[Music]
Welcome everyone once again to the
Selling Greenville podcast I am your
host Stan McCune realtor here in Greenville
South Carolina and we are doing a part
two episode of the Corona virus because
honestly a lot has changed since the
last podcast that we recorded
basically a week ago about this virus
and there's a lot to cover so we need
to do a part two about this crazy
covid-19 Corona virus woo flu which
some people are saying that's a racist
thing to say so I won't say that but
whatever you want to call it we'll
just call it the Corona virus for
the purposes of this
podcast there's a lot that this thing is
doing and causing to our economy right
now and we need to talk about it a
little bit more in depth because it
is having a ripple effect on real estate
throughout the country but here in
Greenville South Carolina so there is
much to talk about so so let's get
right in what I keep hearing over and
over again people are scared of a
recession and and understandably I mean
listen we are we're probably already in
a recession right I mean the economy is
the global economy is basically going to
shut down it's it much of it is already
shutting down we're getting here in
Greenville we're having major local
restaurants that are sending people
requests to buy gift cards just so they
can pay their employees so they don't
have to to have mass employee layoffs
sadly there's just only so much that
can be
done and and and we're definitely
going into some kind of a recession and
whenever there is some type of a
recession there are fear responses
people respond and react out of fear
there will be people that will stop
buying or maybe decide that they don't
want to we we talked about this a little
bit in in our last episode so I'm not
going to get into tons of that but I'm
really starting to hear more and more
people are really starting to what
used to just be a whisper now they're
starting to verbalize okay I'm really
concerned and I may
change the way I approach buying and
selling real estate because I'm
uncertain about what's going to happen
in the
market and honestly we're trying to
figure out what is going to happen in
the real estate world I mean me as a
realtor and and when you look at
the statistics well just in our area
here it hasn't changed that dramatically
yet we haven't
seen people that are just completely
scared to go out and look at houses now
I did have a contractor that I talked to
today a contractor that I that I
frequently use for homes that just need
you know small repairs here and there
and he has self-quarantined himself
because one of his Subs tested
positive for the virus and so this
contractor now has put himself in a in a
self quarantine he's on day eight and
and so he's gone into into next week
hopefully he said he feels fine right
now so hopefully you know by the time
he's at day 14 from having been exposed
to this subcontractor he will be fine
but that's the closest thing that I
have seen to this directly
impacting my business except in one way
and and when I recorded the last episode
about the Corona virus I did not see
this happening okay mortgage rates when
I recorded the last episode were at
historic lows
and overnight they jumped almost an
entire point in fact there were like
moments where lenders couldn't even
provide estimates they had to wait
because when when Banks start
shifting what their rates are going
to be which usually doesn't happen you
know multiple times per day but when
they do that it kind of freezes things
for you know like an hour or so well we
were having rates changing three or four
times a day for like multiple days
and so it's kind of like the the stock
market where we're seeing periods of
people buying and selling because
nobody's really sure if this is the time
to buy or sell we're seeing that in the
mortgage markets what what happened was
when the rates dropped to his historic
lows everyone rushed to refinance so
what happens when you have more demand
than there is Supply and in this case
what I mean is that we had more
people trying to refinance then we had
Banks and bankers capable of handling
that
load the banks decided you know what we
have to increase our rates even though
they could have have based on their
normal profit margins had much lower
rates they ended up
increasing their rates just in order
to be able to handle the amount of
volume that they were getting and hopes
that the people that you know maybe the
people that were sitting at like a a a
425 rate or like a you know a 4 point
maybe even a four and a half percent
rate that those people who were like oh
I can get down to a a 4 point or sorry a
3185 or or a 3.25 yeah I'll do that
that once they saw the the markets and
the mortgage rates adjusted up to 4%
that those people just back down and
decided not to do refinance that's the
whole idea and so but since then
rates I'm starting to see some rates you
know down in the mid threes again so it
seems like the the mortgage Market is
we're going to see some
volatility more volatility than we're
used to seeing and it's it's really
unusual because the FED is dropping
their rates the what the FED does
doesn't necessarily directly translate
to the mortgage Market but oftentimes
there's a close correlation to what the
FED does to what the mortgage markets do
in this case
that's not necessarily 100% the case
because of of basic economics like I
said where we're seeing incredible
demand for people suddenly wanting to
refinance and all of that with not as
the with with not the ability to supply
that Demand with all the banks now what
happens if all of the sudden the for you
know maybe a temporary period of time
the bottom kind of falls out of the
market with real estate so that you know
buyers aren't looking at houses and new
contracts just disappear overnight I
could see rates going really really low
and in just a few weeks now now I
don't want to promise that because I
thought that that was going to already
happen and that we were going to be
seeing low you know those historically
low rates I thought that those were
going to be here for several weeks and
it turned out that just overnight the
rates ho back up but don't be surprised
if we run into a
situation where basically buyers
disappear off the market for a few weeks
because nobody is willing to leave their
house to look at homes that will then
flip the script so that the demand there
will still be the demand for refinances
but if all of the demand for new home
purchases disappears from the mortgage
Market we could all of the sudden see
rates go back down to the historic lows
that they were at so it's going to be
very interesting we really are in
uncharted waters here we really don't
know exactly what is going to happen
I I think right now the the people in
the real estate world particularly here
in our area that are the most
susceptible to being damaged by what's
happening right now are the people that
had their homes on the market for a
little while leading up to this crisis
so the people that wer for some reason
weren't able to sell their home well we
know why they weren't able to sell their
home if if up to this point up to before
the the Corona virus hit our Market you
weren't selling your home there's one of
two reasons why
either a you overpriced it or B the
home was was just not in good condition
and and really that still goes back to a
right because there there's a price at
which even a home that's not in good
condition will sell so those people
that had their homes on the market that
weren't selling because they were
overpriced for some
reason those people now find themselves
in a really really bad spot because
now there's a possibility that the
market might slow down
dramatically and so those people might
become more desperate to accept an offer
that's lower than what they would have
considered
than the way they felt a few weeks ago
because now there's all of this
uncertainty now that's being injected
into people's minds because it's like
well if I couldn't sell my house for
$250 or
$250,000 a month ago what am I going to
be able to sell it for in two weeks from
now like if if it's just been
languishing on the market at this price
I mean what happens if the bottom
completely falls out of the market am I
even going to be able to sell for 230 or
220 and so so those sellers really
find themselves in a precarious place
and and it's it's going to be very
interesting to see how that plays out
I have had multiple buyer clients get
under contract recently for 10 or
more or greater than
10% less than than the list price of a
house and I think that that has to do
a lot with just the uncertainty that's
in the markets right now on average
here in Greenville you typically find
that home sell for about 2 to 3% below
what they're listed for so to go 10 or
more percent it is very unusual now my
clients on average get several points
below usually around four to 5% off
off the list price when they're buying
Through Me versus the average which is 2
to 3% at least that's based on the
statistics that the greater Greenville
Association of Realtors released for
2019 compared to to my own personal
statistics obviously I can't promise
that on
on on any scalable level but but just
looking at the numbers from a meta
standpoint that is the case but now
well we see a stretch here where that 2
to 3% stretches out to a much higher
number for those people that have had
their homes on the market for for a
month or two or three I I think that
that's a very real
possibility
here's the other thing that I have
become kind of more aware of in you
know the past few days since I recorded
the last
uh
covid-19 U podcast that I recorded as it
relates to real estate I Now understand
so when I recorded it back then I was
kind of looking at at what happened in
China and and looking at what was
happening in South Korea and some of
these other countries and it's like okay
this virus has a lifespan it seems like
it's about two months after about two
months our economy should recover all
should be right in the world we'll be
we'll be good to go
I I think that that that is still a
possible
outcome but I also think I'm I'm
starting to become more and more
convinced that there's a
possibility that we're going to go
through all of this again in a few
months that this virus will cycle back
through and and maybe it will cycle back
through like as soon as the fall like we
don't know they're they're there's again
a lot of uncertainty with what's going
to happen but we know this that it's
not likely that we're going to get a
vaccine for at least another year and
maybe a year and a half unless there
the restrictions that are placed on
pharmaceutical companies in terms of
how long they have to test their
vaccines and all of that unless those
restrictions
are are lifted in some way to account
for the virus which is possible that's
possible that that the restrictions are
lifted and and and that they make it
to where okay you know maybe we only
need to clinically test these
vaccinations for six months for for
instance
again there's a big risk associated
with doing that but but but maybe that's
what they do right unless they do
that we might be looking at we're not
going to have a vaccine coming out next
month you know we we've got presidential
candidates right now saying we need a
vaccine that's going to be free for
everyone well yeah that's great are you
going to go out and make that vaccine
like do you just dig in your backyard
and find the vaccine like there's a
process that this takes You' got to
isolate the the strain of the virus
which apparently the Canadians did like
just a few days after the NHL season
suspended by the way the Canadians
figured out a way to isolate the
strain for the virus so it so it turns
out that there is a apparently a direct
correlation between productivity
in Canada and the end of the NHL season
so I was very impressed by that but
you've got to like isolate the strain
you've got to do all the stuff figure
out what kills the virus then normally
you do animal testing I understand that
they have skipped the animal testing
gone straight to human testing which
is in and of itself kind of an extreme
step but then there's you know several
months usually several years that you
have to do that so I mean what if this
virus comes back around again what if we
have to go through all of this again in
the fall I I think that that could
happen and you know that could be a
really bad scenario I I I don't know
I I don't know what the light hoods are
at this point but but
regardless I think that we have to
approach things
levelheaded if you need to buy or sell
at home you can't try to time the market
we don't yet know what the market is
going to do and so like I said on the
last episode I still feel the same
way it doesn't make sense to delay
something that you already know that you
need to do because you're uncertain
about the market you you can't time the
market you I mean you can maybe get
lucky and just happen to buy low and
just happen to sell High but no none
of us knows what exactly is going to
happen and how long things are going
to be bad for and so really I think the
most reasonable thing to do is just to
live your life as normally as possible
obviously practice the social distancing
and wash your hands and do all that fun
stuff if you're sick you know you think
you might have it quarantine yourself
get tested wear a mask but in terms
of real estate like you can't factor for
something that you don't know how it's
going to turn out and I've heard people
say for m multiple years now we're in a
housing bubble and the bubble is going
to crash and the economy is going to
crash for years for for like three years
now I've heard people saying this and it
hasn't happened and so what if you keep
responding to the Assumption and keep
acting under the assumption that there's
going to be a recession that recession
doesn't
happen What then you know it it that's
that's not a that's not the right way to
live you can only live with the
information that you have with the
information that you know and so right
now all that we know is that there is
uncertainty and that there is the
possibility that that this could get
worse there's also the possibility that
this might after a couple of months
that we might just completely rebound
from this and everything will kind of go
back to
normal right now we just don't know
for sure and and so my recommendation
to people is operate under the
assumption that that things are going to
be okay unless there is one exception to
that
rule and again my apologies I think we
discussed this a little bit in the last
episode but if if you're looking to buy
and sell like you want to buy a property
and and have the flexibility to sell it
within a year I wouldn't do that I I
would very very much be cautious if if
you're in a situation where you might
not be living long where you might not
be keeping a property long term where
there's a possibility that you might
want to
sell in you know a year or
less whether that's because you're
flipping the house or or whether that's
because you think that you might just
want to buy and then live in it and then
move right
away that that's a bit of a risky
strategy right now flipping houses right
now you're taking a Gamble and I
would make sure that you have
multiple what I would call multiple
exit strategies multiple options at your
disposal like maybe do you have the
ability to hold on to that house without
it causing you a major Financial strain
and maybe renting it out or or doing
something to that effect but if it
don't put yourself in a position where a
year from now you have to make a sale
when we don't know what is going to be
happening in the next few months and in
the next year that's the thing that I am
most concerned about and and that I'm
advising my clients
on I had someone asked me recently about
the housing bubble thing like you know
aren't we experiencing a a big housing
bubble that going to burst in our area
and and I I don't think that that we're
experiencing that for the most part and
here's why for the most part we are
having more people moving into
Greenville than we have homes that are
being sold in in Greenville and in the
upstate and this is reflected in what
we've talked about before in the
inventory levels that we're we've been
hovering around three and a half months
of inventory for a long time now in
in Greenville
County and so no there is no housing
bubble now you know I can't speak too
nationally nationally there could be but
I'm I'm not concerned nationally I'm
concerned about what's Happening Here
locally because if real estate might
crash in some other areas but that
doesn't necessarily mean it's going to
crash here when the when the economy
did what it did in 2008 2009 2010
even into
2011 the real estate industry here in
Greenville was not as affected as it was
in some other
areas we still saw in fact I my wife and
I we were looking at houses back then we
were trying to take advantage of the
Obama tax credit right I think he
offered like $7,500
they were just trying to get people to
buy anything and everything and we were
trying to take advantage of that at the
end of the day we were very poor at
that time and our financing fell through
and so we weren't able to buy a house
but we looked at a ton of houses and we
put offers on multiple houses that we
got out bid on out bid on during the
recession during the recession that was
literally a housing market crisis that
was a recession that was caused by
by the housing market directly not by a
virus or whatever so that was not
happening in other parts of the US that
was a a pretty unique phenomenon here in
the Greenville
area and I think that we're still in a
similar boat now there might still be a
bubble in certain
submarkets okay for instance I could see
there being a bit of a housing bubble
that that could burst with a recession
in the
high-end Downtown
Greenville condos you know these
$800,000 two bedroom you know 900 square
feet condos that are that are real
trendy real
urban we've had a lot of those built
in the past few years and you know
developers are are building more and
more of those I could totally see that
market there being a bubble that's going
to burst in that market will that affect
the people that live in two three
$400,000 homes my opinion and this is
this is just my opinion I I don't think
so I don't think that I think that
the bubble that could burst on homes in
that $800 $900,000
range if there is a bubble in that
submarket I don't see that impacting
broadly the real estate market in our
area with people that have properties
that really are not comparable that
they're that they're trying to sell
but that is my general opinion I I
feel like our economy here because we
have so many people moving to Greenville
Spartenburg I believe I saw
recently that that this area is one
of the you know one of the fastest
growing in terms of population one of
the fastest growing areas in the
US that means that we
need houses to go on the market that
means that it's more than likely going
to stay a sell's market more than
likely
now we might see it shift a little bit
more in the buyer Direction that's
that's a good thing that that's not a
bad thing it's it's been frustrating for
for buyers for a long time now we see
you know multiple offer situations
happen all the time and it gets old for
a lot of
people so I I don't necessarily think
think that a slight correction on that
would be the worst thing in the world
but I do think that
obviously we we want the economy to be
good we want people to keep their jobs
and hopefully what what we hope doesn't
happen is that there is a cascading
effect from this virus now probably the
best case scenario is that this virus
runs its course everything is is kind of
over andone with in you know a couple of
months and we're able to get a
vaccine shortly thereafter and we we
kind of don't see this impact us you
know much into the
summer we discussed that in the last
episode quite a bit what about the worst
case scenario I don't want to be a
doomsday kind of guy and I don't want to
freak people out but I I do want to show
the other side of the coin what would
that doomsday worst case scenario look
like and here's here's the way I picture
it I mean obviously you can you can get
really doomsday if you want to but I
mean with with it still being
realistic I could see the Corona virus
having a Cascade effect on our economy
that we have several weeks of just the
economy shutting down it just completely
shuts down people aren't leaving their
houses they're not buying anything
they're not doing
anything everything completely shuts
down and so what do businesses do they
they have basically a few choices one is
mass pay cuts and mass
layoffs and so you know they have to
find a way to cut costs and so that's
one option we're already seeing that
I saw today this is what day is today
today is the 18th we're recording
recording this I saw that
18% of the workforce has already either
been laid off or had some type of
hour decrease or pay cut
18% of the workforce has been impacted
by this virus
already so that's one thing that that
happens that's that's one option
another option is that and and this is
really sad and this is going to happen
is that businesses just closed
they're they're they don't see a way
that they can survive a few months of of
just literally no
Revenue while at the same time they
still have expenses I mean you still
have to pay your lease if you're if
you're if you have a
storefront you still have insurance
that you have to pay I mean there's all
kinds of expenses that don't go
away with with businesses even if
they're not able to be
open and and people forget that so
businesses are going to have to close
they're there there are there is going
to be some collateral damage in that
way and the other thing that I'm that I
see happening that I'm really concerned
about is a lot of small businesses
taking out loans in order to
survive what's going to happen here the
next few weeks and then them never being
able to pay those loans off a lot of
people don't realize how many businesses
is barely make a profit like there's a
re a lot of people don't realize what
Black Friday is Black Friday has
traditionally the way I understand it
been the day that retail stores for the
first time in the year turn a
profit and so like they have to go
the
entire almost the entire year before
they finally the books finally flip over
that they're starting to make a profit
and and a lot of small businesses are
you know just barely barely making that
profit barely getting by and you talk
about two months of just shutting down
the only way that they'll be able to
survive that is that they start taking
out loans well well then how are they
going to pay those loans back if they're
already barely making a profit during
the best times and so so I'm
concerned about that
happening
and if that happens then then a lot
of people are going to lose their
businesses lose their jobs companies no
doubt are not going to make their
quarterly goals for this quarter and for
next quarter which will then result in
further
panic and here we're teasing out the
worst case scenario that then there's a
possibility that could result in in
deeper panic and a deeper recession
people selling off their their shares
companies doing further layoffs in order
to you know cut expenses in order to
make their shareholders happy and and as
all of this all of these things start
piling up the economy the global economy
is literally losing trillions of
dollars literally money that was there
that's gone just because a virus forced
people to stay at their
homes and no doubt if that happens there
will be less money for Real Estate there
will be less money out there for people
to buy houses to buy property to buy
land to buy real estate and what if that
happens then the market absolutely will
shift if if all of these cascading
things
happen and this goes on for a sustained
period of time in in the worst case
scenario and and the virus comes back
later I we're talking about something
that that could potentially be very
very damaging and and the market would
for sure change that people would
that were thinking about selling would
decide not to people that are are
thinking about
buying you know might be in a
situation where they're not able to get
financing they just lost jobs or they
just lost income there are so many
different negative ways that this could
could go but I'm just hoping that after
a couple of months that the virus goes
away that our economy recovers that we
figure this out the the nice thing is
that this is a a global
well I shouldn't say the nice thing
about it but one of the positive
aspects of it being a global problem is
that we have the smartest Minds in the
world working on it and so we have a lot
of people trying to figure this out and
and hopefully they will and hopefully
we'll be able to as humans as
Humanity mankind whatever broad word
you want to use that we can can pull
our
resources figure out what to do figure
out how to get out of it the government
can can do what needs to be done you
know Obama did that
$7,500 house credit now they're
talking about possibly paying every
American like $1,000 a month for the
next couple of months I could see that
even going on longer than that it's
an election year our president is going
to do whatever is necessary
to get his approval
rating up as high as it'll go and as
will everyone else that's running in
elections there's a lot of Elections
this year and there is not going to be
any concern for our deficit they are
going to spend spend spend the
government is gonna gonna take charge of
as many things as possible in Spain this
week the Spanish I I read that the
Spanish government took over private
hospitals I mean we're seeing things
that we never even thought that never
even was on our radar is happening right
now it it's it's a very strange time
but I think we need to like I said
before if your plans are potentially
volatile there's a possibility that
you're not sure if you're going to want
to if you buy now then if you're going
to want to to have to move again later
or if you're thinking about flipping a
house don't do anything that's volatile
plan on
any particularly purchases that
you're doing in real estate plan on on
needing to hold on to those for a few
years and and if you don't need to great
but but just assume that you will
if you're if you're
selling I think you need to try to sell
sooner than later like we don't know if
if things are going to get better
don't try to time the market that's
risky you have a window here where
we are still seeing we're still I'm
still getting requests from people
wanting to see houses it's still there's
still a decent bit of activities
showings are still pretty comp able to
what they were before the Corona virus
came out don't risk it don't take the
risk that we go into a really deep
recession and that people aren't are
told to stay completely in their houses
and to and to not leave their houses at
all due to the the risk of of
spreading this virus don't take that
risk that is still my opinion it hasn't
changed a whole lot since the last that
we recorded but what has changed since
then is is I do think that there is a
stronger likelihood that that we're in
this for the long run than I originally
thought and that might have a ripple
effect but the the government is working
to try to solve things hopefully things
won't continue to worsen hopefully
will turn the
corner and and I feel I still have
optimism that our Market will rebound
that we will see that that that worst
case scenario maybe not the best case
scenario will happen but also the worst
case scenario won't happen that we'll
see something in between some type of of
Middle Ground scenario where yeah a lot
of businesses had to close people had to
take out loans but the the government
was able to do some things to help to
stimulate the economy we were able to
figure out a way to to limit the spread
of this virus we were able to figure out
a vaccine solution and between all of
these things that the disruption was
just for a few months and that we didn't
have you know this Global recession
for for multiple years like we had in
2008 I still don't think that we have
anything close to what we experienced
back then but it we might see some
quarters some quarterly numbers that are
worse than 2008 2009 simply because
we're going to essentially cease
economic activity we might essentially
cease economic activity for a few
months here but I'm hoping and and what
I think is going to happen is that the
rebound is going to happen much much
quicker than than what happened
during the Obama presidency where it
just took a really long time to to
rebound it was kind of a gradual build
back up to what it used to
be now I've had some a few people ask me
what they think or what I think that
they should do in terms of their other
Investments don't ask me that I'm not a
not I'm not an expert on stocks and and
mutual funds and IAS listen ask me
about real estate and if you if you
want to reach me to buy or sell at
home my contact information is in the
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hope to hear from you guys soon
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