The Brad Weisman Show

Winning Strategies for this Tough Real Estate Market w/ Pete Heim

July 10, 2023 Brad Weisman, Realtor
Winning Strategies for this Tough Real Estate Market w/ Pete Heim
The Brad Weisman Show
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The Brad Weisman Show
Winning Strategies for this Tough Real Estate Market w/ Pete Heim
Jul 10, 2023
Brad Weisman, Realtor

Hi This is Brad Weisman - Click Here to Send Me a Text Message

Ever wondered why buyers are fighting over the same properties, or who's actually winning in this increasingly combative real estate market?  Brace yourselves, as Brad and our guest Pete Heim not only cranks the numbers to explain this phenomenon, but also lays bare on a surprising trend that Downsizers, predominantly baby boomers, are the ones capitalizing the most.  Their secret weapon? High equity in their homes.  Pete also sheds light on the staggering statistic that a whopping 74% of Americans have over 50% equity in their homes.  Did you know that the net worth of residential real estate in the US sits at a mind-blowing $23 trillion?

Pricing, predictions, and unicorn pricing (yes, you read that right), we cover it all in the second part of our chat with Pete.  We analyze listing prices vs. sales prices.  Wondering if it's better to wait out the current market dynamics or to jump in? Trust us, you don't want to miss our take on this.  We wrap up our conversation with Hugo, where we talk about the importance of buyer's staying in the game, regardless of the competition.   So many ideas and information about this challenging market!
#peteheim #bradweisman #realestateandyou #realestateagent

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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.

Show Notes Transcript Chapter Markers

Hi This is Brad Weisman - Click Here to Send Me a Text Message

Ever wondered why buyers are fighting over the same properties, or who's actually winning in this increasingly combative real estate market?  Brace yourselves, as Brad and our guest Pete Heim not only cranks the numbers to explain this phenomenon, but also lays bare on a surprising trend that Downsizers, predominantly baby boomers, are the ones capitalizing the most.  Their secret weapon? High equity in their homes.  Pete also sheds light on the staggering statistic that a whopping 74% of Americans have over 50% equity in their homes.  Did you know that the net worth of residential real estate in the US sits at a mind-blowing $23 trillion?

Pricing, predictions, and unicorn pricing (yes, you read that right), we cover it all in the second part of our chat with Pete.  We analyze listing prices vs. sales prices.  Wondering if it's better to wait out the current market dynamics or to jump in? Trust us, you don't want to miss our take on this.  We wrap up our conversation with Hugo, where we talk about the importance of buyer's staying in the game, regardless of the competition.   So many ideas and information about this challenging market!
#peteheim #bradweisman #realestateandyou #realestateagent

---
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 Wiseman. You're listening to Real Estate and you. We are back here again. Boy, it seems like we're here a lot actually, but no, we're back in the studio and we have a show here. This is definitely about real estate. Last couple shows have been not about real estate, so this one's about real estate, and it's also. our good friend, pete Heim, is back in the studio to give us numbers, to crunch numbers, to decipher what in the heck is going on in this market. right, yeah, is that what you do? You have new glasses, or?

Speaker 2:

something. No, I actually have glasses.

Speaker 1:

You have glasses, so I have to stop squinting. Yeah, yeah, yeah, you should use them. The crow's feet are getting worse.

Speaker 2:

Yeah, is that what those are?

Speaker 1:

Yeah, they might be hawks feet by now. They're eagle-tongued ones.

Speaker 2:

Wild turkey feet Did you?

Speaker 1:

ever see a wild turkey's feet. They're nasty man Like my aunt in here. I dated a girl who had feet like that. One time I'll tell you what man That was over, took her socks off. I'm like, i'm out, i'm out. It was nice knowing you Exactly. They take your feet and go All right. What do you got for us, Pete? They take your feet and go All right. What do you got for us? Oh, hey ho, Let's talk some numbers.

Speaker 2:

So let's talk about numbers, like we always like to do So, brad, right before we turned this on. We always like to talk numbers because there's a lot of misinformation And I feel that, and we always talk about local numbers being hyper-local And that's the necessary thing, which is so true. But really, we'll get into the median thing. But really, what I think we should talk about today is really what is going on with buyers competing against buyers, and why and what's causing that And who's winning.

Speaker 1:

I think we're kind of winning. Do you feel like we're kind of like in a rut? right now It's not really changing, like if there for a while it seemed like we would have inventory go up and we get a little bit of relief And your buyers that were waiting for a while would get a house finally, and then it would go back down into being And it just seems like we're in this 350 to 375 listings at any given time in the county And it just sits there.

Speaker 2:

Yeah, and there's a reason for that. Remember What's the reason. Remember what it is. What's that? Over 65% of the mortgages right now have under 4% on their mortgages.

Speaker 1:

So why move?

Speaker 2:

So why move? And then there's a lot of people thinking oh, you know what, if we just renovate this thing and if we do this or do that, we're just going to stay put. However, you and I both always preach this. I think we do it almost every month. We talk about people move because they need to or they buy because they need to. Absolutely And if you don't need to right now. It's not like a secondary. Oh, let's just go ahead and sell it and see what we can do. So inventory 357.

Speaker 1:

It was yesterday 357 homes on the market in Brooks County And, like I said, it's just floating in that 350 to 375, 370 range And every day I get up and I look at it I'm thinking, ah, come on, it's like winning the lottery. I'm like, come on, let's just see 380 or 390. That would get me excited.

Speaker 2:

Yeah, no, no, no, so and it's for the reasons we just talked about. But the people who are winning? I think there's a certain demographic that's winning right now And I just did a video on this last week on downsizers. Downsizers is, out of all the years that you and I have been doing this, it's probably the number one demographic that's winning because they're the baby boomers mostly, mostly, and they're equity rich And just, for example, ok, 38.7% of people in America their houses are free and clear 38.7%. That's almost 40% where no one has a loan against their house. Wow, and those are boomers. Mostly, that's amazing. Yeah, 29.4% have more than 50%. Wow, so you're talking, almost 70% have like amazing equity, amazing equity. And those are the people that are downsizing into homes, that are competing with the first time home buyer.

Speaker 1:

Yeah, And that's what's happening. They sell theirs, they get cash.

Speaker 2:

Yeah.

Speaker 1:

They take the cash and then they compete against a first time buyer that's trying to buy something in the 250, 270 range.

Speaker 2:

I actually know somebody just like that actually Do you? Are they close by?

Speaker 1:

Yes, very close by Yes, no, but I know somebody. I mean it's hard, man, it's tough, yeah, but you have to stay in it. I mean I tell Hugo this you have to stay in it.

Speaker 2:

You have to stay in it. You're never going to get anything.

Speaker 1:

So otherwise it becomes really depressing, of course. But you'll find something, it'll happen.

Speaker 2:

It will. 74% of people have quoted that they have over $100,000 of equity And 20% say they have over $300,000 equity. That's amazing. Ok, so there's a lot of equity, lot of equity, and there's what did I say? It was 23,. The residential real estate worth net worth. Yeah, did you see what that number was? No, it was $23 trillion.

Speaker 1:

Wow $23 trillion of net worth.

Speaker 2:

I said that to my network group. I said, hey guys, guess how much I think all residential real estate in the United States, how much is it worth? You heard $1 trillion, $3 trillion. I said no, it's $23. I went wow. Because, you know what? Five years ago it probably was. Yeah, absolutely. That's incredible Think about the amount of equity that's based on these numbers. That's amazing, and so the other problem is inventory again. So in April of 2022. Yeah, in the nation. Now, this is not micro.

Speaker 1:

This is Mac, this is national.

Speaker 2:

Okay. 497 844 listings on the market in April of 2020. Say it again. What's the number? 497. Just shy of 500,000. Got it, okay, got it. April of 23, 392. Yeah, it's just right. Yep, that's, that's 100,000 less. Yeah, yeah, in the nation We still have an in 2022 was low.

Speaker 1:

Yeah, 2022 was. Yeah, i think it was like a million one or something. You're going. you're going down from what was already a low number.

Speaker 2:

Yeah, it's like it's going half half Yeah.

Speaker 1:

Yeah, you know. So, once again, you know, and I just had I was talking to Kevin Tamishanko and he'll be on the show at some point again, uh, but I was just talking to him and he was talking about with developing and he he keeps saying the big issue is, is local? local government is just really making it tough to do developments, to do well, to do, to build communities and, and you know, unless we're going to stop having children or unless we're going to close all of our borders from anybody coming in, we need housing. Yeah, you know, we have to put people somewhere. So until until the government both federal, state and local loosens up on things, yeah, you know, we're not going to have more houses. No, you know, or we got to stop people coming in then at that point, right, you know, we got to find a place to let No, we can't, You can't.

Speaker 2:

That's not what we're about, right.

Speaker 1:

You know um. You know, hugo wouldn't be here if it wasn't for us. We love you being friendly to, to immigrants and stuff. So exactly You know. So I just it's just an issue and we somehow we have to to find a way around it. Another situation that him and I have talked about apartments. You know, i think there's realtors out there that are like anti apartment new apartments going in No way. You know, i just got two new listings because of Iroquois, the, the new apartment place, going in. I have two past customers that were looking for an easier way to live on first floor, on one floor.

Speaker 2:

Oh yeah, they couldn't find the houses. You know they did their renting now and they're happy as could be.

Speaker 1:

I got two new listings. Guess what those two new listings does. Somebody else comes in that was looking for a home, so that helps the housing situation. You know it does So I think we should see more of those bigger complexes going out because it would solve part of the problem.

Speaker 2:

Oh, it totally would Give Kevin a a tip for me. I will tell him we should buy the Berkshire mall and make it.

Speaker 1:

Oh, dude, and make it what apartments that would. That would solve a lot of think about housing issues.

Speaker 2:

Oh my god, yeah, that'd be awesome.

Speaker 1:

Yeah, that would be amazing, it really would. Yeah, yeah, it'd be really cool. So anyway we'll have to. I think he's already talked about that. I'm sure he has.

Speaker 2:

Well, we're 10 steps behind.

Speaker 1:

Yeah, i was going to say, yeah, he's way ahead of us, Yeah.

Speaker 2:

But anyway, median price. Let's just talk quick about median price. It's a bad indicator of value right now. Okay, you know you, everything you read are here on this. Oh, the median price is down and all that is okay. Here's, here's why.

Speaker 1:

And median, let me see if I remember Okay, don't you throw away the top one and the bottom one, take Yep, something like that.

Speaker 2:

I'm going to give you an example. I'm never good at this. It's the top half goes away.

Speaker 1:

Yeah, the bottom half goes away, okay Yeah.

Speaker 2:

And the one that's in the middle is what your house is worth.

Speaker 1:

Okay, so that's yeah. So that's not the same as average. Yeah, it's not good.

Speaker 2:

So let's say you have, let's say you have, three coins, mm, hmm, you have a dime, and put them in order Dime, dime, nickel. Okay, take the dime away, take the nickel away. Your house is worth a dime, yeah, but that's not really right. Right, don't I have Dime, nickel, nickel.

Speaker 1:

Yeah, now we're gonna be worth a nickel away, dime away.

Speaker 2:

You're worth a nickel It's. That's how ridiculous meaning price is sounds like you're a magician.

Speaker 1:

Actually, i Would just take them all yeah. I'm taking all the change that I see.

Speaker 2:

Anyway, screw you.

Speaker 1:

I love your I love your analogy, give me the damn money. That's crazy.

Speaker 2:

But no, that's what, that's what you're hearing. And then people are Affording less, maybe because of hi just rates, and they're going down a little bit. Yeah, they're saying now, your house is gonna be worth less because of that. No no, no, that's not the way to look at pricing of a house or any property really.

Speaker 1:

So I say you know interestingly enough, is just on the piggyback. On that interesting, i'm doing a market analysis, just did one this morning for a rancher in in Shillington, you know, and what was really what? what agents and I think also sellers need to look at. They talk about there's there's marketing price And there's sales price Yep, which is what it sold for. The marketing price is what it's listed at, basically Mm-hmm. Everybody always thinks that the marketing price is It's always your, your sales price is always gonna be less than that or whatever, or that you have to go with the last sold price. Okay, so it was interesting. I'm looking at this property and in my mind I'm thinking it's worth like two forty five, two fifty. I Looked at the sales. Currently the last solds in that area same kind of house They were 260. I looked at what they were listed at 235. Both of them were listed at 235, 237. Both of them. The sold prices 260. So you know, whenever you're looking at marketer, when you're looking at prices, you can't just go by what it sold for, you have to also look what it, what was it marketed at? Because I, because I told them let's go where they did, so we get multiple offers and get 260. It's exactly because, if you go to 260, you might not get any offer, you might not get what you want. It's an interesting way Look at, but there was literally two houses, same exact price, got the same result. Yeah, it was over by 15 grand, right? amazing.

Speaker 2:

Yep, yeah, that's called. That's called unicorn pricing. Yeah, right, right, because you're pricing off of what we just came through on unicorn.

Speaker 1:

That's you know. yeah, exactly, yep, you're exactly right. So it's just amazing to watch that stuff.

Speaker 2:

So where price is going? there will be a graphic.

Speaker 1:

Yeah, i've been told yep, There will be absolutely so the estimated price there?

Speaker 2:

I mean they're saying it's gonna be negative point three, seven this year. All these experts, you know, you know you're talking to me, freddie, fluctuating all year. I don't see it here. Locally I don't see it, but maybe nationally, i don't know, because you got to take in the short points and stuff. I don't know.

Speaker 1:

I think you're. No, i think it, you're right, i think it will be. Nationally It will be point negative. Point three, seven or or, or stead or steady, because I do watch a lot. I watched the ocean city, maryland short points, just because I like that area, and their pricing is coming down, sure, absolutely. And I think it's because it's second homes and things like that I know.

Speaker 2:

Tampa is Tampa's come a lot of Florida. Florida has definitely gotten.

Speaker 1:

Their inventory is going up. So you know, the thing about Florida that's different than us is they can turn on the new construction switch. Yeah, I mean right because they, they approve stuff in like five months right So they can. They can turn on the new construction switch. All of a sudden, the builders start producing and then it, then it levels off the market and then when, when they see stuff Getting back, they turn to switch off and they wait smart. Yeah, that's the way they do it around here 18 months, two years, three years, until you get any, any inventory, millions and dollars of cost exactly.

Speaker 2:

Yeah, but I think we're Going to be four. I'm just my around here.

Speaker 1:

my prediction Yeah, i think you're about my prediction, i think so I don't know, but then nationally 1.34.

Speaker 2:

So this is something for buyers to look at, because we get the question Should we wait? Yeah, um, no, because here's the pricing 1.2, 3.4 in 2024, then 3.2 in 2025. Now these are increases, these are appreciation rates 4.1 in 226, 4.48. So four and a half in 2027.

Speaker 1:

And those are national, national predictions.

Speaker 2:

And we are usually a little higher than national.

Speaker 1:

Yeah, the national here is pretty conservative. Yep, yeah.

Speaker 2:

And then and then, what are mortgage rates doing? Well, if, what were they today, brad?

Speaker 1:

That's 7.22 is what it says, so 7.25.

Speaker 2:

So, mr and Mrs Homebuyer, they're going up.

Speaker 1:

Yeah, okay, i'm hoping they come down.

Speaker 2:

But so here's the thing about waiting. If you wait and they're for the interest rates to come down, the houses are going to go up, the price is going to go up. If you wait, if you don't wait, while the rates are this high, you're going to have, you're going to have a better opportunity while the prices are still staying somewhat, some status quo. Yeah, exactly, you know. So you got to consider which. Which poison you want to drink?

Speaker 1:

Yeah, i think the rates are going to come down, hopefully a little bit soon, i'm hoping whether all the all these experts are saying 20, 23, 3 quarters going to be 6.3.

Speaker 2:

Yeah, and then 5.97 again. That would be wonderful, right, and then 2024. It's going to be in the high fives. Yeah, i'm hoping that's what they're saying, but you know what They also said it was going to hit 3% last year and it didn't.

Speaker 1:

It's so true, yeah, they, they don't.

Speaker 2:

nobody really knows what watch what inflation is doing and the 10 year treasury. If you just watch those two things, you can predict for yourself what interest rates are going to do. Okay, so stay on top of that.

Speaker 1:

And the other thing is too you know, these are all predictions. These are all people that are much smarter than you and I. Oh yeah, oh yeah. And they are coming with these predictions, and if you watch throughout the year or throughout the time period, they almost always are adjusting them, yeah, as time goes on. So the other thing that to me, is always a clear, clear, fact based thing is the market right now, yeah right. The interest rates right now. The prices right now Yeah, those are the things we know. Yeah, we never know what's going on in front of us Exactly, never. You can predict. You could be a Harvard grad that's trying to tell us what numbers are here. Yep, yeah, it's it. You don't know. You just don't know. We weren't supposed to have rain today too. Yeah, oh, geez, exactly. Oh, my God, seriously, yeah, If we could all just be weathermen, people weathermen, that would be wonderful. I mean, seriously in the crate, that is amazing. We just do not know how to predict weather. It's it. We just don't. And we don't know how to predict interest rates either. No, and we don't know how to predict house prices either.

Speaker 2:

No, we don't.

Speaker 1:

You know what that means. We just talk. All we know is what it's doing right now. Right now, if it's, you know, it means seriously.

Speaker 2:

I'll never forget what Lou Ho Oh, wait, wait, wait I do have my eight ball here, if you want to ask Oh yeah, Shake it.

Speaker 1:

Yeah, let's just see. You want to see if I ask if the rates are going up. Let's see, this will be a good one, see if the rates are going up. We'll see. See what it says. Hold on, i have to get my glasses on for this. Okay, our rates going up. What's?

Speaker 2:

this It says ask me later.

Speaker 1:

That's a political eight ball right there, man, holy mackerel. So it said, ask me later. So we'll ask it next time and we'll see what it says, but that's about as good as it is, oh yeah, it's about it, yeah, yeah. Yeah, so what else are we?

Speaker 2:

talking about here. What other charts do you got? I'm just staying on charts for Hugo, for him to do it. You know, number one thing still American dream is owning a home. Yeah, And then it goes down from there. Able to retire, successful career, college degree goes, it goes down from there but what's interesting?

Speaker 1:

Okay, this is really interesting. If you look at the the two top ones that are on the screen, owning a home, being able to retire, those two things are pretty much hand in hand, that's it. If you own a home, you most likely will be able to retire because of why.

Speaker 2:

Because of equity because it's and it's your wealth builder.

Speaker 1:

But in that funny Hugo, those two things right there owning a home, being able to retire. So 74% say the. The American dream is obviously owning a home. The other part is being able to retire. Those things should be tied together. They should be tied together, yeah.

Speaker 2:

Yeah, i successful career.

Speaker 1:

That's before all that All that successful career, you need to buy a house too.

Speaker 2:

And college degree, obviously college degree. Yeah, but then the last thing I have here was the supply of homes and showing how low they still are. There's a graph here that shows 2017, 2018, 2019, and then 2023. Yeah, and it's half. Yeah, it's half Yeah, basically, and so you'll. You can see that graphic. It just, it's just more reinforcement of our inventory problem. Average days on the market's 18 still. So 74% of homes coming on the market are selling less than 30 days. It's, it's So what should a? buyer do So. your buyer should not wait Okay.

Speaker 1:

They should stay. What should they do to help? What can they do to make their offer the one?

Speaker 2:

Well, they should adjust their parameters a little bit. Okay, i should loosen those up. That's the first thing. Okay, maybe location, maybe change something.

Speaker 1:

So don't get so strict on your parameters. Make the net bigger. Yeah, right, yeah.

Speaker 2:

Try to stay loose on your parameters, because there might be something in there you can live with. Yeah, right, got it. That's the first tip, right, yeah. The second tip is find have your agent educate you on what the seller needs.

Speaker 1:

Yes. True, And and see if you can accommodate that one, very true, that's like the biggest thing.

Speaker 2:

Yeah, right, what will be? an example of that?

Speaker 1:

Like what the seller needs, like allowing the furniture to stay in the house.

Speaker 2:

Oh yeah, Exactly, that's a good one. We have experience with that, we have, we have experience.

Speaker 1:

I love how he just lights up when I I had I had one with a cup.

Speaker 2:

The seller needed to find a house first before they, before they settle on this one. Yeah, yeah, my buyer was willing to walk their dog and watch their kids while they're looking for homes, and that's that could be there And they want, and they want also allowing them freedom with the settlement date.

Speaker 1:

If the seller is needs freedom, the sell date, the settlement date, as a buyer you say look, you take the time you need, we're here, we're here, we're not going to rush you Now. If they say the opposite and this is the thing that I think we this is what we do And this is what I was doing for Hugo is is you do have to connect with the agent. Yeah, have a conversation, Say, okay, what is it that your seller needs? What do they need? Is it walking the dog? Is it whatever? it is? Yeah, in in this situation it was, there was a bunch of furniture left in the house. So the quiet that we said Fine, leave the furniture in the house. They didn't want to have to remove it. So the seller said that would be a bonus if you would just take the furniture. Well, that was something that we said. Yeah, we'll do that, of course. So those are things you can do.

Speaker 2:

And the last thing get your offer as close to cash as you can.

Speaker 1:

Absolutely.

Speaker 2:

And that's not. That's the hard ones.

Speaker 1:

That's the hard one.

Speaker 2:

Right, That's what appraisal gap coverage. That's maybe paying their transfer tax, Maybe paying the realtor commission. I hate to say it, but I hate to always bring a buyer into the listing contract. I don't think that's right. But you can do that And then get as close to cash as you can. That's the best thing you can say And your first time, buyers are competing against the boomers who are equity rich, and I hate to say it, but that's what's going on.

Speaker 1:

Yeah Well, hopefully that will get to a point where it starts to wind down a little bit. You know what I mean. That will give opportunity for a lot of other buyers. But don't give up.

Speaker 2:

Oh I can say don't give up, stay in it, you're going to get it, and don't wait, no, don't wait.

Speaker 1:

Yeah, there's no reason to wait. There's no reason. It's like anything.

Speaker 2:

If we thought you should wait, we would tell you It's the same thing.

Speaker 1:

I say Yeah exactly To a seller Back when the market was the other way around. They would say I'm just going to take it off the market because it's not going to sell anyway.

Speaker 2:

And.

Speaker 1:

I'd say well, guess what? I can guarantee you, guarantee you, it won't sell when it's off the market. That's a guarantee When it's on the market, you have a good chance of selling it right, right, so that's the same thing. So you've got to be in the market if you want to play this, you've got to be there. So all right, man, that was it Awesome, but we had some good topics there. Hugo got involved, so everybody needs to hope that Hugo can find a house and get things done.

Speaker 2:

all right, let's go Hugo. And once he gets a better realtor he'll be in much better shape, that's for sure.

Speaker 1:

Yeah, you need to talk around boy.

Speaker 2:

Yeah, exactly.

Speaker 1:

All right, that's it There. It is Pete Hime back here for Pete's point of view, and he's here once a month And yeah, it'll be Thursday at 7 PM. This will be out, and we look forward to seeing you next week too. All right, see you there.

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