tell you your first offer is your best offer and when you hit it right in the beginning, it's the right offer. If you overprice it and you reduce it, the offers get less because they think something's wrong. It's just funny how that's maybe human psychology psychology.
Speaker 1:So a piggyback on that great point Tony made and that is part of pricing it right is properly conditioning it, and I know I shared this when we met last time. Tony on Market Update is and I'll share it again only because I think sometimes we have to keep hearing it and hearing it. That is, there are four buckets of listings, as Gary Scott sees. There's a bucket that's empty, which means we need to fill it with more listings, which you've indicated is beginning to happen Correct, pretty aggressive from a percentage perspective, pretty aggressively Correct, which feels very good, right. Buyers have more choices. They don't get caught in the froth of necessarily multiple offers albeit, I want to come back to that. Then there's a bucket where agent goes in super well prepared, collaborates with a seller. Seller then chooses a price that will create energy around the property by more than one buyer to allow the consumer or the buyer to dictate the price, not the realtor and the seller.
Speaker 1:And I always say what's interesting about our business is a list price is based on information, but it's fairly random. And my first offer price is based on information, but it's fairly random. And what we have to let the market do, what markets do and what a buyer is willing to buy and a seller is willing to sell is what the value is, not what you and I think. And then there's that second bucket not only they priced right, tony, but every seller has done exactly and I mean exactly what the agent has told them to do Paint, declutter, landscape a pre-warranted home, whatever it is to separate yourself. I know you want to come back. Then the third bucket I always say it's the seller who listened to their expert, who happened to be a neighbor not in the real estate business or a relative who lives in another market. That's always my favorite pricing strategy. I'm going to talk to somebody that I know that lives in another state, and I'm going to take their advice, not the expert advice of Tony Jarrett.
Speaker 1:Those houses are staying on the market and, as Tony just said, they have put themselves in a precarious situation where it is costing them money as a result of testing the market them money as a result of testing the market. Then the fourth bucket is luxury, which today we'll come back to. Luxury is its own kind of world today, because the luxury buyer is paying cash which is taking them out of this affordability kind of challenge. That has happened, so we're going to jump around a little bit. Let's go to days on market. You talked about go ahead, wait a minute.
Speaker 2:I want to say one more thing. I want to give our audience a very specific example of what you and I have been talking about. So when I researched the triangle region, I really want you to think about this. Three years ago, price reductions to go back to your headline 11% of the entire triangle market had a price reduction. Here we are today 42% of the entire market had a price reduction. So that tells me that this is a big challenge for everybody.
Speaker 2:And if you play those numbers the 97 to 98% if you hit that 98%, let's pretend you have a $300,000 price. If you list it right to begin with and get a quick offer or you start reducing the price down to 94%, 95%, you may be costing yourself $12,000 off the top just by that decision. That's how critical this number is when you think about pricing it right. And one other thing that hit me as you were talking, gary, is one of the things I'm seeing trending really in most of our markets is the word staging. I'm seeing a lot of people staging houses right now and that's all about getting the first impression, pricing it right, getting it on. But staging is a hot trend right now with our service because our agents are telling sellers how to position so that they don't lose that $12,000. It's fascinating because you didn't hear the word staging that much during the pandemic market, because you could put it out in the market. It's fine, but today, much different. This is where the realtor comes in with the professional advice to really help our clients.
Speaker 1:Hey, tony, there's a lot of words and concepts that have come back that were out of our glossary of terms. Right, I get laughing. Depending on when an agent joined the industry. You already talked about it. Price change, price reduction yeah, we've gone a couple of years where. How about expireds and withdrawals? Historically, when Tony and I got in the business in the 80s like that was a strategy, I'm going to go after expireds and withdrawals the average day on the market was. You know, when I got in it in the 80s, tony, it was 92 days and I knew that if I got that expired, I was going to be this. You know there was a point in time in our market where it was always better to be the second one in right.
Speaker 2:That's right.
Speaker 1:And so Tony talks about staging, right, not that it wasn't important then, and here's what I'll tell you the great agents were staging even when the world was crazy. Now, staging is the separator, tony's point. To maximize my return, and I actually think last time we were talking and some of our trends and analysis are going to be consistent quarter to quarter, and that is like the first impression is not only when I walk in the front door, tony, when I pull up to the house, yeah, like when I pull up to a house. I just was in my neighborhood.
Speaker 1:I drove down the street and a neighbor had just redone their landscape. They had just taken care of, they resotted, where the grass was dead, they had pruned the bushes, they had remulched, and I literally, like, drove by and was wondering if it was the same house, right. And I think when you go to sell your house and the other piece of advice I'm going to give everybody is don't wait till you go to sell your house to. And the other piece of advice I'm going to give everybody is don't wait till you go to sell your house to do the upgrades, right, upgrade it as you live there, for a thousand reasons, one being that you don't get a big check to write at the end.
Speaker 2:The other is you get?
Speaker 1:to enjoy a beautiful home. A number of times, Tony, I've gone to sell a house, and when I get ready to sell I wonder why I'm selling it.
Speaker 2:Because it's so darn nice, right that's right and your point's well made, because I'm hearing that a lot, especially as certain generations sell their house. We had one the other day. It was built in 1980. Guess when the last time the seller has done any improvements to the house 1980. And guess what price? They want Very, very top price. And everybody who's come in wants to talk about how much it's going to cost to bring. It's a fabulous house, fabulous foundation, good as we say in our industry, good bones, people love the house, great neighborhood, I mean, it sells itself. But it's going to cost me $200,000 just to get it into today's world. And if our clients could do a little bit of that every year, boy is that magic on the end when they sell it. So you make an excellent point.
Speaker 1:Well, I'm going to do a little infomercial for an initiative that I know a lot of companies believe in, but we've used the term home physical real estate review. We have a plan that our chairman put into play years ago called the seven R's and you know, I think, as Tony talks about that two things Number one every single homeowner listening, whether you're thinking of selling or not.
Speaker 1:Have a. Have a maintenance budget that I am prepared every year to spend eight thousand dollars, three thousand dollars, whatever that number is Like. Build it in to your monthly payment. That I'm going to kind of on my own discipline and then I'm going to encourage every single consumer. Listening is to have what we call a home physical. Understand what are happening with prices. Understand that if I'm going to do some work, what work should I do? Where will I get my money back? That if I'm going to do some work, what work should I do? Where will I get my money back?
Speaker 1:Understand that I personally think and I do this every three to four years I get a home inspection on my home to make sure that the things that I can't see, but that someday I go to sell it, get taken care of. So I invest every three to four years in a home inspection. I might have wood rot on a window in a dormer that I couldn't see, but, tony, if I take care of it in year three, not year 10, when I go to sell it, I've avoided the water damage that I didn't know was going to happen. And again, think about this home that you live in, build memories, build community. Is this incredible investment? So, anyway, I'm going to encourage home physical real estate review. Make sure that, whether you're thinking about it or not, what a great time for every homeowner to really understand their home, their neighborhood, their community and their market.
Speaker 2:That's right. We call it the joy of homeownership, but you're saying it magically.
Speaker 1:It's just maintenance and stay ahead of it, because it becomes deferred maintenance, and that's another problem, tj, let's shift gears a little bit. We talked about it a little bit. Let's talk about days on market. I mentioned the 90 or the 80s when I was selling and you were selling. It was 92 days, and when it got to 69, we thought we were in the hottest real estate market ever, and I think it had gotten down in the high teens low 20s at that. So walk us through More inventory, right?
Speaker 2:More inventory. So consistent means more competition, means a little longer on the market. So we're across the board, the number is pushing just under two months. We're probably right around 50 days when you come into the mountains between the high country highlands and Asheville Mountain we're looking about 80 to 90 days, which that's very healthy in the mountain region as well. So 50 days is that's I, which that's very healthy in the mountain region as well. So 50 days is that's. I would say that's balanced. If you got into that 90 days, as you were talking about across the board, that might be pushing the other envelope, the other market. But sellers need to be just expected of the expectation of that.
Speaker 2:Two months is where we're going Now. I do think it'll improve, typically May, june or two or better months when that spring market. There is something about it. We've had seasonality start coming back in our markets and I do think it'll improve. But here's what I want to stress to our audience when we say days on market, those are the ones that got a contract. Meaning days on market to me is a magic number because it measures the day you put it on the market to the day you get a contract. So 50 days is the sellers who priced it right, conditioned right, did the right thing to move it. There's another days on market out there. That's much longer than 50 days, and they're sitting there and those are the ones you talk about with the price reductions.
Speaker 1:They're in that third bucket I described right.
Speaker 1:They were priced from the beginning. Probably no stager, probably listen, they're in that third bucket I described. Right, you know a reminder that you know you buy a house, you need a mortgage, you need insurance, you need title closing, et cetera, and you know we firmly believe that. You know. The ability to come one place to get all of your needs for home ownership makes a complex transaction much easier. And one of the interesting things in both meetings separate companies they were talking about their ability as a mortgage company to close in three weeks or less is a reality, and so days on the market play a role.
Speaker 1:A consumer, buyer's particular need, goal, objective is part of the equation, what the seller's motivation is. But in today's world, world, the ability to find your home and close in a fairly short period of time, yeah, the reason I bring that up is I often and you do too, I'm sure, tony we have buyers ask us what recommendation do you have as a buyer? And mine is number one be prepared to be a buyer, like be ready to be a buyer. If the number one, the number one be prepared to be a buyer, like be ready to be a buyer. The number one piece of advice is be ready to be a buyer meaning have a realtor, trusted advisor, understand your financing capability and comfort level Right.
Speaker 1:Capability and comfort level are not always the same. Go comfort level Right. You and I both know oftentimes we can qualify for more than we're comfortable. Don't get caught in that euphoria because it's all about the comfort that comes with that acquisition. But I think it's so important to be prepared and that if a house comes up remember we got that second bucket of listings, price right, stage right. We're still getting multiple offers on those. Tony, we're still getting above ask price. So if you really want to be a buyer, my recommendation is be prepared to be a buyer. That's great.
Speaker 1:Yep Be pre-qualified too be prepared to be a buyer. That's correct. Yep, be pre-qualified to Tony. Let's talk a little bit about. I know you have a region that you run in the mountains. You know we obviously today navigate the coast and we navigate the Western North Carolina mountains and then obviously in kind of the central part of both the states of North and South Carolina. Is there a difference in the primary home market and the secondary home market in terms of what happened in Q1 and what we think might happen in Q2?
Speaker 2:Yeah, I think when you look at our sales pace with both in the mountains where the Hurricane Helene came through, is definitely slower. But there are a few things. I think there is a residual effect from the hurricane and you think about it. There were a lot of areas that you couldn't even access for time, months, months, infrastructure. So me showing a buyer a certain area, there were certain areas I couldn't even get to in October, november, december last year. Good news is a lot of those things are opening up. Bad news is there are certain areas still not recovered. Part of the Blue Ridge Parkway, which is a feeder into many local communities in certain areas is still closed. You can get to it but it's going to take years, based on certain areas. So you had that going on.
Speaker 2:The first quarter in the mountains, I will tell you, ski season was the best we've had in a few years because we had more snow. So when I've got areas I can't access and I got two feet of snow and it's zero degrees, some buyers are like I'll wait till the spring. So I think we had some of that happening in the mountains as well. So it was a double combination of those things. But here's the good news. The last few weeks we're definitely seeing the activity.
Speaker 2:I'm a firm believer that mountains are going to have a pent-up demand for tourism and for homeowners because people want to come back to the mountains. You know it's funny In life you lose something. It makes you want it more and I think the mountains has that impact because that was a hurricane event that none of us ever saw coming at that magnitude. But the word resilience comes to mind for those communities, but we are starting to see it pick up, but the markets are off right now simply because of that. However, we are definitely starting to see the for sale signs come back and I think the buyer is going to be right behind it. Watch May and June be a lot better in our mountain regions.
Speaker 1:Yeah, so you know it's interesting, Tony.
Speaker 1:It's now six months since Helene, right, yeah, and you use the word seven months, really that's right, you use the word resilient and, uh, you know, one of the things I've shared with people is, you know, so often when a tragedy strikes a community, uh, there's a t-shirt that says something strong. And so, when you're close to it and it impacts you and you see a t-shirt that says Carolina, strong, it means much more when you've been close to people who have been impacted. I'm going to piggyback off of Tony.
Speaker 1:There is continued to be I'll call it a hangover, for lack of a better term but we do believe, as Tony said, that the pent up demand to live in these incredibly beautiful, fantastic communities. You know, maybe we would have thought would have started April 1 and maybe it's May 15. But we have seen the energy there at a very high level. Now I'm going to shift gears to the coast. Um, and again, I'm not going to make a general statement to the coast, I'm going to talk about a market that we actually have an office in which, yeah, right just think about this 80 over 80 percent of every buyer there's a cash buyer, so only only 20% are getting mortgages.
Speaker 1:Their market a million and above, very, very hot. Their market 400 to 600, not nearly as hot, because those are the 20% of the people that need to get financing. And so, again, I think those are important things to think about. So let's take a minute, let's step outside of the real estate market because, tony, you and I, in our business, are impacted by, I'll call it, economic headwinds, and that could be stock market volatility not that we've experienced it over the last couple of years Interest rate fluctuation. We haven't spent a lot of time on interest rates, we're not going to spend a ton of time, but everybody is curious about it. So let's touch a little bit on interest rates, what you think, what you feel, but, equally important, what strategy should or shouldn't be deployed as a buyer or seller as it relates to whatever respective interest rate?
Speaker 2:Yeah, that's a big question and you know, part of me says I don't want to predict mortgage rates anymore. You know, I just 30 days ago thought with the treasury bonds pulling back down I thought, oh, we're going to get some mortgage rate reduction. And then US federal government decided to pull back on their buying some of those treasury notes and that changed it again. We're leveling off around just under seven, right at seven, the high of the roller coaster in the last two years. We went up to eight, we came down to six, we're back to seven. But it does give a couple thoughts on strategies like you're talking about. One is we are seeing a lot of buyers looking more at mortgage payments versus the price of the house and think about it when we're talking about our markets and negotiation. Price appreciation has been very strong, it's been very healthy, the asset is working. And now what buyers are looking at, especially first-time home buyers, is can I even afford the house? Not the price, but the monthly payment, and we talked about that residual from the hurricane.
Speaker 2:It's really put a focus on insurance and we have definitely seen insurance shifting. So to our listeners out there, when I started the business, you didn't talk about insurance until closing. Oh, I need to get insurance policy. Then a few years ago I went I need to start thinking about insurance at time of sale. Who am I going to use? And let me look, but the hurricane really brought out some things about flood insurance and you talked about the coast, and I think when I'm getting pre-qualified, like you talked about, I probably should be looking at insurance as well.
Speaker 2:At the same of what our company has, we have a product called Buy Bar Bundle. That's been a big hit. We just crossed over $1 million giving back to the client in the Carolinas, and that is when a buyer comes to us and uses our mortgage. We have a program that gives a half a point back on concession. Well, that closing cost becomes a really important part. But what I'm now seeing is not only is that important, it's possibly buying down the rate. I'm hearing more buyers buy maybe two points.
Speaker 2:So year one, I'll pay 6%. Year two, I'll pay 7%. Year three, I'm making the numbers up 8%. Whatever the number is maybe 5, 6, 7. But that's a way to get a good negotiation and when we're seeing the sellers getting their price, they've become very negotiable on concessions. So why not get a concession to get my mortgage payment down, just to get me in the house the house that I love and dream and I really want to raise the family. That's become a bigger, important, crucial conversation recently about how to get my financing used. The word pre-qualified but it's also know the loan product, know the payment and use. Important, crucial conversation recently about how to get my financing used. The reward is pre-qualified, but it's also know the loan product, know the payment and use. That in my negotiation and we can help with that. That has been really so important the last year than it has in the last few years, quite frankly.
Speaker 1:So I'm going to piggyback off that Tony's saying as a buyer, whether it's buy and borrow bundle, thank you. I had just written a note down because we want this edition, this version, to get to the consumer. And that is, we've taken affordability as a challenge and turned it into an opportunity. One of the numbers I want to just reiterate is Tony said it's half a percentage of the mortgage amount. Now that doesn't feel like a lot of money, but when I tell you it's nearly 20% of your total closing costs, now it feels. And as Tony said, $1.2 million in the Carolinas, $3.5 million across the Howard Hennant Enterprise and we work very closely with our partners in Virginia They've gone over $300,000. So just in the Southeast it's like $1.5 million invested I use the word invested into buyers, our buyers, to help them buy. So a couple of things Tony talked about.
Speaker 1:As a buyer, maybe I ask for concessions, maybe I use that as a buy-down.
Speaker 1:If I'm a seller, depending on where I am in my motive, I call it my motivation continuum. Maybe I offer to buy it down and part of my promotion is buy my house at five and a quarter because I've already built into my pricing and my staging and my, I call it the cost of sale, and so you know it's all about being different than the balance of the market. So, tony and I have never talked about that and I actually just thought about it. You know, I might have a condo in downtown Charlotte that might be worth X, and maybe it's that first time home buyer who used to buy at age 28. Now they're buying at age 38. And maybe I want to be the best of the 12 that are for sale, and if mine's the one at 5% because I've taken an initiative, then that's just built into the transaction. So I think there's opportunities and clearly there's a community out there that has taken advantage of it and that would be called the builder community. Yeah, just touch on that a little bit, tj.
Speaker 2:I was going exactly there because what you said is magical in the sense that we have more for sale signs, which means we have more competition. So your positioning of the house for the concessions to buy the rate down is critical because guess where the builders are winning, it's the mortgage rate. Rate down is critical because guess where the builders are winning, it's the mortgage rate. So a lot of new home builders have that built in, that they are more competitive because they have lower rates if you go through their financing, and they're winning that a lot lately Because, think about it, everybody's wanting to know the best price right now when it comes to monthly commitments and builders can position that well. So if I am a seller which I love where you're going with that, I might be competing with new home subdivision just down the road and I better be competitive with that, because some people want new construction simply because they don't. They want new. But some are looking not for new or resale, they're looking for the best monthly payment in today's world and that builder's offering it. So why don't you seller offer it? I just think that's a genius comment you made, gary, because it's the reality of what's happening. So why not position. So if I were talking to a realtor right now, I'd want to know am I competing with new construction? It is in my area, it's in my market, it is in my neighborhood, because that changes maybe how I'm going to position my property.
Speaker 2:The other thing I will tell you from a seller's perspective that we have is the buy before you sell. So we definitely one of the benefits that most of our homeowners have right now is incredible equity. I think it's record equity. Everywhere we look in all our markets, the asset has performed. I keep saying that the asset has performed and there's a lot of equity.
Speaker 2:Well, I don't know if I want to walk away from that 3% mortgage.
Speaker 2:I know I want to downsize, I know I want to move, but man, I'm just staying here because of that rate. Well, you have so much equity, why not dip into that asset, let the asset work for you, bar against that money to go buy with a cash offer somewhere else and then sell. It's bridging those two things and there's a lot of strategies I'm seeing right now regarding that. That is making sellers stand out, because now I don't have the pressure. What am I going to if I get my house closed and I get that money, will the buyer rent back to me, will they give me an extended closing? And now where am I going to go? So we're seeing the whole process reverse back when you and I started. We did that the seller would sell and then we figure out where you're going to go live. Now the sellers need to go figure out where they're going to live and then sell the house, and that's much different from what it used to be in our markets.
Speaker 1:It's so much to unpack there. So, yeah, but really good. And I made a note here, tony, you know I was going to ask you a question what are the three questions a buyer should ask their agent? What are the three questions a seller could ask their agent? We may come back to that, but the comment you made is the critical for both the buyer and seller, for your agent and you to know the market.
Speaker 1:Tony talked about it. If I'm a seller, I'm not just competing with the three houses in my neighborhood. There's three new subdivisions within a mile and a half and they've got buy downs and they've got free appliances. I mean, builders have been doing this giveaway thing forever, right, and what we know is there are more spec homes than there have ever been and the builders need to move them. So you know they're really important.
Speaker 1:And to know the competition, tony talked about this incredible equity buildup. I shared this for the last time you and I spoke, tony, and I shared again because now I'm taking the math problem that you've kind of predicted for 25. And basically it said from 2019 to 24, the average home appreciated 57%, equity buildup 74%. Because we all know that not only are we getting appreciating home values. Every time we make a payment, we're buying down, buying down, buying down. Now I'm also going to recommend, depending on what interest rate you have if I'm at 2.5%, I may or may not recommend pay down some principal. If I bought at two and a half percent, I may or may not recommend buy down, pay down some principal. If I bought at six and seven 6.75, I might recommend you make a couple extra payments or a couple hundred dollars a month.
Speaker 2:Things like that.
Speaker 1:But I think it's so critically important you know that that we understand that piece of of the marketplace, know the competition.
Speaker 2:Let me give you one other trend that we haven't talked about, and I'm having more conversations. I talked to a good buddy of mine who's been in this house for 30 years and I said why haven't you moved? I can't believe you haven't rolled into something else. And he said I don't know that I can find the house. And I said somewhere else what he has, he's got a great location, he's on a pond, he's got this awesome yard, his kids are grown, they've moved, and I said you're about to pay that mortgage off at and he said I only have five years left. And I said what are you thinking? He said I think I want to go buy a house in the mountains. And so I'm seeing another trend that, with the equity, we're seeing a lot of people go. Maybe I don't want to move. I've got that two and a half 3% mortgage rate, but maybe it's time to go buy an asset somewhere else, enjoy life a little bit, use the equity, go buy it. Maybe put it on Airbnb or use it as a vacation home for myself, my family, my friends. But what a wonderful investment because we talk about.
Speaker 2:You mentioned earlier the stock market. Well, residential real estate, especially the second home has been pretty consistent as far as an investment strategy. I mean, when's the last time we saw prices drop? It's been 20 years and that was because, not because of housing, it was because of the mortgage industry had an implosion, if you will, which has been corrected. We heard a speaker the other day at Hilton Head who said the housing, the depreciation of housing, was not caused, didn't cause the recession. The recession caused the housing and that was a really good example in 08 and 09. I don't know that we'll ever see that again in our lifetimes because of the corrections that were made, but I am seeing people go wait a minute, maybe I should go invest in real estate in other parts of the state and make a smart investment and use it for my family and give it as inheritance or whatever. I'm seeing more people talk about that.
Speaker 1:So I'm going to piggyback off that. If you remember, tony, I probably heard it the first time eight to 10 years ago, which was determine where you're going to retire and buy it while you're working, not retired. Yeah, and I think about your comment just now and I think about where you're going to retire and I'm going to retire. Too many people waited till they retired and what you're saying is take this massive equity, leverage it to maybe go mountains, beach, wherever you're going to retire, then let that be an income producing property while you and I are going to work another 10 or 12 years. And now I know that on the Southwest part of Florida, that's where I'm going to be, but I've already begun to build equity in Fort Myers or wherever, and do it while I'm working. Do it while you work, and I think that was a big thing about 10 years ago about this. How do you retire? And then I think about the equity and I was starting to go down a path about the 57 and 74%. If we simply take that out another year of 2025, we're going to be at 60% and 78 or 80% of this incredible buildup of wealth. And there's another. I know you saw me looking at my phone, tony and I can see each other and I know you guys are all just listening is I was looking for that graph that showed the last 30 years, the number of years that prices went down. I'm going to get this number wrong, but I'm directionally right. I think it was four years, maybe five, that prices actually went down in the last 30. So real estate is an incredibly safe investment in your portfolio. One of the things that I like to talk about is the five I's inventory interest rates, inflation, investment and then index Index being what's the market doing? Inventory We've talked about interest rates. We've talked about inflation. When inflation was high, we all know the greatest hedge against inflation is ownership of real estate, and I can share this. I've got some family members that help people manage their money, and even those individuals say to me I encourage real estate to be put into the portfolio for times just like we might have experienced in the last 30 days of the volatility.
Speaker 1:So let's end our session. We could talk about a lot of things. We could talk about baby boomers, we could talk about the demographics fundamentally being our friend, but let's just give a little look into the crystal ball, tony. You know, what do we think, what do you think? You and I have not talked about this, so I'll be curious as to whether we agree or disagree. You know we're now by the time our listeners hear this, it's going to be the first week of May. You know we're a third of the way through Q2.
Speaker 1:So we're going to bring this update to you each and every quarter, because it does change. Well, I will tell you, tony, a lot of what we've talked about is not particularly dissimilar, other than I do believe that I believed that the first quarter would be a little better than it actually was, and I think there's some, you know, kind of national, international, uh, economic conditions that have caused probably the biggest challenges. Consumer end of the day day, if you had to look at every single metric, the consumer is feeling a little bit uncertain and a little bit on pause because of some of the things that have happened in the last 45 to 60 days. What do you think we are in for the next 90 days in our industry? Your thoughts.
Speaker 2:Well, I do believe, based on what I hear and see in all the offices, there's still you just said the word the consumer has an economic uncertainty. Is that one word? Or consumer confidence is decreased. All the polls show that. There's another thing that's been happening in the markets, which is the pandemic effect of people getting these low rates and just sitting in their houses. Well, the trends in the first quarter are showing the opposite. It's that people are coming back to the market. I always like to say life happens. So I may feel uncertain, but if a new job opportunity offers or I have another child or I need to move, we're seeing that consumer right now. They are popping because of life. In fact, every agent I've talked to is not saying I'm selling my house because of a mortgage rate, I'm selling my house because of equity. They're saying it's something about life and I'm not letting some of these other things get in my way. I think we're going to have a strong spring. I do think that when we say strong, I think it's going to be stronger for a lot more listings. So our buyers on the call. You've suddenly got more options than you had in a few years. I think the concessions are going to be strong. I think you're going to have options to.
Speaker 2:I'm not going to get 3% ever again in my lifetime, probably. But could I get from that 7% down to that, 6% to that, that five, with some buy downs that you talked about earlier? Yeah, probably I can. I think there's opportunities and I think we're going to see some people take advantage of those opportunities. When you see prices, I think the prices are going to remain consistent.
Speaker 2:One of the headlines I've been more concerned about is the word crash. I just we're not crashing and I just don't see it. There's no indicators that would. And if the economy was even going to, the R word that I've been reading lately is possibly recession. I do not think the recession is going to cause housing prices to drop, and that goes back to that 08-09 example we talked about. I'm feeling good about it, I'm feeling positive about it. Now are we going to run like we've done the last three years? No, I don't think so, but I think it's.
Speaker 2:Again, I keep using the word health and balance. We didn't talk about inventory supply. Inventory supply is tipping up upwards up to about three months, and so if we talk about what the definitions four to six months is usually really good, healthy market. So we're still trending to more health. However, based on the inventory numbers I've seen over the last few years, we don't have enough housing in most of the markets we serve in North Carolina.
Speaker 2:I said because more people here are moving here every single day. I think three months is now the new market balance in my opinion. I think if we get into four to five, we are going to dip into a buyer's market if we go that way, and it doesn't mean house prices are going to crash, it just means there's going to be a lot more negotiations going on. So my prediction is still having health, still having balance. I'm not even going to touch the mortgage rates because I don't have a clue what's going to happen with mortgage rates. Maybe you do, I'd love to hear your opinion but I do think, based on the trends, it's going to stay healthy.
Speaker 1:Yeah. So it's interesting. I just saw that there's a prediction. When the prognosticators came out, they were looking at existing home sales across the country at 4.4. And they're thinking about new construction at new homes at 650,000. And whether that number is 4 million, whether it's 3.9, whether it's 4.1, our good friend Matthew Farrar shows this thing that says it's 12,833 homes sold every day.
Speaker 1:Tony brings up a great point and that is life happens and the other piece. You know, there's this other piece of the pandemic that people got caught in a frenzied buying environment at an incredibly low interest rate and maybe they didn't buy the perfect house and maybe their life changed just enough to outweigh two and a half, two and three quarters, three percent, because what we like there was a euphoria that was like nothing we've ever seen or will ever see. So I think that interest rates are going to stay where they've stayed. I don't see eight and I don't see breaking six. I think six and a half to seven and a quarter and I think that the other piece of it is so long as we continue to get appreciation I'll steal a phrase from one of our mortgage colleagues, mark McGoldrick it will be more expensive to buy tomorrow than it is today.
Speaker 1:It is difficult to time mortgage interest rates, the stock market and housing appreciation to buy or sell at the perfect time. It comes down to the motivation of a buyer and a seller, because life happens, that's right. And so we in the Carolinas and in the Southeast are certainly in an enviable position because people choose to come here because of all the great things that this community and this quality of life presents itself. So we're very fortunate. Again, I think it's. You know it doesn't mean it's going to be easy, but you know, home ownership, american dream, generational wealth those two things haven't changed, tony Jarrett.
Speaker 1:So we're bullish, we're optimistic, we think being in multiple markets are important for our company and I think that the other number I love to give out is, you know, the last three years, tony, 92% of every buyer and every seller used a realtor. It's a really complex transaction that requires full-time attention to detail, know the market and be able to deliver an experience to the consumer. That is, you know you're going to stand from the mountaintop and refer that person. So we continue to believe in the value that we bring to the transaction. We're going to close it out, tj, any one final thought and then I'll give a final thought, and then we're going to get people off the airwaves.
Speaker 2:I think I just echo what you said. Life happens. I mean it's your words about. You can't time this stuff is critical. There have been moments I wish I could go back and refinance at a certain time, or sold or bought a home, but I didn't because it wasn't the right time for me in my life. So don't think of it as this. Everything money-driven with home ownership it's, and I can't stress enough what you said earlier. I just think it was brilliant.
Speaker 2:You can't time everything, but when you need to move, you need to move and if you've deferred maintenance and you haven't done the things that you need to do as a homeowner, it's going to be a painful process because you're not going to get the price you wanted because you haven't kept up the house.
Speaker 2:I think that's probably one of the most significant things I've heard in this conversation is we probably need to be more proactive with that message with our folks, because you're not selling your house for a certain price or a certain interest rate. You're moving it because I got to go somewhere and my house needs to be ready and most of the time, a lot of our sellers are not ready when that happens. That was a fascinating part of our conversation, but thanks for having me again and one of the last thing I'll say is it's fascinating to me how similar our markets are across the board, because my deep dive into every region in the Carolinas there was not a lot of difference and in the past you'd see the mountains or the beach versus the Tri-Triangle or Charlotte were much different. It's, across the board, very, very similar trends of what's happening in this industry right now in the real estate markets.
Speaker 1:Awesome. So my three takeaways Number one I encourage everybody to get a home physical. Number two I encourage everyone buying or selling use a real estate professional that feels self-serving. I'm sure 92% of the public agrees with me. It is a complex transaction that requires an expert to help guide it. And then number three is connected to number one, which is home physical. That's about knowing my house Use. Number two, which is your real estate professional, to know the market, and Tony really spoke to that. So get a home physical, lean into your trusted advisor, your real estate professional, and understand the market, not just when you want to buy and sell, because it evolves. We appreciate you joining us today, tj, always a pleasure to our listeners. I always say without you, there's no us. Have a great day and TJ and I'll be back in 90 days. Take care, partner.
Speaker 2:Thank you, gary. Bye-bye everybody.
