Episode 7: A Realtor's Forecasting Of The Real Estate Market: Time to Buy or Sell?

Contact Alan:
Website:    Alansellscthomes.com
Email:   alan.hill@exprealty.com

This is a podcast for those who love to talk common sense about everyday issues. You will listen to a variety of guests that share common sense ideas through their life experiences by sharing what they learned. For any comments, questions or suggestions for future topics, please contact the show at: stand4commonsense@outlook.com
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Transcript

MizzyM: 0:00

welcome to another episode of Podcast From the Edge Talking Common Sense. This is Manju, your host, and I thank you once again for listening in for today's podcast. You'll be hearing from Alan, who's a very well experienced realtor from the New England area, and boy has he seen a lot throughout the years in the real estate market. So sit back and enjoy the show. Hi Alan, how are you?

Alan: 0:31

Hi, Manju. Very well, how about yourself?

MizzyM: 0:33

I'm good. Thank you very much for participating in this interview. I appreciate that you took the time out of your busy schedule to do this.

Alan: 0:44

Thanks for, thanks for asking me to do it. I appreciate it.

MizzyM: 0:47

Okay. All right, so let's get started. Um, what was the real estate market like during Covid?

Alan: 0:55

Well, you know, it's funny you ask, um, COVID, let's see, started. It would be three years in, uh, probably January or February it started. And let me bring you back to Covid first hit. New York City and Connecticut hasn't rebounded from the 2008, um, down trend of real estate cuz our prices have never came up to the 2008 price. Up until the Covid, until Covid came.

MizzyM: 1:27

Wow. Now, why did that happen?

Alan: 1:29

Basically, because, uh, we had 300,000 people leave New York City. We, we are all caught in our homes, and people found out that they didn't have to live in New York City to still work in New York City. So I think you'll find that many, many people left now, not all of them came to Connecticut. Some of them went to Rhode Island, some of them went to New York State. Uh, but there was 300,000 people that that left New York City when Covid started. So once that started, it, it caused a trend in the market. Uh, let's see. Let me give you some numbers back in 2000 and. Uh, our Hartford County, the average sale of a home for a three bedroom home was 246,000, plus or minus of 2000. Okay. In 2022, it went up to 313,000. Now that's Hartford County. Okay. That's an increase of around 27%. Hmm. Now, Litchfield County, which is a little closer to New York City, went up a little higher. Back 2020, New York City had a a three, excuse me. Uh, Litchfield County had a $332,000 price tag on a three, uh, three bedroom home. The average price in 2022, it went up to 393,000. That's the price today. Wow. So that's a 29. And the reason it's 29%, I think because a lot more people came from New York City, uh, to Litchfield County versus Hartford County. So that's the extra 2%. But in essence, it's really saved our real estate industry because Connecticut was really suffering prior to the pandemic. Now let me just give you a, a rundown. Let's see, um, what's happened since. Our prices right now are, let's see, the market right now is a market that is a seller's market. Uh, we have, um, probably our days on our, our days on inventory. Okay. So how many days does it take to sell a home? Days on market? At one point in time, we were probably five or six days on market. The average home would. Right now we're probably up to 20 or 30 days on market. So it just tells you the market has slowed down a little bit since that period. Uh, but we are, right now, we're in a, uh, we're still in a seller's market because it's such a low inventory. Right. You know what, um, what, um, precipitates a buyer's market versus a seller's?

MizzyM: 4:35

Um, is it the interest rate?

Alan: 4:37

No. The buyers versus seller's market is, is, is how many homes, uh, supply are on demand. So I'll give you the example of that. Um, so say Hartford County. Hartford County had right now has, I think 86 68 homes for sale right now on the market. That's Hartford Co. I mean, excuse me, Hartford itself, the city of. City of Hartford to this date for this year, has sold 400 for, for a year period. Has sold 411 homes. Now, to be in a buyer's market or a seller's market, a buyer's market is anything over six months supply of inventory. So you can see that if you cut that number in half 411, that's 205 and a. Right. That would make it, uh, a buyer buyer's market. But we only get 68, so that makes it a seller's market still. Okay. You understand what I'm saying? Yes. Yeah. So that's really what's going on and that's what happens. Uh, if we get flooded, the market gets flooded with many, many homes, uh, say their foreclosure homes. Uh, what's gonna happen is that's gonna drop the price that's gonna create a buyer's market. So if. Let's say we have, uh, 250 homes in Hartford for sale. That would make it a buyer's market if we had 400 homes for sale at this period in time on the market. Okay? It doesn't have to be for a year supply. It just at one point in time, it's going to, it's going to give you a buyer's market that would be an extreme buyer's market that would be crazy for, for the buyers. So the buyers right now are at a disadvantage to buying the home because. You know, there's not a, there's not that many homes out there, so the sellers kind of dictate the price. Okay. So you tell me on those things.

MizzyM: 6:35

Yeah. So that would lead me to a question to ask you then. Um, how would the mortgage rates currently affect the market?

Alan: 6:46

Well, that all goes hand in hand. The mortgage rates, uh, the days on inventory, that all goes hand in. Um, because obviously more homes on the market, you're gonna have more to choose from. Prices probably will drop prices. With the mortgage rates being higher now in the sixes and sevens, uh, it's changes on a daily basis, believe it or not, the mortgage rate, and there's several different mortgages out there that you can get. Now, if you're in the military, you can get a mortgage, which they call a VA loan, and that VA loan. 0%. Um, you don't have to put any money down. So when you write a contract, normally to, to start a contract, you have to put money down at least probably about $500. Then you can get that money back if you'd like at closing. Uh, but not everybody wants to do it that way. Some people wanna wanna put more money down so they don't have as high payment. Uh, other people wanna play with the bank's money. Um, there's another loan out there called a, uh, uh, sda, A. And that's usually done in rural areas, areas. And that's similar to, to the VA loan. The loan is no money down as well. And it's, you know, similar to the same kind of loan, but it's in a rural area. Like you couldn't get a VA loan in the center of park. You'd have to be like on the outskirts. And the banks all have this kind of information on hand. So if you're wondering what you have, are you eligible for a VA loan? Are you eligible? Uh, U S D A loan. Then there are other loans like FHA loans and, uh, there's other special loans out there, uh, variable rate loans that seems to be right now in the fives, the variable rate rate loans for, for people to go that route because, you know, who knows the, the interest rates may come back down. It's a very, very hard thing to call. But the, uh, prior to, oh, go ahead. Prior to, Prior to the pandemic, did you wanna say something or did I jump in?

MizzyM: 8:49

No, no, no. Go ahead. Just keep, uh, you can keep going.

Alan: 8:52

Yeah. Prior to the pandemic, the prices of homes, obviously, um, we thought when, when the market, when COA came in, that we were, that things were gonna, were gonna drop in price, but it far, it didn't do that at all. It went, went up close to 30, 30%, something like that. From the time the Covid opened up to the time to today, homes have gone up that much in price. So with that being said, it's, that's putting a lot of people out of buying a home because prices have gone so high. So, and now you're, you're looking at it, at the interest rates being high. That's how putting people out of buying homes. But there's still people out there looking to buy right now. There are. Probably December is one of the highest, believe it or not. It's kind of crazy. I looked at some numbers earlier and December's mar market is kind of crazy cuz a lot of people buy homes in December. You would think, well, they would be concentrate mostly on at Christmas and buying Christmas presents. But with that being said, I don't think, um, that's happened. I think what's happening is December people are looking that things are gonna change, you know, and, and it's just going. Change us all. All the whole world is gonna change. And every market, every person, or every market in Connecticut is different. Every little town has different, uh, different things that they, you know, the price of their home. And, and what drives a price up in a home is, is, is supplying demand for one, for two. If you're in an area that has a really good school system that's gonna bring in. If you an area that's not in a really good school system, that's gonna drive the price down a little bit or maybe a lot depending on what happens. Does that answer some of your questions?

MizzyM: 10:47

Yeah, definitely. Um, what I was thinking when you were talking about the, the variable mortgage rate, That's usually the most popular cuz they're like at 5% right now. Yeah. Um, but they're, I mean, what I have always been told, especially when, you know, we bought our home is, uh, the fixed rates are, the fixed mortgage rates are always better because they're more stable. You don't know what the variable rate will be. It could be 5% and then it can go really up to seven. 8% or it can even be lower than 5%. So what would you suggest to a, um, new home buyer?

Alan: 11:31

I personally would suggest do not go with a variable rate loan, but there are lenders out there that say, oh yeah, we, you, the prices could come down. But I've been in, let's see, since the seventies, if you knew the market in the seventies, mortgage rates were up to 13, 15. Believe it or not, but obviously homes weren't that expensive back then. Oh yeah. My first, yeah, my first home I paid 34,000 for, so it gives you an idea. I bought a multi-family home and it, it got me into a, to buying a home. I mean, we had somebody helping us with the rent. It's a little more difficult dealing with, with renters, but it puts those people that maybe can't quite afford a home, the ability to buy a home, you know what I'm saying? Right. So that's pretty much with that. Um, any other specific questions that you might have?

MizzyM: 12:23

Yeah, and the other one that I was, um, thinking about is what is the difference now in the market between new home sales and existing home sales? Like, are people, um, you know, using, uh, their money to invest in building new homes or would they prefer to buy an existing.

Alan: 12:48

Well, gimme, let me give you my thoughts on that. Uh, to buy a new home is usually three, $400 a square foot to buy a new home. Well, to buy a used home, it can run anywheres from 150 to $250 a square foot. So there are certain people that have the ability to buy a new home, to build something that, that is exactly they way they want it. They don't have to settle for, you know, having a three car garage. Maybe they want it a three car garage and it only has a two car. Or, or the basement was remodeled, or things of that nature. Um, that's, that's the advantage of buying a home that you build on your own. You can add all those things prior to building it. Uh, if you, anybody's interested in doing any of that, I, I work with some builders that, that do it on a daily basis and I can help them with that. You know, get a home, a brand new home, or in the same token, I can help them get a used home. But right now, the market, like I say, is, is. It's extremely, I've never seen a market like this back during the pandemic of 1918. Obviously I wasn't around then, so I can't comment on what happened in the real estate market. But, uh, it's, um, it's, it's a crazy market. It's something I've never seen before in my whole life. Uh, I, like I said, I thought that what was gonna happen during the pandemic, there were people, a lot of people would lose their jobs because they weren't paying their mortgage but instead the government stopped that from happening and, and kudos to the government, they, a lot of people made more money not working or outta work or working from home than they did before. So it caused a, you know, it was a little tough situation for a lot of people to go back to work cuz they had it great. They didn't really have to really do too much and they were still paying their bills so, Things are changing now, and we're getting, I, there's a possibility that we could go into that market that I originally spoke about while foreclosures and we could get, uh, a huge amount of foreclosures in the market and that would definitely impact the, the market as far as the price of your home. It would bring it down. Mm-hmm. and every, every town is different. Every town. Some towns in Connecticut, we probably 35, 40% increase on their price of their. And other towns, maybe it was only 15, 20%, but for overall, the increase in Connecticut was like 28 per 28%, something like that. 28, 20 9%, uh, value increase. So that's something that that's really helped the sellers, not the buyers, but the sellers. So if you're thinking about selling your home at this point in time, uh, now would be a good time. Although we have noticed, like I say, a lot of. things have dropped a little bit in price from what they had six months ago, but it's still a strong market. It's still, houses are still selling. People are still looking to buy. The people that are out there right now are, that are looking to buy are very serious buyers because, you know, most people like wanna shop to buy a home and. Spring or, or even summer or even the fall. But now we're into December and we're getting close to winter and houses still sell. People keep saying, oh, we don't sell our house during the wintertime, but that's not true. December is a very, very good month in sales. Uh, and then January and February things slow down a little bit, but there are people out there that are really, really interested in selling at that point in time. They may be moving outta state. They may have taken a job in California. They may have done something and that they have to sell. Uh, that's why you see the huge influx coming first part of the year, like in the march where they call the spring market. People are all ready to go. They're gonna, they've already talked about selling their house. You wanna be the first person on the market to sell your home, so it'd be best to get on the market January, February versus, you know, because you're gonna have less competition out there for people that are actually putting their houses on the. You know what I'm saying?

MizzyM: 16:58

Yeah, yeah, exactly. Um, in terms of what you were saying about people that want to build their homes, um, that kind of um, leads me to the next question. So let's say you do choose to build a new home. Um, what is the wait list? Or is there even any longer a wait list for materials like wood or lumber? Um, windows. You know, um, appliances,

Alan: 17:28

well, let me give you an example. I, I own a multifamily house myself, and I have a boiler down right now in, in my house. I, I have three boilers in the house. It's a four family house and a boiler. I can't get parts for the boiler. I've been waiting for like six weeks, my god, one part for the boiler. Uh, so I think that's a lot to do with the supply. Uh, the price of materials have dropped a little bit since the pandemic. Uh, they've come down, but you know how things say they're gonna come down and they don't. And then now gas prices are at all time high, right? So how can it come down when those things are really at an all time high? So we need to do something, we need to, to change that. We either need to change who's, who's calling the shots, or we need to do something to make things better for. Right. Americans out there looking to better ourselves and buy our first home. Okay. And alongside, um, what you were saying about the changing demographics, how a lot of people left New York City, and you're right, a lot of people did move to Connecticut, um, and other areas, but one of the states that really benefited from New Yorkers moving was the state of Florida. and I don't know, um, you know how the prices in those homes, um, I know they suck, skyrocketed for some time, and I don't know if the prices are still high. Maybe it came down a little bit, but you know, maybe alongside the hurricane that just happened, um, I'm not sure. But that leads me to the next question for you.

MizzyM: 19:11

What states would be the best states now to move to if you were looking to move?

Alan: 19:17

Well, there's a lot of different scenarios. I mean, you, you could, you could say, I wanna go to California because I like the weather. Uh, but then I notice there's a lot of crime out there in California, and there's more people leaving California than that are actually going to California. Um, years ago, it used to be just the opposite. People were, were were coming to California in drones. They didn't have enough housing. Now things have slipped. or you could go to a state like Texas. Um, I sold a home earlier in the year to a, a guy down to the southern part of the state who was moving to Texas, and he, he sold his ho house like, uh, $50,000 over asking price, which is, which is a market that we've never seen before. Uh, there was such competition out there. People were bidding up. Today things aren't not quite as as bad, but there's, you know, instead of getting 10 offers up, $50,000 over asking, uh, there there's only a couple offers, uh, and longer days on market. We've mentioned that earlier days on market means how many days the property stays on the market before it actually goes under contract. Not not where the property sells, cuz usually it's around 45 days unless you're a cash buyer to buy a home. To actually to, to get the keys and get into the home. It usually takes around 45 days. So it's days on market. It's based, based on when the property goes under contract. Uh, let's see some other, other, uh, places around. Um, you know, you can get out into Idaho and Utah and things in that area. Prices are a little lower in price, uh, than they are around here. You get into some of the big, bigger cities like Philadelphia. Prices are high there. Uh, I, I have a friend who is a realtor down in Florida, and he, I was talking to him earlier in the day today, and he said, prices, prices have dropped a little bit in Florida, but uh, still, it's still a seller's market. Uh, it's not, you know, the days on market were like, like I said, in Connecticut, five days his were about the same, and now they're down to 31 days on market. So that means 31. Before the property goes under contract on an average home, I mean, you're gonna get some that go under contract quickly. Others that will go under contract take longer. I presently have a home up in an end field right now for sale. It's an old home. And the property, uh, I knew it was gonna be a difficult property to sell because it needs a lot of work. Um, and you know, it's people, people will blame the realtor if the house doesn't sell well, if the realtor could be the best realtor. Around in, in the country. And if you don't have the right price on the home, the best realtor in the world is not gonna sell your house. Doesn't matter, no matter what marketing, he does not gonna sell it. Um, I'm, I'm an advocate of doing videos and showing people in town, um, you know, what the house looks like, and doing a video. I've been doing that for a long time, and that's a little different, little extra that a lot of realtors don't. Just do videos and, and actually go around and show, show different videos that on different sites, you know, what homes look like.

MizzyM: 22:39

Right. Well, I was also reading, um, for example, um, the City of Miami has seen the biggest price increase in their real estate market values. And I think, um, places like Washington, DC or. You know, like Denver, Colorado, like those types of places have really seen the lowest. Um, do you, do you know why?

Alan: 23:09

I, I don't, that's a good question. I don't know why Washington DC but I mean, I could get back to you in a future time. We could talk about it in another time. Right. Talk the why Washington DC and Denver, Colorado. Um, they may have had, you know, a lot more houses on the. Um, I do have a friend that came from that area, the one I just spoke about, who went from, he lived in, uh, right on the border of, uh, Maryland, which is, was only like a half an hour to Washington dc I have a son that lives in Maryland, and I know in Maryland the prices are, are, are going crazy. I mean, you were looking at a house, 900 to a million dollars and it was very, very expensive and it was no more, you know, it was a three four bedroom house. It, it's, it's crazy how the mark has exploded all around the country and to tell you why Washington DC has not hit the same mark as, I don't know that answer, but I, I'm more than happy to get back to you.

MizzyM: 24:06

Right, right. Okay. That would be great. Um, and then is there anything else that you see towards next year in terms of, um, real estate price?

Alan: 24:20

You know, I guess it's hard to say because I was the one that projected earlier in the pandemic that, that what was gonna happen was we were gonna, we were gonna have a lot of foreclosures and that didn't happen. I think a lot has a, uh, is pending what the government does, the interest rates. I mean, if our interest rates search to 13, 14, 15%, that's really gonna take a hit on the real estate market cuz people won't be able to afford to live in those. Right. Right now it's in the sevens. It could double, uh, between now and the spring it's only, only, there's only a few people that know and that's God

MizzyM: 24:56

Right, right. All know And the Federal Reserve.

Alan: 25:02

Yes. So, I mean, they're trying to bring the inflation down and I understand that bringing by, by raising the interest rates, it brings the inflation down. But I don't think it's done too much thus far, but I might.

MizzyM: 25:16

Okay. And what piece of advice would you give someone who's looking to, um, not sell but buy a home, especially, um, someone you know from a, um, a younger age bracket.

Alan: 25:32

I mean, you know, what, what would you suggest to them? If you ask me that question two years ago, I would've said, don't buy a home right away, because prices are gonna come down. And I was totally. Uh, the prices of homes could go up even more, which it's, it's hard. You people buy homes for one reason only. They don't buy 'em for investments. They invite them. They buy a home to live in, to be able to raise their children in. That's what people do. Uh, if you just happen to buy a home in the right market, like I've done, I bought, I was fortunate. I bought all my homes in the right market, but I'm sure there's people out there that bought 'em. Real estate goes up and real estate goes down. It's a trend that's happened for hundreds of years where it goes up and down, up and down. So, um, I, I don't think you can really worry about now is now the time to buy a home. I think if it's, if it feels right for you, you're paying rent. Because think about it, if you're paying rent now and you're paying, you know, $2,000 a month for rent, and that $2,000 a month for rent is going to the landlord. You don't get any equity from the house that you're living in. You're not getting anything out of it. Where if you were to buy a home and for $2,000 a month, you could buy a pretty substantial home, or you can buy one for even less than that. Uh, but if you're interested in buying a home or if you need any help, I'd be more than happy to help you out. Uh, I'm probably, I probably do less sales. The top real estate agents out there, but I kind of work for my clients. I don't, I don't, it doesn't matter. I, I want my clients to be happy, you know, if I sell them a house and then move on and they don't, it's not the right house, I would feel bad. So, uh, I work hard for every single one of my clients that are out there. I try to give them what their best, what, what they can get best outta the house and, and my thoughts. Uh, years ago I used to work for a builder, so I have some expertise in that category. What to look for. Um, but I never, I always had somebody get a home inspection, because you're never a top notch professional and know everything about everything, plumbing, electrical, construction, the whole nine yards. You're not gonna know it all. So that's why I advocate to get a home inspector to look at the home. So, you know, when you move into that home, you know exactly what needs to be done to it and what, you know, what it's all about. Right. So I hope I've been informative today and you know, if people have more questions in regards to real estate, please reach out to me and, uh, I'd be more than happy to answer any question you may have.

MizzyM: 28:17

Great. That's really good. I'm gonna link your, um, Email and your, um, website if you have one, um, you know, on the page. So that way people can be able to, uh, contact you about any questions that they have or if they're in the market to buy or to sell that, that would be very, um, You know, I, I'd be very grateful for that. Um, okay. So as we're winding down this interview, um, I just wanted to ask quickly, um, about the whole BlackRock company, um, how a large entity such as BlackRock, you know, they have been buy. Homes above market price and above the asking price, sometimes even a hundred thousand dollars or more. Um, just so that they could own that home and then be able to rent it. So basically what they're doing is creating a generation of people who can't afford to buy a home. Themselves, but they'll be able to rent. So you're basically creating a generation of renters. Um, do you have any thoughts about that? Yeah,

Alan: 29:37

I've heard about that company and from what I looked, looked into that company most of the time. Now, depending on obviously what homes they buy, they want to buy homes that, um, probably like four, four family homes. I've had some people buy those investors and you can make a good buck as an I. Uh, if you're charging, you know, $2,000 a, a month for rent, it's, you know, you, you run the numbers at, at a four family house and what it's gonna cost you to buy that home. But most of the time they buy the home undervalue. I've had a lot of, um, I have this other home that I have for, had for sale in a certain town in Connecticut. Um, that was a four a three family. And I got a lot of calls from investors looking to buy it from all over the state. It didn't matter where they, where they were, they were buying up properties all over the state and renting them out because you can make a good buck renting a home. Um, they, what they do is they rehab the home if it needed a lot of rehab, put granite countertops in. And a lot of people say, well, why would you wanna put granite countertops in if you're renting a home? Well, basical. Uh, they wanna get topnotch renters. I mean, that's where you're gonna get the most money is from a topnotch renter. So why not put granite con tops in? So I took that advice from a, a person who was looking to, to buy this home, and I said, you know, I'm gonna do that with my home, is I'm gonna put, you know, much better quality things in there, things that are gonna hold up. Because if you think about it, if you put in, you know, a linoleum or, or a floor, or you put in a, a countertop, it's. Not granite. It's a lower grade product. You're gonna get, uh, less wear you're gonna get, it's gonna wear out earlier. Uh, the only thing that really can go wrong with granite is it can crack. So I think you're gonna get it a lot longer lasting, uh, product with a granite countertop than you would something else. The same with wood floors. Wood floors are the number one thing in your. That you get a hundred percent value when you go to sell it. Now, there's not many things that get that. You're like, you do a remodel in your kitchen, uh, you're gonna get like 75% return. So a lot of people think, well, before we sell our house, we should re, we should remodel the kitchen. Well, no, I mean, depending the market, the market has a big difference in what, what to do. Uh, you, you wanna, you don't need to remodel the kitchen cuz you're only gonna get 75% back that you put. So why not put it on the market the way it is? Clean it up, make it look really nice, make it inviting. Cook an apple pie. When people come over to look at the house, make it very appealing. Make it something that people really resonate to cuz it's their home where they wanna live. Right.

MizzyM: 32:35

Well, thank you again so much, um, Alan for coming on and I will definitely post up your information that you can give me to the show's, um, website. And, um, before I let you go, I just wanted to ask, is there one piece of common sense that you would like to leave the audience? From all your experiences, um, in your years as a realtor?

Alan: 33:04

Yes. I spoke about this just a few minutes ago. In the common, common sense are don't buy a house because, because you want it for an investment purpose, unless you're an investor. If you're somebody that's an investor, that's a different story, but you wanna live in that house and bring your children up. You wanna have a great. if you worry about making money on that house, I mean, you could buy a house that needed some rehab work and then do some work on it yourself, because that's the best way to get money outta your house. Many of my houses that I bought, I've done a lot of my own work on, on the houses, so I've, I've brought my value up from doing my own work. But if you're not the type of candy person that can do all that, or you don't have the time to do it, just enjoy your house. Buy a house, enjoy it, make it, make it your. And that's the advice I really want to give you.

MizzyM: 33:55

Oh, well, thank you so much and um, hopefully we'll be in touch soon. I know I'll be seeing you, um, probably in a week or so, I think. Um, but anyway, All right. Well, thank you so much. All right. Mind you. Thank you. Okay then. Bye