Navigating Current Real Estate Figures, Trends and Generational Shifts

Pete Heim is back w/ Brad!!  Ever wonder how the real estate market has evolved over the decades? Worry no more, because we're unraveling the intricacies of the current real estate trends with our regular guest and industry expert, Pete Heim.  We're looking at figures that haven't been seen in over half a century: an astounding 68.7% of homeowners with mortgages have a minimum of 50% equity.  Foreclosure rates are at an all-time low of 186,000, a steep decline from the 2010 peak of 1.7 million.

But there’s more! We’re examining the profound influence of home ownership on net worth, featuring the intriguing generational differences between renters and homeowners.  Generation Z is shattering norms by immediately buying homes after leaving their parents' nest, unlike their predecessors who typically opted to rent first. It's an eye-opening discussion about the importance of financial acumen in home buying and how the rise in home ownership has impacted net worth over time.  So, gear up for an episode packed with valuable insights to help you navigate the current real estate landscape!  #GenZ #Millennials #bradweisman #peteheim #foreclosures

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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.

Transcript

Brad Weisman: 0:18

Hello, this is Brad Wiseman. You're listed to Real Estate and you we're back with one of the guests that just just won't stay away. He comes back every single month and you know we try to. And, hugo, I thought we were going to change the locks down here so that he couldn't get in. He broke in. It's amazing. You know, here we have Pete Heim in the studio, so good to see you. Don't listen to any of that stuff. I said before that was you didn't have your headphones on, did you? No, but Pete's back. We're always, you know, talking about what's going on the market. You're always keeping us up to date on what's going on, and we are starting to see some changes.

Pete Heim: 0:56

Yes, we are.

Brad Weisman: 0:56

Things are starting to change, but there's there's a lot of good in the change. I mean, I don't think there's any doom and gloom here, it's just. It's just there's good stuff. The only thing that's a little bad is the rate's going up.

Pete Heim: 1:05

That kind of sucks.

Brad Weisman: 1:06

Yeah, that is, but, but can't do anything about it. Yeah, what are you gonna do? That's right. So you had talked to me before we went live here about there's some really good numbers on the equity that we have in our homes today. Let's talk about that first. It's crazy.

Pete Heim: 1:20

I mean, this just came out not too long ago, but 68.7% of people out there that have a mortgage or have paid off their mortgage or at least have 50% equity.

Brad Weisman: 1:32

That's amazing. Is that the first time in history, or is that that has to be breaking a record?

Pete Heim: 1:36

over 50 years. So over 50 years, I guess that's as long as they've been keeping, okay, god. So yeah, I'm going to say that's the first time since we've been keeping track of that. Now, however, though, way back in the day, you'd have to pay cash for your property, usually most of the time before 20% down at least right yeah but that was before mortgages came out and all that stuff, so we're talking way long ago.

Brad Weisman: 1:54

This would be so.

Pete Heim: 1:56

that's good news, though it is so if you have a mortgage right. 30% of those have over 50.

Brad Weisman: 2:02

Did you forget your?

Pete Heim: 2:03

glasses. No actually you're squinting a lot. I didn't even see them.

Brad Weisman: 2:08

And I'm worried how I'm worried that your arms are long enough to be able to read this thing that you're having in front of you yeah, hold this for me. Yeah, not to bring it up, I was trying to be very subtle, but yeah, you're squinting like crazy. I'm like is there something in his eyes, or am I cutting an onion or something, or good, so what do you? See on your chart there, now that you can see.

Pete Heim: 2:26

Yes, now that we're here. Yeah, now that you can see, oh, there was a chart here. Mortgage homes yes, they have a mortgage. 30% of those people are over 50% equity Got it, got it. Mortgage homes with less than 50% there is 31% people, okay say that again 31% of the people that have a mortgage have less than 50%. Okay, okay, so it's about equal, got it. But at 38.7% are free and clear. That's amazing. That's over 69% people either are free and clear, no mortgage or fade off, or 50% more.

Brad Weisman: 2:57

So that's and that is a hedge against foreclosures. Yes, it is right, absolutely, because the market would have to take a dive like unbelievable dive in pricing in order for people not to be able to sell and not have and get out of their house. And then the other part of that is also we have the people that want to buy it. That's right.

Pete Heim: 3:18

Yeah, so that's a good, it's a good mix. Well, that dive you're talking about would be like 3000 homes. Come on on the market tomorrow. Yeah right, and that's unrealistic.

Brad Weisman: 3:26

No, it just wouldn't happen. But it's. That's incredible and that actually makes you feel good about the position we are in as a country for homeownership. We're in a really good position because we're not leveraged to the hill.

Pete Heim: 3:38

No, we're not.

Brad Weisman: 3:39

You know what I mean? We're actually not, which is good.

Pete Heim: 3:41

Back before 2000,. Let's see 1998. Yeah, because 1998 was the legislation that came out that everyone needed to own a home, and they were going to loan you 103% of your equity of the price, right, yeah, and that that's what bite us 10 years later.

Brad Weisman: 3:55

Yep 2008 was what happened it was 1998 when the legislation started. Yeah, Because as soon as you have any kind of movement when you own, when you don't own any of your home, basically, and the bank does, as soon as you lose your five hours of overtime, you're screwed. There it is, that's it. That's what happens. How tight, I know, and that's not like that.

Pete Heim: 4:14

No, you can't sleep, dude. No, I mean what you said about the foreclosures. That's why it's not going. Then next the one with the red bars the first six months of this year. Yeah 186,000 foreclosures. Are you ready in the United States?

Brad Weisman: 4:28

That's, that's nothing.

Pete Heim: 4:29

I mean that's compared to 1.7 million at the high in 2010.

Brad Weisman: 4:33

That's amazing 1.7 million Is that one is that 10%.

Pete Heim: 4:40

Yeah, yeah Around 10%.

Brad Weisman: 4:41

Yeah, it's exactly right, gosh. So that's good. That's good it is climbing. It did climb a tad from 2021, which was the lowest it was 65,000.

Pete Heim: 4:50

It climbed a little bit.

Brad Weisman: 4:51

You know what the news is going to say. It tripled since 20. It tripled since 2021.

Pete Heim: 4:56

Thank you for saying that, because that's what I heard.

Brad Weisman: 4:58

They will say that yes, of course it's like.

Pete Heim: 5:00

Will you stop it?

Brad Weisman: 5:01

Yeah, I mean it's wrong. It looks like we're going back to 2010. You know, that's what's going to happen. Yeah, yeah, that was my Walter Cronkite.

Pete Heim: 5:09

That was really good. You liked that. That was pretty good. That was really good.

Brad Weisman: 5:11

Tomorrow's not like a bulldog or something. I don't know what the hell that was, but yeah so but 2021 was the start of the forbearance program.

Pete Heim: 5:17

Yeah, yeah that's why there was only 65,000. That's true. That's true. Yeah right, You're exactly. It was false.

Brad Weisman: 5:23

It was false. Yeah, right exactly. I got put off a little bit so things are good, things are good, so what else? What else you got there?

Pete Heim: 5:28

Well then, in on that same vein, looking at the delinquencies, which is the next chart, where it has those that green and blue line going down, yeah, the Fannie and Freddie one. Look at those delinquencies, they're just going down through the floor. I mean, wow, in January of 22 Fannie Mae had that at 1.2 million. Right, we are down. What is that blue line?

Brad Weisman: 5:49

Oh, I came under it's under point.

Pete Heim: 5:51

It's point five and a half.

Brad Weisman: 5:53

Yeah, that's, it looks like yeah that's where it's gone from.

Pete Heim: 5:56

So, from January of 22, it's an all-time low.

Brad Weisman: 5:58

It's it means overall mortgage to the language rate match the all-time low.

Pete Heim: 6:01

But and delinquencies is where someone's three months or more behind. Right, that's what. That is right. That's amazing I mean that's less than a percent.

Brad Weisman: 6:09

Yeah, right, so things are good.

Pete Heim: 6:10

I mean, yeah, you're good.

Brad Weisman: 6:11

Yeah, let's keep it up with the good news.

Pete Heim: 6:13

Let's get the good news going. I said a million, but that's a percentage. Now I got you right. We know you man, you know what, I know what you meant.

Brad Weisman: 6:18

So let's keep going with the good news so what another thing we? I looked at the numbers today Yep, yep, for how many houses on the market? Yes, and I always use the same way that I do it. So some people say you should take new construction. I should take, I don't. So mine is always relative, though, to how I started it, To where it is right now. Okay, mm-hmm, but today was 405. Over the weekend we hit 400. If you look at my facebook page might have seen that hit 400. That was a big deal, because we hadn't seen 400 homes in the market Since, I believe, before christmas. It was 2022, it was 2022, but it was like around november.

Pete Heim: 6:52

Out november, it was november.

Brad Weisman: 6:54

Yep, and then now and out. Today, we're at 405 and what we're seeing is, instead of a blip, I think this is a trend that's actually starting to happen. We're seeing more, more coming soon and active on on on the market or active properties. That's over.

Pete Heim: 7:10

It's overdoing the pendants a pending and before it was always more pendants than there was houses coming.

Brad Weisman: 7:14

Yeah, and that was what kept us in that situation. Yeah, so that's good. So, if you're a buyer and you were waiting or you got discouraged, this might be the time now. Rates have gone up a little bit, come on back, so your buying power might have changed a little bit, right, but it shouldn't change that much. No, just get re-qualified. Yeah, exactly.

Pete Heim: 7:33

Check it out, absolutely, did you get a raise? It might have offset it. Yeah, here's the thing.

Brad Weisman: 7:36

You know we talked about this before. I'd forget if it was you and I talked about this or not, but oh, you know it was Kelly spade. She said you know what's what we need to tell our buyers if you, until you find and win a home, save more money. Okay, save more money, do what, pay off credit cards, whatever you have to do to become a better buyer. Yeah, so that if you start last month looking for homes and you lost two or three houses in that month, you should be since you didn't buy a house yet saving up more money. Because what will happen is if, if it takes five months for you to finally get a house, you're becoming a better buyer the whole time, which means your offer is better, offers better.

Pete Heim: 8:18

Especially if you're still staying with your parents. Yes, exactly, sock it away.

Brad Weisman: 8:21

That's right, sock it away, hey if you're in the basement, stay there, that's right. Just keep, just stay there, just stay there. Exactly, we're actually in the basement at the studio here, so we're gonna stay here. We're gonna stay here, but no, I just thought that Kelly had said that and I thought that was a good point.

Pete Heim: 8:37

Yeah, become a better buyer, absolutely. If you're gonna take that time off, just become a better buyer, but you know don't wait long, because which point? Let me talk about poison Remember that one do you want? You want the higher price, higher price house or higher interest rate, yep, exactly, all right, make your poison so yeah, you know.

Brad Weisman: 8:52

Also, I want to let everybody know that Hugo found a house. Yeah, hugo found a house. He's under contract, yep. And then he just went and bought a brand new car. I don't know. No, he didn't, because he listens to real estate and you, he knows that you do not go buy a new car until you settle in the house.

Pete Heim: 9:11

That's one of the 10 commandments you got that right.

Brad Weisman: 9:14

Good job, good job, hugo. He did try to kid me with that there.

Pete Heim: 9:18

He tried to. He almost had me. For a little bit he had me. It was a split.

Brad Weisman: 9:21

He's like, oh yeah, I celebrated my wife and I celebrated, brought it, bought a brand new car. And I looked at him like, oh my gosh, you didn't and he so he was kidding, he did not you should have said a boat or something.

Pete Heim: 9:30

Yeah, right.

Brad Weisman: 9:33

Well, you know it's funny, you will be living in it.

Pete Heim: 9:36

That john burpee you have in the backyard.

Brad Weisman: 9:38

Oh man, that's funny. So what else we got here? What else do you?

Pete Heim: 9:41

know what do we got oh, equity equity, equity, equity equity back to equity. Let's talk about equity because, um, the homeowners in united states, this is according to income level. Oh, this is kind of cool, right? This is really mostly renter versus homeowner. Oh, okay, and your net, well, uh, your net worth, um, if your income level is between 46,074, your, uh, if you own a house, your net worth of 191, if you rent, it's 11. Wow, okay, wow, and this is just. These are just stats.

Brad Weisman: 10:13

Yeah right, this isn't pointy. Say that again, so we understand.

Pete Heim: 10:16

Okay, if your income levels 46,000 to 74,000. Okay, okay, got it. And you own a house Yep, your net worth is $191,000. Yep, and if you're a renter?

Brad Weisman: 10:28

it's 11,000 dollars. Yeah, that's your net worth, because you have nothing, which is pretty you have. You don't have any, you have no assets.

Pete Heim: 10:33

It's the, it's the balance left on your car and their furniture.

Brad Weisman: 10:36

Yeah, yeah, it's amazing. What else is it Wow?

Pete Heim: 10:39

a couple thousand savings, Wow. And it goes up 74,000 if your income 74 to 127,000, your net worth to 61 and Interesting and if you're a renter it's 34,000.

Brad Weisman: 10:50

Isn't that incredible? And look at the income. Now the income starts going up. Yep, but you still don't have anything.

Pete Heim: 10:56

No, some of those people probably have a 401k.

Brad Weisman: 10:58

Yeah, right, they start to build some wealth.

Pete Heim: 11:00

That's right yeah and then you have an income level between 127 and 192. If you own a house is, you know, you have a net worth of 433,000 and if you're a renter you have 117. Again, the difference is 316,000 and that's more again, probably 401k or whatever else, but this is a big one. If you're over hard $192,000 income, you know, your net worth is 1.6. Yeah, $1.6 million. If you own a house and if you rent, it's 705. Amazing. And that's a go back to that first one.

Brad Weisman: 11:28

That's an $895,000, let's go back to that first one, because I want to just like, when I just say something here with it. The income level, yeah, the first one 46 to 74. Okay, and what was it? It's the, the, the own house, your own house.

Pete Heim: 11:39

That's what.

Brad Weisman: 11:39

191 Okay and then it's 11 11 if you're at okay, you know who the one night. Who's getting the 191 when you rent, right? Yeah right, I know who's landlord, yeah, the owner, because they're the owner. And guess what? And guess who's putting the money towards that one ninety one? You, the renter. Yeah, it's just funny, right, when you think you're basically you're building the wealth of somebody else? Oh, absolutely, yeah. So if you have, you have to live somewhere, right, yeah? So obviously, why not build your own wealth, yeah, instead of building somebody else?

Pete Heim: 12:06

Exactly. You know, I teach first time home buyers this philosophy, and I know you do too. Yeah, it says. Or educators yeah, sure, I tell people how they can get a tenant to pay for the kids college education. Oh, absolutely, absolutely. I train them every time.

Brad Weisman: 12:19

Yeah, and it's true, I mean you have a baby, call me.

Pete Heim: 12:22

Yeah, let's talk before the kids three.

Brad Weisman: 12:23

Yeah, and then at that point.

Pete Heim: 12:25

That's the sweet spot. Yeah, Right, yeah by the house.

Brad Weisman: 12:27

Then I coach them on what to do? Absolutely. There's your college fund, yep.

Pete Heim: 12:30

You can pay, get college, paid by a tenant, absolutely. So if you're a renter, how do you feel now? Yeah, sorry, I mean there is a purpose for renting, absolutely. It's a time in your life I don't want to slam renting because I mean I've done it.

Brad Weisman: 12:41

Yep, you've done it. I've never rented, you never have I've never, rented. I was. I was a Gen Zer before it was even popular, or whatever it is.

Pete Heim: 12:53

I think it was a Gen Z Before you knew what you were.

Brad Weisman: 12:55

I didn't know what the hell I was. That's right, no, but I did leave at home until it was 25.

Pete Heim: 13:00

So okay, so open your basement doesn't count.

Brad Weisman: 13:04

I don't know if I was smoking dope. I was probably drinking pretty heavily. I don't know if I was smoking dope, but no, when my parents were, they were nice enough to let me start my career in real estate at 22. So from 22, 25, I was building up my money and I did pay to live there and not cutting your hair. And not cutting my hair. That's right. If you guys knew Brad back then it was down, it was all the way down. We'll have to put a picture of that on the podcast of the album cover.

Pete Heim: 13:29

It was before Star Search. Yeah, it was it was unbelievable, unbelievable.

Brad Weisman: 13:33

So, yeah, so so just interesting how what's happening with that? Right? Let me go through. There was one thing that I did think was really interesting about. We just talked about Gen Z. Generation Z I always like these generation things as I'd like to see what the ages are. Yeah, yeah, generation Z is I have two of them pretty much at home nine to 24 years old, yeah, and what it's saying here is that they're actually putting, they're actually starting their financial independence sooner than the other generations by purchasing a home. They go right from their parents. When you call a basement, that's the term everybody uses. They come from their parents' home and they're going right into purchasing instead of renting. Boy, that's cool, it's really cool, yeah, and I think that's another, that's probably another factor of driving up cost of housing. I agree, because if they're not staying at home as long as the millennials did and if they're going right from living at home to purchasing, that creates an issue for housing Right.

Pete Heim: 14:33

Think about it Right Creates an issue. Well, that millennial generation where I think a little more cautious and a little bit more calculating with saving enough money to do this and when you're young it takes a while yeah, it does, absolutely. I think the millennials came into it like around the 30 mark, where they were like 30 and go. You know what I got to do this? That's about right, Because you know they're seeing the stats, they're seeing the gaining wealth thing and where the new generation now is seeing it firsthand, Absolutely, and they're going. What do I got to do to buy houses?

Brad Weisman: 15:03

Well, they're also seeing all over it. They're seeing increases go crazy.

Pete Heim: 15:06

Yes, exactly, think about it.

Brad Weisman: 15:07

Like the millennials didn't see that happening. They saw maybe a 4% appreciation every year. Big deal. Why would I get involved in this? It's not really doing it in this morning, but now you're seeing 10, 15, 20% or 10% at least. They grow Well. It's 56% over five years. That's what I'm saying. So they're well and that's what they're seeing. Because they turned 25 years ago or 19. So they're seeing this growth and going. Holy crap, man, I need to jump in on this they're the unicorns man.

Pete Heim: 15:34

They saw the unicorn years you always see unicorns.

Brad Weisman: 15:36

There's a lot of times you bring up unicorns. There goes one Exactly, yeah, but no Speaking of smoking things. Geez, he's always talking about unicorns.

Pete Heim: 15:44

Permanent damage?

Brad Weisman: 15:45

Yeah, I guess so I guess so. So what else do you got? Anything else?

Pete Heim: 15:49

Well, you know and the other two reasons why sellers are maybe hesitant to sell their house and they're fearful on two things, and I think one of them is interest rates, and they don't want to move because they want to get rid of their 3% rate and then get into a 7% rate. But waiting might hurt you on the price side. Yeah, so I think it's the same thing as where some buyers are hesitant to get into the market. Some sellers are scared about selling this sweet spot for the equity, though we're not sure how long this is going to last. We're slowing down appreciation-wise.

Brad Weisman: 16:19

Oh, absolutely.

Pete Heim: 16:21

So, sellers, we're not sure how long this honeymoon's going to be, yet it's changing.

Brad Weisman: 16:26

It's changing. It's slowing down, it's definitely slowing down.

Pete Heim: 16:28

It's increasingly slower. It's increasing slower, slowerly, more slow.

Brad Weisman: 16:35

The rate of appreciation is slowing down, but it's appreciating, but it's still going, but slowly, yeah, slowly.

Pete Heim: 16:41

And the other thing is a fear of not knowing where they're going to go, if it's not going into an institution. If you're not going into an institution, then where am I going? Well, hey, there's a lot of other options out there on new construction. And have you considered a condo?

Brad Weisman: 16:56

maybe I have two people that are in that age group of, let's just say, late 60s, I'd say early 70s, and they no longer need the two-story home or need the steps and stuff. Both of them went into a first floor rental. Yeah, you know what I mean. So that's where that's another option.

Pete Heim: 17:15

And I think actually that's a good option. You close the door, it's exactly right. You got the grassy ticker of everything, yeah, and it's like this guy comes and fixes your faucet.

Brad Weisman: 17:22

You can budget All that stuff, yeah, no, it's good. Anything else you can think of, because we got to wrap this up.

Pete Heim: 17:27

Oh, I see.

Brad Weisman: 17:27

Yeah, believe it or not, man, we must have been talking about a lot of stuff that I don't do at real estate. I'm thinking, I don't know, hugo bought a car. I mean all kinds of stuff went on this show, but no. So thanks for the information. Thanks, man, appreciate you. If there's anything else you can think of, let me know. We'll be on again next month. Next month, all right, sounds great. Hugo, you're good. I'm good. You're good. You'll be getting in that house soon, buddy.

Pete Heim: 17:48

That's right. I'm excited for you. I'm excited for you, man. It's awesome. Thank you, that's awesome.

Brad Weisman: 17:53

All right, there you have it. Hugo bought a house. Pete is seeing unicorns everywhere. I'm not sure what that's about, and I guess I was smoking to open the basement when I was younger. I don't know. That's pretty much the wrap up of this show. All right, that's about it. There you have it. We'll see you next Thursday at 7 PM. All right, take it easy.