Hello everyone and Welcome once again to
an episode of Selling Greenville your
favorite real estate podcast here in
Greenville South Carolina I your host as
always Stan McCune realtor right here in
Greenville and as always you can find
all of my contact information in the
show notes you can reach me for anything
particularly if you need to buy or sell
real estate whether you're an investor
whether you're an owner occupant I
handle all of that I handle land
purchases anything like that that you
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people now today I'm really excited
to talk about this I just got out of
a meeting just a little bit ago with the
National Association of Realtors chief
Economist yes the N has a staff
Economist Dr Lawrence
Yun and it was not a very long
meeting but it was very informative I
got a chance to communicate with him
directly ask him some questions and I
really enjoyed that and it was really
insightful to hear his perspective about
2020 and then about
2021 and and it turns out he's
extremely knowledgeable not just about
the national what's happening on the
National level but even right here
locally he talked about Greenville
Anderson Spartanburg and we really
got into some nitty-gritty
details with regard to what's happening
in the real estate market around here
and and and he really had some good
ideas for for what he thinks is going to
happen in
2021 and so that's what we're going
to talk about we also had earlier
this week the greater Greenville
Association of Realtors release Market
stats for the month of November so
they always you know after the month is
over usually about a couple of weeks
into the next month then they release
their statistics I've got I'll I'll
go through that a little bit with you
guys so you can see where things are
tracking but with regard to my meeting
with Dr Yun I wrote down some notes
and I just have a few things that I want
to tell you guys I think you'll find
really
interesting we were looking at the
economy for starters and just looking at
the trend and the outlook for how things
have been going and so
obviously we see if we if we go back
about 20 years we see the economy takes
a really tremendous dip in 2008 2009 now
a lot of people don't realize this
but it took the Obama Administration 6
years to recover from from what
happened in 2008 so it's not until 2014
before a lot of the economic activity
jobs Etc are kind of nationally back to
their former level and a lot of us
experienced that in real time I was in
the workforce I wasn't a yet a realtor I
became a realtor one year later but
it took the Obama Administration 6 years
I'm hoping that it doesn't take the
Biden Administration as long
with regard to helping the the economy
recover from covid but that's just
something to keep in mind sometimes
the things that are done by the
administration that's in power it might
not be very fast acting and you know
you can say what you want about the
Obama
Administration whatever you think it
it took a while it took a while whether
that was their fault whether that was
our fault whether that was nobody's
fault it took a while and hopefully
Co won't the initial Outlook is good co
has not damaged the economy as much
as it could have and most of the numbers
show a pretty good bounceback now what
Lawrence Yun what Dr Yun pointed out in
particular is that the upstate is
outperforming the national numbers in
every way just about every
way
whereas nationally we are about 9.8
million jobs fewer than we had earlier
this year so if if you look at
February March versus now nationally
we've lost about 9.8 million jobs that's
not good locally particularly in the
the greater Greenville
area he didn't give us the exact number
but he showed us the chart and basically
the bounceback is just a hair behind it
might be a few hundred jobs behind
if that what it was earlier this year so
the upstate has really bounced back
almost entirely to prior to preco levels
now Spartanburg isn't as good
Spartanburg is still
outperforming the national level but
it's it's not performing as well as
Greenville that's not super surprising
Spartanburg has a lot of lower
wage type of jobs and those are the ones
that have been impacted the most by Co
and so we are seeing that Greenville
and even Anderson Pickin are
generally doing a little bit better than
Spartanburg but the entire region is
outperforming the national numbers
that we're seeing here's another
interesting little tidbit that he
brought up people are saving a lot
more than normal and and that's a very
interesting phenomenon so even the
stimulus checks that were you know
issued out earlier this year a lot of
people ended up saving those checks and
I think that this is a lot of people
remembering what 2008 was like and
realizing hey we we need to hold on to
this and not just you know immediately
go out and go crazy people may have
gone out and spent it on some toilet
paper it seems like everyone spent it on
that these days but people are saving
a lot of their money and Dr Jud thinks
that once people really start to start
to feel secure again which we hope is is
sooner than later perhaps with some of
the developments with some of the
vaccines that are starting to be
released now people will start to feel
like the world is is and the economy is
kind of going back to normal that money
might in theory hopefully get injected
into the economy and it's certainly
possible that that people are taking
that money and and just investing it
into stocks or whatever long-term
Investments where it won't directly
impact certain sectors of the economy
but he believes that actually it will
be in injected in a very real way into
the economy including real estate that
some people have been saving up money
over the course of this
year and hopefully particularly those
that that didn't lose jobs didn't have
pay cuts and whatnot they're actually in
a better situation going into next year
than they normally would be because they
were so conservative and now we're going
to see an influx of money into real
estate and into other sectors of the
economy so that that's a very
interesting obviously a very optimistic
Outlook but that is certainly one
of the possibilities and something that
he thought had a very good chance of
happening here's another
interesting little tidbit that he
brought to mind he showed how
basically rates of of Home ownerships or
or home purchases I should say went
up and down over the years and we saw a
little dip we started to see home
purchases dip a little bit down towards
2018 and then last year it started
rebounding and that rebound has actually
continued through 2020 20 20 we are
seeing record sales of houses despite
being in a pandemic despite I personally
have clients multiple clients that chose
not to move this year because of covid
so we've had even fewer people moving
and and selling homes and whatnot than
we should have and in spite of that
we're still seeing record numbers I'm
looking at the greater Greenville
Association of realtor Market stats that
I referenced earlier and the 12 Monon
rolling average we it says that we've
seen a 5% gain on pending sales year
over-year
when from November to
November and that honestly is probably
quite low because what I've learned at
from reading these numbers so many so
many months in a row is that usually the
trailing month which in this case would
be November of this year usually that
number is is
inaccurate with regard to this metric
and usually it's quite low so it it says
actually that November we only had 468
pending sales versus last year's
November 1,51 because that's such a
difference I know that that number is
not right that number is going to get
redacted next month and what we're going
to see is that percent change in pending
sales is actually going to be even
greater an even greater number of
pending sales in 2020 versus 2019 which
is which is really
remarkable well Dr Yun pointed out that
the
trend exactly follows mortgage
interest rates and so when mortgage
rates go up home sales go down people
are a little bit more skittish a little
bit less interested in moving
because perhaps they already have a
great interest rate and now the rates
are going up and they're like you know
what for me to get a nicer house I'm
going to have to pay a whole lot more
because not only am I paying more for
the house I'm also paying more interest
to the bank and this is we've talked
about this in previous years this is
actually going to create perhaps a
little bit of a problem a few years
down the road from now when rates do go
up because they will they are at record
lows right now people are going to have
a hard time figuring out what to do when
they're ready to make that jump to the
next house but they currently have a
house with an interest rate of 3% or
whatever the case may be they're not
going to want to buy a house with an
interest rate of four and a half 5%
that's also $150,000 more than their
current house so that might create
down the road a bit of a problem the way
we're seeing these Trends but right now
it's a positive because rates are so low
so we have a
temporary really nice push for
for people buying new homes because of
lower interest rates and he believes
that these low interest rates will
continue into 2021 perhaps not as low
they they almost certainly will go up a
little bit probably particularly if the
economy rebounds more the FED will
you know do what the FED does and Tinker
with the rates probably pushing them up
a little bit higher probably nothing
close to what they were in
2018 when they exceeded four and a half
you know when when mortgage
interest rates exceeded 4 and a
half% and but we can expect it to go
up a little bit he didn't expect the
average for the year to be very high
though
another interesting tidbit so one
concern that I know that lenders have
and I've heard this concern from other
people is what about the risk of
foreclosure and I found this to be
extremely interesting so obviously
there is a risk there's always a risk of
people for closing that's just kind of
in general but when there is a lot of
economic disruption like there has been
recently sometimes that can trigger a
series of events it can kind of be the
first Domino that falls that triggers a
series of events that causes a lot of
people to foreclose and that's what
happened in 2008 we saw a bunch of
people start to foreclose in 2010 and
even
2011 and and that all stem back to
what happened in in
2008 well Dr Yun pointed out that we're
actually in really good shape unusually
good shape in this regard because if you
look at the graph for home prices home
prices in other words appreciation if
you want to think about it this way the
appreciation rate for houses is going up
dramatically in recent years it's gone
up very dramatically whereas the amount
of financing that is outstanding the
amount of borrowed money towards homes
has basically stayed flat over the past
however many years five I think it was
five to 10 years it had basically
stayed flat so what we're seeing is
people are using the same amount of
money to buy homes that are actually a
lot more valuable so the Gap here's
here's where people typically foreclose
they typically foreclose when they owne
more on their house than it's worth
because what happens is when they come
into that situation where they can no
longer afford their mortgage payment
they don't have an out anymore most
people if their home is is worth more
than what they owe they have an out
right they can just sell it at the end
of the day but when your home is not
worth as much as what you owe on it
you're in big trouble because now you
don't have an out if you can't make your
your monthly mortgage payment well Dr
Yun pointed out because and again this
is on a meta level this doesn't apply to
everyone but in general there is a
comfortable margin between what
people's homes are worth and what they
owe and so the economy and home prices
could diminish quite a bit before
homeowners are in trouble so we're going
to see hopefully we all hope this low
foreclosure rates in the upcoming years
even if we have more economic
disruption other you know potential
things that could cause recessions
whatever the case may be so that was
really
encouraging he touched on
obviously we need the main thing we need
in order to Help Housing
affordability which is a big thing on
everyone's mind you know the the
increase the appreciation of holes is a
two-edged sword because even though it
will help people not be likely to
foreclose it squeezes out a lot of
people from buying homes and then we
have the flip side of that which is the
housing affordability issue well that's
not being helped right now one of the
indirect impacts of the pandemic and any
one of you listening that are into house
flipping or rehabbing homes or
anything like that know this that the
cost of lumber has nearly doubled this
year and this is something that we're
just having to deal with it's a it's a
frustrating thing that all of us are
having to deal with he referenced he
didn't go into a whole lot of detail but
referenced the possibility that the US
might be sourcing lumber for from some
other areas in order to help ease this
this issue but we we have a lumber
shortage due to the the lumber
industry basically being shut down by
covid another little tidbit I thought
this was I think really significant for
Greenville there is a major
trend for people to move away from
cities and more into suburbs that is
directly related to Co at least in his
opinion and what his thoughts were was
was this
basically PE a lot of people have been
needing to commute into cities for their
work for a really long time and so a lot
of people just live in the city right so
that their commute time is low maybe
they can Bike To Work walk to work
whatever the case may be well as Co has
settled in and more and more jobs are
turning
remote either partially remote or
perhaps full-time remote a lot of those
jobs are going to stay that way and
what's happening is people are like you
know if I can work
remote I don't need to be spending all
this money to live in the city I can go
out into the suburbs and have and be
more comfortable be more spread out and
in some cases those people are moving to
areas like Greenville if they can if
they don't even need to be in the same
city then they can move out of state and
go to an area like Greenville and he
said he's seeing that very trend of
people moving from California people
moving from New York coming down to the
southeast they have more flexible job
situations and that is helping areas
like ours where I mean in Greenville
even though we do have Greenville city
quote unquote but compared to a lot of
places all all of Greenville is kind of
a suburban area I mean the vast majority
of Greenville County is either Suburban
or rural and it's just all kind of
mixed in just the the demographic down
here and so Co has actually helped
and this is probably part of what we're
seeing in some of these real estate
numbers Co has actually helped bolster
areas like ours because s people are
less dependent on the need to be in a
big city than perhaps they were even
just 10 to 11 months
ago now he talked a little bit about
oh actually I should I should go back to
one more thing he mentioned that W with
regard to housing affordability I almost
skip this because this was a question
that I came back to and I I wrote at the
end of my notes he mentioned that he
thinks that there is going to be more
construction and more more homes
being built next year which will
hopefully ease some of the housing
affordability concerns and I found that
to be very interesting well well how
where where do you get that Intel from
because around here we're seeing some ma
major housing affordability issues
which I'll get into in a second which
we've talked about before as well
but we have locally and and
nationally have seen that Builders are
still very conservative so he showed a
chart that was a 20-year chart for new
construction and there there was a
baseline on the chart and then you see
you know leading up to 2008 new
construction was going crazy and then it
just tailed off after 2008 and the
reason is pretty simple people were not
buying new houses they did they
couldn't they couldn't even get
financing on them well from 2008 to 2020
you see that new construction creeping
up each year but it is nowhere near the
2008 levels I mean it's still way far
below that and that's again because
Builders are playing it cautious they
don't want to run into a situation like
they had you know in 2008 through 2000
really through 2012 2013 where they
would have homes that they'd build and
then would just be sitting there
for several years at times and then a
lot of those Builders went out of
business they they couldn't pay their
bills because they weren't moving any
homes they weren't able to they you know
they might have bought some land and
then they couldn't build on that land it
it was really a disaster so they have
played it really cautiously Dr Yun is
really hoping that Builders become a
little bit more bullish seeing the way
the market is seeing how we have an
inventory shortage basically Nationwide
and he said that there is evidence by
way of the fact that first off there
are more permits for new houses being
pulled now that's not specifically in
our area that was on the national level
but there are more houses more
permits for new houses new construction
being pulled and that's evidence to him
that Builders are ramping up some of
their production that's great he also
said they're seeing signs that some
of the older population this year
decided to play it safe and cautious and
didn't move because of covid and he
believes that next year there's going to
be a little bit I mean it won't be a
dramatic influx but a little bit of an
influx of some of the older population
that's looking to downsize or whatever
the case may be enter the market and and
put their home on the market and that
that will help some of these inventory
issues that we're running into and
that that again that we'll see more
homes come on the market and hopefully
that will help housing affordability but
new construction is a big part of it
because what happens when people are
looking to most people when they buy
their first home it usually has to be a
little bit of an older home maybe a
little bit of a fixer upper whatever the
case may be and for a lot of people that
second home is a new build for them it's
new construction they they are now
established they have some money and so
they're able to purchase that new
construction and then they put their
home on the market as well which then
becomes available to perhaps a
first-time home buyer again and so it
really helps new construction helps to
ease some of the inventory issues in
multiple ways just the way the the
market
Works he spoke brief briefly about
the new Administration one thing that he
thought was a positive for the Biden
Administration and one thing he thought
was a negative the positive was that
he said that the Biden
Administration is talking about perhaps
doing some down payment assistance
particularly for families that would are
are trying to get out of the rent cycle
trying to move from being renters to
firsttime home buyers perhaps even
something to the effect of like a
$155,000 down payment closing cost
assistance type of program there's a
lot yet to there there's more questions
than answers on that but he was very
interested in that the National
Association of Realtors is going to be
very involved with looking into that
and and communicating with the Biden
team on that he also had caution that
the Biden team is talking about making
major changes to the 1031 exchange which
I'm not going to talk about here first
off I'm not an expert in that you need
to talk to a 1031 intermediary about
that or an accountant and I'm happy
to refer you to either of those if
you would like to communicate with them
I know 1031 intermediaries that will do
a free consult but the 1031
exchange is a way for you to sell
real estate buy other real estate in a
short time period
that all of this is investment real
estate of course and you don't pay
capital gains tax you defer that capital
gains tax you might have to pay it later
but right at the moment when you do
those two transactions close to each
other you don't have to pay the capital
gains now if you're an owner occupant
you don't have that issue anyway because
that's that's wed for owner occupants
but for investors the 1031 exchange is
an important strategy and I've had
investor that have have done deals
strictly because of the 1031 exchange
I've had closings directly related to
this and apparently Biden is kicking
around the idea of potentially even
eliminating that tax strategy alog
together obviously Dr y was was not
very happy with that at all and he he
said that the National Association of
Realtors would be fighting on behalf of
all of us all of us that benefit from
this to to make sure that that that
doesn't get eliminated because that that
would really mess up a lot of people's
long-term Tax Strategies if they did
that so that's pretty much it in
terms of of my takeaways
from from that meeting it was a
really great meeting dr's very
knowledgeable a big asset to the N I
already referenced that how pending
sales in our area are up if we can pivot
here to local greater Greenville
Association stats not going to spend a
lot of time on this but yes pending
sales it's it's really remarkable
what's happened I mean the recovery that
we have made June July August
September were massive months even
October there were more pending sales
year on-ear versus October of
19 November says it was down but
again that will be redacted I'm sure
next month and probably November was was
comparable if not up year onye based on
what I saw
happening and so that's all good
closed sales up
99.7% year on-ear that is again just an
incredible number and that's probably
lower as well I I imagine that that will
be edited a little bit next month
we are seeing I I never I never expected
this I really thought when Co hit that
it would just not bring real
estate to a halt but just it you know
there was a stretch where like no homes
were coming on the market and where
nobody really knew what was going to
happen and that changed very quickly and
here we are towards the end of the year
looking back and it's like wow that was
a a really incredible year of real
estate and and as a realtor I'm I'm
really grateful for
that one of the most shocking statistics
and this is one that usually is
pretty accurate for the trailing
month is the days on Market until sale
for November was I believe this is
the lowest I've ever seen it was 38 days
so our to to bring perspective our
typical average around here for days on
Market until sale which is defined in
these GG statistics as the average
number of days between when a property
is listed and when an offer is accepted
in a given month so this isn't when it
closes this is when an offer is accepted
the average is usually between 53 and
54 days now that's skewed a little bit
by the the homes that are priced on the
higher end tend to take a lot longer
homes priced you know on the lower end
of the Spectrbelow 250,000 usually
take way way less time than this but
just looking at the metadata the average
is 54 to 53 is days for two for two
years now that's been pretty consistent
and in November it was 38 days so so not
homes that were listed in the months
of October no and November we selling
very very quickly compared to the
average
and and we're I'm looking here at the
Historical number going all the way
back to 2007 that is the lowest number
that has ever been on this chart and I I
don't have any data be before 2007 so
we're seeing homes selling faster
than they ever have homes going under
contract faster than they ever have
which is very
interesting the U media in sales price
in October it was at 244 and it
stayed about the same in November
243 and that compares to November of
2019 it was 215 so that is a tremendous
uptick we talk about this the the median
sales price tends to be a little bit
more of an accurate gauge than the
average sales price for for what the
average in our area is because the
median looks at the middle number in the
sequence versus just taking the average
which can be skewed by really low
numbers or really high numbers in our
case it's skewed by really high numbers
because the average in our area for
November was was
2965 so 243 that was the average that
is a that was the median that was a
13% increase over 2019 when when it was
2115 so that's again showing you the
local appreciation here
is is really incredible those are the
two highest months the past two months
have been the two highest months in the
history you know since this has been
tracked by the
GG so no big no big surprise there
but again we're not seeing any sign of
of
appreciation of homes prices
depreciating in any way I I remember at
the beginning of this year I had some
clients that that investor clients
that were like do you think that you
know that homes are going to
depreciate in value do you think we're
going to see you know something happen
like what happened in 2008 and I didn't
know at that time but it's pretty clear
now no way we saw the exact opposite
home prices have just gone berserk this
year the percent of list priced
received this is also the highest that
it's ever been this is a metric where
they they it's it's kind of a flawed in
my opinion a flawed metric but they take
the most recent list price of the home
so this can be after price changes but
they take the most recent list price
don't account for any seller concessions
like closing costs paid or warrant
that the seller pays for anything like
that but what percentage of the current
list price did or the the mo the last
list price did the home sell for and
that number for the month of November
was the highest ever
98.8% that's pretty much all year
it's been in the high 98s but 98.8 is
the highest ever last November it was
98.1 so again we're seeing increases
there as
well housing affordability
not surprisingly when you see all
these things at their highest point
points ever housing affordability is at
its lowest point ever we are at a 97
on the housing affordability index
that means that the median
household well I'll just read it to
you this index measures housing
affordability for the region for example
an index of 120 means the median
household income is
120% of what is necessary for the medium
pric home under prevailing interest
rates a higher number means greater
affordability so right now the median
household income is only
97% of what is necessary for the median
high priced home under prevailing
interest rates so the median family
so to speak based on income is not
able to afford the median priced home
and this year is the first year in
the history that they've track that that
that's happened in Greenville so that's
that's unfortunate this is why we need
more Builders to build we need for
people to be able to to
afford a an average home if they have an
average income we don't we don't want
people to be left
behind
inventory I'm not going to I'm not
going to get into super heavily into
inventory we know the inventory is a big
problem we already know that the past
several months it's been down in the low
twos which Again Records it says that
November was
2.8 which would be below the 3.2 of
last November of 2019 but I suspect that
that number is also too high based on
them having some data that's a little
bit behind I suspect that number is
probably in the low twos so we're
probably looking at you know almost
an entire month supply difference what
that means is if no more homes came
on the market
it would take roughly two and a half
months for all the homes to get sold for
those of you that are new that that
haven't listen to some of my other
podcasts we consider a a fair market
Nei a buyer's market neither a seller's
market to be six months inventory that's
generally speaking what people consider
it at when it's below 6 months it is a
squarely a seller's market when it's
above 6 months it is squarely a buyer
highers market so when you're in the low
twos low to mid twos that is a major
sellers Market it's been in the
threes for a really long time and then
this year it went into the twos so we
are seeing a sellers market like
honestly we've never seen before that
seems like that is going to continue
again the only way that changes the only
way that changes right now at least in
our area is a if a major recession hits
that really impacts our area co was not
that as we discussed before based on
what Dr Yun said or secondly the
other possibility is just that if ramp
it get ramped up in terms of new home
construction and we're all waiting on
that to happen as well up to this
point you know we are seeing new
construction is it enough is it what we
need to to really ease the housing
affordability and whatnot probably
not we're not going to see a buyer's
market anytime soon that is not flipping
it's going to stay a sell's market
barring something really really
incredible like a war or something like
that that directly impacts us here
Stateside I I do not see that
changing anytime soon that's it for
today's episode again my my contact
information is in the show notes please
subscribe leave me a rating for this
podcast leave us a review I would
appreciate any of that in the meantime I
hope you guys stay safe I am going to
try to do an episode over the holidays
but if you guys have off next week I
hope you do enjoy that and I hope you
listen to our next episode we're going
to keep plowing through through the new
year I enjoy doing this I hope you
guys enjoy it too so until next time
stay safe and enjoy some time over the
holidays with your loved ones
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