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 need real estate related I'm your guy please let me know all my contact information is in the show notes and I would just appreciate if you're listing to this go ahead and hit the Subscribe button by the way if if you're using this if you're just opening this in apple but you would prefer to open this on a different podcast player go ahead and search for selling Greenville in with ever podcast platform that you prefer we should be on there and if we're not let me know I'll get us on there but please subscribe so you don't miss any episodes go ahead and give us a rating and a review I would appreciate that particularly I would appreciate those five star reviews so that I can get this podcast out to more 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 [Music]