[David] Let’s start talking a little bit about the MBA members only webinar that will be this Thursday. Bob Broeksmit will be putting that up. I think really, it’s going to be interesting to get to questions or thoughts and put the Pulte who, as you just heard Adam DeSanctis just talk about being confirmed by the Senate on the Director Congress by being director of FHFA. We’re gonna get some thoughts from Alice a little bit later on. So, we’re gonna leave that alone. But I want to make sure everyone signs up for the MBA Member only webinar. That’s so important and then we listen to Les Parker’s segment. He talks about easy come, easy go. Alice is always writing down what less to say. I do the same thing. And he said we’re gonna see lower rates by June 30th. Down in the lower sixes and that is what Doug Duncan says for the longest time? Kittle, he says, if you’re going to quote a rate, you don’t quote a time. If you’re quoting a date, you don’t quote a rate. Parker gets out there and he’s going out on a limb with this and he’s saying, we’ll see the 10 year three 60. Corbet, your thoughts on that rate at 3.60 in the 10 years, what are your thoughts? Mortgage rates in the lower sixes by June 30th. Pretty bullish.
[Bill] Pretty bullish, but to take a couple of questions out of left field. So, from the purchase side, that’s going to first, that’s going to come from a weakening economy.
[David] I think we saw some evidence of that today in some of the numbers possibly hinted. Things have already started to go beyond leaning to maybe falling in a weaker economic direction. Rates get lower. Our buyers are going to outnumber sellers and the answer that has a huge impact on where home values go, right? If a lot of people look at it as Okay, I’m gonna get out of my house give up my low rate, now’s the time to do it and I’m gonna put the house on the market and I’m gonna price it to sell. That’s kind of code for prices coming down if buyers are nervous about the economy and all this pent-up demand starts to pull back a little bit as economic weakness and concern takes over, this is the Pavlovian low rates is good response. It may not actually be the way it plays out. \
[David] Yeah. Good point. Wait, let’s expound on that a little bit. It may not work out quite as others might anticipate, explain that a little bit more. I want to make sure everyone understands your logic there.
[Bill] Straight purchase side, lower rates improve affordability. Which should bring more buyers into the market, but if the economic concern and outright weakness or concern about weakness take over, and a lot of those potential buyers, even though it’s more affordable, stay on the sidelines and you’ve got a bunch of people that want to bail on their house, you wind up with a lot more, or enough of a supply and demand imbalance that it could be negative for home values.
[David] Yeah, but isn’t the pent-up demand so strong, Bill, that the probability of that is slim unless we have a crashing of the economy, not a worsening of the economy?
[Bill] So the first thing you learn a long time ago is if you don’t know the answer make sure you’re the one asking the questions.
[David] That’s the key to me hosting this podcast. I ask a lot of questions. I’m not the smartest guy in the room. You all are.
[Bill] I think that at least in the shorter, immediate six month time frame, let’s say that if outright weakness and probably more importantly, the perception of future weakness may take over and it may keep enough people on the sidelines that it’s not a slam dunk that demand no matter what will always exceed the supply.
[David] Yeah, good point. Mr. Kittle, get some of your thoughts and reflections, especially when you hear Bill’s comments. Yeah, if I’m still chuckling about if you don’t have the answer, ask a question like that, but
[Kittle] I’ll just say that Bill is right if the economy takes a pretty severe downturn, but if it doesn’t, it just weakens, then, house prices go up. That’s going to be a real fine line there because there is no inventory to the point you made David. I’d like to see rates come down a little bit. I don’t think the drop we’re talking about here is enough to start a big refinance boon. So, if it spurs anything, it’s going to have to spur purchases. I can tell you about the TMC conference, which I was down there for the board meeting. I had to come home on Sunday, but it kicked off.
[David] to be what you had to come home for what reason? Come on, grandpa. Come on, grandpa. Be proud. Speak it out.
[Kittle] Hey, I got a new granddaughter. So, a little Phoebe. So, let’s see. Yeah. It’s a TJ. And yes, that’s so good. EJ and Lacey. But yeah, thank you for that. But I think there’s just still not enough inventory out there and we’re not going to have a refinance boom. I’ll get back to the TMC. That’s where my thought was when you allowed me to talk about my new grant. It’s very optimistic in Arlington down there in Dallas at our conference right now. This is the second largest lender attended conference we’ve ever had. So, think about a second in this market. So, there’s about 330 something people down there right now and there’s a lot of optimism and we just had two of our preferred partners rejoin that hadn’t been with us for about two years.
[David] Oh, really?
[Kittle] Yeah. A lot of interest to come back in. And so going to have a great time.
[David] Yeah. I’m sorry that you’re not here. It’s not the same without you. David, Mr. Kittle, it’s a joy to have you on stage. You do present so well. We just miss having you here. But what’s really interesting is that Fannie Mae, the chief economist, was on talking about interest rates. He is not as bullish as Les is on lower rates. He’s taking more of the conservative track that we will see lowering and the trend is down. But I’m not sure anyone’s being quite as bullish as Les is on his opinion on race. Love it. I’m glad to have that. Mr. Helm, get your thoughts on interest rates and your thoughts on the overall economy.
[Marc] David, I’m not so sure I’m going to give comments on interest rates anymore. I’m one of those people that’s like a fool, so I’m not going to do it. No, seriously, I think comments now about it are just, are especially best.
[David] And it’s like noses. We all got one. And is there, that’s right.
[Marc] That’s right. We all got an opinion and I’m interested like everyone is to see how this shakes out over the next two, two months. I don’t understand why the magical date is that far into the year. I don’t really get all the moving pieces on that, but I think we need to have reduced interest rates in our market, and I think we all agree with that. And there’s just no listings going on right now because there’s no buyers going on, especially in my market area today, which is well,
[David] Yeah. It is very regionalized. And I think when you look at certain parts of the country, up in the DC area, we’re seeing listings going up for obvious reasons, a lot of people losing their jobs, but in your part of the market, you’re right. It’s just, it’s stagnation right. Big time. But other parts, we’re seeing homes going on the market in my neighborhood. Again, I told everyone last week I’m going through a divorce, so I’m putting my house up for sale. And thank you so many for you reaching out. Many of you reached out and said some really kind things. Thank you. Thank you. It is what it is. We’re moving on and making something positive on the other side of this thing and that’s what I think we have to look at in this market. I think it is going to be regionalized and what’s going on in your market, find a professional that knows what’s going on. Alice, you are there in the Ohio area. What are you seeing as far as the market overall there?
[Alice] I’ve seen more houses hit the market and signs staying up a little bit, but no big dramatic change. I think one point to make sure everyone is remembering in this onion there’s so many layers to it, is the seller. Those sellers have debt, and when they’re sitting at that 4%ish range, 3%ish interest rate range, and the values of homes have to drop substantially to offset that for them to be able to get a larger home at these higher interest rates. When you say houses aren’t going on the market, that’s a part of that dynamic. Sellers it hasn’t improved enough. Rates alone will not make that change. There have to be other factors, and it is very much a micro-market solution. It is not a national solution. It’s not.
[David] It’s not. It’s not a very regional, very micro. Yeah, you’re right. Absolutely. Allen, any thoughts you want to contribute?
[Allen] Oh, I think the wisdom has already been shared. But like you, David, I’m going through a divorce and this week I’m listing my house. I live in the neighborhood of the TPC Players club. So, my realtor said to wait for TPC to end, which I did this morning with the playoff. But in the end homes, my realtor sent me some very interesting information. Homes are selling at a percentage of the listing price. I think it was it was either 86 or 94 percent of listing price in my specific area and the average time on market is up to almost 60 days now. So yes, there’s not. Yup. Yes, there’s, and I’m in a hot, still hotspot where the mark, where the value has stayed flat, and it hasn’t really increased or decreased in the last two years. So, I’m going to sell it for exactly what I purchased it for. I’ll lose money in the end because of the money I put into the house and the cost to sell it. I also noticed that realtors, even though the new law was passed this is something that’s on buyer’s minds, by the way, that’s why I bring it up. realtors are still getting the 6% or 5% because what’s happening is that the buyer has to pay their realtor if it’s not part of the transaction, which takes certain buyers away from the transaction because you as a seller are not offering a percentage enough for the realtor to be compensated. So, it’s creating a little bit of a scenario where, yeah, there’s a law in place, but it hasn’t affected anyone on the seller side.
[David] Yeah. I was saying the same thing. I know seeing the same thing.
[Allen] Yeah, the other thing that I’ve noticed is that. There is a lot of inventory coming on the market. And I also noticed that rent has started to drop faster than home prices. So, people in my area were listing rent for 3 a square foot. It’s been 2 a square foot for the last few years. It’s starting to come down, meaning they’re listening to hide. No one’s taking it. It sits for a month or two on the market and they’re lowering it. Some people are lowering it by 50 at a time. And some people are lowering rent to 50 at a time. So, I think rent plays a factor because how much will you spend in the next year? If you in your mind think, hey, I’m going to wait for rates to come down because you’re not in our industry like we are and some of your mom or dad, or someone said, wait for rates to sell. I could just rent for another year. So, we’re, I think we’re also fighting against that.
[David] There’s no question. The rental market is really interesting. It’s overbuilt in many parts of. country. I’ve been traveling around a lot. I was in Las Vegas over the weekend, saw the amount of multifamilies gone up in our area in Austin, Texas. Multifamilies just continue to go up and I’m going like, who’s going to be renting all these homes? All these apartments, I think we’re going to see a real interesting dynamic play out here, but we’ll, we shall see. Anyone, Bill, you want to have any final comments on this segment?
[Bill] Just going back to what Mark said of things being regional. So, I have a client in northeast Georgia and their application volume this month has already exceeded what they had done last month. So, there are pockets of strength, but it’s, that’s great. That’s great. If you’re in those areas, if you’re not, you have to deal with what’s in front of you.
[David] And I think the general feeling here at the TMC conference is as, as it was at the lenders one conferences, overall optimism, and we’re seeing a pipelines doing staying respectively better than what someone people feared they might see. We’re but what’s really playing into this and we’re talking about this, and Allen segment is the amount of technology is contributing to reducing costs and what people are willing to spend more so wisely to get their costs down. So great stuff. Great feedback on all of that.