So, I was talking with my wife recently and I asked her, what do you think I should blog about next? She told me people at work (she’s a CRNA, nurse anesthetist, and works with surgeons and anesthesiologist) ask her what's does your husband think about the current state of the market? My first, very pleased thought was, my wife is using my dot. business card I placed in her employee badge holder, which is awesome considering where she works. My second response was quite purely, well that’s considerably opinionated. Houston has roughly 30,000+ Realtors and we all have different opinions. And, in our business, opinions change like Houston weather. Considering I am told by many I have no filter; this could be an interesting read for you so strap in.
Historically 65%, or relatively close, has boeeen the home ownership percentage since the 1970’s. And even though the early 80’s and Housing bubble in 2008 brought those numbers down, they still hovered in the 63% or slightly better range. Put this into perspective. Home ownership was 65% during the 80’s. Between 1978-1981, mortgage rates were between 16-18% and in some cases went above 20%. I can literally see the millennials in the back of the room who are saying they’re waiting to see if the rates go back to 3%, hearing these numbers and immediately looping a video into TikTok while at the same time jumping into a shark infested waters. Yes, I said no filter. Sorry, not sorry. That ship has sailed.
As I write this (May 2, 2022) the current 30-year fixed rate national average is 5.42% (up 13 basis points from a week prior) For those wanting to understand a basis point: (.01% is 1 BP, ergo 13 basis points is .13%) It doesn’t look like a lot, does it? The difference in .1% on a $300K loan is slightly less than $20 per month in today’s current market. Same millennials, (yes, I’m poking fun at you at your expense) say they’ll just go to one less movie, buy 3 less coffees, drink 2 less beers at the local bar or pass up on the second bottle of edible gummies perhaps. Cool thought. Now remember, this happened in a week. ONE WEEK. Now let’s try non common core math. 30 years, 360 months, $7200. But, but, but….it’s over 30 years. If you listen close enough, you just heard my incredibly audible breathing sigh, along with choice words I say often but shouldn’t share on a blog. Hey, I just filtered! (Seriously, go buy a lottery ticket)
Now, let me explain how you might have to get rid of coffee for the entire month. From January 2022 to May 2022, rates have increased by 200 basis points. 2 percent. TWO. PERCENT. (That’s 20 0.1’s or roughly $400….MONTHLY) At this point the Federal Reserve is slated to perhaps raise Federal interest rates 4-5 more times THIS YEAR to help curb inflation. Let me repeat that. 4-5 times over the next 8 months. These rates, while not always in line with bank mortgage rates, have a HUGE impact on its course. Louis Pasteur is famously quoted for saying “Chance favors only the prepared mind.” Who is Louis Pasteur, you ask? He’s the French chemist whose name is literally on every container of milk you buy. His pasteurization discovery nearly singlehandedly saved the milk you usually put in the coffee you can’t afford and the beer and wine that may be less prevalent in your household simply because “When is the right time?” is literally the small devil with the pitchfork standing on your shoulder.
O.K. let’s ease back. If you haven’t figured out that I’m telling you to buy a house now, let me spell it out for you. IT. No seriously, I understand there are people who simply cannot afford to buy a home and for all intents and purposes, may never be able to. Renting is a MUST for them. This isn’t necessarily favoring chance. Some people are simply not dealt with the same favor others are. Fair or unfair, that is a 5,000 word blog for another day. In 2019, homeowners in the U.S. had a median net worth of $255,000, while renters had a net worth of just $6,300. That’s a difference of 40x between the two groups. FORTY. If that hasn’t sunk in, please insert another chewable gummie.
For all their quite literal snooze fest catalog of music, Nickelback actually gave us something worth listening to on a loop. Their song “What are you waiting for?” is perfect, inspirational, humbling, motivational….well, you get it. Someone I have known my whole life, who talks to me almost daily just bought a home recently. He constantly tells me “Why did I wait so long to buy a home?” “If I would have bought in 2000, I might be 8 years away from paying it off.” “I could have used equity and bought a better home.” “I could have more generational wealth.” “I wouldn’t have spent nearly $320,000 paying someone else’s mortgage.” He and his wife bought in October of 2020. The sigh of relief knowing that a portion of what they spend monthly by all accounts is like opening a piggy bank slot in their roof.
They welcomed their newborn daughter into their new home just 4 short months later. He told me, “I can’t imagine having not brought her into her new home instead of renting while blessedly, fully capable of paying a mortgage. I agreed. Through all of the excuses, all of the waiting, all of the holding off, all of the not taking a chance, when he and his wife were considerably and financially prepared, they finally made the right choice that he and his wife had worked hard for and set a path to generational wealth for their family for years to come. His name is Mike Watts, and you just read his blog. Remember, no certain time is perfect. It was finally our chance. Is it yours? If so, what are you waiting for?
To discuss readiness for the future, bring me a coffee, a beer and a jar of gummies and I will help get you ready for home ownership. Just kidding, unless you want to.
The opinions shared and/or suggested are my own, and not necessarily shared by my brokerage. Contact me today for a brief consultation to see if the time to buy/sell is right for you.