Understanding Real Estate Market Shifts: From 2020 Turbulence to Today's Challenges

Curious about the rollercoaster that is the real estate market? Join Jenny and Lauren on the Move Worthy podcast as we unravel the dramatic shifts since 2020. We promise to equip you with insights into how a global pandemic turned home buying on its head, resulting in frenzied purchases and waived safeguards like inspections and appraisals. As we navigate through this episode, discover how increased interest rates and soaring insurance premiums, especially post-Hurricane Ida, have contributed to today's complex market conditions. We offer a thoughtful exploration of the repercussions for buyers and sellers alike, and the delicate balance between a stable yet challenging market landscape.

In our engaging conversation, we take a trip down memory lane, comparing the current climate to past years, particularly 2017, and the eerie echoes of the 2008 crash. Dive into the intriguing dynamics of increased foreclosures and investor-driven opportunities that paint a challenging yet hopeful picture for the future. With housing shortages adding another layer to the narrative, we discuss the potential for price trends, even amid a dwindling buyer pool. We wrap up with our signature flair, inviting you to join us every Monday at 10 am for more spirited discussions. Make sure to follow us on Facebook for the latest links as we expand to Spotify and Apple, keeping you informed and inspired along the way.

MOVE Worthy Podcast with Lauren Jones & Jenny Lendle. Together we have the experience to MOVE you forward!

Transcript

Market Changes and Market Challenges

Jenny Lendle 0:06

All right , we are back with the third episode of the Move Worthy podcast with Jenny and Lauren . And today we're going to talk about changes in the market . How has the market changed since 2020 , since COVID ? How , like what are the things contributing to the changes and what are we seeing today versus what we saw or encountered in 2020 , which was crazy ?

Lauren Jones 0:45

Crazy . We thought it was the end of the world .

Jenny Lendle 0:48

I thought we're gonna shut down real estate forever . And then all of the sudden , like we were even setting up inspections , like no one would show up except the inspector yeah and it was super slow and all of a sudden things started rolling in well , interest rates dropped significantly , significantly lower than we've ever seen ever in some cases lower than two percent I know so sick to see that we refinance at three . And then when people said oh man , we held out , yeah , 1.9 . I'm like what .

Lauren Jones 1:26

Crazy , crazy , which that definitely drove the market in a completely different direction .

Jenny Lendle 1:32

Oh , yeah , I think someone said at a meeting I went to is we stole buyers from the future ?

Lauren Jones 1:41

Oh , for sure .

Jenny Lendle 1:42

No intentions of buying , just like sure . I'll sell my house and get $500,000 and I'll go buy the other $500,000 house for 1.9% , 1.9% , interest Like geez .

Lauren Jones 1:59

And then some of the things that the interest rates impacted impacted not only did the number of sales happen , but people were paying over what these houses were worth . They were doing cash deals , which was crazy to me where did all the cash come from ? Where did all the cash come from ?

Jenny Lendle 2:19

they were waiving inspections , I mean it was which is highly not recommended and appraisal gaps yes okay , I'll pay over the appraised value if it's within twenty thousand dollars yeah we saw people do it oh , absolutely , and then , of course , when they they agreed to it , not really thinking that it would happen , but it happened multiple times I had a I had a client that put an offer in on a property that had .

Lauren Jones 2:46

it was a multiple offer situation and the agent came back to us and was like look , it's multiple offers . You have till this time in this day to write a new offer . They went in 50,000 or maybe it was 60,000 on that one . I think it was 60,000 over asking , waived appraisal , waived inspection and we were rejected .

Jenny Lendle 3:10

Oh , my God .

Lauren Jones 3:11

The offer that beat us out was 100,000 over asking .

Jenny Lendle 3:16

Waived appraisal . Waived appraisal . Waived inspection . Yeah , because they were paying cash for the difference .

Lauren Jones 3:20

Good Lord , they were only financing . I mean , it was like a $300,000 house but they were only financing . I mean , it was like a three hundred thousand dollar house but they were only financing like a hundred thousand , so at that point the appraisal didn't matter . Um , yeah , it was crazy .

Jenny Lendle 3:31

What does that do for the values today ? I know I mean we've seen a fairly significant decrease in prices today . I mean , there's this one property that I always mention or talk about , and I won't go too far into detail .

Lauren Jones 3:45

I haven't on my TikTok , but they paid way over price and today those houses are at least going for 20,000 less oh , absolutely like , if not more , I think yeah , and I think so many people might be upside down , upside down yeah and actually that's that's something that I use when I , when I talk to buyers that are concerned about buying in this market today , with the interest rates being , you know , 6.1 , 6.5 , which they've kind of gotten down to at this point , um , I tell them , I'm like which which would you rather have ? Would you rather have a house that you paid too much for and be upside down on , or a house that you have a 6.5% interest rate on that ? If the interest rate did drop , you could refi . You can't ever take back what you paid for that house , what you paid for the house .

Lauren Jones 4:35

It's always going to be , it's always going to be that inflated number . Yes , yes , for sure .

Jenny Lendle 4:40

I think and look , my rule of thumb , or my husband's rule of thumb , has always been if it drops a certain amount , even one whole percent could make a difference . Oh , absolutely Just depending what you need . Do you need to take cash out or ?

Lauren Jones 4:56

what do you want to refi for ? Just to ?

Jenny Lendle 4:57

get that lower monthly note .

Lauren Jones 5:00

Note .

Jenny Lendle 5:02

And I think we will see them kind of come back down . When I bought my house it was 4.875 that was normal , yeah I mean we're not really that much higher than that , but I think the interest rates going up was one hurdle yep for sure and then ida so we're in south louisiana , uh luling and ida destroyed our parish and others . And ever since ida , the insurance , the insurance rates increased . So it's like we could kind of handle an increase in interest . But can we ? We are struggling handling both interest and insurance absolutely it's like we went from .

Lauren Jones 5:43

We went from covid to just a very ghost town market . Then we had the low interest rates where it was insane market . Yes , then everything starts to kind of settle down and we're back to kind of like a normal .

Lauren Jones 6:02

We're back to a normal market then we have ida , which is was complete destruction on the south , on the south coast , um . We're in southeast louisiana , so you know we were impacted tremendously hard between us and in florida . I think those were the hardest , the hardest areas , um . So then you have insurance companies pulling out of these states left and right .

Jenny Lendle 6:26

Dropping customers .

Lauren Jones 6:27

Dropping customers , leaving people in a position where some of them not only did they pay $100,000 more for their house but now they have a $10,000 homeowners insurance premium because their mortgage is so high . It's crazy . So now we're at the point where the market got kind of kind of stable . Interest rates went up , the market kind of dropped a little um with that and it's kind of still there lingering , lingering . It seems like it's moving a little bit now that interest rates have gotten a little better . But the insurance for our area is definitely been a harder hit , still out of control than the interest . Yeah , if , if , if our buyers could , could buy at six and a half or seven percent but not have , you know , a eight to ten thousand dollar homeowner's insurance policy and a four to five thousand dollar flood insurance policy , you know , then they'd probably be okay . But when you have that factor in our area it's not okay , it's not okay .

Lauren Jones 7:30

I mean you're talking $1,000 extra a month just in interest , flood insurance , homeowner's insurance and taxes .

Jenny Lendle 7:38

And taxes .

Lauren Jones 7:38

yes , Aside from your principal . Yeah , it's crazy .

Jenny Lendle 7:41

It is crazy . I have a listing right now and it's crazy . It is crazy . I have a listing right now and it's roughly a three hundred thousand dollar house . This most recent couple that was interested , I think , got a quote for 45 to five thousand dollars a year for their homeowners . Only that's an extra what we figure for something a month or something a month on top of .

Jenny Lendle 8:02

yeah else I mean people already a lot of times buyers already are possibly at the max at the top of their budget . You throw this in , it drops their buying power down significantly . And yeah , I mean this particular one , it wasn't my client , but they were like you know , we're just going to hold off . And then I think interest rates jumped a little bit in the the last week or two yeah so they're like , yeah , we're gonna hold off , and I think that's why .

Jenny Lendle 8:31

I think that's why the market has slowed down so much people are just waiting and watching . And then I think those buyers from 23 that were like , oh yeah , we'll wait for the interest rates to drop and they never did they're finally like , all right , we really have to .

Lauren Jones 8:44

We have to move . I need a bigger house .

Jenny Lendle 8:46

We have to do this yeah , drop job , transfer bigger house . You know other factors , the reasons why people sell they just like I can't wait any longer , yeah and we've seen that , and I think that has been our 2024 clients probably yeah and then along with some cash buyers in there , which always makes it easier .

Lauren Jones 9:07

But yeah , to get over those hurdles even the cash buyers are still hurtling , that they still have to have insurance .

Jenny Lendle 9:14

Yes , so even that has been a big change . Um , what do you think ? I guess all of this too , coupled with some of the new buyer agency rules , the written agreements , um , it's been a tougher market . We've seen some agents leave . I mean , I think NAR is reporting like a 2% decrease .

Jenny Lendle 9:37

Just since last year Just since last year , I mean in our office personally we've had some agents , and you know , not full-time , you know they might have had other jobs , they were part-time agents , kind of say you know what ? I'm just going to go inactive for a little while , until this gets better .

Lauren Jones 9:56

Wait out this market .

Jenny Lendle 9:57

You know , until it gets better .

Lauren Jones 9:59

Yeah .

Jenny Lendle 9:59

You know , and some of the agents that we had in the office , like they're investors too . Yeah . So it really made sense for them to get their license , but in this kind of volatile market , yeah .

Lauren Jones 10:10

But in this kind of volatile market , just the uncertainty .

Jenny Lendle 10:13

They're like , yeah , I'll just hang it up for a little while and see how things go .

Lauren Jones 10:21

Maybe next year we'll see some changes and I think that the economy itself has been through so much that any career move right now is just not just real estate . I mean real estate for sure , but you know there's a lot , of , a lot of changes in in people's career paths right now .

Jenny Lendle 10:41

I think so too , and just not knowing what next year is going to bring yeah there's man . When I get on TikTok I'm like I don't know if I have like the doom and gloom , the prophecies , like I don't know where it comes from , but I'm scrolling through and we're gonna the market's gonna crash and all these crazy people are talking about crazy things . I'm like can .

Lauren Jones 11:02

I ? I heard one the other day . All these storms is is the sign of at the end . It's the end of times . Yeah , all these crazy . You know , you got ice storms up north and you got hurricanes down south all at the same time , look , and if you go down the rabbit hole , you'll really oh my gosh , it's crazy together .

Jenny Lendle 11:20

I can't go down the rabbit hole I just want to get back on like puppy tiktok , I can't take the doom and gloom . It's like I'll have nightmares .

Lauren Jones 11:32

And you know what's crazy is that agents you know have to adjust emotionally , psychologically , physically to all of these changes and financially and financially .

Lauren Jones 11:48

Because when you're giving advice , I mean mean your sole purpose is to be in the best interest of your client , whether it be a buyer or seller , right , so you have to stay educated , you have to stay up with all of these and you have to give the best advice you can . And when everything is so and and just not super stable , it makes it very hard to be in the real estate industry as an agent and it causes stress .

Jenny Lendle 12:12

I think at a certain point you have to decide like how , how much am I willing to give ? Yeah , like all the things you just said and that brings a certain level of stress yeah when you have another job and this isn't your full-time job . I mean , you kind of weigh the pros and cons yeah and make a make a decision yeah but financially preparing even as realtors in this kind of market , you cut your budgets you , you look at your , your business budgets , you look at your home budgets and you have a heart-to-heart with your kids yeah , like we're gonna less chick-fil-a yeah like can we cook at home , Right ?

Jenny Lendle 12:51

Seriously , there's so many factors and again , like we mentioned last week , the ability to adapt to the changes

Real Estate Market Trends and Predictions

Jenny Lendle 13:00

. I mean since 2008, . The market crashed .

Lauren Jones 13:03

Yep .

Jenny Lendle 13:04

There were tons of people who got into the market right before then and then tons of people who left the market . I got in in 2009 and the market was crap mm-hmm and luckily I . You know , my mentor at that time worked with a ton of investors she was an investor herself . So I pretty much like where do you need me to go ? Yeah you know , and who do you need me to show houses to you ? I learned a lot , I saw a lot , but I also saw the market creep back up year after year after year , all the way up to 2019 .

Jenny Lendle 13:38

I mean , I felt like 2019 was a great market . I feel like we were doing well . 2020 , of course , amazing .

Lauren Jones 13:47

And 21 .

Jenny Lendle 13:48

But now I feel like we're back to maybe 2017 , a 2017 type market see , and I got in the business in 2016 .

Lauren Jones 13:58

So 2017 was just a nightmare for me . Well , you were new , I was so new and , and everybody knows , if you're a realtor , you don't . You just don't get out there and start making millions . That's just not the way it works . Um , you know it's very , very slow to build your clientele , to build your rapport , to build your experiences to you know all of that . So it's not . You know , I think I read something at one point that said on average , realtors don't really start having successful years until year four or five . Anyway , so 2016 is when I got into the market and 2019 is when I came here , the end of 2018 . 2019, .

Jenny Lendle 14:40

I had a really great year . You had a good year , yeah .

Lauren Jones 14:42

I had a really great year .

Jenny Lendle 14:43

You had a good year .

Lauren Jones 14:45

I've had good years since because of COVID and the drop in the interest rates . I just happened to have gotten into the industry right before all of that happened . So this year has definitely been probably the slowest year I've had since I've really founded my business . But you know , you roll with it . Most people that get into a business that's , you know , a self-employment . There's ups and there's downs there's goods and there's bads , and you either stick it out or you don't .

Jenny Lendle 15:20

Yeah , and that's like you said , that's any business .

Lauren Jones 15:23

I mean , you have a great client base .

Jenny Lendle 15:26

You have a very strong investor base , which is which is a good thing , which kind of helps get through these dips . I mean , back in 2009 , she had a great investor base , I mean , and then investors were scooping up properties like crazy . I feel like we're starting to see more foreclosures now . And the investors are still picking up properties . I mean a couple of my sales this year have been investors . I mean I've gotten in with some foreclosure properties , some listings .

Lauren Jones 15:53

And I think we're going to see more and more foreclosures . Oh yeah , you know , just because of the changes since 2020 , you know .

Jenny Lendle 16:02

Well , there was the moratorium on foreclosing on properties Yep . A lot of people deferred their mortgages .

Lauren Jones 16:08

Yep . There was a lot of assistance with that , even with renters .

Jenny Lendle 16:12

With renters , with investors yeah . And then now with the spike in insurances , especially here , the spike in insurances are forcing people to either have to sell or walk away .

Lauren Jones 16:24

Yep .

Jenny Lendle 16:25

So I think that's probably the biggest changes we're seeing now is a flip in the market more foreclosures . I mean nothing like 2008 obviously , but definitely more hitting the market , I mean just the , the asset company that I'm working with currently . I mean we've got a few coming yeah and they're somewhat local yeah so it's happening , and then we still have people who haven't repaired since Ida . Unfortunately , people are still fighting with insurance companies over that .

Jenny Lendle 16:56

It's such a combination of things , and then , of course , there's differences across the United States . My niece is in the Austin market mm-hmm they seem to be doing pretty well yeah yeah , so she's been , looks like she's been staying busy over there , and the prices are high yeah so it's it's different everywhere .

Lauren Jones 17:17

I mean real estate is local yeah , I mean , how do you feel like ? What do you feel like the next year is gonna look like ?

Jenny Lendle 17:25

oh , um , you know , I think it's gonna be another year of investors yeah because we're definitely going to see the foreclosures coming . I agree there's opportunity there . Hopefully we see some of those properties , instead of being held , maybe flipped , trying to encourage the first time home buyer market and maybe even the people looking to get out of their first home into a second . So if we had some more properties hit the market in those mid you know , mid price ranges , I think will help move the market .

Lauren Jones 17:59

I think we're going to see some more sellers yeah but like we're seeing now , things are kind of sitting , yeah , like well , the the problem is is that they're sitting because they need a certain dollar right to get out of them , to get out of them . Oh well , then there's that I mean sellers are going to start to take a loss yeah , I think .

Jenny Lendle 18:18

Well , the ones who have purchased 2020 and now ?

Lauren Jones 18:22

yes , yeah , those that are having to sell . Oh , absolutely .

Jenny Lendle 18:24

They're going to see some losses there yeah For sure . And then if you bought prior to , you probably have some equity built up .

Lauren Jones 18:31

Yeah , for sure .

Jenny Lendle 18:32

But then the buyer pool is smaller . So I think that's what we're seeing .

Lauren Jones 18:36

Yeah , and then , of course , I think we're definitely like you said . I think we definitely will see a lot of investors , a lot of foreclosures over the next probably 12 months or so , but I think the market is on its way up .

Jenny Lendle 18:50

I think so . I mean we still have a shortage of homes .

Lauren Jones 18:54

Yes .

Jenny Lendle 18:55

There's still not enough homes for every person .

Lauren Jones 18:57

For sure .

Jenny Lendle 18:58

So the prices , while they have fluctuated , some are going to trend upwards , I agree um . So I do think it's going to be okay . I think we just stick it out like we always do adapt to the changes you know um . Share , share what we can share information , make sure that our clients are . You know , they understand the process so they feel comfortable buying or selling for sure .

Lauren Jones 19:26

That's where you become adaptable , as , as realtors , you have to be able to give the best information that you can possibly give for your clients and if you're not adaptable to what's going on in the market , you can't pretend you can't be an agent and just pretend like things aren't happening right . You can't pretend that it's okay to pay you know the same price that somebody paid in 2020 and pay these interest rates and pay these insurances . You know , you can't pretend and you can't make clients believe that that's okay , oh gosh .

Lauren Jones 20:00

Because it's not . It's not okay . You have to look at their long terms . Based on the information you provided , I actually had a client yesterday and the feedback that I gave him on the house that we looked at was that I felt like it was slightly overpriced . And I was very honest with him . I said I know what your goal is for this house and your goal is to live in this and live happily ever after , but when you're buying real estate , I think everybody should truly look at their transaction like it is a business transaction . Yes , it should be an equitable transaction .

Jenny Lendle 20:39

A smart decision .

Lauren Jones 20:40

A smart decision . So you know , I told her . Well , I know your goal is to live in here and be totally fun for the rest of your life . If you put $60,000 to $80,000 into this house , which is probably about what it needed the bathrooms needed to be updated , the kitchen needed to be updated . It really needed like a master suite needed to be created . So if you do those things .

Lauren Jones 21:04

Sixty eighty thousand dollars . You're not going to turn around and resell this house for four hundred thousand , which is where it would have been at if she was interested in paying what it was listed for . So you have to talk about those things you have to you know .

Jenny Lendle 21:19

Talk about what it looks like down the road , not just what it looks like right now , right all right , are you that's what I tell my new buyers like are you going to be comfortable writing this check month after month after month ? Yeah , and be careful about the money that you put into it , kind of like you mentioned . Yeah , and always be prepared for the possibility of of having to sell , yeah , for whatever reason . Yeah , um , don't get in over your head . I think those are all important things to talk about . Are you okay with the increases in insurance ? Oh , man , the full risk premium .

Jenny Lendle 21:50

Oh my gosh we have to let everyone know who's buying a house . Hey , your flood insurance is $900 now .

Lauren Jones 21:56

But your full risk is $4,500 .

Jenny Lendle 21:58

Yes , but your full risk is close to $5,000 . Are you okay with that ? Right Because 500 , yes , but your full risk is close to five grand . Yeah , are you okay with that , right ? Because , if so , let's , let's plan that out .

Lauren Jones 22:05

Let's make sure that your monthly mortgage payment is okay if that were the case next year yeah so , so many factors and , I guess , being knowing what you're doing , being an educated agent letting your clients know all of these , and I think if the agent has the mindset of exactly what has happened from 2020 to 2024 , that things are going to change , they're going to go up , they're going to go down , they're going to go up , they're going to go down , and their main focus is you know what's best for that client , for the future , for the past , whatever the case may be , I think if the agents stay focused on that and not on closing the sale because it's such a slow market and they're just pushing to get a sale , yeah , don't do that . I think that's going to go a long way .

Jenny Lendle 22:55

No , you're right for sure the client is more important than the sale , always . Yeah , that is the goal , and the houses sell themselves .

Lauren Jones 23:04

They do .

Jenny Lendle 23:05

You can't push a house on someone that they don't want .

Lauren Jones 23:07

No .

Jenny Lendle 23:08

The house will sell itself . Yeah

Continuing the Move Worthy Podcast

Jenny Lendle 23:10

, that was some good stuff . I feel like we could talk about this forever . We could just keep going .

Lauren Jones 23:15

Story after story Right .

Jenny Lendle 23:18

But you know we're good timing on this , so I think we'll call it and we'll be back next week again , monday at 10 am . You can check our Facebook pages . Right now is where the links are being shared to the podcast . We're working on the directories in the big . You know Spotify , apple , things like that . We'll get there . But , yeah , next week same time , and we'll have a new topic to talk about . This is the Move Worthy podcast with myself , jenny Lindley and Lauren Jones , and together we have the experience to move you forward .