435 Podcast: Southern Utah
Explore the heartbeat of Southern Utah with the 435 Podcast, your go-to source for all things local in Washington County. Stay ahead of the curve with our in-depth coverage, expert analysis, and captivating interviews. Whether you're a resident or visitor, our podcast is your key to unlocking the latest happenings and trends in St. George and the surrounding areas. Tune in now to stay informed and connected with our thriving community!
435 Podcast: Southern Utah
Real Estate Decisions in a Changing Economic Market
Unlock the complex world of Southern Utah's real estate market as we tackle the pressing issues shaping its current landscape. Have you ever wondered why some properties are skyrocketing in value while others seem to stagnate or even depreciate? We'll unravel these mysteries with insights into fluctuating home values, steady interest rates at 7.07%, and their impact on the pace of home sales. As St. George continues to grow rapidly, we anticipate a surge in activity by spring, driven by increasing inventory and demand. Prepare to gain a deeper understanding of how these trends might affect your next real estate decision.
We also navigate the nuances of vacation rental dynamics, credit spreads, and the broader economic implications of tariffs and bonds. Discover how an increase in vacation rental inventory is impacting home values and what that means for property owners. We also delve into the bond market, explaining the intricate relationship between inflation, tariffs, and mortgage rates, and how they shape investment decisions. By understanding the historical context of credit spreads, we provide you with a perspective on what the future might hold for interest rates, real estate prices, and your potential investments. Tune in and get equipped with the knowledge to navigate this evolving market!
Guest: Branden DuCharme, AWMA®
Webpage: https://ducharmewealth.com/
Phone: 435-288-3396
Guest Bio: With a Bachelor of Science in Finance from Utah Tech University and as an Accredited Wealth Management AdvisorSM (AWMA®), Branden brings experience in wealth management, specializing in Real Estate, Tax Planning, and Active Asset Management. Branden is passionate about helping clients achieve their definition of success by applying technical skill and insight.
Notably, Branden leads the Du Charme Wealth Management Podcast and hosts the NAAIM Confidential podcast for the National Association of Active Investment Managers. Residing in Washington, Utah, with his wife and two small children, Branden enjoys playing strategy-based games, golfing, and conducting financial research.
An active member of the National Association of Active Investment Managers, Branden is dedicated to providing exceptional wealth management services.
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[00:00:00] Intro.
[00:00:52] Real Estate Market Overview and Trends.
[00:09:01] Real Estate Market Employment Impact.
[00:13:29] Real Estate Market Buyer Psychology.
[00:22:34] Vacation Rental Market Analysis.
[00:31:43] Market Impact of Tariffs and Bonds.
[00:36:41] Bonds and Tariffs Impact Market.
[00:47:16] Credit Spreads and Interest Rates.
[00:52:28] Real Estate Market Trends Analysis.
[01:03:10] Podcast Audience Engagement and Suggestions.
Price per square foot is down. Interest rates are identical to 2023. Identical 7.07 yesterday when I pulled it up Crazy From the Blue Form Media Studios. This is the 435 Podcast, the pulse of Southern Utah. Hey everybody, welcome back to another episode of the 435 Podcast. I'm your host, robert McFarland. I got Brandon and Jeff in the studio with us. Today we're talking real estate statistics. We give you what you really need to know in the first like five to ten minutes. Everything else we dive deep on. We talk mortgage interest rates, we talk tariffs. We really get into the weeds with some of this stuff. So if you're a data nerd or if you're thinking about buying or selling, you definitely want to listen to the whole episode. We've got a surprise for you at the end. Surprise for you at the end If you listen to the whole thing. Uh, hope you enjoy this one. Guys, we'll see you out there. Okay, we're talking real estate today. Oh, boy, we got the fast facts.
Speaker 2:For those that are going to listen to boys, yes, uh, how much time do we have for me to rant?
Speaker 1:30 seconds who are home home values going up or are they going down?
Speaker 2:uh, I think over time home values will always go up over time over. In the last year in the last 12 months.
Speaker 1:What has happened? Have home values gone up or down? There's cheat sheet in front of you mostly down, boom, yeah, I think. Home they come down a little bit. Five percent appreciation average price point, six percent on the median. Uh, okay, hold on, let me. Let me double check that is this in the?
Speaker 1:last two point two. Point five percent on the median. This is the last 12 months or year over year. But you know what's interesting guys? You're going to have to listen to me slowly because sometimes I just say things. Median sold price is up 3% year over year, year to date. So this is December, we're going back quarter four. We're doing quarter four. Okay, so median is up 3%. Average is up 5% $31,000,. The average price sale in Washington County has gone up. I just saw a video the other day of the self-described most best agent in southern Utah, most sales in southern Utah. He said the home values are going down, which is not what the data says.
Speaker 2:It's not what the data says. It's not what the data says. Well, I I think there's an interesting dichotomy where if you have uh, if you have a a newer home, it's it's catching some of that market appreciation, and if you have an older home where there was a premium being captured for that, now that it has to compete with newer homes, the price is actually correcting down yeah, I think that's a good point on average.
Speaker 1:We're gonna. We're going to get it.
Speaker 2:We're going to get into that one up but you know homes that have deferred maintenance or issues, whatever it might be, or they're just less desirable compared to alternatives, and newer alternatives in particular. I think those prices have come down.
Speaker 1:It's. It's interesting because, um, the price per foot is down like 20 bucks a square foot. Well, I saw one. Uh, I mean we have these laser markets right.
Speaker 3:So I saw one micro markets laser markets micro markets laser focused market. Laser focused micro markets uh, desert color. I saw one that was a.
Speaker 1:It had sold cash in 2021 for 750 and just listed yesterday for 720 right, and then and then other ones in, like an ivan's like sold in 2022. It was like 730 and it just went under contract for 799. Yeah, right. And so depending on the house we've said this a million times your house is unique. So if you're a seller and you're wondering what the value is, we can't say make a blanket statement your home value has gone up five percent, the market has gone up five percent on average, but your individual house might not have right. So there's some homes that are going down in value, some homes that have gone up in value.
Speaker 1:Price per square foot is down. Interest rates are identical to 2023. Identical 7.07 yesterday when I pulled it up Crazy 7% interest rate. It's on the 30-year market. It's an index, so being able to say your interest rate versus my interest rate, everybody's interest rate is a little bit different because of how much debt they have, what's their credit score, all these different factors but on the index, interest rate is identical today 7.07%, as it was in December 2023, the end of 23.
Speaker 1:So interesting start to the year. So interest rates haven't have gone unchanged. Price per square foot's gone down. Average price is up. Absorption rate is slightly up. So it means how fast are homes selling on the market, so it's taking a little bit longer to sell. Days on market is up. New listings dropped below the sold number for the first time since December of last year and then, going back before that, it was the December of 22 that it did the same thing. So December always tends to fall down below, but it was significantly below the new listings. Just not a lot of inventory hit the market in December, but we're about to see that change. Now we're in February. Pray to homes, spring selling season. Everybody's out of the holidays. It's getting warmer, getting warmer. They're ready to do it. Total sold. So we have 6% more sales this year than we did last year. So, per our MLS, 4,047 homes sold in 2024 versus 3,800 homes sold in 2023. 6% up, and then new inventory is up 10%. It's good news. So that's good news.
Speaker 3:So we have increasing inventory, increasing demand which is what kind of accounts for the increase in price. It's good news for most people. Some people just want to complain that St George has grown too fast.
Speaker 1:It is, and you know I guess that's but growing versus number of homes sold. We still haven't built out so and we're going to get into that as well. So if, if I was to give you the 32nd snapshot, that was it right there. Uh, interest rates basically unchanged. Absorption rate is up slightly. We're in a balanced market. Days on market is up. It's going to take you 62 days or maybe a little bit longer to sell your house. Average price is up. New listings we have less listings, more demand and a total number of home sales. People are are buying up inventory. Still nothing's changed. So that's, that's kind of the the general overview, but we're going to get into the specifics. So this right here is the price breakdown. So, going back to what you were talking about, brandon, about new home inventory, so these are the percent changes. So if you look at the top here this month versus year to date. So the far right columns, if you're listening online, definitely jump on YouTube or click on the Spotify video to take a look at this.
Speaker 1:But the biggest numbers that jump out to me basically anything under 250,000, uh, less homes have sold. Surprise, surprise, uh, there's just that kind of inventory is now gone in Washington County. Um, who knows if it'll return, but maybe. But the biggest number of home sales, uh, percent change was between three, 50 and three, 99. So 350,000 to 400,000, 19% more homes sold in 24 than they did in 23. Uh, but we had less home sell between 400 and 500,000, about 12%, 11.8% Um less homes sold there. And then we had a big jump between 500. The MLS does this weird thing where it breaks down between five and 750. So I broke it down between 500 and 600,000. We had 659 homes sell in 24, 619 sell in 23, 6% increase, which is kind of typical.
Speaker 1:Okay, so you guys that's where the inventory is.
Speaker 2:You guys deal with hands-on transactions way more than I do, um, are you seeing at all any like in the macro world we talk about, like this lock-in effect, this potential lock-in effect where people aren't moving because they have these really sweet rates, right? Do you see that there's a certain price point where the lock-in effect or the desire to stay in your home is, like more prevalent because they have a lower interest rate, like and like? I guess so, to be like really clear, like if, if two people have a three percent interest rate, is it um more impactful or more important to the people in a four hundred thousand dollar house to stay put, thus creating lower transaction volume in that? Then, say, people with $900,000 homes.
Speaker 1:I think you nailed it right there. It's like if if they bought a house back in 22 for 400,000 and they're thinking about moving up, but they had this low interest rate because you're talking about a move up buyer right.
Speaker 2:No, I'm just saying, I'm just saying like in general. So if two people have an identical rate one, you know, one person's got a $900,000 home, or a million dollar home, one person's got a $400,000 home Is there a difference in the thinking between like, hey, I'm going to move, whether it's to take a different job somewhere, or, you know, move across town, or you know whatever right Like, whatever life circumstances that drive moves? I think it depends.
Speaker 3:I think it depends on the equity position that they're in and like um, okay, so one example you got two, two people that have the same rate, one's in a $900,000 house, one's in a $400,000 house. I would assume that the the if the house is worth 900 K, now it was probably they probably bought it for 500, you know, or or 600. They probably have a couple hundred grand in equity, but the $400,000 house with the same interest rate, they probably have a significantly less equity position in their house. So the $900,000 house probably would be more inclined to to move. But you also got to think it's. Someone with a $900,000 house probably doesn't have a loan for that much. Yeah, I don't think it's. I don't think it's. Someone with a $900,000 house probably doesn't have a loan for that much.
Speaker 1:Yeah, I don't think it's. I don't think it's a price point thing. I don't think it's a lock in based off the value of their house. I don't think that's what it is?
Speaker 2:You don't think there's. Like I'm just looking at the discrepancy in in transaction volume and price points and just wondering if that, if that's playing a new role. If you look at a million to 2 million.
Speaker 1:We had 26% more homes sell in 24 than they did 23,. Right, that could be a lot of new construction between 750 and a million. We had a 12% increase in home sales and we dropped number of home sales below 500,000. So maybe that lock-in, like to your point, is basically anything over 500,000.
Speaker 1:They're not moving because they don't have a place to go that they can switch right. They don't have the equity position to make sure that they can afford that next place that they're in. It's more of a function of what is their motivation for selling. Okay, I think it's a motivation, not necessarily what the numbers say, because even though we've gone through this period of high interest rates from basically the beginning of 22 till now we've been around 6% or above for basically the better part of the last two and a half years People are still buying and selling. Right, we're still seeing people move, but what's their motivation for moving?
Speaker 1:And why people are moving in Washington County are different than why people move from Provo to, let's say, orem or something like that. You know it was like they're they're. They're moving for different reasons. We're we're a destination town and so a lot of our inventory moves as either a second home or people moving here because they're leaving some other area that has a ton of equity, like California or Washington or you name. You know 50 other different areas of the country that they had a huge appreciation and now they want to move to somewhere like St George whether it's for retirement or a job change where they can work remote.
Speaker 2:What do you think the demand push has been in the county from your guys's perspective, with some of these employers that are offering, I think, like more reasonable paying or high paying jobs, like some of the tech companies in town? Right, so they're bringing talent into St George and but that talent is still oftentimes like it's a good paying job, but like I mean nowadays, right, like a good paying job, you're not buying a million dollar house like that's. You know what. Like a good paying job, you're not buying a million dollar house Like that's. You know what I mean A good paying job as a young professional, you're still buying it.
Speaker 1:You know what I'm going to like air quotes here Between seven, 50 and a million probably regular family home to a certain extent Right Like uh.
Speaker 2:And so what is like? What does that growth in into town do? On different price points you due on different price points. You're saying those people are pushing the $700,000 bracket on average. That's where you see those buyers kind of land.
Speaker 1:Yeah, I think so, and I don't know if we've really hit an employment number for those higher wage jobs.
Speaker 3:We need more.
Speaker 1:Yeah, I think the number of jobs has increased and it's still coming. It's like this buildup as TechR ridge gets built out and a couple of these other businesses are growing, like I know for for certain Zonos they had these big plans of doing a big hire on but they haven't hired on as many as they previously had projected Talk about a business that is probably going to be really busy the next couple of years.
Speaker 2:I know tariffs right, yeah, exactly.
Speaker 1:That's that I was thinking the same thing, and so so when I when I can speak to that actually I know you guys do their info, you guys do their podcast there every morning, this week with a new podcast so far on trump's tariffs. He's like he's like hey, we're doing tariffs, just kidding, we're not doing tariffs anymore, hey, we're doing tariffs again.
Speaker 1:Just kidding, we're not doing good at tariffs by the time we stop the recording, it's like already out of date. They were laughing at it, they're. We left, we left the studio and it was like already not relevant.
Speaker 3:Already changed.
Speaker 1:It's crazy. So I just don't know if there's a big enough job change. I think people are coming here working jobs from other areas that are, uh, improving the pay. Uh, private wages uh, weekly wages has gone up 16% year over year, which I was looking at that data as well. We still don't have the data for what the medium household income is. It still goes back to 23. I don't know why we haven't gotten an update on the median household income wage here in Washington County, but the weekly private wages has gone up 16%. So I know for a fact that people are making more money and it's pushing them into the little bit higher categories, but I think it's because they're selling homes and they have equity positions to be able to do that. So I think, if I was to look at everything, over 750,000 has had an increase in demand. If you build it, they will come. So a lot of that is new construction. A lot of that's new construction, but we still haven't built that much new construction which we're going to get to Washington County data continued.
Speaker 1:Uh, this kind of is just showing the the total number of listings. We're at a high water mark, going really back to like 2017 as to how many uh active number of listings. But the the new listings have been pretty stable over the last two years, uh. But you see, that big drop off in December of 23 and December of 24 just happens. So we can kind of project out what we're going to see in the first part of this year January, february. I know we've already seen the January numbers come in. It started to climb but then we peak out right around that end of February, march timeframe and then it kind of has a sliding effect throughout the rest of the year. I don't think there's going to be much change from the pattern that we've seen over the last two years.
Speaker 3:For this year it's like the holidays leading up to the parade of homes, kind of. Yeah, that's what it looks like.
Speaker 1:So it's going to be typical. So if you're in the market, if you're selling, if you're thinking about selling, hit the market. But if you look at the sold, these are pending. So the pending and sold numbers look almost identical. But the demand also climbs. The demand climbs all the way into April.
Speaker 1:So if you're thinking about getting the house listed on the market, now's a great time to do it. We know that there's going to be demand in the market up until we get the summer. You can see June of 24, it drops off. June of 23, it drops off. Once we get into the hot summer months, uh, demand slows down. Where listings active listings stay pretty consistent. So if you're going to get it on the market, you're definitely going to want to get into market in the next couple of months or, if not, right now. You know the number to call. You can call us, we'll take care of you. Um, price trends. So this is just looking at price up and down. So the yellow one is the list price, always comes in above what ends up getting negotiated down. The orange one is the sold median sale and the purple is pending. Uh, so you can see we have these big spikes parade, parade of homes, parade of homes. Two big spikes total, and they just keep getting more expensive too. They just keep getting more.
Speaker 3:You told me there was like three over 10 million, first time ever that there's been a house and this year there's two but over 10 million. There's one at 10 million and then there was one like at 10.8. It's crazy, man, crazy First time, man, crazy first time. If you got 10 million dollars to spend.
Speaker 2:Well, the most expensive one from last year was 8 million, and it sold like in a month cash dude I I saw a sneak peek of the uh rl wyman house down in like little valley. That's the 10 million dollar one. It's insane, it's like a hotel that's it's beautiful it's absolutely like they bill.
Speaker 3:It's a stunning yeah, that's the one that sold last year, the volcano one that sold, was it eight million dollars?
Speaker 1:all right, rl, why he does a good job, they did that team does a good job because it's not just one guy, it's a whole, his whole team, uh, from top to bottom to landscaping. They just they dial in all the little details. So, pray to combs, pray to homes coming up. If you want, uh, more information about that we can give, give you more information. Make sure you reach out to us on pray to homes too.
Speaker 2:But I'm just going to derail you with another question. Keep derailing me. Uh, do you think that when pray to homes happens, you see any spillover of like unreasonable expectations in buyers? So like, if you go to list your home during pray to homes because you're like, oh, there's all this excitement about around real estate, so that's when I'm going to listen to my home, do buyers also tend to be like, well, this home isn't a hundred percent perfect and I just went and toured all these $10 million houses and so now that's kind of what I was hoping for in my mind subconsciously, and now I'm really like nitpicky as a buyer.
Speaker 3:You you give yours and my opinion is that the people, the people that, uh, that walk into parade homes and and see stuff like that and or complain like, oh, I wouldn't have done this or I wouldn't have done that, those people aren't in the market anyway.
Speaker 2:No no no, I'm talking about?
Speaker 1:do buyers? Do buyers, when they're looking at houses, like have this expectation? Yeah?
Speaker 2:So you just went through your parade and looked at 15 immaculate, perfect homes where every detail is on point, perfectly, not a you know, nothing's out of place stage, and then you know. What they're really in the market for, though, is a seven hundred thousand dollar or eight hundred thousand dollar, home in little valley that's, you know anywhere from five five, five to ten years old doors, yeah right, like in, and now this hardware seems a little janky or or the you know, yeah, this landscaping really needs to be updated, or the grass isn't perfect and we'd have to, so we'd have to tear that out and do new sod, or just like, whatever.
Speaker 2:Like, consciously or subconsciously Does it? Do you think it spills over into buyer's expectations?
Speaker 1:So I think, it does a little bit, but I think actually more so it has, uh, their subconscious. Is the house I have right now, isn't? I think it doesn't necessarily make the buyers more picky. It makes the sellers more, more invested in saying I'm ready to get something new. I think it inspires the sellers more than it does make the buyers picky.
Speaker 2:Right, but I have to sit here and advocate for good financial decisions. It's at the core of who I am, and so I think if you're a seller like that's probably the wrong reason to be selling.
Speaker 1:But I think that's the psychology there. If there's a psychology play going into, whether it's a buyer or seller, it's that sellers are more motivated to unload the stuff they don't want anymore, more so than the buyers are excited to or unexcited to buy it.
Speaker 1:Yeah, or buyers are just overly picky, because I think people have fairly reasonable expectations when it comes to new construction. I bet you that's it's. It definitely shifts, shifts some buyer perspective on expectations. I'm going to build a new house, I want everything perfect right, like the blue tape walkthroughs where they're like you know this, this miter doesn't like match up perfectly and you know those kinds of things.
Speaker 1:I bet you it probably has some, some psychological interest, but I think it probably more than anything, it makes sellers more but, motivated to be like I mean, I don't want this house anymore, I want to go get something else nothing major and significant though, after, like over the years, of you guys no, I don't think dealing with with all this okay but also I think I I think I agree with jeff too is that most of those people aren't necessarily in the in the market at at the moment it.
Speaker 1:There's still some time, there's some lag that goes into. They went and look at those houses and then it might fire them up to go buy something new and then, like two months later, which you could see, which you could see right here for the from the sold. Uh, uh, let me look at the inventory. So you have the peak of the pending sales comes in April. It the peak isn't in February. It starts climbing in February but the peak doesn't happen until March and April. Right, there's a delay between the parade of homes, so the parade of homes doesn't incite the pen and these are pending. So the pending in March is closing in April. The pending in April is closing in May. Does that make sense? So the people in the market it's inspiring people to get the selling or buying juices flowing. It's not that in February, that's when all the sales happen. Does that make sense? I think there's a delay and lag time in there. I don't know if that answered your question.
Speaker 1:We're coming back to vacation rental data man. We've been watching this pretty closely. It was actually one of the key features. The Kempsey Gardner Institute did their end of the year features. The chemsy gardner institute uh did their end of the year report and they were talking about vacation rentals.
Speaker 1:There's some uh legislation up in salt lake talking about uh allowing cities to enforce uh zoning laws. So if somebody's uh doing a vacation rental in a neighborhood that's not zoned that way letting off the change, so to speak, and is to allow the city to criminally prosecute it, prosecute it or enforce the zoning laws within it, because right now there's a lot of hoops that they have to jump through in order to. If you know you live in Bloomington, for example, I know, jeff, you have this, this issue where you know that somebody was doing a vacation rental and it's next door you go tell the city and they're like well, we need an affidavit signed by the person who rented it and you need to have all this documentation saying that they are vacation renting it, and it makes it really difficult for the city to stop the behavior. There's some legislation up in Salt Lake which I don't think is passed yet, but I think it was presented by Neil Walters to stop that and allow the cities to enforce that.
Speaker 1:But you can see this climb If you're looking at the data. We've had just a steady climb since March of 22 in number of active inventory. So we've gone from basically 50 homes for sale that are vacation rentals, up to 168 active listings and you can see at the bottom the sold listings or the pending pending listings between 25. I think there was only like 18 vacation rentals uh, pended in December 24,. Um, home values for vacation rentals has definitely taken a hit.
Speaker 3:I wish we could overlay, um uh, list to sell ratios on this, because I bet the list to sell from March of 21 to March of 22 would be outlandish. Yeah, absolutely.
Speaker 1:Outlandish, and a lot of this was new inventory. So this is new construction of vacation rentals and I think a lot of this is still. They're still building more vacation rentals. There's still more subdivisions that have vacation rentals. They're hitting the market that just really haven't. The demand hasn't caught up, so we're seeing it slide from a peak of over 200 active listings down to 168. But if you look back last year, in 2023, or, I'm sorry, 2022, the end of the year there was a drop off of active listings. It'll be interesting to watch this year continue, cause I think this is going to see a continued upward trend of active listings for vacation rentals, cause so many people are not making the money that they thought, because less people are vacationing here than they were post COVID.
Speaker 2:Well, that it creates a problem too from a margin call perspective. Right, like, if you so, if you buy a property expecting to make, you know, have a certain revenue, revenue, revenue, dollar, whether it's from occupancy or or raising rents or or stabilization or whatever, and that changes in your upside down on the mortgage, right? Or even if you were, you know, flat from a cashflow perspective. But then you start having capital expenditure stuff, right Cause even if, even if your rental is not making money and you're like man I'm just like you know, I'm cashflow neutral Like you're lose, you are losing money in those months it's just accruing until the point that you have to fix the roof or replace the water heater or you know they break a bunk bed or something, yeah, whatever, it is right.
Speaker 2:The capital expense anytime there's use going on like truckers understand this really well. Right when they like they don't want to take a load just to break even because they know they're still accruing deferred maintenance on their trucks right.
Speaker 1:Vacation rentals take a lot of deferred maintenance.
Speaker 2:Yes, and so what ends up happening, though is is, at a certain point, people go I have to sell this, right, I can't continue to float this, I can't continue to do this.
Speaker 2:And so they sell it. Well, once people start selling, it really brings on the value of it, of these nightly rental properties where the premium was being paid in their ability to produce this higher revenue the top, well in the top line revenue, not the net return, but the top line revenue. And uh, and so, as as as as those sales happen, I my theory is it's going to push, have a have a downward pressure on prices for nightly rentals, which will eventually then like right, if so, if you bought in in 2020, and you're like well, I have all this capital appreciation, but now the market's coming down on it, I might, I might now jump out and sell while I can, and and that's how you have a cascading effect. So the same thing happens in capital markets, like in the stock market. Um, it just happens so much faster because the liquidity is there, the instant pricing, yeah.
Speaker 2:I think it's click and it's sold. Yeah, I think the same thing's going to happen in in essentially this this market, where the valuations on uh nightly rentals are so overextended and the uh leverage was so prevalent. Um it just. It just takes a longer amount of time in real estate for that to happen in our mind. But I think, unless there's a drastic change, it's almost, you know it's. I think it's inevitable now. Imminent and inevitable are different.
Speaker 1:Yeah, well, like I think the adjusted value, uh and I don't have the data right in front of me, but I think the adjusted value because vacation rentals are so another micro market from one subdivision to another. You know they might have tons of value, like paradise village or desert colors, an example of vacation rentals those values aren't going to take as much of a change in value versus Sienna Hills where there's not, as the lofts is always an example that I go to where they were selling in the high sevens, you know, in 2020, 2021 and now the same exact units, fully furnished, are selling less than 600 yeah, or just not selling at all.
Speaker 1:We're not selling, we're just not selling at all, and that's that's the thing, is that?
Speaker 2:like it. Well, it's a hybrid between residential and commercial right. You're buying a largely residential property but you're competing against hotels and and and the like, and so it they're really being priced from like a commercial perspective. Yeah, so when?
Speaker 1:you when, when? My point being is that, like when you look at, okay, what's the depreciated value or what, what is the? The value of property over the last two years declined. Back to our conversation. Is the home? Home value is getting more expensive or they're getting less expensive?
Speaker 1:When you step back from from and look at the 30 000 foot view, vacation rentals have only declined about five percent as a market. Okay, but the individual listings a lot of times have way worse values today than they did, you know, 18 months ago, 12 months ago, and some, like the vacation rental we have in desert color. It was on the bottom floor, condo. It has its own unique amenities, it's right across the street from the um lagoon and all the the resort stuff, and that sold almost immediately, right, and we were priced over what the rest of the market was selling.
Speaker 1:But the buyer for that one wasn't looking at it for a vacation rental. He, his job, takes him all over the country, so he's here for six months and then he might leave for three months, and then he's back for six months and he might leave for three months, right, and so he has a job that takes him in multiple different places and he wanted a place that while he's gone he could vacation rental it out and make some some income off of off of that property, which that goes back into finding that needle in a haystack of. You know who is the buyer and what's their motivation for buying. And then the sellers what's their motivation for selling. If you're taking on water and a vacation rental and you can't weather this correction in the market, now might be the time to sell, but you got to recognize that you're going to have to be competitive to whatever else is on the market.
Speaker 1:I still I still believe the long, long tail value of vacation rentals in St George, because I think we're going to get less and less vacation rentals. I think, uh, the city's going to stop this. Multiple cities across the County are going to uh permit less and less of them and we're still going to be a destination town. So the the long tail value of vacation rental is still going to have have value. Think park city or any other resort town.
Speaker 2:Yeah, long-term have value, think park city or any other resort town.
Speaker 1:yeah, long term long term value holding on to it. You got to look at it as a 10 year. We got to hold on to this thing for 10 years, so we can see the ebbs and flows of the market. Yeah, it just it's. It's a it's a tough hold, so it's a tough hold make sure you have yeah you got to make sure you got the the money in there. You got the whole me.
Speaker 1:You gotta have the whole plan put together yeah, so this is a 30 year fixed mortgages. We just dive a little bit deeper into that. So this goes back to December of I'm sorry, yeah, december 22. So this is basically I'm sorry. This says May, may of 23, all the way to February 4th.
Speaker 1:You can see the ups and downs in the mortgage rates. If you, if you look at what the expectation is of there's, this is my crystal ball, this is the crystal ball of all these other institutions. On what mortgage rates are going to do over the next year. It seems like there's a consensus that it's going to land in the sixes. We're at seven now. What do you, brandon? I know you have some thoughts and opinions on where mortgage rates are hitting and maybe how tariffs come into play on this. We were talking about this, uh, the other day. I was like don't, don't spill the beans, because I want to talk about it on the podcast. How is there some kind of correlation between what we're seeing with Trump administration and mortgage rates? What do you think is going to happen or what can you expect?
Speaker 2:I think I don't have a crystal ball, so I don't know that I want to make a hardline prediction on this. I'm way more apt to respond to markets rather than try to predict them. However, I think understanding the relationship between how some of these things work together and how their price is worth considering right. So, in particular, to start like, the first thing is to remember that mortgage rates are priced on the 10 year treasury, right, right In general, um, and that's because mortgage rates in practice are going to have a effective duration more akin to a 10 year treasury from a risk perspective, and they're also implicitly guaranteed, um, you know, backed by the government when you're talking about, you know, jenny and Freddie and Fannie.
Speaker 1:Yeah, you know backed by the government when you're talking about, you know, jenny and Freddie and Fannie, yeah, and just along those lines, the there was a survey done for homeowners. How long did they expect to live in their property? And for basically the last six months cause they do it monthly Sure Is a 10 years, that they expect to live in that property for 10 years, which is interesting and it just kind of there's a there's a link between those two things.
Speaker 2:Well, there's a, there's a link between those two things. Well, it is effective. Duration is a risk profile of a, of a, of a bond, once it's securitized, and that's different than the actual tenure or maturity period of the bond, and so that's um. There's maybe some data to get to get in deeper to that, but I don't think that's uh, if anything that would change the way mortgages are priced. Uh, and increase the rate, if anything. If anything that would change the way mortgages are priced and increase the rate, if anything, if anything, that would be an upward pressure, I think, on on rates.
Speaker 1:How long they hold the if they stay in their house longer.
Speaker 2:Yes, yeah, because it would. It would increase, like in thought, more effective duration risk into the bond and if, all else being equal, the more duration risk you have, the more term premium you need within the bond itself. And so that's why you know, aside from these periods where there's these inverted yield curves, generally over time you're going to get more yield or get you're going to pay, you know, like the government's going to pay more interest on a 20 year bond than a 10 year bond because you have more duration risk in the 20 year bond, right? Okay, so if all of a sudden, people start staying in their homes longer and longer and longer, well, it changes that underlying duration risk and so you could theoretically then expect, maybe, like mortgages, to completely start pricing differently than they happen. I don't think that's really going to happen. Going back to um like 80s, just for perspective and this is based upon this is the spread between the mortgage index and the 10-year treasury, right? So as this is going up, that's a widening. So, basically, you're paying more for a mortgage relative to the 10-year treasury. When this is increasing, when it's dropping, you're getting a better deal, and you can see that right now we're trading down near historical lows. Right, we're in a pretty good environment for people taking out new mortgages and, I would say, somewhat of a unfavorable environment for people investing in mortgages.
Speaker 2:Now, when you look at what's going on in the bond market, you have to remember that bonds are based upon future expectations of growth, their risk asset, and it all relates back to what is your expected return relative to other risk assets and other investment opportunities you have. One of the things to understand and remember is that people that invest in bonds don't have the same upside return potential as they do equity investors, and so they uh, they need to make sure that they're getting a return on their money. But, in particular, especially if they're investing in in something that's a longer dated maturity debt instrument, like a 10 year treasury, they want to get a real return, right. So this is like it's a, it's a bad investment principle. If inflation is going at 3%, to invest in a bond that pays you 2% a year for 10 years, right, you effectively lose purchasing power. You lose money over time. So, if you look back to um 2006, this just shows uh, you know the red years the yield of the 10-year treasury, which, remember, mortgage rates are priced on the 10-year treasury, and the blue line is year over year inflation. Using CPI as the measure, and you can see that generally, the red line is up above the blue line. When the blue line's up above the red line, that tends to be a pretty bad time to be invested in bonds, and largely the last couple of years has been open for the last decade was okay because rates continue to fall. However, that fundamentally changed in 2022, when the fed started raising interest rates, and you can see that the bond market had already started pricing that in going back to 2021.
Speaker 2:When we started in the end of 2020, when we started getting increased inflation prints, right Like the market started really saying, hey, the government is printing so much money, this is going to cause inflation, and we start we, we want to start getting more. You know, paid more for our bonds, or we're not going to hold them, we will sell them. Um and uh. Last year, in the end of 23, you started getting a, a, a again, a real positive return on on bonds, so you were now at least getting a return on term premium that was higher than the inflation rate, and we've largely held steady on that now. So what happens is, though, is now let's move into tariffs. If tariffs go into effect and they go into effect in- a manner road.
Speaker 1:that was a long road to get to tariffs, but this is actually really interesting.
Speaker 2:There's a lot of complexity here. But if tariffs come in and they stop or halt or significantly slow us growth, right. What that does then is it's it's going to make this look more attractive than equities, right, it's going to make bonds look because you're getting a real return in bonds, right Returns. You're getting a return over inflation and you're going to get it. It's guaranteed to get paid by the US government in the case of a treasury.
Speaker 2:And if you think, well, growth is slowing, so equities are going to come down or the price of real estate is going to come down because people can't afford, you know, like we're going into a recession or a significant, a period of significant slow slowing on the growth, and we're already at extended valuations and equity and all this stuff. What happens is then people go and buy these bonds, right, like, well, I, you know, hey, if things are going to be bad for a couple of years, I'll just buy these bonds and you know I'll get. Really, I'm not talking about you know, you know Johnny and his 401k. I'm talking about, you know it's big and, yeah, big endowment funds and and pension pension funds and this sort of thing, right, um, where they invest in a completely different way than you know.
Speaker 2:Uh, main street does, um, but what that does then is it brings the yield on a 10 year down. But what that does then is it brings the yield on a 10 year down. And so, all else being equal, if the mortgage rates are, are priced on a 10 year, and a 10 year goes down in yield because everyone's buying them, right, there's only so much supply, and so, if people want more, you had to buy them. Well, in order to buy them, you pay more for the bond, which pushes the yield down. There's an inverted relationship there Price of bonds come down, price, price. The yields go down, which means mortgage rates come down, okay.
Speaker 1:So what if, however, inflation starts going up? Though because I know there's there's a big conversation around how tariffs are going to cause inflation, because it's a if a tariff is a, a tax on the buyer of the good and if we're a net right importer of goods, we get it from other countries. Let's say, a 10, 10, 10% increase on tariffs from China. You know, 10% of everything we buy from China is now being levied on to the American population. Could that? The assumption or at least this is what I hear is that that's going to trigger an increase in inflation. So if inflation starts to go up, are we going to see that?
Speaker 2:Look, I'm not a. I'm not a. I'm not a tariff expert, right Me, neither I very much more.
Speaker 1:We got somebody on here. If you're a tariff expert you're listening to this I'd love to chat with you. If you're an importer exporter.
Speaker 3:I might.
Speaker 2:we're interested in talking I might know a couple of people in in uh tariffs in the institutional world, then I could probably have them on my other podcast. Um, if that's something that really actually interests people on a deep level. However, um, what I'd say is is two, two things that I I think is um, uh tariffs are a turn on, turnoff in inflationary events. So you turn it on, you have the inflation. Inflation, remember, is not measured on a continual basis, but a year over year basis. So all is being equal. Like if this can of soda is a dollar today and then next year it's a dollar 50, we'd say, like man, we had a 50% increase in inflation. But if the next year it's still a dollar 50, we'd be like we had no inflation. It's like my can of soda is still expensive. So if the 50 cents is a result of a tariff and whatever cause, that tariff you take the tariff off, it's deflationary.
Speaker 2:It's deflationary Like and so then everyone go, oh, we have deflation. Well, you, just you kind of you put it on and then you took it off. It's like, I don't know, it's like ankle weights, right, so it doesn't continue to increase the inflation.
Speaker 3:You have ankle weights, but they are exactly five kids.
Speaker 2:I try to slow them down, uh, but yeah, that's right. So I like I think sometimes this stuff about tariffs are more about the short-term impact of it potentially selling the economy, more so than the potential impact on inflation. Good point. However, I'm also like I'm a market technician by nature, and so I look at stuff and say like, when the market's trying to tell me something, am I paying? Good point, it wasn't particularly great for commodities, but they are on a potential technical breakout and just as sort of an asset class right Buy corn.
Speaker 3:So you're saying we need to buy some corn.
Speaker 2:No, no, no, no, no, no, no. Like I am not Industrial lubricants, you have to Lumber Only for you, jeff.
Speaker 3:Fun fact diesel is classified as an industrial lubricant, not a fuel.
Speaker 1:Yeah, yeah, no one cares.
Speaker 2:Well, the interesting thing about commodities is they all trade different. So cocoa trades different than silver and it trades different than copper, and it trades different than cotton, and that trades different than sugar, and that trades different than oil.
Speaker 2:They're all really their own. Yeah, and that trades different than orange juice. Futures, right, right, which is a big one, by the way. But if you look at them, but if you look at them on on mass right is like an index, like all sort of a basket of so has, or even two and a half years has been tough and they've kind of what we would say in a technical sense, have sort of bottomed. That is not good for, I think, bond prices, because if commodities do go up and inflation goes up, you don't want to go back to owning the thing that doesn't have the upside potential. Remember, right, right, you want to own the thing that doesn't have a cap to the upside and you don't want to have the same instrument. So there's a I mean there's a lot.
Speaker 3:There's a bottom line, there's a lot of theory here. But Is if your lender or real estate agent tells you that rates are going to go up or down? They don't know. They don't know and you should.
Speaker 2:Yeah, they're probably full of it. You should call Brandon and I'm happy to go through as much as we want, but there's a lot that goes into pricing bonds and what I would say is, if I go back and look at not this, but let me just pull up this one which is just like so this is not the credit spread of mortgage to tenure, but this is like the actual, just raw mortgage rate. So this is on a daily basis. Let's just I mean to make it just a little bit easier and see, go to a weekly basis, um, and, and back this out. Now, now this index started printing in. Uh, what was it when I bought my home in 1985, yeah, like I paid $35,000.
Speaker 2:This goes back to 71.
Speaker 2:Right, so you can see like so so look, I mean, they only started tracking this index in in 71, but interest rates in general right, remember, they all kind of priced together Like debt instruments are all very similar. It just has to do with credit quality and credit ratings, you know, length of bond, all those sort of things. But you can see like rates just have been coming down right, and there's periods where they came down and they went back up, you know for a short period of time, but uh, uh, structurally they've, they've really come down Um and the, uh, the bond cycle should have bottomed in 2008 and and rates should have started going up after. After that. Now the government chose to artificially hold them down here, um, in this kind of period here post GFC, and then just exacerbated the problem even worse in COVID, um was suppressing the, the, the rates even further.
Speaker 3:What's the lowest possible interest rate you could have had in 2000?
Speaker 2:Uh two, two, six, five on the on the index, which is again going back to Rob's comment, that's like, not always like. I mean I'll look, I'll look, I'll say my rates 2.375 on my house, you know yes.
Speaker 3:I have a VA loan.
Speaker 2:So so like this is just the index again An index is not, it's not everyone's experience. It's just. It's a summation of everyone's you know, experience Right, so mine's 2.65. Funny enough. Wow, jeff, you nailed the bottom of the market.
Speaker 3:Well, I don't have a VA loan.
Speaker 2:But my point is, I look at all this and then I look at the structure of the whole market coming up here and I think that you know, look, if you get a rate around six, I think that for a long period of time it's going to look like a relatively attractive rate. And I think that the bias is to the upside right, the bias is for rates to be higher. I'm not saying there isn't a period that they can come lower, and I think you saw that in in this period when, when, when, in, you know, going into 24, everyone thought rates were going higher and and they largely came down over the rest of the year.
Speaker 3:Right, so I mean, there were plenty.
Speaker 2:There were plenty of but now they're, they just shoot right back up.
Speaker 1:You know it's it, it yeah, they're, they're ping ponging around this, and I also I take it from a real estate agent perspective is we don't want home values to keep going up as fast as they were Right value over the last five years. In Utah, real estate 65% in five years. It's just not something that's sustainable, and so the rates are one element, a factor of it, and then the values of the house are this other factor.
Speaker 3:There's a lot of factors that go into it, and some of it is quality of life too, that you can't even quantify.
Speaker 1:So if you're waiting for a rate to change. I think my biggest point is like if you're on the fence in 2025, should I buy or should I not, and am I waiting for a rate? The reality is, is that you're waiting for the wrong thing. You're you're getting lost in the forest for the trees that if anybody tells you they're going to go up or down, they're not really a hundred percent sure, they're probably not even 50% sure, barely right as to what exactly it's going to look like. And so you've got to make the best financial decision for yourself what, what makes the most sense for you right now? What can you afford and you can find a house that you can live in and and be happy in, and be careful with your investments in real estate, because it's it's a it's a it it.
Speaker 1:It can be a lot riskier than what it's riskier today than it was five years ago.
Speaker 2:Well, yes, yes and yes, and I'll say that I'm one of the probably one of the most qualified people in in in Southern Utah, um don't break your arm patting yourself on the back there.
Speaker 2:No like okay From a professional standpoint, right Like to to try and listen like I'm not saying I'm I'm the best financial planner or advisor. I'm saying like from a, from a qualification standpoint I'm, I'm, I'm one of the most probably credentialed people in Southern Utah to try to time markets. And what I'm telling you is, if you need to buy a home, it's very, very tough to time in markets and you likely cannot do it. So make a prudent, overall decision that you can live with long-term and and stick to the long-term, because you know, like the old adage is time in the market versus timing the market Right and and if something is a lot, the longer your time horizon, the less the timing sort of matters.
Speaker 3:Well, brandon is the only certified market technician in the entire County that has CMT one, two and three, three, uh shout out to Brandon Appreciate it. Um, it's true, I'll drink to that.
Speaker 2:It's, uh, it's true, I'll drink to that it's, uh, it's facts. I'm shooting straight facts so yeah, look, I I'm. Yeah, if I can share one more thing to your point about it being riskier than it was five years ago and why people really should have you're not sharing anymore, but what let me share? Do I have to help you share? Just you just share. Send requests, you gotta. You gotta stop sharing, you gotta stop sharing Someone else is sharing.
Speaker 2:I'm stopped. I'm stopped, I stopped, okay, okay, okay, all right. Look here, here's the bank of America high yield index, or a last thing, this is your credit Everybody.
Speaker 2:This is credit. Look, this is credit. Look, this is credit spreads. So this is, this is a graph showing if I have, if I have money and I'm going to borrow it to people and I have, I have the choice to borrow to, you know, jeff with an 800 credit score, or Rob with a 500 credit score. That's probably true. Okay, I, I am going to go like, if I have a thousand bucks, I'm going to say, rob, I want you know 15% a year from you. But, jeff, if I bought it to you cause you have an 800 credit score, I'm going to give you. I'm going to give it to you at 8% a year or 7% a year, right?
Speaker 1:Like, my number is bigger. That's how with mine.
Speaker 2:That's how.
Speaker 2:That's how credit normally should work Right In a in a in a in a in a in a functioning market. That's sort of what happens no-transcript incentivized to want to borrow it because I have to get it borrowed out, because I need to borrow it out so that it's working for me, right. So eventually it just gets to a point where you're like you have an 800. And it's like I'm not getting compensated truly as an investor the same way that I should be for the amount of risk I'm taking. But that is how it's, just a result of things being as good as they are for as long as they have been sort of deal, and so what that? Then that difference between you know, jeff's rate and Rob's rate is the credit spread right. And if you go back and look at so, if you look at the bank of America's index on option adjusted credit spreads and you see right now we're down at 2.71. And if you go back, the only time in history that we've been tighter on credit spreads than that is right before the the GFC right.
Speaker 2:So I'm not here to housing market crash yeah, look, I'm not here to like ring the bell and just say like it's all, it's all going to crash. I don't think it's all going to necessarily crash, but to your point, it is becoming riskier and riskier, right Like the later. The longer you take to get invested, the more risk you theoretically which we're not going to cover right now but, um, I think there's got to be a lot of different functions as to why this credit spread is so, so small well, it's just there's.
Speaker 2:There's so much money chasing so few people chasing so few few loans and, in particular, in public markets, right, I mean that this is obviously based upon public markets, but it's, it's a good bellwether of the overall financial conditions of the country, and when it's tight and when it's getting tighter, that is a good, it's a good sign for prices in general, right? So, as it's been getting tighter, like if you go back and look man, real estate prices have shot up. If you have a 401k or you've been holding stocks, like, chances are you've done really, really good the last 10, 15 years. Right, since spreads have been tightening. Problem is, when they blow out it's, it's because they're worried about a default, and again you're going back to an instrument where you have no upside. You know you have no like real upside in the equity value of the of it, but you have a limited, uh, but you, but you're promising it repaid, yeah, but if the promising it repaid goes away because of bankruptcy and and and defaults, um, then you want to try to unload that as fast as you can and get, get, you know, get what you can out of it, so to speak.
Speaker 2:And so that's why you know, bond markets crash the same way stock markets crash. It just happens that the bond market typically crashes first and in the high yield space, and that manifests in credit spreads rewidening because people are like my gosh, I'm not going to get this, I'm not going to get my thousand bucks back from borrowing with borrowing with the rob. Jeff's fine, he's going to pay me back. He had 800 credit score, rob had 500, so I borrowed you a thousand bucks, but if somebody's willing to give me now 600 bucks, I'll. You can take over the loan with rob and I'll just be out right like yeah, that's a 40 loss of your money, so that's a good point okay, anyways, that was.
Speaker 1:That was a helpful uh overview as to there's there's a lot of functioning pieces going around with interest rates. I think, uh, if, if you followed along with that whole thing, you'll get get more of an idea of I don't think there's going to be a huge swing up or down with interest rates over the next 12 months. From my perspective on what we're seeing, brandon I don't know if you'd argue with that the, the crystal ball tellers, morgan stanley's and all these these credit institutions say that we're going to probably run around six percent low sixes is going to be interest rate for the remainder of the year uh, I think you're going to be hard pressed to get a rate better than six and I think the bias is to the upside.
Speaker 2:I don't where where it ends up and when that happens. I am almost. I don't have a crystal ball, I'm just, but I, I it would be. It would be challenging for it to get below six.
Speaker 1:In my opinion, okay, we're gonna jump in, we're gonna do rapid fire because we only got a few minutes left. Uh, platted lots, 10 higher than in 2023. So we got platted lots. We got uh, investors that are going through the, the, the entitlements process. In getting platted lots we had a bunch hit right in February of 2024. We'll likely see a bunch hit in February of 2025 as well. But, yeah, platted lots are up.
Speaker 1:December new home sales highest number as a percentage of the year. So percentage of the total home sales we had 37% of the market was new dwellings versus the total dwellings. There was 6,500 total dwellings sold in Washington County, as per the recorder, so the Utah title company reports. So the County recorder, the MLS only had like 4,700 or 4,800, I think is what it was but total dwellings for sell by owners stuff that wasn't listed on the market. So 6,500 total dwellings. 37% of the market in December was new dwellings.
Speaker 1:So new construction going back to kind of what we talked about at the very beginning with you, brandon is new construction I think is driving a big portion of that home value appreciation. Where you have the older inventory is selling for less money. New inventory is getting a premium on the new constructions, housing costs, you know, building costs, all those things. Lots dwellings, acreage and commercial um did pretty well this year. Commercial uh values in 2024, just just lots and dwellings up over 2023.
Speaker 1:So all the dwellings were up 19%, lots up 53%. So a lot more land moving acreage. About the same little change 12 commercial I don't know how accurate that is 12 commercial properties. I'm not sure about that number, but Southern Utah title says that we're up over 2023. So we've got more demand in the market. This is the uh home appreciation forecasts. This is average of all 22, uh institutions 2.7%. This is as a uh U S housing market uh forecast. So we got a AI housing center says a 5.5% appreciation where Morgan Stanley says we're going to see a 2% depreciation of home values across the country.
Speaker 2:Someone at Morgan Stanley is about to lose their job 2% depreciation of home values across the country.
Speaker 1:Someone at Morgan Stanley is about to lose their job. Moody's. Moody's has it as a basically no change. Freddie Mac 0.6%. So I think the appreciation values, if you're looking at the macro, this is all of the United States across the board it's kind of a 2.7%, right Is? There's not going to be a huge appreciation.
Speaker 2:I know Texas, stuff is always BS. A huge uh appreciation. I know Texas, the consensus stuff is always BS. Yeah, I think so too.
Speaker 1:It's a fun number to look at.
Speaker 2:Well, if you get in the institutional world, it's, it's. It's a game of over under slightly. So you know, here's the deal is. Is that the guy at AEI housing center, he's about to get fired or promoted. And the guy at Morgan Stanley is about to get fired or promoted? Yeah. And and everyone else in the middle, their job is safe, yeah.
Speaker 1:That's a good point. That's a good point. Uh, home prices. This is a percentage uh value year over year. Uh, going back all the way to 1954. You can see huge jump. Uh, we dropped significantly. So if you look at the housing bubble, uh, september, oh five, we were just at a 14% annual year over year change and we started to crash all the way through September of 2009 at the bottom at a 12% depreciated value. Remember we were building homes in Washington County. They were issuing out a million dollars of basically open credit. If you had a real estate license and you wanted to build a spec home in Washington County, you got a million dollar credit to go build a home. We were letting people and anybody with a pulse build homes in the country. Uh, over the course of 2005, 2006, which caused a big portion of the market crash. I thought you were yeah we had.
Speaker 2:I don't know the pulse, because that's like that's all. It's pretty much required to get a real estate license. Is that? Yes, absolutely. I'm glad you said that.
Speaker 1:Jeff's offended, I'm not. The reality is we had over 10,000 homes on the market in 2008. No 2007. It was like right before the crash. We had 10,000 active homes on the market.
Speaker 2:We had over 10,000 homes on the market before the crash, which is why we had such a massive If anyone's trying to conceptualize how large that is, the entirety of the Long Valley project, once it's completed, is supposed to be 2,500 homes.
Speaker 1:Yeah, exactly Like I mean. We're selling 6,500 homes a year total and we had 10,000 active on the market before the market crashed.
Speaker 3:That's five times as many that's active right now. Yeah, on the MLS.
Speaker 1:It was insane. No-transcript annual home sales. Total new homes sold uh 15 years below. Uh 696000 homes sold across the country in the 15 years and that's below the average, I'm sorry. The average year. The average home sold number of homes sold across the country over the last 15 years is 696,000 homes. We sold 682,000 homes last year, so right about the average. If you look back before the housing market bubble 2004, 2005, 2006, they were selling significantly more double homes. The number of homes sold this is actually puts us right around what was going on in the nineties.
Speaker 3:Well, that's because borrowers could buy two homes or three homes at one time Exactly Pretty easily.
Speaker 1:Or investors were owning several homes and they were trying to spec them out, right, just kind of like what I was just explaining. Existing home sales uh, over the course of 2018, 19, 20, and 21, we had 27 million homes sold, where 2002, three, four, five and six we had 32 million homes sold. We've dropped significantly. The green line is percentage of the households per sale, so we're down to 3% of the total households in the country sold in 2024. The lowest number since going back. I think this is back all the way to the 70s, before we had that few as a percentage of the homes.
Speaker 1:Going back to what your question was is it causing people to stay in their home or not? Uh, I think interest rates people are staying put and millennials are bunking up with mom and dad. Utah annual home sales by year we uh had more home sales in 2024 than we did 2023, uh, still under 22 and far below anything else, going all the way back to 2014. So, um, the definitely a correction in the annual home sales. Demand is low, uh, but we're seeing an increased uh movement in demand.
Speaker 1:Uh, median home payment this is, this is the big chart. This is where everybody gets pain, right? You see the yellow line here is interest rates as they jacked up. Uh, the median sales price goes up and the average home, uh, principal and interest with a 27, with a 20 down payment was 2500 a month. Is it cheaper to rent or buy a home? Right now, boys in washington county, it's cheaper to rent. Cheaper to rent, which you know over the course of almost all of the last 30 years. That was not the case, but it that is absolutely the case today.
Speaker 2:Supposed to no, that's I mean, that's up for debate. What's? What's the total cost of rent versus the total cost of ownership? Net, net, it's been. It's been a better solution to buy the last 15 years, regardless of payment. Payment perspective might've been cheaper to rent or cheaper to buy, but it could have been more expensive. You don't got to pay taxes. You don't got to pay.
Speaker 1:You don't got to pay for repairs, different maintenance, all those things, I think. I think right now you're right. Over the last 15 years it was a net better decision to buy. However, in the last year it has. That has not been the case, right.
Speaker 2:The math is truly working against you to buy a home right now.
Speaker 3:But aren't you supposed to marry the house and date the rate? Isn't that what you're supposed to do?
Speaker 1:That's what all the new agents say that's what all the new agents say and the lenders say Don't do that. Really, the point is is, if you're going to buy a house, you buy it for specific reasons. Right, you buy the house because you want to plant yourself in that community. You see a long-term perspective on it. You have proper motivation. If you plan on living in a place for only the next one to two years, you would likely be better off renting, and it's the conversation we'd love to have with you is to flush those things out.
Speaker 1:Flippers home flippers are the real estate equivalent of day traders, exactly, and it's tough, it's can be done, it can be done, it can be done. There's a much higher risk today than there was last year or two years ago.
Speaker 3:They say if you can win 70 of the time day trading, then you'll be all right oh, you'll be a.
Speaker 1:You'll say 30 you'll be.
Speaker 1:You'll be loaded if you, if your accuracy 70 70 okay, this I think this is the last thing before before we wrap back in uh, quarter three of 23. Okay, so, this is just just a year. Year plus ago, 89% of mortgages had interest rates of 5% or less. Okay, so, in 2023, quarter three, so October of 23, 89% of all mortgages had a 5% interest rate or less. As of quarter four, 76% of mortgages are less than 5%, so we've seen a massive 13% change.
Speaker 1:People are still moving. They're not staying put as much as that is the theme that tends to be happening. For sure, the market has definitely shifted. People are moving for reasons that are outside the interest rate, but a big portion of the market is definitely shifted. People are moving for reasons that are outside the interest rate, but a big portion of the market has under 5% interest rate and I don't think that is going to change. It's not going to change. If you have an interest rate over eight, call us. You should likely refinance. Now's the time. Don't wait for it to change anymore. Whoa.
Speaker 2:It's a big statement.
Speaker 1:It's a big statement. If you have an 8% interest rate, you should look at what does a refinance look like. Because, back to our point. Before what are we waiting for A 5% interest rate?
Speaker 2:Don't call the company that mails you stuff either.
Speaker 1:Yeah, call someone local. Okay, that's a wrap, gentlemen. Anything else you got for us, thanks for. That's a wrap, gentlemen. Anything else you got for us, thanks for tuning in everybody who listened to the whole episode. We enjoy doing this for you every quarter, talking real estate.
Speaker 3:If you listened to the entire episode, call us for free parade of home tickets.
Speaker 1:Yes, if you listened to the whole thing if you listened to the whole thing. If you listened to the whole thing, that's beautiful.
Speaker 2:I like that also call us us, let us know who you want to, who we should have on the podcast and what we should talk about.
Speaker 1:Yeah, yeah, yeah keep sending us ideas. We got, we got lots of ideas, but, uh, send us who you guys want to hear from. Uh, until next time, guys, we'll see you out there. Bye, thanks for listening in. If you enjoyed this episode, please like and subscribe. Make sure you're following us on all the social media websites. We love your support. We love dialogue. We want to continue that going.
Speaker 3:Find us at realestate435.com. We'd love to help you find a house here in town or help you get wherever you're going.