Real Estate Happy Hour Show - Episode 40

Watch the Real Estate Happy Hour Show - Episode 40

Baby it’s Cold Outside” so it’s time to warm your brains up with The Real Estate Happy Hour Happy Hour Show. On today’s show Collier Swecker & David Arnette are talking about the 4 Things Buyers and Sellers Should Watch For in 2019 | an Update on December 2018 Mortgage Rates  | Why Pay Day Loans are Awful | and Stock Market Update. Join us every Thursday at 4pm for the live show on Facebook Live or watch or listen to the Real Estate Happy Hour on replay or podcast.

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Collier: All right! It’s Thursday, it’s 4 o’ clock here in Alabama! It’s time for the Real Estate Happy Hour Show!

David: We’re here! We’re back on again! It’s Thursday.

Collier: And you can’t touch this!

David: You can’t touch this! This a special song for a friend of mine here.

Collier: What are you, Casey Kasem?

David: Oh! I just missed it, it’s Tammy time. Hola!
Collier: Oh, Tammy time.

David: Tammy Hallman is funny, so she’ll get it.

Collier: It’s Tammy time!

David: Yeah.

Collier:  Go!

David: MC Hammer, everybody loves little MC Hammer huh?

Collier: Hey who doesn’t love MC Hammer?

David: You can’t touch this!

Collier: I mean, you wear pants still like him.

David: You can’t touch this!

Collier: It’s Tammy time!

David: Oh you gotta love it!

Collier: Who doesn’t love it!?

David: Fasties on, cares on.

Collier: The birthday girl!

David: Yep, that’s right!

Collier: Carin Charles, she is 48 today so good to, good to know that,

David: You didn’t, she’s not gonna appreciate that, she’s 38, 38.

Collier: Is she? Who knew right? But anyway hey, who doesn’t love a little MC Hammer?

David: who doesn’t love a little MC Hammer? Kari’s gonna have a tough time with that one tomorrow at the office.

Collier: Absolutely! Hey there’s the King of old new homes Bob Shultz, how are ya? Hope you’re doing well, one of the best trainers in all of North America for new homes sales Bob Shultz, good to see ya man, one of the best programs I ever went through.

David: Let’s get back on here live, we’re gonna dial in see what’s going on all right!

Collier: All right, you ready to rock n’ roll man?

David: Yeah so today we’ve got, I was a little under the weather last week, just had a bad attitude I’m just kidding.

Collier: (Laughter), bad attitude.

David: Hey, he was outta town too so I was like well you know what, he was rocking from Key West without having anything to worry about.

Collier: Yeah I, I, I, I, I was sick of having too much fun.

David: Sick of having fun?

Collier: Not really.

David: Yeah, no you.

Collier: I was trying to make, make a little pun there but it didn’t work.

David: But man, we’ve got some good stuff, we’ve got some mortgage stuff, we’ve got a little.

Collier: It’s gonna take time.

David: A little tip on credit that came up this week so, I just I like talking about stuff that happens right now, we’ve got some trends, home buyers and sellers talking a bit about the market, it is December, it is cold outside.

Collier: And I still haven’t bought a single gift.

David: So we’re rolling!

Collier: Yeah, yeah.

David: (Laughter).

Collier: Well you know, the sad part is my wife wants a new house right?

David: Oh, that’d be.

Collier: Yeah but.

David: That’s just one big gift.

Collier: But unfortunately, you’re my lender and, and I don’t wanna pay off your mortgage you know, I would hurt your feelings if I paid it off you know?

David: Oh yeah.

Collier: I mean so, I can’t do it.

David: I’ll just get you a new one.

Collier: That’s right, that’s right, don’t tell her that!

David: You know what, you know if you’re ever having a tough day.

Collier: Right.

David: What always makes you feel better refinance, always.

Collier: That’s right, that’s right no, no, I did and you know it’s funny we stepped down as interest rates came down? I started with a thirty 1 payment, with a 20 same payment, 15 year same payment, it was incredible!

David: Now it is funny, benching all night did have this joke years ago and obviously, not doing a whole lot of refinance right now but, we say it as I will.

Collier: Oh yeah.

David: If you wanna make yourself feel better just refinance.

Collier: Hey, just yeah it’ll make you feel better.

David: Anyway, we’re having all kinds of people, we’ve got David Rocker, good to see ya buddy.

Collier: Mike Hulen in the house.

David: Yes!

Collier: Anyway you know it’s funny the other night we were watching, before we get in real estate.

David: Interesting huh?

Collier: Everybody knows we, we, we’re kinda full of just random facts here at this top of the show, but watching a, a, I had it curious, Julia our 9 year old loves that show “The Greatest Showman”.

David: Yes.

Collier: And so you know of course, the eternal pessimist that I am about movies, are they true or are they not true, I start, I said hey Imma, Imma sit here and I’m gonna watch a thing on P.T. Barnum and what was fascinating was a ton of the sayings that we have in our culture today. (Laughter), who knew? They came straight from P.T. Barnum and I wanna share ‘em with ya a little bit.

David: And that right about what time was this? What year?

Collier: Mid-1800s.

David: Mid-1800s ok.

Collier: All right so, so, so.

David: Circus time.

Collier: It’s not, it’s not, I, I guess growing up I thought he was still alive you know? ‘Cause obviously they’re on tour right?

David: It’s Barnum Brothers Ringlin’ Circus right?  

Collier: Ringlin’ brother, Barnum & Bailey.

David: Yep, yeah, yeah, yeah.

Collier: All right, yep.

David: P.T. Barnum.

Collier: All right anyway, the term “jumbo”, jumbo mortgage, jumbo shrimp, just the term “jumbo”.

David: Yeah.

Collier: Derived out of he had an elephant named Jumbo the Elephant.

David: Jumbo the Elephant, so everything oversized.

Collier: It was oversized.

David: Became jumbo.

Collier: And so it became jumbo (in unison with David).

David: Nice!

Collier: The term, the next one was the term “hold your horses” came from P.T. Barnum! When he, when he would be going through obviously in the mid-1800s you didn’t have David, if you see David on 280 he’s doing you know, he’s doing this all the way down, that’s not what was happening.

David: It’s traffic patterns, that’s all.

Collier: Yep, yep, you’re gonna fall into traffic but anyway, basically horses and buggies where in the way so.

David: Right and he’s coming through on elephants right?

Collier: With elephants they’re parading through the streets.

David: So, so, so hold your horses I’m coming through.

Collier: Hold your horses, pretty fascinating huh?

David: Yeah, pretty good.

Collier: Next one “throwing their hat in the ring”, we hear it all around election time and that’s exactly what happened at one of the circuses!

David: Somebody threw their hat in the ring.

Collier: A politician was having so much fun.

David: Yeah and, and you think about these things now and makes sense right? Obviously all these are circus jargon, if you will.

Collier: They are really, yep.

David: So, it makes sense if you’re explaining it but you don’t, you don’t stop to think that, the next one jump on the band wagon.

Collier: I mean, how many times have we heard it and never just you know, I wonder where that came from?

David: I read this funny that it’s the wagon that carried a circus band, so it’s actually a wagon for the band, it’s a band wagon.

Collier: Yeah and this is not like your marching band, these are like a bunch of freaks that play instruments right? I mean.

David: Right, I don’t have any idea.

Collier: I mean for them anyway, last one was grandstanding and how often do we hear that in politics today?

David: This is where, this is where Collier would be, this is the VIP seats.

Collier: The VIP grand stand seats and they would say.

David: Yeah.

Collier: Hey, look at those VIPs grandstanding.

David: Look at those elitists over there.

Collier: Anyway, I just wanna share that with.

David: Hanging out with Collier.

Collier: I just wanna share that with ya, I thought it was interesting.

David: Well Mitchell, thank you for that information you helped me refinance Coach Clark’s contract, winning all kinds of coach of the year awards, how long did they extend that contract?

Collier: Oh, they need to extend it for a long time.

David: Yeah.

Collier: ‘Cause that man did a phenomenal job at the University of Alabama, Birmingham.

David: Did a great job, I really want to see him beat A&M, but A&M played tough, they had a great year.

Collier: Oh, it’s just like Stanford did with FSU going down the stretch, I mean just too tough, I mean and plus.

David: Yeah.

Collier: Mitchell is probably, Mitchell Miller is probably the fan of the year for them.

David: And I apologize for missing this until now.

Collier: (Laughter).

David: But, I know that everybody is on the edge of their seat, highest paid coach where it comes down and everybody is on the edge of their seat for the new Georgia Tech coach, Jeff Collins.

Collier: Oh hey, everybody’s just worried about that.

David: All right listen, coming from Temple you can rest easy, coming from Temple had a good cut record at Temple, actually beat South Florida this year barely lost at UCF you know, the big story behind UCF for the last 2 years, beat South Florida which Tech lost to this year, so we’re, we’re stepping up.

Collier: Hey big time, someone’s gonna make some money, some realtor over in Atlanta is gonna make some good money!

David: We’re stepping up, Jeff Collins it’s, it’s, it’s gonna be good to see. All right current mortgage rates right now, 30 year rates are coming down a little bit ok? Thirty year fixed rate average on Freddie Mac mortgage market survey, 30 year fixed rate averaged 4.63.

Collier: That’s lower.

David: Ok so that’s looking good, 15 year 4.07, obviously not gonna be as much movement there.

Collier: Wait hold on, but that is lower than you had it a few weeks ago.

David: Oh definitely lower than a few weeks ago, I think, I think the business slowed down, markets you know, stock market is changing what I think is interesting, I really feel we talked about this a little bit earlier today, but I think, I feel like we’re gonna have a little bit of an early market, an early spring market next year.  

Collier: Well, I hope that’s the case.

David: You know, any time and I know buyers and sellers will wanna hear this because buyers are frustrated with their houses on the market.

Collier: Oh sure!

David: Sellers are probably you know, sellers are probably not frustrated right now it’s December they understand but you know, we had a little bit of a slower market I would say over the last 3 months, there’s been pockets, I was talking to somebody else today at lunch about you know, it’s kind of a sporadic market to be busy for 2 to 3 weeks and then drop off for 2 to 3 weeks, so I think this change in the slowness recently will increase the demand and if rates can hold on a little bit that’ll help us in I think February, a little bit before the March-April typical season.

Collier: As we roll into it, I mean God, I surely’d hoped that, that we have an early season ‘cause I think the market needs it.

David: Yeah.

Collier: Because we got, because what we don’t wanna see happen is these buyers get so frustrated they don’t wanna enter the market as it comes to, I mean and I’m not talking, of course you’re gonna have some we’re not talking about that, but we wanna make sure we have a positive start to the year ‘cause I think it’ll set the tone because interest rates and we’re gonna talk about it in a little bit, the guy that we’re being given from the quote unquote experts, is that we are still headed higher towards the end of next year.

David: Right.

Collier: Possibly as high as 5 and a half percent.

David: Yeah true, and I know we’ve got some things later in the show about trends in 2019 for buyers and seller, that’s gonna be interesting but I feel like you know, if our rates can hang on I think that right now people are a little frustrated it’s the end of the year, I think they’re frustrated with the way things went this year as far as the inventory and interest rates, I they can just stay down here give, people will have time to see that, notice that, come into January you know, obviously a lot of new things start up in January, a lot of people might be on to things.

Collier: It’s gonna be one of the biggest things that I’ve been thinking a lot about, was that we need to see some of these builders get back into that starter home, construction, those type things if they can get it, ‘cause they should be getting deals on land that sort of thing, it’s hilarious because there’s always a move up buyer right?

David: Right.

Collier: In other words, everybody’s gotta start somewhere with these prices rising like they have, you, if now at the lower levels pricing out of decent housing, you’ve priced certain people with that level out and then it trickles up because that person already in that home wants to move up, they can’t move.

David: Yeah.

Collier: And it’s a never-ending cycle.  

David: Yeah and I feel like right now a little bit if you wanna think about this, a little bit of the psychology behind let’s say a 4.75 interest rate, right now people might be happy to be under 5 ok? Whereas before they hated 4.75 so, that might change things a little bit too, that dynamic is gonna continue to change as we move on, people still have reasons to buy, move up buyers, first time home buyers, family getting larger, whatever, you still have reasons to buy a home.

Collier: Well and I, I think too that at 4.8, listen just like we talk about in the stock market don’t try to time this market, relative to the interest rate.

David: Yeah, it’s impossible!

Collier: You’re gonna kill yourself ‘cause you know what? You told me over 10 years ago when I got my first loan with you, and one of the things he said was don’t look at the interest rate tomorrow ‘cause I guarantee it’s gonna be lower right? It’s just Murphy’s Law.

David: Right.

Collier: Right? Sure enough! (Laughter), I remember, I think my last one I got with you was 4 and I remember looking the next day and it was 3.875, Ah gum! What were we thinking right?

David: Right.

Collier: But, but there’s, at the end of the day neither one was gonna kill me.

David: But you, you’re also, you’re also buying a house so you’re not gonna be able to find the house and.

Collier: Right.

David: There’s not, right, you find the perfect time with the rate and then you go out there that’s the perfect house.

Collier: Oh no.

David: Yeah, it’s not gonna work that way.

Collier: It might be perfect for her, it’s never perfect for me.

David: Well.

Collier: ‘Cause the price is for me.

David: I wanna move on to some Birmingham real estate market numbers.

Collier: Yeah.

David: So, looks like the sales this was in last month?

Collier: Last month.

David: This was November.

Collier: November.

David: So, 11 hundred and 42 single family homes sold.

Collier: They did and what was interesting about that, is that inventory went down almost 9%, but yet we wold more houses so we’re out of balance right?

David: And we’re going the wrong way.

Collier: We’re going the wrong way.

David: We’ve been going the wrong way, we’re going further in the wrong direction.

Collier: Correct so, what we’re seeing is that these houses are selling, they’re selling for good money but there’s nothing to replace ‘em.

David: Right.

Collier: And if we, we can’t keep losing 10% of your inventory.

David: Right.

Collier: Or you’re gonna be out of inventory.

David: True.

Collier: And so, you’re getting a situation where the sellers aren’t really wanting to sell because they have nowhere to go.

David: Right and that’s a big problem.

Collier: And you know, a lot of times we hear people and a lot of agents don’t want all this new construction out here, but we need houses and they’re gonna fill the gap and they’re gonna overprice for new construction and often times, I don’t think always get the best deal right? ‘Cause he doesn’t have to, ‘cause he has The Man on this.

David: Yeah, he’s got The Man so you’re gonna pay a little better price, but that new construction’s also going to help you on a resale right? Because it’s going to be the newest thing around you unless.

Collier: Absolutely.

David: It’s gonna be a lot newer than what’s around you right now.

Collier: (Laughter), well surely.

David: Right.

Collier: I mean you look at our area though, Mountain area I mean, it’s rare to find because your, a lot of these areas are sooo cut like a Vestavia, it has a circle around it of other cities I mean it’s surrounded, it’s landlocked except for that part they keep annexing, Liberty Park areas right?

David: Yeah, yeah.

Collier: But if you want a Vestavia proper you’re stuck.

David: Yeah.

Collier: Right? So they’re not gonna have new ones, but one thing to remember here too is part of that was the average sales price up 9% year over year you know, and the other thing that we have seen too is that prices on town house and condos are becoming more affordable.

David: Yeah.

Collier: Which is interesting too I mean they’re down by 2%, the other thing too to remember I don’t care whether you’re here, you’re in Auburn where Ashley Miller is, you’re where Mr. Arnette right there is in Atlanta.

David: Yeah, Piedmont.

Collier: Ahem, Piedmont, Georgia, everything’s hyper.

David: Piedmont.

Collier: What we call hyper in Alabama.

David: Yeah (laughter).

Collier: Sorry, I don’t, I don’t.

David: Third time’s the charm, we got it.

Collier: Hey, I’m talking right over my own self, no, but one thing I wanna make sure everybody understands is that real estate is so hyper local.

David: Yes.

Collier: Like you and I were looking earlier today at the open mountain area and the, saw an increase of 11% in inventory.

David: Yeah.

Collier: Right? Where of we said that the market in general saw a decrease of nearly 9%.

David: Yeah, so definitely there’s gonna be a this is, this is a generic average number across all of Birmingham, but they’ll definitely be different numbers in different areas, like you said like a Vestavia, where there may not be a lot of room for new construction, there may be an area like Chelsea where there might be more new construction.

Collier: Or it could be over, or you could be in a Chelsea where you’re over, overbuilt and you have too many homes where you would say oh, we can just keep building right? I mean, what I’m saying is that it can go either way in any city.

David: Right, yeah.

Collier: I think you’re right about Chelsea.

David: And I think, I think yeah and I think median days on the market 17, which is that, is that kinda where it stands.

Collier: That’s a median! Now, everybody needs to remember.

David: Kinda where is bent for the year.

Collier: Yeah roughly, what we wanna talk about median is we’re talking dead middle and we’re also talking about a lot of houses that were new construction, that were one day they were input in the MLSS as if they sold in 1 day.

David: Right.

Collier: That’s ridiculous they didn’t go on you know, I mean en masse to get a median number of 17 you have to add a lot of ones.

David: Right.

Collier: The, the other thing average is, is, is you know, is a lot, is a little bit higher so obviously, the, the average as average takes all of them in the buys.

David: Yeah, great stuff so, I wanted to share a story of a buyer, a young buyer that I talked to this week and I just you know, this kind of stuff I was gonna get on and just do a Facebook live separately, but I saved it for this, I saved it for the show.

Collier: And you’re cheating.

David: And then we talked a little bit about credit all the time, but this kid was looking to establish his credit ok? And he told me he’d gone and gotten it’s kinda like a pay day loan.

Collier: When you say kid, you’re talking in their 20’s?

David: He was yeah, he was early 20’s.

Collier: Of age you know, you need a loan.

David: Yeah so, he was looking at building his credits, I was talking, I was talking to him about his credit, where his scores are you know, he gave me some information that he was looking at on Credit Karma so you know, I’m asking what type of loans he’s got there, so he’s got this pay day loan ok? He went, he went to a company.

Collier: Pay day loans.

David: A company invest him around and I’m telling you guys you can’t do this, I know they’re telling you to do it to build your credit, I have seen credit reports with 3 or 4 pages of these things, where they’ll open ‘em up and 3 or 4 months later they open another one, 3 or 4 months later they open another one, another one, another one, so the loan was for a little over 200 dollars, the total amount of the payments back over 4 months was 250 bucks.

Collier: not a lot of money but.

David: He’s paying roughly I’m not giving you the exact numbers, but the, the interest was about 20% over the 4 months.

Collier: What was the APR over the year?

David: Right about 60, 60 plus.

Collier: 60? So he’s paying the equivalent of what we think of is 60%.

David: Over 60% APR and he’s not, he’s not building his credit the right way, I’m telling you building your credit is gonna take time, you gotta start early, we’ve said it before start with a credit card, don’t use it up too much and then 6 months later go get another one ok? And stay around 30% of the credit limit, just put gas on there, put a little bit of.

Collier: When we talked about that.

David: Put a dinner on there, something like that.

Collier: A lot of these, I even think some of the big players will give you what’s called a secure credit card.

David: Yes!

Collier: And explain that a little bit.

David: So, what you would do is you go into your local bank, open up an account for let’s say 3 to 5 hundred dollars and then they would give you a secured card so, you leave that let’s say 500 dollars in there, in the bank and then they would give you a secured credit card, that is guaranteed by that 500.

Collier: Now they can’t use that 500 while they have this card.

David: Unless, unless there’s some, yeah right, the client cannot.

Collier: That’s correct.

David: The consumer, right, but the bank has the 500 guaranteed that the credit balance will be paid off.

Collier: And that is the best way to do it.

David: Yes, I mean credit cards are the best way to affect your credit score because it shows, it shows that you can manage using it and then paying it off.

Collier: Well.

David: Using it and paying up, even a car loan it’s only, let’s say a car loan is 200 dollars a month for 48 months and you’re just paying 200 dollars a month you know, credit, credit cards establish a better understanding, a better responsibility for using credit.

Collier: Well and quite frankly, we’re seeing a lot of peer pokes out there, I can’t even tell you how it drives me bananas!

David: I hate ‘em!

Collier: They’re, just because it has the Visa logo doesn’t mean anything, that’s the pro, that’s how they process the payment, it has nothing to do with your consumer protections right?

David: Well yeah, but I get, I get tired of people saying that they don’t want a credit card.

Collier: Right there’s nothing wrong with credit, there’s something wrong with you! (Laughter).

David: Yeah and if you can’t manage how to use a credit card, you’re consciously making a decision.

Collier: Yeah (laughter).

David: To, to limit your opportunities because you need, you’re not gonna need credit in your life.  

Collier: And remember there’s reasons we hear negativity, the, the, the stores don’t like ‘em ‘cause they pay more.

David: There are bad decisions made on credit cards, I’m not, I’m not denying that.

Collier: Well no.

David: But learn how to use ‘em.

Collier: Yeah absolutely! But also remember.

David: You have to!

Collier: I love what Clark Howard calls ‘em, fake Visa, fake MasterCard you know, they’re fake, they’re not real credit cards and the other thing is too hey, you wanna travel the world get you a good one and get some bonus miles and get you a good credit card.

David: Yeah get some perks, yeah and, and use it wisely if you, you know if you choose to do so that’s great, but don’t and please don’t go get pay day loans, don’t get cash loans, don’t pay this 60-80 percent, look at that, think about how much interest you’re paying, look at those APRs you know, you might get stuff in the mail and it’s in the fine print it’ll tell you the APR.

Collier: (Laughter), really?

David: Yeah.

Collier: You’re supposed to read that stuff?

David: Oh man, man just do some homework or call me out I’ll give you.

Collier: He’ll give you his referral code to his.

David: I’ll give you my regular rundown of credit that I tell everybody.

Collier: Oh yeah.

David: It’s, it’s not that.

Collier: It’s amazing to me you know, I’ve been reading a lot about this lately for our personal finance stuff that we’ve talked about, is we gotta be talking to everybody about not utilizing, I mean it’s okay to, to put charge it and then pay it off, but one of the problems we’re finding is people carrying balances higher than they’d have in years.

David: Yeah.

Collier: ‘Cause they felt confident going into this year.

David: Yeah and, and, and let me tell you one problem with using and paying it off still, is that credit card companies are only gonna report a certain time of the month, so your balance say you gotta a 10 thousand dollar card, let’s say you ring it up to 10 thousand every month and pay it off and you might feel like, that you’re doing a great thing ‘cause you’re paying off your credit and you are managing it well, but there’s a chance that they report that when you have an 8 or 9 thousand dollar balance and that’s gonna look like it’s maxed out.

Collier: That’s why, that’s why I’m real big on, we, I pay mine just so you know ‘cause you know me about the credit card game, playing to get the miles and every dance, but I’m paying it down all year, month long, so that when it comes to the end of the month they really don’t see much of a balance.

David: Yeah.

Collier: But, yet I’ve run thousands on it.

David: Yeah, so at any point in time it’s not too high yeah.

Collier: When you have kids it’s easy to run thousands.

David: Oh yeah.

Collier: I mean my god.

David: ‘Cause they, ‘cause they don’t mind spending it all the time, do they?

Collier: Nooo.

David: (Laughter), yeah.

Collier: Your dad, your dad said I’m not mature enough to have a credit card.

David: (Laughter).

Collier: Sir, you gotta a good teacher.

David: (Laughter), any way I’m out, I’m out, I’m out of that game that’s right.

Collier: Hey.

David: That’s funny.

Collier: Hey, first step is knowing right?

David: That’s right.

Collier: I mean so.

David: So let’s say.

Collier: All right.

David: What do we got next?

Collier: We’ve got 4 trends that home buyers and sellers need to be watching out for as we head into 2019.

David: Yeah right around the corner what, it’s just 3 weeks or so huh?

Collier: And we will, we will and I’ll tell you what, we will have, number 1 is we’ll have more homes for sale on the market, people are gonna have to move still, that’s one thing we learned even in the down turn everybody still had to move, the one, one of the biggest things you’re gonna notice is that a lot of the ones sitting are gonna be the higher priced homes, the luxury homes, for us in Birmingham that would be what would you say? Over 5 hundred probably would fall into that category of the.

David: Yeah, depending on where you’re at right? Yeah.

Collier: Well, we’re talking about like the backer because here’s the problem, you gotta a whole generation of folks, I’m 40, you and I are both at right 42 years old and you’re not 43 yet are ya?

David: Yeah.

Collier: Oh ok, a year old.

David: Just barely.

Collier: But anyway, that our parent’s generation went into the back of Greystone you know, behind the gates and legacy snd places like that, these were massive houses that were built on massive lots, unfortunately our generation doesn’t want a massive house with massive lot, we want admit at maximum a big house on small lot ‘cause I don’t have to maintain and do all this stuff.

David: Right.

Collier: And the problem is there’s not enough people to take these houses that people spend a ton of money on and so, I think going forward they’re gonna have to really think hard as you’re getting your house ready of competitively pricing it if you want to sell, I love that “well I can’t sell it for that”, what? That’s, that’s cool! You don’t have to sell it for that! But you, you’re not moving.

David: Right, you’re not selling it.

Collier: You’re not selling, you may move too.

David: Yeah.

Collier: Ain’t that right?

David: Yeah and you’ve got you know, plenty of houses that like you’re talking about if they’re in these big lots, the maintenance costs if you don’t want to do the maintenance yourself can get expensive too right?

Collier: Absolutely!

David: I mean just, just the yard care, cleaning services you know.

Collier: Just main upkeep.

David: Yeah, just basic upkeep.

Collier: I mean going into this year, we haven’t really had to, you know sellers really haven’t had to worry about their competition very much, I think as we head into 2019 they’re gonna have to start looking at their competition, am I better? Am I? You know, I was talking to one yesterday and you know the buyer was asking me, well why is this? One was in 440 and these are both houses on 2 acres, one was 440 and the other one was 580, what’s the difference? And it was over 2,000 square feet difference right? And they’re going well, I don’t really care about that, I don’t but I want the big house for 440, I’m like well me too!  

David: Yeah, yeah.

Collier: I mean I get ya!

David: Yeah.

Collier: But there’s legitimate reasons and, and, and so.

David: They’re not logical.

Collier: But, with that seller that was at the higher price needed to do, they need to be on their face marketing the attributes that did make them better than the competition so, they can justify the price without having someone that did define that information.

David: Yeah and it’s, it’s tough though and when there’s that big of a discrepancy especially in, in the size of the house you would think that that would make sense and be ok with most buyers that make sense in the market, but.

Collier: Well and I think too is, is one you know, the news of the Wall Street Journal this week was some of the guys are saying you know, that we could be headed towards a real recession and if we are headed to real recession what happens is a lot of these high paying jobs get cut back, they don’t increase in price, they’re not bringing new people in and guess which part of the market gets hurt, I mean it’s not the low end that gets hurt on that, it’s the higher end and quite frankly that’s where you wanna see your growth ‘cause you’re gonna have natural growth at the lower levels, I mean look, we can sell a 150 thousand dollar house all day I mean, they’re gonna come on the market all the time.

David: We’ve got people, we’ve got people.

Collier: Who want in.

David: That are getting older and moving into that, they.

Collier: Absolutely!

David: You know that happens every year.

Collier: Absolutely, but at the, but at the higher end you can’t just go, they’re not, you just don’t have everybody just knocking the doors down.

David: Right, right.

Collier: As we see that and now, some markets will see this worsen others obviously you know, ‘cause we’re not quite the mecca of luxury housing and.

David: Right so some, somebody’s in California and Massachusetts we’ve got several fair way branches in Massachusetts, people doing business up there, Nashville, Tennessee.

Collier: Hey Nashville, absolutely.

David: Yeah.

Collier: All right, what we’ve got next? Number 2 right here it says affording a home will remain tough and you know, it’s.

David: Yeah, this is an interesting one because you know, you got price pressure.

Collier: Yep.

David: You know, houses are still appreciating, they have been what, for the last 8 years at least? We had, we had a drop from 8 to 10, but we’ve been probably moving.

Collier: Absolutely!

David: Steady up since then.

Collier: We’ve been catching up with inflation.

David: Yes

Collier: The outside numbers.

David: Yeah so, you’ve got that as well as interest rates, so you’ve got 2 things working against the affordability.

Collier: And their jobs.

David: Which making and jobs is gonna be the big thing with any type of recession fear, the unemployment numbers are gonna change.

Collier: Well, good example as you’re saying a lot of, when I, what, one, one thing I’ve seen in our market is you got some people saying in their mid 50’s they’re not ready to leave their work force, they’re getting laid off or whatever and they’re reentering the work force, but they’re working no offense to anybody working at Lowe’s or Home Depot right? But they were making you know, 75, 80 thousand dollars and now they’re making 35 thousand, statistically they’re employed but they’re not making what they were making and so, it’s gonna affect the affordability of them buying anything.

David: Right.

Collier: But they need to move, and so, and I think we’re gonna see more of that as we head into the new year.

David: Yeah so you know, along with that you, you’ve got the mortgage rates hopefully that will slow down, but there’s a lot of people expecting them you know, we already kinda touched 5%, a lot of people expecting them you know, we just mentioned earlier 4.6 to move back to that 5% rates, maybe up to 5 and a half you know, there’s all kinds of talk about the Fed and their funds rate, them moving rates around and how many times they’re gonna move next year, you know but there is also more talk about the Fed calming down and cooling off a little bit and letting this economy play out a little bit more on its own.

Collier: Well and I think part of the craziness of this is for 10 years or more, you and I talked about the Fed, oh certainly the Fed’s gonna raise rates, certainly they are and they never did it so I think, but I think the consumer got used to that, him thinking they’re already keeping ‘em low and they don’t believe the Fed as we get, as we, we.

David: Yeah.

Collier: Sometimes on the podcast we, we have a light issue, it’s a motion sensor that goes off, there it goes we’re back, but the Fed is in a situation where they’re actually doing what they say they’re gonna do (laughter).

David: Yeah.

Collier: Which was not the case.

David: Well, there’s been a lot of.

Collier: Before.

David: A lot of scrutiny and criticism, but Donald Trump and Jim Kramer are just the headlines that I read, both going at it on the side of the Fed doing too much, getting too involved, moving rates up too much, which is obviously affecting all of our rates.

Collier: Well and one of the best things I do think that out of this Federal Reserve board, we’re getting now is we’re getting explanations that we didn’t always get before, good or bad, you may not like what he’s having to say, but at least we’re getting the rationale and it sounds like he is willing to listen.

David: Yeah, things are, things are overall still a lot better with you having more equity in homes that we have in a while right?

Collier: Absolutely!

David: So, that’ll give some home owners a little bit of relief let’s say, it gives some sellers a little bit of profit.

Collier: (Laughter).

David: You know, to turn around and maybe buy a another home.

Collier: Even if it, absolutely, even if it is just inflationary profit, now one thing is next one, the third one millennials will still dominate home buying as we move on to the next year, yeah interesting.

David: Yeah and I thought it was very interesting, biggest generational group of home buyers accounting for 45% of mortgages right now.

Collier: Well they (laughter), well and one thing is they’re gonna continue buying and we just talked about the reason of what will be a problem and it will be a problem for that group too, because we need, the millennials are especially gonna be the move up buyers.

David: Right, right so, a lot of them will be move up buyers, but it also says year 2020 projected to be the peak for millennial home buying and the bulk of them will be aged 30, so 2020 will be the peak of home buying.

Collier: Yeah, if I’m correct what millennials buy is 82 to 95 somewhere in there.

David: Yeah.

Collier: Money wise.

David: Yeah, we were talking about this earlier today.

Collier: Yeah, something like that.

David: I think I remember, but yeah.

Collier: CHNZ was running right in there around 95 so, so it’ll be interesting the millennials and they also are the most needy of the groups too, I mean we see it everyday.

David: Well, I just think there’s just a lot more information, a lot more available information and I think people in general just feel like they can figure things out on their own and you know, Google can tell you a lot of stuff right?

Collier: Yeah, Google can do a lot!  They can make the most of it.

David: And then at the end of the day, you need somebody to kinda manage the process, kinda make sure, make sure everything gets done.

Collier: Well, this is a big one and this is probably the biggest that everybody, I’m getting asked more, everybody has a tax law degree in they think, well certainly he knows everything, well I tell my wife I do but I really don’t know everything and this is the wild card for this next year and that is the new tax law.

David: Yeah and we won’t find out until you know.

Collier: We won’t be able to read the bill till we pass the bill.

David: Yeah, May, June, July.

Collier: (Laughter).

David: You know, sure a lot of people get their taxes filed in April, find out what’s going on and how it affects everybody, you know a lot of people are gonna delay and, and put it off to May, June, July.

Collier: You know, I try, I tried to download Turbo Tax the other day and they were like yeah, we really don’t have the new forms yet and that is unusual, they usually have all that done now, I don’t even know if the Government really has that, knows what they’re about to do.

David: Well so, we’ll find out how this, this affects everybody, I know that you know, some of these, the biggest thing was the, the standard deduction right? Which is obviously gonna affect how you look at your mortgage because you’re itemizing it.

Collier: Well we.

David: Towards interest.

Collier: Well most people are not, not over 90% will not be itemizing as we go into this year and I think the, the, we gotta retrain our mindset because it never made sense, you know all the people that told ya hey, I’m gonna buy a house so I can get that mortgage deduction.

David: Yeah.

Collier: Or they used it as an excuse, it never was a good idea, I mean that was just a side benefit.

David: Yeah side benefit, but it’s the only debt that gives you that benefit.

Collier: It is, but it was never a reason to go spend money, you still needed a house.

David: Yes, yeah see that’s the thing, like you’re still spending money on a place to live, you’re still spending money on a roof.

Collier: If it wasn’t a good idea you shouldn’t have done it, like absent any, anything else if you couldn’t afford the house don’t do it for the tax, the tax benefit.

David: Well of course.

Collier: No, but people did that!

David: Oh yeah.

Collier: I’m convinced!

David: Yeah.

Collier: ‘Cause they talked about it every other time right?

David: Yeah.

Collier: I mean so, it was like that is really ridiculous you know the, the, I mean you’re talking renters you know, they’re talking about renters you know, renters will not be affected either because they’re not gonna have to worry about it ‘cause most renters, I would venture to say into the 96, 97% of ‘em will be standard deduction.

David: Oh yeah.

Collier: Going forward.

David: They’ll be a lot of standard deduction, another big one is you know (short sigh), I guess for, for people like myself who is W2’d, even though I’ve always had a lot of business expenses in the past you know, the W2 wagers are not allowed to itemize all those business expenses, so that’ll change obviously self-employed people are still itemizing expenses but.

Collier: But you know, one area that.

David: I would couple those business expenses along with the mortgage interest, so now I’ve lost the business expenses, so.

Collier: Well.

David: It’ll be even less.

Collier: And if you’re hiding that income in person and you’re wanting to buy that second house, now that’s where I think that you could see some movement in the market to the downside is that person that says you know what? The narrow margins I have now say you rented a rental house at the beach, I was getting that right off from that mortgage deduction, you know what it’s not worth anymore if I’m gonna, I’m not getting any money, I’m not getting any taxes.

David: Right.

Collier: I’m not getting any, it’s not that primary it’s gonna be the problem, it’s gonna be those people and quite frankly they drive the market.

David: Yeah and I, I gotta remind people I talked to a CPA about filing taxes on, on investment property, I see people do it all the time, they put it on their primaries, they lose some benefits, they put it on their I’m sorry, their individual tax returns, they lose their benefits ‘cause they’re just filed schedule C and not taking those losses, whereas you could if you put into an LLC or something and set it up with.

Collier: Yees.

David: And we, we are going to find out.

Collier: And wouldn’t (inaudible) say anything about that, he’s talked ‘cause you brought it up, one of the dumbest things I have seen people do, is not dumb but it’s better to be honest with your mortgage broker up front, is if you’re going to put anything in an LLC go ahead and tell him because theoretically when you do that, you’re calling in, what happens in a lot of these situations is they have let’s say a lake house down at Lake Martin, they say you know what? I think I’m just gonna go get me ol’ quick claim deed and what that means it’s just an easy deed, and Imma transfer it from  Ethel and Bob to Ethel and Bob LLC and what happens when they make that transfer, they have effectively transferred ownership of that property and within the confines as you call it, the boiler plate of the mortgage. That note is know immediately callable by the bank if they catch wind.

David: They could be yeah, it’s in the, it’s in the, it’s in the several pages that you just initial and, and move on from, but yeah there’s definitely.

Collier: It’s just a risk that everybody needs to be aware of.

David: Yeah, I mean how quickly are they gonna find out that you did that? But either way you know, if they do it’s not something just you.

Collier: But Ethel’s gonna be mad at Bob if she didn’t tell her the risk.

David: Right, but a lot of these tax changes we’ll, we’ll find out as the year goes on, updates of people, so a little, a quick, a couple of notes on the stock market.

Collier: Hey!

David: It’s been volatile lately huh?

Collier: Volatile? It’s been crazy!

David: Crazy volatile huh?

Collier: And we’re what, mid-December 2018 right now so.

David: Yeah and I think what, are we below 25 thousand?

Collier: The market was up a little bit today so, are we the same as yesterday?

David: I just thought it interesting I did see 1 article today, where, it’s one of Collier’s favorites “Robin Hood”.

Collier: Yes!

David: Is now opening up a 3% savings, a 3% return on checking and savings accounts.

Collier: Absolutely!

David: So it’s something to check into, obviously mote the highest typical yields on that are less than 1% or up to 2%.

Collier: Up to 2%, but they can do this.

David: It’s not all that accounts to 2%.

Collier: What did we tell everybody about 3 months ago? That banks were screwing you, they’re making far more on the money and it was you know, they were making, they were not sharing any of those danes back, Robin Hood seems to be, ‘cause I got in line today you know, got myself in line to get an account, they, what they’re doing is they’re buying market share, when you agree that they’re going after the swabs of the world and these people aren’t offering much.

David: Yeah.

Collier: In terms of interest rate, then they’re saying we’re gonna get some people over here.

David: And right, right now they really don’t have a model for this that is profitable and they say that’s ok, well I think what there is go at it like in Amazon and just you know, offer something awesome, offer a great benefit snd they’re hoping that they can make money off the millions of customers that they’re gonna draw ok? These accounts, one thing to know is that they’re SIPC insured, which is a little bit different because you’re technically with a brokerage account, I think is up to 250 thousand dollars for cash, it’s not FDIC insured, you can be, you can either be one or the other and so, definitely look that up if you’re looking into this or if you’re interested in it.

Collier: Hey Robin and one thing too, you may, when you look at this Robin Hood platform ‘cause David knows I trade on there, that’s where I trade my stocks.

David: And that’s how, that’s how.

Collier: It’s free!

David: They made their name.

Collier: Right and so, they made their name by the free trading, you get free trading and you say well how do they make their money? Well, one way they make their money on the stock when they give it to you free is they do the options and those type of things is one way, but what you don’t know is that they trade the stocks at a mind, a fraction of a penny more or less than the market rate.

David: Yeah.

Collier: Right? So.

David: So they make that little bit.

Collier: And we’re talking microscopic, who benefits from that? You and me and who gets screwed by it? It’s the mutual fund that wants to trade on their platform for some reason.

David: Yeah, they’re making a fraction of a cent on every dollar.

Collier: On every dollar.

David: And what they said on the trading side, I don’t, I don’t think they have a model yet.

Collier: On this side.

David: On this side for the savings, for the 3% savings, checking accounts but I think if they, if they draw enough people, if they get be large enough, I think right now they’re already valued at 5.6 billion roughly, don’t quote on that.

Collier: 5.8, it’s bigger you know what? You know you’re doing something right when the big boys are starting to go “we really don’t like these guys!”

David: Well they created a trade, they created a price war with the commissions on these online brokerage accounts.

Collier: (Laughter), yeah you’re talking about really ticking people off, they’re going we’re 5.95! No we’re 4, we’re free!

David: Well look, we saw the same thing with Shave Club right? As soon.

Collier: Dollar Shave Club?

David: Yeah, Dollar Shave Club as soon as they came out Gillette changed their model rights and started doing things differently.

Collier: But they were screwing you for years.

David: They’re, they’re.

Collier: The profit margins were so wide.

David: They’re finding let’s say holes or opportunities in the market, and they’re kind of exploiting it, which will create a ripple, which will create change, you know you see it, you, you saw a book store.

Collier: Yeah.

David: Right? Turned into Alexa.

Collier: Absolutely and you know, the other thing I’ll say is, if you’re looking for a good pick this week we don’t have it a lot, what I will say is find some, a dividend paying stock or fund I like that these bond funds, these toe, I like PCI which is a fifth, PIMCO puts out a lot of funds paying 8% right? And so, you’re installed against the down side right?

David: Yeah, just hang on, hang on to what you’ve got right now and don’t look at your year in statements, don’t worry about it just tune in 36 months, you’ll be fine.

Collier: And we’ll put a link down below to Robin Hood, you get a, if you’re on the podcast we’ll put it down in the, in the notes for the show as well, so you can click through there we all, I think we’ll get a little nugget, you’ll get a little nugget, that little gift from them ‘cause again they’re giving away the farm to build the farm.

David: Hey, I think, I think they’ve doing a good job.

Collier: They are but, well we certainly appreciate everybody stopping in this week, man.

David: And I know everybody wants to see that the last, I think the last debut of the triple option at Georgia Tech will be the 29th, I don’t even know.

Collier: Ha! The debut of the triple option.

David: Well not the 29th, that’s the Child’s Plant football championship, 26th I believe we play.

Collier: Yeah I mean, who’s Alabama playing? Oklahoma!

David: Oklahoma?

Collier: Boomer Center!

David: The Kyler Murray stole that Heisman trophy huh?

Collier: Stole it, it’s sheet numbers, imma, that must’ve been 1,300 hundred more?

David: And the kid, the kid’s already got a contract to play baseball, unbelievable.

Collier: Which they.

David: Five million dollar signing bonus I believe.

Collier: And I heard, I heard his interest was unbelievable right?

David: Yeah, I love to hear him talk about his coach, Lincoln Riley pushed him and make him a better person, I thought that was great.

Collier: Man, look at you!

David: I’m telling you.

Collier: All right, we’ll see you next Thursday 4 o’ clock!

David: See you guys! Y’all have a great week!

Collier: All right thanks so much, have a good day!

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