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 right here in the Greenville area of South Carolina and you can find all of my contact information in the show notes if you need to reach out to me for any of your real estate needs I will say there's been a few times that people have reached out to me from the podcast with a subject line that looks to be spammy and so be careful with that because it could end up in my spam folder so I've had a few times where something like that has happened so please put something like hey I'd like to connect with you or great podcast or something like that something that would actually stand out to me if you're going to send me an email something that won't end up in my spam folder because I've had a few instances of lately and I want to make sure that I respond to every single fan mail we'll call it all my fan mail that I get which isn't very much by the way but I I get a little bit of it as always as well please remember to subscribe to the show if you enjoy it please leave a rating preferably five stars if you can handle that and leave a short little review just scroll down in the podcast app you can see where those five stars are smash that five star button leave a short little riew under that and I'd really appreciate that today I'm going to be talking about this upcoming year actually by the time I released this podcast it will already be the year 2023 I'm recording this on New Year's Eve because I will actually be out of town next week so I want to make sure that I I get this recording down but I'm looking ahead towards this new year which like I said by the time I'm releasing this it will already be the new year and I'm trying to think about what is going to happen we talked a little bit last week about reviewing 2022 previewing 2023 but I like to spend a little bit more time typically just thinking about what the new year will actually bring so I wanted to come up with a bold predictions episode of this show for the year 2023 here are 10 things that as I'm looking towards the new year that I think will happen now I want to try to keep track of these throughout the year because I'm sure I won't go 10 for 10 like there's a very good chance that I won't go 10 for 10 who knows I might not even go five for Five for 10 I don't know but I want to go ahead and put this out there and we can track how well I do so 10 bold predictions for the year 2023 with number one being that mortgage rates will hit low or mid fives at some point in the year I believe this for a few different reasons one is that we already know the FED is slowing down their rate increases there's a prediction that that most people believe that in January and February the FED will raise rates by 25 basis points which is in contrast to most of this past year they were doing 75 Point increases and so this should help once we get past hopefully February hopefully those increases will stop and I think that that those increases are already kind of B into the rate what I do think is going to happen is at some point for one reason or another that rates are going to come down I think that there there could be a few different reasons for that so I'm not going to speculate on on one of them but I do think that the FED has probably they they've shown they've tipped their hand a little bit that they like to Tinker okay this Federal Reserve they like to Tinker in markets they like to Tinker with the economy they like to think that they really have a tremendous amount of control over what's happening and so I think at some point maybe rates will just come down organically on their own because they're already kind of artificially inflated in contrast to what the FED is doing but I think as well the FED may bring rates down before the end of the year perhaps in response to recession or something like that again I don't know for sure but generally speaking I feel like there are a lot of ways where we could end where we could find ourselves by the end of 2023 with mortgage rates which have been hovering in the high sixes lately we could see them coming back down into the low to mid fives I believe that that's going to happen we'll see um number two my number two bold prediction for 2023 is that the US will experience a mild recession with the result that real estate closings will be down 10 to 15% year on-ear I do agree with kind of the consensus that it does appear that we'll be going into a mild recession now this is a little bit tricky because by some metrics we have been in recession in 2022 and that that was a big debate you know earlier this year it's like oh we've got had multiple months of negative GDP all that isn't that typically how you define a recession um well I agree with the Biden Administration that you do have to account for unemployment being historically low like in a recession you never see historically low unemployment so I'm not exactly sure who's going to ultimately determine like when we're actually in recession but I think it needs to be a combination of looking at the GDP and then also looking at U at unemployment and I think that we will see it's pretty clear that the that the FED has said that they want to see unemployment go up in order to cool down the economy in order to slow down inflation um so I do believe that that's going to happen and with that some sort of mild recession will occur now I could be wrong on multiple levels I could be wrong maybe we won't have a recession or perhaps on the flip side of it maybe we will and maybe it'll be something way worse than mild I know that Elon Musk has said that we're going to have a severe recession in 2023 I don't know um all I know is that the from a housing standpoint whatever happens in 2023 should look a lot different than what happened in 2008 because that was a housing recession um what we would have potentially in 2023 if we go into recession it will impact housing but more indirectly whereas in previously we had a recession that was caused by the housing market that would not be the case this time around based on what I'm seeing um so at the very least even if the recession is more severe than I'm predicting I I still think that closings at least in the Greenville Market will only be down 10 to 15% year onye which is not a very big decrease when you consider that closing things have been at record highs for a while um so to only have a 10 10 to 15% decrease year on-year that would be a a pretty good sign for our economy for our housing market um if that happened during a recession um my bold prediction number three is that median home prices so median being you know the middle number and a sequence of numbers the one that we typically look at to kind of get a sense of what the average house costs because if if you look at the middle number that's more accurate than looking at the entire average because the average is skewed by a handful of very expensive homes so we look at the median the medium home prices I believe in 2023 will stabilize but will not go down i' we've been talking about this before where I'm looking at the price to see if it goes down during this winter season below or near $285,000 that would indicate prices are actually going down more than the seasonal Norm um I believe based on what I'm seeing that home prices will stabilize that will start to go back to this normal of of 2 to 5% um increase year onye but that we will not see prices actually go down that we won't actually see a scenario in which homes are cheaper now than they were a year ago and I have a few reasons for believing that um really the the primary reason is that the Greenville Market is a resilient Market and we have more sustainable demand than most other areas what I mean by that um is that if you look at areas that have seen you know major population booms parts of California parts of Texas parts of Florida in a lot of these in instances we see kind of a gold rush type of mentality so for instance Austin had this Gold Rush type of of experience where you had all these Silicon Valley people moving there and I guess they're still experiencing that to some extent but that that can't happen forever I know that Boise Idaho has had something similar now I think that Boise is maybe a little bit more sustainable um but I also think that without knowing that market super well it seems a lot of that is just driven by cheap prices that people are just flocking there because it's like okay here's a city that has cheap prices um and so some of these things can't last forever the Boise one maybe Boise can sustain it um I don't think Austin will I think several other cities that have really seen major increases in population in recent years are due to see a tapering of that it's just not some of these growth numbers that I see just aren't sustainable the economics aren't there Greenville on the other hand has had people moving here for Su what I'm going to call sustainable reasons I don't mean it's sustainable from like a climate perspective I mean sustainable from a from an economic perspective um people move here because it's a nice climate that's not changing anytime soon because it's a smaller city that has big city amenities that's not changing anytime soon it's it's always going to be a small City the local government is ensuring that um people are moving here because we have a state and local government that respects private property rights and keeps taxes fairly low that's not changing anytime soon so all of these dynamics that cause people to want to move to South Carolina and specifically Greenville from outside of the state those Dynamics aren't going away and on the flip side that means we have a high retention rate because people moving potentially moving from Greenville somewhere else they're finding that oh it's more expensive oh there's less private property rights here than what I'm used to I don't like that um all of these different things and so we just have a consistent pipeline of people and we've had this for a long time that want something different than what they're getting in the areas they're moving to Greenville from and I and once they get here they stay and so I think that that these things will continue and will continue to make Greenville an attractive location for people to move to and to stay to to stay at in the foreseeable future I don't see that we're having some kind of a gold rush that's just going to to taper off I think that the economics that the everything about Greenville that makes Greenville attractive I think will continue to make it attractive in the years to come and I think that that means that we're going to see resilience in home prices that's where I'm trying to Circle all this back to is that those median home prices that a lot of people are are reaching out to me and saying you know hey our price is going to go down our price is going to go down what's going to happen um I'm not prepared to see prices go down because I I see on the ground from my perspective what's happening in this area and to me we're going to see a stabilizing effect on the flip side we didn't have the type of boom that other places had people this might sound crazy to people because of how much prices went up for our area but prices didn't go up as much in Greenville as they went up in some other areas so the highs are lower in Greenville than other areas because we don't have that Gold Rush type of of flocking here that other areas had um but the the lows are higher so Greenville is just generally speaking a more stable market and and I anticipate that continuing to happen um on the flip side if we want to talk about average home prices which then are skewed by those by those more expensive homes I would anticipate that at some point this year we will see a year-on-year decrease in averages and the reason why I believe that in average home prices the reason why I believe that is that I think that those higher priced homes are not going to sell as much as they have the past couple of years as wealthier people and those buying second home see their net wealth go down I mean we're already seeing this people as the stock market has kind of struggled I think it's rebounded a little bit recently but people have seen their net worth really go down the the wealthier population and those were the people buying obviously those expensive homes those those second homes on the lake those types of things and so I think that um we'll see this for the rest of the year to the extent that at some point we're going to see average home prices even though median home prices I think won't go down I think we will see the average go down as those more expensive homes either don't sell or don't even come on the market and we've already seen average prices unlike the median prices we've already seen average home prices according to the greater Greenville Association Realtors have gone down month on Monon for four straight months and and likely once we get the numbers for December it will be five straight months so it's only a matter of time before the year on-year numbers reflect what we're already seeing in the month-on-month numbers but that has not been the case with the median price points so this is why it's important to differentiate between these two the average home prices have so much of those expensive homes baked in whereas the median kind of tells us more what's happening Market wide number five my number five bold prediction for 2023 is that National foreclosure rates will remain at alltime lows this is what a lot of people don't fully understand foreclosure rates are really really low and they should continue to stay low now there is a little bit of concern that there is still believe it or not a lot of covid forbearance and things like that that is that's coming out of the market that could cause us to see a little bit of a spike in foreclosure rates but even if we see that it will still everything that I'm looking at datawise suggests that foreclosure rates will still stay very very low the reason why people go into foreclosure is when they end up having negative equity on their house so they can't list their house and sell it they also can't make payments on their house um if they sell it they'll owe more than they'll owe to the bank because they have negative equity and they don't have the money to do that it doesn't make sense to do that so instead they just foreclose and and you know try to find a way to to rent for the foreseeable future until they're able to to get their credit to recover well foreclosure rates have been low for a long time and I think that will continue because we have seen his historically High down payments for the past couple of years homes that have been bought the the past two two and a half years have had historically High down payments and the average homeowner right now has way more equity in their home than we've really ever seen because we also in addition to the high down payments we also saw um homes gain Equity more dramatically than they normally do as a result of inflation so and we've talked about this at at other times in this podcast long story short people have a lot of equity in their homes their homes would have to lose an incredible amount of value for that Equity to dissipate and so if someone finds themselves in a situation let's say the unemployment does go up and so then they have to um they they can no longer afford the home that they're in at that point they have recourse they can just sell they might not sell for as much as they hope that they would be able to by this point but they will have the ability to sell because they have enough equity and so um that's what we're going to see rather than foreclosures we're going to see people that are starting to get behind on their mortgage payments they're going to have the ability to just list their home for sale and move to something cheaper um that is also a big factor in why I think that median home prices will stabilize because what typically is the driver of home prices actually going down that's typically foreclosures foreclosures are UL Ely what really drives prices down so in the absence of a major foreclosure type of event um and we could we could obviously see that if the recession is worse than I'm anticipating um if we have more Wars and things like that we could absolutely see foreclosure Skyrocket but right now I don't see it and in the absence of that I think that prices will remain fairly stable and and will we go back to the prepandemic Norms of moderate increases in home values number six my number six bold prediction for 2023 is that Greenwall will see its first increase in housing affordability since 2011 um and so we measure housing affordability the the greater Greenville Association of Realtors has a housing affordability index where it kind of factors in how expensive a home is with current prevailing mortgage rates and then also looks at kind of what's the median household income and then determines okay what percentage of the median home can the median household income purchase um and we want that number to be over 100 typically that means that the median household can purchase your average median home medium priced home um but that number has been well below 100 now for for quite some time since we've come into the pandemic um and it's just been constantly going down I think that we're going to see housing afford ility go back up for the first time since 2011 the reason why I think that is that interest rates I think will come down as I've already said appreciation will slow but you combine all of that with um employers are going to have to make higher pay raises than normal so as we factor in What's happen what people can't afford which is again a part of that equation that should all end up in favor of those who are looking to buy so I think will become a bit more affordable over the next year when you factor all of those things in um does that mean that it will go back up to 100 where the median household is a to able to afford the median priced home I don't know about that I'm I'm not sure that I'm ready to to quite jump to that conclusion because that housing affordability index is still very very low I believe um let me look it up real quick gjr Market stat I had these pulled up before but I closed it all right so the housing affordability index for November was 78 so yeah we we've the last time it was over 100 was January of 2021 yep so we're now approaching almost 2 years since it was at or over 100 I don't see that getting back up to 100 but could it go into the mid to high 80s could it maybe even hit the '90s I think that that's very reasonable given all of these other things that I that I just described bold prediction number seven a little bit different than the others but I think that Greenville realtor turnover will exceed 50% within the next 12 months now I'm not really sure exactly how to measure this but I feel confident that this is going to happen that we're going to see a 50% turnover realtors in the next 12 months I'm not the only one predicting this this actually isn't that bold of a prediction I just wanted to make sure that you guys understood because I do get people from time to time that ask me what it's like being a realtor should I become a realtor when's a good time to become a realtor um you should be aware that that this is a difficult time to become a realtor when the market is Shifting like this and it's shifting in a way that it's Contracting um Tough Time tough time to become a realtor I've got two stories about this um there was a a guy that I was on committee with for basically the entirety of 2022 I was on a a local committee and that's realtor Associated um and so we were on this committee together and he was very involved took it very seriously I took it seriously but wasn't quite as involved in him with like events and different things so we had an end of year kind of little celebration you know not nothing very big um and I asked why he wasn't there after a couple of hours because I just I had seen him everywhere and the the committee organizer said yeah I don't think he made it um I tried to reach out to him his phone number is disconnected he doesn't appear to be a a realtor anymore and it was just shocking it was like this was a guy I had actually even put an had a client that put an offer on one of his listings this past year this a guy who who took everything very seriously seemed like he was really invested um but the the crazy thing that's that that's kind of funny but also kind of sad was that this committee organizer had said that this person um recently had had been asked hey can you go do such and so for for the association can you almost like that they needed someone to to go somewhere to drop something off or something like that um and I don't I don't remember the specifics of it but he said something like yeah I I don't think so I'm just trying to figure out you know how I'm going to afford my next tank of gas and the organizer thought that he was just joking you know cuz this guy wasn't he had kind of a dry sense of humor but it was like oh no he actually wasn't joking he actually really was just trying to find his next tank of gas so um we're going to see a lot more of that in the future here as the quote unquote easy money that's been flowing through real estate dries up and now it becomes difficult again where you have to to scratch and Claw for your real estate business business that's the market that we're entering another story I have from this is um I was at a company party for cedan Jer realtors that I'm a part of towards the end of the year and I sat by someone that I had never met before and so I was just stucking up a conversation with him and you know it was just kind of like I I figured he was new he was he he was a realtor for about a year and and so we were just talking and um he said yeah it's been kind of a weird year it's like the vast majority of the money that I made this past year was from opening doors for other Realtors well opening doors for other Realtors what that means is if you're unavailable if someone needs to to look at a house let's say that one of my clients needs to look at a house but I'm unavailable for one reason or another I can have someone else with cedan Joiner that's a licensed realtor helped me out by opening the door for my client letting them get in letting them do the showing and then afterwards I debrief with them and talk with them about you know what they thought about it what they want to do how they want to move forward well the the going rate for that is about $50 per door so if you um if you open you know if if you do a showing for another realtor typically they pay you about 50 bucks that's kind of what the expectation is but it's not needed that often right at the end of the day like most real are trying to do as many of these showings as they can for their own clients because that's a big it it's actually challenging for me I can make it work obviously but it's a it's challenging for me if I don't see the house with my client I don't know what they're thinking what they're saying in the moment um I can't be as much of a of of an assistant to them and as much of a sounding board as I typically am when that happens again we can work through it but it's just if I'm if I can do it if I can do the showing I'm going to do the showing so the vast majority of Realtors are trying not to Outsource these to other Realtors but it happens sometimes obviously there are times when we're out of town there's times when we already have things planned when someone is is available to look at a house whatever the case may be well this realtor who has been a realtor for a year and during the year when it was probably about the easiest time ever to be a realtor he shared with me that most of the money that he had made the past year was just from opening doors for other Realtors so 50 bucks a pop and that just blew my mind mind and I I wanted to encourage the guy but I was just thinking to myself man this is going to be a tough year buddy I hope you've got something else in the pipeline here to to back you up in case things really get bad because there's going to be a lot fewer doors to open that's just the reality of of the situation um and so all of that to be said the these I think that that we're going to see a lot of this type of thing happening and we should expect some pretty substantial realtor turnover um and and by the way just kind of a Shameless plug um but you should a lot of people don't consider when they are assessing different realtors of whether the realtor will actually even be in the business in a few months you know if you're looking to buy or to sell a house and right now that's taking longer than it normally would um like imagine if you were working with a realtor who during the time that you are looking for houses or looking to sell your house that Realtor has to get a full-time job because they're not making enough money now they're attention is divided and they're not necessarily able to help you out fully so one thing a major major consideration when people are looking at Realtors and considering who who to work with that a lot of people forget is will this person actually still be doing this a you know two or 3 months from now a year from now that's a very important question that almost never gets asked T um and obviously a person is going to say well yeah I'm going to be doing this a year from now um but there are better ways of going about asking that question how many years have you been doing it the 90% of Realtors drop out before their fifth anniversary um how many closings did you have the past year questions like this that help you to kind of understand okay here's what here's what to expect if if it's a realtor that's only been in the business for a year and a half and they've only had you know 10 closing that entire time um you might have cause for concern that might be a realtor that's not going to be able to help you in the future so that's just kind of that's just something to help you guys out in Greenville or not in Greenville you know you might be looking to sell a home in Texas or California or Florida um if when you're selecting when you're looking at your realtor definitely consider that how long they've been in the business how many closings they've had all these types of things all right prediction number eight I believe that inventory will stay below pre-pandemic level so there total number of homes for sale at any given time will stay below pre-pandemic levels however month supply of inventory May temporarily go above pre-pandemic level so month supply is a metric that we look at that looks at both the supply and the demand how many pending sales are there in comparison to how many homes are on the market month supply has been very very low it was in the the ones and twos for a really long time it's it's quickly approaching the threes pre-pandemic Norms was in was between four and five um I could totally see that month supply temporarily going above pre-pandemic levels so perhaps into the fives um whereas actual total inventory I think will stay below pre-pandemic levels which would have been around 4,000 to 45 100 homes on the market and and so what I'm saying here is that I think that weakened demand through this year and will be coupled by weaken Supply but that the weaken demand will outpace the weaken Supply so that what we'll see is that the months of inventory will end up going up because demand is weakened and the total inventory will kind of stabilize and will not exceed prepandemic Norms because Supply is lower than it normally is and there's a reason why I believe this I I think we're entering an extended period of time now where people who purchased their homes two plus years ago and might be candidates now to sell people that typically would be selling around this time and buy something bigger or nicer are going to choose instead to enjoy their low mortgage rates you know 3% rates on their cheap homes a home that now you know if they if they upgraded they'd have to pay way more than they did when they moved and so we're going to see people that normally would be selling this year next year the year after that will really have a hard time making that choice because they are paying so much less than they would if they ended up selling and moving but again I still see the month supply of inventory which factors in not just Supply but also demand going up before it goes back down at least for the next few months so we'll have to have to keep tracking that and see if I'm right on that prediction prediction number nine days on Market until sale will reach its highest point since 2016 what that would mean is that days on Market until sale would end up approaching probably nearly 3 months so we have been historically in the lowest ever days on Market until sale which is basically from the time a home is listed until the time an offer is accepted in a given month for the greater Greenville Association Realtors it's been in the 20s and 30s really for the past two years 20 to 30 days on Market until an offer is accepted pre-pandemic that number was more like in the 60s to 70s was kind of more than Norm or even the 50s to 7 50s to 60s 7s something like that so rough l two months you know is what you can what you could expect on average from the time you list a home until the time it goes under contract that feels like an eternity right now um but remember even one month would have felt like an eternity this this past couple of years and the average was still 20 to 30 days and so what that means is that this average is weighted heavily by the homes that don't sell for several months and that number is then obviously impacted by the homes that go under contract like right away so you've got all these homes that go under contract right away but then what's pulling that number into the 20s and 30s is all these homes that go under contract after 3 four five 6 months okay so all that to be said this number what I would expect and what I'm kind of expecting because of of how quickly the market flipped I think this number is going to potentially go way up I could totally see it surpassing and what I'm predicting is that it will surpass the pre-pandemic Norms which would have been around two months I could totally see it going into the 70s or 80 day range I think that that's completely completely reasonable I think that what what we saw is a lot of people that listed homes you know right around the time the market flipped but they didn't account for the fact that the market was flipping was was doing what it was doing and changing gears from this insane sellers Market to a much slower market and so we've got a lot of homes that are just lingering right now well once those homes sell and it shows that they were on the market for 120 150 days whatever the case may be that's going to pull that number that days on Market until sale number way up is what's going to happen there so I anticipate as a lot of these homes that listed at the wrong time and and with unrealistic expectations eventually those sellers will sell them here in the next year and once they sell them and this is particularly true of of new construction right new construction is really lingering once we start to get this glut of new construction sold that's been on the market for forever we're going to see that days on Market until sale number go way way way up and so I'm just waiting to see that the most recent number for this was November and it was 35 days which is the highest it's been in a long time so let's continue to to track that I could totally see that doubling before the end of the year my number 10 prediction is that cheap fixer uppers will appear again as people reset their expectations I just mentioned a lot of people kind of got caught out in the cold as the market shifted well as people now are are have been in this market now for several months and they're they're starting to realize and and Realtors are are starting you know realtors that maybe had never been through a market switch like this are starting to realize hey we need to adjust our expectations one thing that you could get away with for the past couple of years was just to put a fixer upper home on the market for just a hair below what a turnkey home would sell for and you could find a buyer for it because inventory was so low buyers had no other choice but to just purchase those fixer uppers well that's different now now there's plenty of options out there if you're looking for any type of home and so people are just ignoring those fixer upors they're just saying you know forget it we don't we don't need to to buy a fixer upper home we'll just wait for a home that's TurnKey that's just going to be a little bit more money to come on the market so what's going to happen is these sellers looking to sell these fixer upper homes but don't have the money to fix them up themselves they're going to have to to go back down to the norm which was fact in in that it's a fixer upper like it has to be a reduced price in comparison to to homes that aren't fixer uppers and so I think we're going to see a lot more cheap homes that need work coming on the market because sellers are going to realize gone are the days where they could just list it for close to retail and get pretty close to that price now they're going to have to put those heavy fixer upper discounts on those homes and that's going to make it very interesting for people buying in this Market we might see things shift to where you could actually buy homes that you could flip from MLS that those types of opportunities have been pretty sparse lately but we may see that come back we'll have to see but I anticipate in my 10th bold prediction here that we will see cheap fixer uppers appearing again as sellers reset their expectations so those are my bold predictions for 2023 I've got all of these written out so I will be tracking these feel free to track them myself track them yourself and let me know if I miss out on any of course I've got 12 months for all of these to come true so I feel pretty good about that we will see what happens I am happy to keep accountability for whether my predictions come to pass or not so we'll see let me know if you agree or disagree with any of these my contact information is in the show notes if you need to reach out to me for any of your real estate needs or just to tell me that you think my predictions are wrong feel free to do that I have thick skin it will not bother me as well please if you enjoy the show Please Subscribe please leave a rating please leave a review and we will talk again next time [Music]