 you may be thinking when our home price is going to start coming down. Prices that have went up so much, things are so unaffordable. They're actually more unaffordable than we've basically ever seen in history. So we may be wondering, okay, things have to crash at some point. So let me shed some light here. And I want to share this two minute clip from the Brown Harris Stevens CEO, Bess Friedman, who may have an answer for us here. I'm going to share this two minute clip and then give my thoughts. Joining us now is Brown Harris Stevens CEO, Bess Friedman. Bess, good to have you on. And the numbers are getting pretty scary, but I'm not seeing any sign, maybe pockets here and there of any kind of a downturn. If anything, the market is still hot. Yeah, I mean, the market is still very hot because the demand remains high. And that's been really the challenge why prices have not really come down because we don't have enough inventory. And when rates start to come down, we'll get more inventory than prices will start to come down. And like you said, Brian, we don't have those crazy mortgages that we had back then. There are guardrails. So I don't see any bubble anytime soon. The market has been pretty decent given all the headwinds. The prices, rates and tight inventory, we are still doing fairly well overall. But there are a lot of people waiting on the sidelines, buyers and sellers right now. A friend of mine put their home on the market last weekend above asking. They got 11 offers. They were all above the above asking price and a bunch of those were cash. Please help it make sense. Yeah, I mean, look, again, there is no inventory. And so people who want to sell right now, they can get really good prices. And that's a great thing. But some people will not put their homes on the market because they don't want to pay double for their mortgage. But the ones that are doing that are getting really good prices and therefore it might make sense for them to make a lot more money on the sale of their home. They're willing to pay a little bit more in their mortgage. And they're expecting like many consumers are that next year rates will go down and they can do a refi. We have to wait to see what the Fed says tomorrow and Wednesday. They may skip a hike, but they'll probably do it before the end of the year because we're trying to target inflation at 2%. So that's expected. But I think you can do really well if you want to sell right now, you can probably get a really good price for your home. The problem is then you need somewhere to go. You can sell unless you're moving to, I don't know, Gabon, right? You're going to have to pay these inflated, maybe they have housing inflation there as well too. I just wonder who all these buyers are. I guess it's the bank of mom and dad. So if you heard right then what she's saying is that when mortgage rates come down, we're going to see more inventory. She didn't necessarily say why we're going to see more inventory. All I can assume that she's saying is that people who are in these 3% and 4% mortgages right now who are dying, dying to move, they just can't because mortgage rates are so high. All I can assume that she's talking about is that those people that have these lower mortgages are going to put their property on the market when mortgages, when mortgage rates come down and add inventory to the market. But the only problem with what she said is she said that that's going to cause prices to come down. The problem is, is if one of these sellers who is looking to upgrade or downgrade, basically they're looking to buy another home, puts their property on the market, yes that's going to add to inventory. It's going to add to new listing hitting the market. However, they're going to buy the property. The only reason they're selling is to buy another property. When they sell, that means they're also going to buy which takes a property off the market. It's actually a net even. We're not going to have higher inventory. We're going to have the same inventory in that instance. Then we're going to have a lot of first time home buyers come in on top of that when mortgage rates come down and take properties off the market without putting a property on the market because they're a first time home buyer. They don't have a house to put on the market to upgrade into or out of, I should say. But at this point with interest rates so high and prices so high, why are prices continuing to go up? You heard Brian Sullivan there in the interview say that his friend put a house on the market. He had, I think he said 11 offers, over asking price, sold for over over asking price. Why is this happening right now? There's a perfect clip to a podcast here that I want to share with you. This guy articulates it perfectly. Here we go. No one can afford to buy a house now. No young kids coming out can buy a house. This is not a stable equilibrium. Furthermore, the mortgages have gone from three, which explains everything, to seven, which explains nothing. Eventually, the seven will start to explain quite a bit. But how long does it take? I mean, just think. The first reflex is, I can't move for God's sake. I can't afford to go from three to seven. So I am going to stay, which means no houses are on the market, which means for the handful of people who have to move, they're actually in a bidding war. And prices stay up. So real estate has never been about three month predictions. It works slowly, but surely. In the end, you pay more because you could afford to. In the end, you will pay less because you can't afford to. House prices will come down in everywhere from Australia. Mentioned that in Australia, it's World War Three instantly. They are more optimistic than Americans. Oh, really? And they hate any idea that they're real estate. Jeremy, by how much? Because I agree. Housing prices, it's an awful issue for people that are looking to get into a home. Are they going to come down by 10% down by 30 or? 30 would be a pretty good guess. Now, as I said, wasn't that a perfect perspective on what's happening in the market? What I really liked that he said and what really hit home and why I wanted to share that clip with you is that he said that, yes, prices are high, interest rates are high, interest rates have doubled and it doesn't make any sense. He did say that he felt prices are going to come down 30% or so, which I find very interesting. I didn't really hear in the podcast how that is fundamentally going to happen. I'm not saying it can't happen, by the way. And keep in mind, if something like that did happen, myself, it would greatly help me because I buy a lot of properties. I have a lot of investors that I represent as clients who would buy a lot of properties. Prices coming down does not hurt my business. Prices going up does not hurt my business. Business is going to happen regardless of what the market's doing. But what I found interesting and the reason I wanted to share that is because of what he said about what's happening right now. We're down to just the people who have to buy, the people who have to sell. Even though prices are higher, there's no inventory because people are locked into their lower rates. The people that have to buy have to sell. They're stuck fighting over whatever few listings are out there on the market. And that's why we're still seeing bidding wars. That's why we're still seeing prices continue to go up because there's nothing for sale. And you say, where are these buyers coming from? Well, they're people that have to buy and sell. And when you get down in the market to just the people who have to buy and sell, then that is rock bottom. You're not going to go any lower in terms of demand. I would fear to say, and I'm sure even if you're a bear on the market, and you feel like things are going to crash and burn, which you've probably been saying for the last two years that prices are going to come down. Most of the people saying that prices are going to come down and prices are going to crash and burn, they've been saying this is going to happen for like two years now. And so I'm sure one of these days they're going to be right. Maybe, maybe not. But the fact remains that I would say that we at least agree on the fact that the only people doing deals right now are people that need to buy and sell and investors. Investors buying sell regardless of the market. People that need to buy and sell, they're going to buy and sell. They got relocated. They lost their job. They got a new job. They had a baby. Their kids went to college. Even people in those situations aren't moving. I know a gentleman, he works at a bank that I do business with, and they bought their dream home in 2020. Since then they had triplets unexpectedly. So now they have more kids and they need more room. They really need one or two more bedrooms, but they're not going to move right now. Even though they really want to and actually need to, they're not going to do it because of interest rates. So even some of the people who need to buy and sell aren't even right now. So we're going to hit four million transactions this year, which is dead even with 2008. 2008, okay? Does it get worse than 2008? Is it going to be worse than 2008? Some people say it's going to be worse than 2008, but we're down to the people that have to buy and sell. Those transactions are not going to go away. And if we do see something downward happen in terms of prices and even fewer transactions, let me tell you something. If prices were to come down and transactions would go up, there's so many people on the sidelines. And if prices actually went down considerably at all, even 10%, you would see a flurry of people. And that's even if we're in the middle of a recession. Even if we see GDP hit less than 2% grow for two quarters in a row, and everything that was supposed to happen this year, now it's supposed to happen next year. Even if this were to happen, there's so much demand. So in the middle of 2008, this is called the Great Recession. This is one of the worst economic, most fearful times in recent history. There were still 4 million people buying properties, okay, even back then. And by the way, there were 4 million listings at the time. There's far less than a million on the market today. So we're in just a much better place in terms of 45% of all homes are owned free and clear. All right, out of the ones that have mortgages, 90% are under 6%. 70%, something% are under 5%. 30% are under 4%. We're just in such a great, and a lot of these people keep in mind, bottom at 2008, 17, 18, 19 prices, they have so much equity in their property. Even if prices came down a good 10%, 20%, 30%, as the gentleman said in the clip, they're still sitting on so much equity, even if the prices went down that much, they've still got considerable equity in their home. So we're just in such a strong, fundamental place when it comes to the housing market. We just got builder numbers out. The builder sediment is down. We saw less housing starts. We saw more permits month over month being pulled, but still less than that time last year, talking about August, more than last August. And so builder sediment, it's come down a little bit. And that's due to interest rates being so high and just the builder's fear of what's to come, how long are interest rates going to stay high? We know they're going to come down. It's just how long are they going to stay this way? And they're sitting back, the builders are sitting here saying, okay, interest rates are high, sediment is down, we're going into the fall and winter, we've been building like crazy anyway. They're probably sitting here thinking, it's okay to cut back a little bit and not get too far overextended. Because remember with builders, everything is pretty much on a, let's just say six to nine month timeframe, because they have to build the house. And a lot can happen in that time. So they're being very careful. A lot of these builders learn great lessons in 2000, very careful. And when you slow down too as a builder, it's a double-edged sword here. It's helping you in many ways, because when you pull back, because you're like, okay, let's just see what the market does because of interest rates, well, that's also controlling inventory. And when you control inventory and you don't just flood the market with inventory, it keeps prices high. 30% of all sales right now are new construction. That's the highest it's been since they've been recording those numbers. And so they know that they're controlling a lot of the sales right now in the inventory, because nobody wants to sell. The existing homeowners aren't selling. And so, you know, they're like, well, we control the inventory. We don't want to get too far overextended. We don't know how long this thing's going to last. We're just going to click at a nice pace here where things are selling at a really nice price. You know what it is? I think that the builders have found that sweet spot where they're right under, you know, giving us like, you know, you've heard forever. We're behind 4 million homes in the U.S. You know, we're behind 5 million homes in the U.S. Builders need to build all these houses. Well, the builders are probably saying to their self right now, man, we're in the driver's seat. You know, we're most of the market. We're basically bringing most of the inventory to the market. And a sweet spot for us is to really be under, you know, a little under where, you know, the population needs us to be so that we've got massive demand here. So I think that they're building at a pace that they feel really comfortable with. They're not getting overextended. Prices are staying high. They're not flooding the market with inventory. You know, I think they're sitting back smiling from ear to ear like, this is gravy. That's what I think. And hey, as a builder, I think they're playing it just right to be honest with you. That's what I would do if I were a builder. I wouldn't flood the market and overextend myself. And then because you don't know what's going to happen around the corner, we have election year coming. You don't know. Nevertheless, when our home price is going to come down, so you can go out and buy a house. Well, if you look at data and you look at the trends, you'll see every single year from September to January, prices soften quite a bit, actually. Prices come down quite a bit. Days on the market increase. Number of listings increase every time this time of year. You see new listings. You see more new listings, inventory rise, days on the market go up. And you see prices soften. So right now, between now and January, before things pick up again, is going to be the absolute best time to go out there and negotiate, right? And you're seeing it with some builders too. They're kind of giving back to, when they were coming out of the pandemic and everything, they were giving a lot of incentives or, I'm sorry, when interest rates started to go up and the market started to, they were giving a lot of incentives. Then they've kind of pulled back on the incentives. Now you're seeing them come back and start to give incentives again. And so it's kind of a double edge here because you've got the fall and you've got the fact that we're in this 10-year down cycle where we're going to have about the same amount of transactions as 2008. So the fall is normally slow. But then on top of that, we're in the middle of this 10-year down cycle as well. And so that's just two negatives working together that could really work well for you if you're looking to buy a home. In my opinion, I wouldn't wait till 2024. I wouldn't wait till 2004. Now, if you can't afford a house, there's a couple of different options. You can go out and borrow money from a relative. You can get one of these low percent down loans. But the other side of that is, if you don't have any of that available, then your plan, you're under, you're at the step below going out and buying a house. You're at the step of saving up the down payment to go buy a house. But if you're to the stage where you've saved up the down payment, you can afford what the monthly payments are. And when I say afford, you're not overextending. Go out there and overextend. Put yourself in a bad situation financially where you're spending, of course, they wouldn't let you do a loan if you're doing like 50% on your debt to ratio and your monthly income and expenses and everything. But don't max it out. And if you have to buy a smaller house or just be patient and look for the deals, there's always deals. In every market, there are people who are motivated to sell in every market. And I think this fall and winter is going to be your moment to go out there and get the best deal you can on a house. I just closed on two new constructions out of five. This is the last two of five. I'm renting them all out. I just closed on two. There were all D.R. Horton houses, two in one subdivision, three in another. I just closed on a new office building. I'm moving my office from one office building to another. I paid cash for the office building, did a loan on all five of the new constructions. I'm going to move my business to the new smaller office and rent the bigger office out that we just don't utilize all the space. I'm like, well, if we don't utilize all the space, it's a really nice office. I remodeled the whole thing. Let me rent this and make that monthly income. And we'll just work out of the smaller office that, by the way, is nice. I've got guys in there painting it today, closed on it two days ago and redoing the bathroom. Then I closed on a two-bedroom. It's an older house, two-bedroom, one bath. It's got a nice backyard. It's downtown Foley, which is about 15 minutes from the beach. And we're going to rent that out. I bought that one for $195. And actually, what happened with that one is, me and two of the partners bought it for $150. We put like $25 into it. We normally buy them and flip them. And on this one, I said, let me just buy you guys out. And actually, one of the other partners, we went in and bought the one partner out. And we basically bought it for $195. And we'll rent that out for $1,500 a month, no problem. So I'm buying, I'm buying out here, buying houses. I also have three acres under contract. And I met with the city for the second time this morning to build 42 apartment units on this one. So I've got a builder looking at it next week to give us a quote on what it's going to cost on the construction side. I've already got partners lined up, engineers, architects, the whole nine yards. So this is going to be my first big project. I know you've been following me for a while. You've heard me talk about wanting to go out and do one of these big projects, you know, in the development, build some subdivisions, build some, which I have, I've built homes. I did a subdivision once upon a time back 15 years ago. I've done a few little things. But this is going to be my first like big one where I'm actually building the structure. And with plans to own this for a good five, 10 years, maybe forever, just depends on how the whole thing plays out over time. But anyway, that property is actually like two miles from my house. Alright, so I don't know if you find all that interesting or not. But my point is, is that I'm out here buying properties in this market. I'm buying new construction at retail value prices. You know, we got a deal on the two-bedroom. The office space was definitely retail value. And but I see the value and I see where this thing's going long term. And the great thing is, is that I own these assets. At the end of the day, we own that two-bedroom free and clear, own that all the offices free and clear. I own a bunch of properties free and clear. I've got mortgages on some, but I own a lot of them free and clear. And at the end of the day, I own these assets. If the market goes down and prices come down a little bit, that's okay. I own these assets. If prices go up, I'm going to reap the benefits. Why? Because I own these assets. And so that's the way I look at it, is that I'm not worried about the market going up, down, sideways, left, right. I'm out here building my real estate empire. And that's what you should be doing as well. Anyway, I'm starting to ramble. I don't want to go too long here. I got to jump on a zoom here. I'm doing this 30 listings in the next 90 day challenge. So I've got a real foolproof plan where it doesn't even matter if you're a brand new agent. You can go out there and get 30 listings in the next 90 days. If you do exactly what I'm going to teach you on the zoom call, I'm going to do in nine minutes. So anyway, thanks for watching. And I'll see you on the next video. Let's go.