Hello everyone and Welcome once again to
another episode of Selling Greenville
your favorite real estate podcast here
in the upstate of South Carolina I'm
your host Stan McCune realtor right here in
the greater Greenville area of South
Carolina and just as a reminder as
always you can find all of my contact
information in the show notes if you
need to reach me for any reason that is
how you Do It and of course if you
have any home buying home selling needs
or any questions about any of that
please reach out to me I represent
clients of all Stripes investors
non-investors buyers sellers I'm a
part of a team that we have a lot of
different resources even if I'm out of
town I have people that can help you
so I am your One-Stop shop for I I don't
want to say all your real estate needs
but I am basically a One-Stop shop for
the vast majority of your real estate
needs I'm like the Walmart wow I I
don't think that's a compliment I'm
not complimenting myself right now by
comparing myself to Walmart but you know
what I'm getting at I'm like one of
those Superstore you know you can you
can get anything specifically related to
real estate that's the way I see myself
that's the way I try to to run my
business so yeah all my contact
information is in the show notes and
just a reminder as always always please
leave a rating please leave a review and
whatever podcast app you're using I
would greatly appreciate it if you guys
could do that so we're here I'm
recording this on February 28th it's
going to release in just a couple of
days you're probably listening to
this in early March and right now all
over the news is talks about Russia
invading Ukraine that is a big deal
right now and that is a big thing that
we are disc discussing just in
general you turn on the news that's what
everyone is talking about you go on
social media that's what everyone is
talking about and so there is a looming
question which is how does this war how
how does war in general but then
specifically how does this potential War
which I guess it's debatable whether
it's War yet in the minds of some people
it sure seems like
War although you know as not
particularly clear from what I've seen
what exactly Russia's endgame is here
or what their strategy is going to be
but how does war
overseas impact what happens here in the
real estate
market in the US but obviously as I've
told you guys before everything that I
talk about even if I'm talking about a
bigger issue like this I'm still
filtering it through a Greenville South
Carolina lens nothing that I say
inherently pertains to San Francisco for
instance or or New York or even
Charlotte or Atlanta everything that
I know about real estate is specifically
through a Greenville lens so what can we
expect to happen as a result of the
tensions happening in Eastern Europe
right now well let's start with this we
all know that that mortgage rates
are basically pegged they they're
directly related to what the FED does
and so we've seen mortgage rates
mortgage rates have gone up
substantially higher so far year-to date
in in
2022 than pretty much everyone predicted
that they would they're knocking at
the door of 4% right
now and that was not expected we we
thought a lot of economists basically
everyone that was kind of analyzing
situation thought it would raise up
gradually and probably get towards 4% in
the second half of the Year well we hit
it in February we got up to what was
it I think it hit last week
3.92 if I'm not mistaken well what
happens in in times of War times of
uncertainty typically and and please
don't take this as Financial advice
because I'm not giving Financial or
investment advice and I'm always very
careful to say that CU I can't do that
as a realtor but my understanding is
that typically when there is unrest like
there is right now that typically hurts
the stock market and people tend to run
for safer
assets and typically when as they run
for safer assets you know Buy BS and
and things like that that tends to
positively impact mortgage rates I'm not
going to get into all the weeds on that
again I I'm not a financial adviser I'm
not an
economist you can do some research on
that if you want there's plenty of
information out there that gets into the
Weeds on on how that how how that works
so typically at in times of unrest
people go for for
safer Investments like bonds and things
like that
and the end result of all of that is
that mortgage rates tend to come down we
saw that happen we saw that happen just
recently mortgage rates after having
gone up pretty consistently this year
they went down from from
3.92 percent which is by the way the
highest rate the highest mortgage rate
mortgage interest interest rate since
May of 2019 so almost 3 years since it's
been that High it dipped this past
week to
3.89% so it finally leveled off a little
bit but here's the thing what also tends
to happen in times of war is there
tends to be things that result in
Greater inflation is my understanding
well we're already
having problems with inflation right now
that's already a major concern and it's
already one of the things that the FED
is trying to address by doing fed things
that then tend to cause mortgage
rates to go up that's why we have seen
the increase in mortgage interest rates
this year so far has been the FED
trying basically you know doing their
thing tinkering with their treasury
yields and all that kind of stuff and
balancing out their portfolio of
mortgage back Securities and and doing
all these things that I'm I'm not
particularly knowledgeable about but I
understand Loosely speaking that what
they do ultimately drives that number up
and that is how they are able to kind
of Curt tail inflation so we don't know
exactly what
war will Direct ly do from the
standpoint of mortgage rates there
are some reasons to believe it could go
down and it started that way but could
it increase as well at a faster Pace
because of what the FED is doing that's
very possible as well could that kind of
all negate itself to the point where
it's like okay well the inflation and
the FED responding to that in by in
theory raising mortgage rates not
directly raising them but you know what
I'm saying could that be offset by the
fact that people are running to safer
Investments during these uncertain times
the treasury notes the treasury bonds
those types of things will the end
result be that those just all wash
themselves out we don't know we do not
know what's going to happen another
interesting aspect of this and something
to keep in mind and and I don't know
exactly how much of this probably a lot
of this is related to rates going up
but we don't know exactly it's hard to
predict everything it's been just a
wild last couple of years where
everything is
unpredictable but there are fewer
mortgage applications new mortgage
applications being submitted right now
last week mortgage applications
decreased 13.1% from the previous week
reaching their lowest level since
December of 2019 so here we have a
couple of numbers going back to 2019 and
they they make sense mortgage rates at
their highest since 2019 mortgage
applications at their lowest since 2019
as rates go up fewer people then are
excited you know they're they're not as
excited about buying they're not seeing
these like low 3% mortgage rates
and maybe some people they they just
can't afford now now they're they're
priced out you know it cost them $100
more per month to buy the house that
they could barely afford anyway now
they're priced out of the market and
of course refinances are are down as
well and so that's an interesting
Dynamic that would indicate that we're
going to see a a cooling of demand now
that is
Nationwide now I I can't speak to what's
happening here in South Carolina I don't
have those numbers at the moment that
is something that I will attempt to get
to try to better understand what's
Happening Here locally but nationally
it seems like there may be a bit of a
of a coold Down in demand if that
happens then that would be good for
buyers not as good for sellers but we've
talked about this ad nausein this
podcast the market has to swing a long
long way for sellers to be in trouble we
we are going to see a sellers market for
a long time barring something really
crazy you know if if this if what's
happening in Eastern Europe does turn
into something akin to World War III all
bets are off who knows what will happen
at that point but
realtor.com Chief analysts or or chief
economists are talking about you know
house housing prices that have been
increasing in double digits there's a
good chance that that those increases
may go down to single digits so we might
not see the type of of hyper
appreciation of housing that we've seen
recently strictly due to the fact that
mortgage rates are going up mortgage
applications are going down and that is
going to just slower the pace slower the
pace of prices going up hopefully
resulting in fewer bidding wars
hopefully resulting in more
opportunities for first-time home buyers
Etc and that's that's good we need that
that is not a problem that's not
something to be worried about this is
not a bubble bursting this is a market
stabilizing into something that
resembles what it it used to be and
every every one liked it more for the
most part the way it used to be it was a
better Market it was a healthier market
for for the majority of people there
aren't that many people at the end of
the day that truly benefit from a
frenzied Market because you think about
it most people that are trying to buy
are also trying to sell and vice versa
there's not a lot of people that
strictly benefit from it being an insane
sellers Market the people that benefit
the most are people that own a lot of
property
and are just trying to sell off some of
of their property but that obviously
is a relatively small part of the market
at the end of the day so here we go
we might see the market balancing out
correcting a little bit and I think that
that's something that if it happens
we'll have much more positive than
negative to it but that was something
that was probably going to happen to
some some extent regardless of what's
happening in Eastern Europe right now
and so it it that may very well
intensify things and another big
variable that I'm I'm tracking that
could really cause some major
disruptions and and could you know this
could overshadow everything else that
I'm saying we don't know exactly what
what is happening in Russia and Ukraine
how that is going to disrupt supply
chain issues
even more how it's going to disrupt
the supply chain even more than the
issues that we've had thus far we don't
know what increased cost of oil which is
almost certainly going to happen here in
the upcoming weeks unless this
Invasion slw War SL whatever you want to
call it tension unless that just
Fizzles which seems unlikely but unless
it just Fizzles it really seems like the
cost of oil is going to to go up
dramatically well if that happens guess
what that's going to impact a lot of
Builders a lot of you know Builders
they have to ship things from all over
the country things get shipped that
causes prices to go up as the cost of
delivering items has gone up we've
already seen that in a lot of
different construction materials well if
that continues to happen that will have
a ripple effect on Builders and we could
see us entering back into something
that we experienced early last year of
Builders just not being able to give
firm deadlines Builders you know
telling people that are under contract
for new construction telling them that
they can arbitrarily change the price
and have it go up but then the buyer
has the option to break their contract
and get their earnest money back we
might see some crazy things like this
come back into the market as Builders
try to respond to sudden spikes in
prices due to the sudden spike in oil
pricing that we might very well see here
in the upcoming weeks so that could have
a ripple effect on new construction and
as we've talked about in other episodes
the cost of new construction directly
impacts everything else because a lot of
people that are selling their home you
know the the people that are in their
first home that are looking to move into
their second home home or maybe from
their second home into their third home
a lot of them are looking for new
construction and if that new
construction is too expensive then those
people don't buy well if those people
don't buy then they don't end up selling
the home that they that they were
living in which then impacts the
first-time home buyers that would be
likely to buy those homes and so there
is this huge ripple effect if new
construction ends up getting wonky
again and so we we do not want that to
happen and hopefully that won't happen
but the long story short is that we
don't know exactly
how the current Global tensions are
going to impact the market but I think
it's pretty safe to say we're going to
continue to have low Supply but Supply
might creep up a little bit we might see
it go from the low ones and and we've
talked about this before we talk about
supply of inventory as in months right
now it's in in the low one month range
we might see that go into the low
two-month range that's still very much a
sellers Market but maybe we'll see that
happen that would be totally I would
be 100% comfortable with that if it
happens overnight that could shock some
Sellers and so they need to be prepared
for that that could happen but
generally speaking that's not a terrible
thing if it does happen now
we should also probably expect for home
pric home price appreciation that growth
to hopefully slow down a little bit we
won't see you know we we may not see
quite the same dramatic increase in
housing prices as we have been seeing
that's not to say they're going to go
down do not hear me say that they're
going to go down they're not going down
barring a global recession home prices
are not going to go down they're just
going to slow down
in terms of how quickly they go up and
then of course I think again we talked a
lot about the mortgage rates I
personally think that they're going to
continue to go up I would not be shocked
if they hit 4 and a half% this year
and I wouldn't be shocked if they
surpass 4 and a half% I I the FED
right now is very
unpredictable but I I would probably
say it's more likely than not that they
that mortgage rates are going to
probably come pretty close to
45% at some point this year now if they
exceed that number I I don't know if
the FED at that point would decide that
it's too detrimental to the economy to
continue to increase that in order to
offset inflation I I don't know again if
inflation is being driven by a war
then the FED might take more drastic
measures wasn't that long ago that
mortgage rates were well above 4% we
we' lived in a kind of a Utopia of
mortgage rates the past 10 years but
that's not guaranteed that you know
there was a time when mortgage rates
were 20% Which is insane to think about
hopefully we don't go back to that
but there's a lot for us to track in the
upcoming weeks if there's any
interesting movement of any of these
things any interesting news related to
what's happening in Eastern Europe or
elsewhere that impacts our local housing
market I'll for sure be talking about
that with you guys but for now that is
all I have I hope you guys found that
interesting and informative we'll keep
tabs on it all but in the meantime if
you have any questions concerns thoughts
homes you want to sell homes you want to
buy reach out to me my contact
information is in the show notes please
leave a rating leave a review just as a
little thank you for the show subscribe
if you're not subscribed to the show I'd
appreciate it and I hope you guys have a
wonderful rest of the week
[Music]