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Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in
Greenville, South Carolina I'm your host
as always Stan McCune realtor here in
Greenville South Carolina and you can
find all of my contact information in
the show notes and the show description
whatever you want to call itif you
need to reach out to me for any of your
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sometimes in the show I talk about
things that are kind of bigger than the
Greenville Market I always warn you guys
though that I'm looking at it through a
Greenville lens well this is going to be
one of those shows where I'm trying to
basically assess the real estate market
kind of on as a whole I should say
that's what I'm trying to say there
trying to assess the real estate market
as a whole but I'm doing it from the
standpoint from the lens of Greenville
while also looking at meta economic
Trends and I'm recording this on August
5th it's not going to release until
probably next week but today the jobs
report came out that was released by
by the government and there are some
very interesting information there now I
am not an economist so I am relying on
other experts to kind of analyze some of
this data that said I do follow a lot
of the a lot of experts that have kind
of differing opinions and then I try to
kind of come to my own conclusions from
all of that but I'm not an economist and
if you are are probably some of my
listeners are going to be a lot more
knowledgeable about the economy and
things related to the economy than I am
and you'll probably think that some
of this information isnot great
information I don't know I have no idea
for me it's interesting andI'm able
to draw some conclusions for what is
going to happen in the housing market as
a result of this so right now there's a
lot of debate just to set the stage
here there's a lot of debate over the
the economy and what's happening are we
in recession are we not in recession
we've had nowmultiple quarters of
negative GDP negative growth and that
typically has been the simple definition
of a recession now there is partisan
debate going on between basically
Republicans that want the economy to be
bad because they're not in power right
now relatively speaking and Democrats
who in an election year want to have the
messaging that we are not in a recession
that the economy is still strong so
we're seeing a partisan argument Brewing
here well it's it's not Brewing it's
been ongoing for a while are we in
recession or not is thenegative
growth truly the only sign kind of
recession that we need to look at I'm
not going to get go too much into all of
that I'll just say this this is a very
weird period of time as we're still
seeing the lingering effects of the
pandemic and not all indicators point to
a current recession and one of those
things is this jobs report right because
typically when you're in a recession you
start to seeunemployment start to
creep up you start to seepeople get
laid off people lose their jobs all that
kind of thing and unemployment
previously the last jobs report that
came out was at
3.6% which is very low that's a very low
number and basically people were
anticipating that it would stay
basically at that number some some of
the more
doomsdayscenarios were anticipating
that it might actually creep up ever so
slightly so everyone was looking at
that number because that was you know
kind of telling us what the economy is
actually doing and most people thought
it'll just Flatline and stay there at
3.6% however what actually ended up
happening is that in the month of July
528,000 jobs were added and the June
numbers were also revised up from what
they were the from what we thought they
were
and unemployment actually went down to
3.5% it it's actually at a 50-year low
unemployment is the lowest that's been
in a generationor I guess depending
on how you look at it multiple
Generations additionally specifically
with regard to housing I found this very
interesting construction added 32,000
jobs and that was kind of unexpected
because you new construction
particularly starts are starting to slow
down in other words new builds that are
are beginning that arejust starting
the construction process they are
starting to slow downbut apparently
Builders are needingand the new
construction jobs were particularly
evident with skilled trades persons
plumberselectricians things like
that they are needing to I guess
finish the inventory that they've
started and sonew construction
numbers were in in terms of jobs added
or just construction jobs added in
general that's being fueled by new
construction was higher than expected
and so I think from that standpoint we
can say that generally speaking the
housing market is Shifting but it hasn't
shifted so much to the point that
Builders have stopped hiring or have
started laying off people so that's a a
very interesting data set so that tells
us that the shift is happening
because we can see that in other data
sets but it's not happening quickly
we're not seeing a flipping of the
housing market at least from the
standpointof new construction new
construction is slowing but it's not but
Builders are not scared yet which is
very interesting they haven't started
laying off people they're still hiring
but beyond simply the the
construction jobs being added there are
other implications from this report for
the housing market that thatthat I
find interesting
I'm not an economist these are my
opinions but they mirror the opinions
of other people that are a lot smarter
than me so just to kind of set the
stage here we all know that the FED has
been increasing rates to combat
inflation I'm not going to get into
all the mechanics of it but the end
result of the FED increasing rates the
way they've been doing is that that
causes mortgage rates to go up most
people understand this most people don't
know how that happens and I'm not
going to try to explain it I would
completely butcher it if I attempted to
explain it so I'm not even going to get
into that but just know that there is a
loose correlation between the FED upping
their rates and mortgage rates going up
and that's exactly what we've seen this
year as the FED has tinkered with things
and up their rates we have seen mortgage
ratesstart to start to go up
basically starting at the beginning of
the year and that has continued through
the rest of the year now now it kind of
tapered for a little bit the past few
weeks but the the FED is hiking rates
again we we expect to seemortgage
rates continue to to go up here and the
end result of that is that that causes
the housing market to cool because then
people can't afford the housing that
they originally couldand and also
we're still seeing home home prices
continue to go up dramatically so a lot
of people have to first-time home buyers
and whatnot just have to drop out of the
housing market they can no longer afford
what they thought they could afford and
so that causes the housing market to
cool also investors it's it's can in
certain situations no longer make sense
for for investors to be able to to
purchase investment properties that they
could afford before but now it's it's
too expensive for them to finance it and
so all of these things play into the
housing market
cooling now as the FED has been
increasing these rates there is a risk
of this driving us into recession it it
impacts a lot of things Downstream in
the economy and of course the housing
market is a big part of the economy as
well but thefed has frequently
said the the main people talking at the
FED they have frequently said and the
messaging that's come from them is that
what they're doing is not going going to
drive us into recession andthat that
is a firm belief that they have that
they are not going to increase rates to
the point that it's going to drive us in
recession they've spoken of what they
call a quote unquote soft Landing
which my understanding of that is
basically inflation is lowered and the
economy cools off but we don't go into
actual recession we just see things kind
of calm down a little bit okay these
the unemployment rate go up a little bit
but not at the point where it would be
you know like a dangerous level of
unemployment things like that now as
I've already said some people are saying
that we are already in recession on the
basis that we've had two straight
quarters of of negative GDP I think you
have to put the whole picture together
and this jobs report and other things
that are out there other indicators that
are out there for instance foreclosure
rates which are extremely low right now
indicate that we aren't in a
recession yet I'm not an economist but
that's just my opinion we're not in a
recession yet at least not in the normal
sense you know where where people are
are losing their jobs and having to take
pay cuts and all those things we are not
seeing those things happening right now
the it's a different type of economy and
so in my mind and I've already alluded
to this but what we are seeing is an
economy that's still emerging from the
pandemic while there are still supply
chain issues throughout the world and
inflationary issues mudding the water
and there's nothing that we can really
compare this to I mean we've never had
with the entire world economy shut down
forfor a huge chunk of time in 2020
like a ton of people just couldn't work
for multiple weeks multiple months
but then there was all the stimulus
being pumped into the economy and then
all these crazy supply chain issues and
thenyou know China which is a major
player in in the global economy like
even this year they have been shut down
major parts of China have been shut down
for for stretches I mean it's just the
economic climate right now is very very
strange and so we're seeing the economy
pulling itself out of the recession
out of the pandemic I guess I should say
pulling itself out of the pandemic but
also there you know there's still parts
of the pandemic that are still hanging
on and so I think that this is why we're
seeing all these kind of conflicting
data points why we can have incredibly
low
unemployment combined withnegative
growth veryvery odd
environmentbut we just again we just
don't have anything to compare it to so
we have to think
differently than we've thought in the
past right we've got to think
differently normally if we had two
straight quarters of negative growth
that would mean okay buckle up this is
going to be rough right now I don't
think that that we're quite at that
point yet and I don't think that a lot
of economists don't think that and for
sure the FED doesn't think it they're
seeing this job's report and they're
thinking Bingo this is validating
everything that we're saying and already
News public are saying that you're
you're going to if you haven't already
seen it you're going to see news
Publications saying you know hey this
jobs report shows that we're not in a
recession the economy is still quote
unquote running hot that's a a phrase
that the FED likes to use and so it
will validate to the FED that what they
have been doing the this tinkering with
the rates raising rates in order to
curb inflation that they are not running
the economy into the ground
and it'll probably validate in their
mind that this soft Landing theory is
actually possible in fact some people
that I followthat are economists or
that study the
economy that were kind of skeptical
about that soft Landing Theory are now
starting to warm up to it maybe maybe
that is possible maybe we can curb
inflation and not drive the economy
into the ground into into recession so
what does that mean it pretty much
guarantees that the FED is going to keep
raising rates and as I've already
mentioned this will then have a ripple
effect it will cause mortgage rates to
climb which will then continue to
cool that down the housing market but
it also appears that the shifting Market
will also have something in my opinion
akin to a quote unquote soft Landing in
other wordswhile some have been
concerned that we could see the housing
market completely flip like overnight to
a buyer Market really
to me as I'm looking at all this it it
seems like that won't happen right and
we have to constantly assess and and I'm
constantly reassessing the data but it
really doesn't seem like that's going to
happen because I feel like the economy
would have to completely flip in order
for the housing market to completely
flip and that's just not what we're
seeing the economy has not tanked yet
yet that's the key word and if you've
been listening to this podcast my
prediction really since the end of last
year beginning of this year was that we
would see the housing market return to
by roughly the end of this year to
prepandemic Norms and the prepandemic
Norms were not a flip to a buyer Market
it was still a sellers Market it was
just a cooler sellers Market it was a
more comfortable sellers Market sellers
were were you know your your house was
growing in value by
5% per year rather than 20% per year
there was four month supply of inventory
rather than one to two months supply of
inventory well that is still a sellers
Market and so I think that at the
moment my prediction from back then is
is looking really good on the basis of
what the economy is doing so we'll have
to keepkeep tracking that I'm not
afraid to call myself out if I'm wrong
right now I I feel like that
prediction looks like it will will be
pretty accurate but the jury is still
out we have to keep tracking things
because things can change really quickly
obviously we we learned that in 2020
however what what's a lot of people
are warning is that all of these things
there there is a little bit of a of a
house of cards being built up in the
economy right we I I said that the
construction added a lot of jobs but
everyone predicts that that's going to
taper off and that there's going to
be construction layoffs and all of that
the FED increasing rates and and
continuing to do that while it might not
drive us into a recession immediately
that can have a long-term impact causing
a recession down the road and so now
Bloomberg and I like a lot of the a
lot of the writers a lot of the the
thinkers at Bloomberg they are now
predicting 100% that the economy will go
in into recession by 2024 so that's
that's very interested they they don't
believe that we're in recession right
now at least the the people that
contributed to to that
predictor but they said 100% chance
that we will see a recession within the
next two years and Wells Fargo and
Deutsche Bank both believe it's going
to happen sooner than that they believe
that
2023 is the year so 2023
buckle up we might be in for a bit of a
roller coaster going into that year and
that's somethingthat we will have to
follow very closely but for 2022 for
the remainder of this year it's looking
like things are going to slowly cool
in the economy and and slowly cool in
the housing market as well so is this a
good or a bad thing for housing I
published some stats on social media
a couple of weeks ago that was just
showing thatthe housing market was
cooling down that Supply was going up
and someone accused me ofsaying Doom
and Gloom related things and it was a
little bit out of the blue and but I
don't mind the criticism but at the
end of the day a a cooling housing
market when prices have been going up at
an insane rate that is not dooming Bloom
that's what the housing market needs
like it it needs to slow down it it's
better if
People's if the housing market isn't
getting exponentially more expensive for
people then that's when you start to see
people not being able to buy their first
home not being able to to buy their
second home that being said it's
still un you know it depending on who
you talk to what's happening and what is
likely to happen in the future could be
a good or a bad thing but I think
that most people want the housing market
to ease back to what it was pre-
pandemicand and to to slowly get
back to that which is what it appears to
be doing rather than to totally flip to
a buyer's market now for some people if
it flipped to a buyer's market they'd be
in great shape you know investors that
are just sitting on cash they would be
super excited about that but for most
people it's better we we know it the
pace in the past was not sustainable
what we've seen the past two years the
housing market couldn't continue to grow
20% per year so we knew that that had to
change the question was is it going to
change quickly or slowly it's better
if it changes slowly for most people
because if it just completely flips like
it did in 2008 it leaves a lot of people
out in the cold specifically people who
were hoping to to sell their home to
move and now suddenly find themselves in
a buyer Market where they can't sell
and perhaps in an economic environment
where they're getting where they're
having to take pay cuts where they're
getting laid off and and then they can't
get financing in order to buy something
themselves and so that causes everyone
to just have to hold on to their homes
longer or to rent longer and so
that's not ideal ifthe housing
market cools down at a cons at a slower
but consistent Pace people can adjust on
the Fly more quickly and it's not so
much of a System Shock so generally
speaking I think that most people
should be encouraged it's better if we
slowly ease back into what was the
prepandemic norm than if we just all of
the sudden revert fromyou know from
one month supply of inventory to five
month supply of inventory overnight that
would be a major System Shock nowwe
still don't have the Greenville Market
stats for for the month offor the
month of July it'll be very interesting
to see what some of those numbers say
because obviously that is the most
important thing for greenw specifically
and you guys know when those are
published I will be here with the data
to discuss it to analyze it to tell you
what I'm seeing but based on this jobs
report I think we can make some
conclusions based on the other data
that we're looking at I think we can
make some some conclusions that
higher rates are coming that's going to
continue the slow down the cool down of
the housing market but for now H it
looks like the economy is strong enough
that we won't see a complete Market
correction more to come on this later as
we have more information we'll
constantly have to analyze itbut I
appreciate you guys listening to today's
episode a little bit quicker than a
little bit faster than some of the other
ones thank you for listeningreminder
as always my contact information is in
the show notes if you need to reach out
to me for any of your real estate needs
please rate review subscribe to the show
support it however you can and we will
talk again next time
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