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Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in the
lovely Upstate of South Carolina I'm
your host as always Stan McCune realtor
here in the greater Greenville area and
just a reminder you can find all of my
contact information in the show notes if
you need to reach me for anything at all
but especially for your real estate
needs that is where you can find my
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please go ahead and do that you guys
that those of you at least that listen
to this show Fairly regularly which I
think is the majority of people that
listen you might have remembered
at the end of the year at the end of
2021 I had a show an episode on the cost
of waiting and basically I looked at the
way prices were increasing year on-ear I
looked at the way economists predicted
that mortgage rates would increased and
I I basically said okay here's what it
costs to buy a home now and here is what
it will cost to buy the same home a year
from now
and then compared basically between
Rising mortgage rates between Rising
home prices kind of gave somewhat of an
idea of how much more expensive it would
be to to purchase a home just waiting a
single
year well it turns out that I was I
was right at least for for now
obviously it appears that was right but
it appears that I didn't take it far
enough because here we are 3 and 1/2
months after I recorded that episode and
the cost of waiting in just 3 and 1/2
months has been unbelievable mortgage
rates have gone up much quicker than
anyone any of the experts predicted that
they would home prices and
appreciation has not slowed down at all
now I let me before I get further
into this let me say this all right this
might be the kind of thing where I
record this and then at the end of this
year it's like well maybe it does revert
back to kind of something more similar
to what my prediction was at the end of
December right because we could see
mortgage rates drop maybe appreciation
starts to tail off I mean we don't think
I I don't see any way in which mortgage
mortgage rates can continue to go up and
prices will continue to Skyrocket at
some Point people will just have to drop
out of the market first-time home buyers
will just have to drop out of the market
we'll have to see some decrease in in
demand we're seeing higher rates of
Builders pulling permits right now so
that's usually an indication that we're
about to get more Supply into the market
will that make a dent into the supply
issues I don't know we talked about the
supply issues last month when the GG
Market stats came out I was correct in
my prediction for that one as well well
if you guys remember often times I'll
go through the market stats and the
month's Supply is usually inaccurate
and I predicted that it would be close
to or perhaps less than one month it
ended up being they just came out with
the stats for the month of March it
ended up being exactly one month of
Supply that's insane that that is going
to go up it has to go up the question is
when when that does go up we should see
a a little bit of a
tapering of appreciation is our homes
going to you know go into price decline
there's no indication that's going to
happen from the standpoint of the supply
and demand Dynamics we've talked about
that ad nauseI'm not going to get
back into that but the point being that
right now as we stand it it's it's worth
discussing how different it is to buy a
house now than it was three and a half
months ago and I hope when we take a
step back at the end of this year that
we find that it didn't continue at this
same Pace over the course of the entire
year of 2022 because it does reach a
point at which you really can't people
can't purchase that first home given
the way the economy is and obviously we
don't want that to happen we want people
to be able to purchase their first home
in their 20s we don't want people to
have to wait until their mid to late 30s
to be able to afford their first
home so let's talk about the beginning
of the year the beginning of the year
we had basically a
median price for a house in the greater
Greenville area according to the GG
Market stats was
280,000 that was that was the median
in January of 2022 and now that was a
big jump from what it was in January
of 2021 which is just 237,000 that was a
an 18% increase year onye for those
two January numbers we discussed that
before
280,000 was the median purchase price in
January the median now is
$295,000 that is an increase of I
believe about 5% yeah 5.36%
increase in 3 months now I don't know
exact it'll probably continue to go up
here in the month of April this is
all as of the end of March so we saw
between January between the end of
January and the end of March so really
more accurately that would be closer
to two months we saw an increase of 5.36
% in home prices massive jump again
we've been seeing between 1 to
2% price increases per month those
numbers would indicate that this year it
at least to start the year it's actually
even higher than that now I will say
this you do have to account for the fact
that there is a seasonal fluctuation in
prices that is just normal there's a
variety of reasons for it January does
tend to be a quote unquote cheaper month
than the spring months so that is
part of what's Happening Here it will
level out eventually once we once we get
past the the busy spring season okay
what about mortgage rates again this is
a bit of a review mortgage rates at
the beginning of the year kind of
depending on how you how you looked
at it or depending on on what your
credit was and what the what the lender
was we can kind of say mortgage rates
were about 3 and a half% just roughly
speaking right now mortgage rates are
hovering around 5% which was what a lot
of people thought that they would be at
the end of this year nobody I I
didn't read a single person that
predicted that we would be sitting here
in April of 2022 with mortgage rates
already surpassing the 5% mark for a
30-year loan that is that's happened
much more quickly than anyone
anticipated some people didn't even
think that that I read some people
didn't even think that we would cross
that Threshold at all this year so
that that's a huge increase now mortgage
rates are still historically very low
that that's a very important point to
keep in mind they're still very low
historically and and where the rates are
right now it's comparable to where they
were a few months before the pandemic
so I think that it's it's important to
keep all of this in perspective that
just because it's like oh man you
know it it was
32% and and even you know if you go back
you know earlier in the pandemic it went
down to the twos at one point well th
those were anomalies the 5% that we're
having now this is more this is more the
norm right so we shouldn't blow things
out of proportion we shouldn't say oh
these mortgage rates are high no they're
not high they're just a lot higher than
they were 3 and a half months ago that
is a
43% increase
between between what we had at the
beginning of the year and what we have
now that is an unbelievable number when
you go the way I'm factoring that
obviously it's a
1.5% increase in the rate itself but
if you 3 and a half% to 5% that's a 43%
increase of the the percentage rate so
that's insane so you've got
home prices going up several percentage
points and you've got mortgage rates
going up tremendously as well here's
what that equates to at the end of the
day how what kind of an impact does that
make on the the price of the home and
and specifically in terms of what you're
paying in your mortgage if you read the
the introduction I did spoil it a little
bit but
who I don't I don't care I get to do
that right it's my podcast I can spoil
it a little bit if I want to the the
difference in your monthly payment is a
26% difference now here's how I came up
with that number let's say that at
the beginning of the year again you had
the median priced house
280,000 you're going in with a mortgage
of about three and a half% I'm not
factoring in taxes Insurance HOA do
PMI anything like that we're just
talking strictly principle and interest
you would have we'll we'll just
assume for the purposes of this
discussion 5% down so on a $280,000
house that's
$114,000 and then again the
Assumption 3 and half% interest on your
mortgage you come up with a hair below
$1,200 per month
$1,194 and change per month how does
that go up when you have a
$295,000 house with 5% down which now
now you have to bring $750 more to the
closing table because your down payment
is now
14,750 and a 5% mortgage rate now your
monthly payment has jumped up from
$1,194 to
$154 that is a an again an increase
unlike anything that I have ever seen in
my life during this period of time that
is nearly a
$310 increase and again this is on the
same house this is the median house the
average mortgage rate now cost
$310 per month more than it did just
three months ago basically that
is it honestly it's sad to to me it's
sad and this is one thing that a lot of
people don't realize about
realtors in theory we get paid more as
these as these numbers keep going up at
as home prices keep appreciating but our
job is is more than just you know
getting a higher percentage of
commission we have first-time home
buyers that are languishing out there
that are that are looking for a house
and we're having to work extremely hard
for them harder than we ever had but
but we see this housing affordability
and it it it doesn't make any of us feel
great at the end of the day we would
rather expensive homes be luxury homes
for luxury clients for for wealthy
clients we don't want our clients that
don't have a lot of money to have to be
pushed into these more expensive
brackets that will potentially result in
them not being able to make their
payments might result in foreclosures
down the line we don't know I have
had past clients reach out to say that
you know they're kind of in trouble with
their mortgage after having come out of
the pandemic and and all of that and
that kind of stuff that just that makes
me sad to hear I don't want to hear that
kind of stuff and none of us do to to
have an average house go from costing
$1,194 per month to costing over 1,500
per month it's staggering and and
again most of that
increase again if if we're going to be
self- serving as Realtors most of that
increase is not going to us right
because a a huge chunk of that increase
has to do with the mortgage rate not
with the the home price appreciating
really the difference for a realtor
between selling a
$280,000 house and a $295,000 house not
a big difference but the monthly payment
is is insane a 26%
increase what does that come out to if
we extrapolate that over the course of
the entire loan so 30 years that
comes out to a difference of
$541,500 over the course of 30 years
that's how much you'll be paying for the
$295,000 house at 5%
interest over the cour once you
accumulate all of the interest and
principal together
$541,500
versus at the beginning of the year the
$280,000 house for 30 years at the 3 and
1.5% rate
$430,000 and and change so a
difference of
$110,000 basically over the course of 30
years now oh and and I should mention
we're not even factoring in here that
you know that difference of
5.36% between the 295 and the 280
numbers that will ultimately be
reflected in some other things like your
property taxes that will cause your
property taxes once they get reassessed
they will be reassessed 5% higher than
they than they would have been and so
you end up paying more for that as well
we're not even getting into that
because that's I I don't have time to
get all into the Weeds on all of that
so it it's just you're you're getting
hit from all sorts of angles with the
with the way the the market dynamics are
right now now the positive is this okay
if if we're looking for a silver lining
if we're going to have one of these
things go out of control between
appreciation and mortgage rates I would
say the better thing to go out of
control is the mortgage rates because
there is a possibility they can go down
right if we go into some sort of you
know market decline that the FED decides
tinkering with with interest rates
making them go down will be beneficial
to the markets then we'll see rates go
down I think think they probably will at
some point we probably will see them go
down you know at least below five I
don't know if we'll ever see them in the
threes again and I highly doubt we'll
ever see them in the twos again for a
30-year rate but it wouldn't shock me
to see it in the fours or the threes so
people will have an opportunity to
refinance potentially I I can't
promise that but my prediction will be
that those that purchase a home now and
they're getting that 5% rate that
there's probably going to be an
opportunity for them at some point to
refinance at a lower rate historically
that has at least in recent history
has been the
case whereas prices traditionally do
not come down now we did see and we've
talked about this a lot we did see
during the Great Recession prices kind
of taper off and did kind of go down a
little bit as as the glut of
foreclosures hit the market and drove
prices overall you know prices down
but that's really an anomaly at some
point we probably will have another
Great Recession type of event I don't
see anyone that thinks that that's going
to happen right away who knows I'm I'm
no Economist and the economists are
always wrong anyway so we'll we'll
let I'll let them just be wrong all the
time and and I'll try to keep being
right on ear but but long story
short generally speaking home home
prices do not go down they only continue
to go up mortgage rates fluctuate and
there are times when they do go down and
so all of that to be said I would rather
between the two mortgage rates go up and
home prices stabilize now the problem is
right now home prices are not
stabilizing and I don't know when
they will I think they will and by
stabilize I don't mean again I don't
mean going down I just mean not
appreciating by 2 half% per month that
is an an insane number nobody wants that
number now other parts of the country
are are going even higher and faster
than that and so Greenville is
actually a more stable Market than many
of the other markets here a lot of
the other big markets in the US and for
that we can be grateful it it is
worse in other places but it's it's
still pretty bad here now if you're
thinking well maybe I should just wait
to purchase until things slow down I
think you're you're missing the point
right
that and I mentioned that because
I've gotten that sentiment from some
people's like you know what the Market's
so hot right now I mean I think I just
need to wait what are you going to what
are you waiting for are you waiting for
mortgage rates to continue to go up are
you waiting for home prices to continue
to go up there again there's no
indicator that either of those things
are going to stop even if the market
stable izes it will still be more
expensive 3 months from now than it is
right now again that stabilized Market
still means home prices are appreciating
and that's driven by supply and demand
and even though there are some positive
indicators on the supply and demand side
we we need a massive shift in order to
bring things to the point where like
basically home prices are are flatlining
that would be that would be a
recession level event that would
result in that
happening so unfortunately and I
don't say this because it's self-
serving unfortunately I can't encourage
any of my clients at this point to wait
because I feel like personally
without having a crystal ball but just
seeing all the data I feel like there is
substantially more risk with continuing
to wait than there is with purchasing
now even
if my prediction you know at the end
of the day at the end of the year
mortgage rates are are not much higher
than they are right now and appreciation
leveled off we would still we'll still
probably see in the best case
scenario you know mortgage rates again
around that that five maybe five and a
half perc number and median home
prices again best case scenario might
might end the year at like 310 or 315
something like that and that right
now it's at
295 so the optimistic scenario not super
optimistic if you're if you're
wanting to wait until the end of the
year to me I think that there's more
risk in waiting and and that's why I
mention this now that we've already
seen just three and a half months in
things are are nutty and we we don't
know exactly how it's going to keep
going but hopefully will see a little
bit of a
stabilization just what I'm seeing boots
on the ground I'm not seeing it at those
median price points now I am seeing some
interesting price drops at higher price
points at price points in the in the
600s and and 700,000 that's something to
monitor it may be that that that
market has kind of cooled down a little
bit but the market below 300,000 right
now I've said this before but it's
like trench warfare it is it's crazy
it's like open house as soon as the
house goes on the market it's like an
open house everyone's scrambling for it
everyone wants to get inside it bunch of
offers it it it's really crazy so
that's there it's going to take a lot
for that to for that Dynamic to change
at the moment I'm not seeing it
but people need to be very aware that
the homes that they're if if they've
been looking for homes for months they
need to be aware that that mortgage
rates going up
43% that has a profound impact on your
buying on your purchasing power if you
thought you could purchase a $300,000
house at the beginning of this year you
may not be able to afford that house
anymore so th those are all things to
keep in mind those are all things I'm
working through with my clients on I I
had a I had a client at at you know
more at that below the mediprice
point
price range that they were looking at
homes in and part of what I did when
when they started finding homes that
they were interested in wanting to put
offers in I had to go back to their
lender we already had a pre-approval
letter in hand but you know what I don't
it's not about getting someone under
contract it's getting them the house
it's getting them to closing I have a
super high rate of my clients actually
getting to closing both buyers and
sellers and part of why I do that is vet
things out that's that's how you know
it doesn't just happen by accident and
so when I saw these mortgage rates going
up and I knew we were already kind of at
the top of the price point that they had
originally been looking at I went back
to the lender before submitting an offer
and said hey can can they still afford
this are we even able to to to make
this offer that they want to make and
the the lender got back with me and was
like yeah I better run this by
underwriting and just double check
because these rates have gone up have
shot up so quickly and so sharply and
thankfully we were able to to do that
additional step and then that was
something that I was able to to have
confidence with when we submitted the
offer now did I reveal that to the
listing agent no I didn't reveal that to
the listing agent because they don't
need to know anything about what what my
client can or can't do we had that
pre-approval letter and I don't want to
make it sound like they're at the top of
their price point which they were but
the the listing agent doesn't need to
know that and so that's a little
insight into the negotiation part of it
and a little insight into what happens
behind the scenes that usually people
don't even know when they're when
they're working with me as a buyer agent
I don't tell them every single thing
I've done in the process and and
sometimes that's just because they don't
need to know some sometimes it would
stress them out if they knew everything
but I try to keep the communications
streamlined so that everyone knows what
they need to know and and nothing more
than that unless they specifically
request more information but that's
where we are right now three and a half
months into this year it has been unlike
anything that we've ever seen hopefully
we see a little bit of a cool down on on
the rates going up maybe we see a little
bit I I think it's probably going to
wait until summertime once people
start going on vacation before we see a
true slowdown in demand but we'll have
to keep tracking it it's it's a
fascinating Dynamic and and if you're
about to enter the market or if you
already are with with buying or looking
at buying a home listen we're all in
this together right I'm I'm doing my
best we're all doing our best we just
got to persevere and eventually we'll
find
something that fits your price point
that actually works out that we can
actually get under contract and lock in
that mortgage rate before they continue
to go up that's all I've got for you
guys for this week I hope that wasn't
too depressing of an episode let me know
what your thoughts are my contact
information is in the show notes please
subscribe rate review the show I'd
appreciate all of that and we will talk
again right here next week
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