Suzanne Researched This
Housing update with Melody Wright
I thought I’d post this Youtube interview as an one-topic short post, because I found so many interesting points in it, many of which you won’t hear from the NAR, some of which I mention below.
I think Melody’s great, and this Todd Sachs guy seems like one of the too few honest realtors around.
If you’re not interested in residential (or multifamily) real estate, you can skip this. It’s long, and has a few moments of filler and self-promotion, which is to be expected, but even if you’re a raging housing bull, it wouldn’t hurt to at least get a perspective beyond what you year from the Business Insider’s and Altos of the world.
The transcripts are from Youtube. I tried to clean them up a bit - let me know if you see a serious error.
Jerome Powell Can’t Save The Housing Market, With Melody Wright
Melody Wright: I think that we would be somewhere much more rational had we not gotten bailed out.
Todd Sachs: You think the bailouts are going to continue?
Melody Wright: I absolutely do, especially as we're in an election year.
Sachs: We know that FHA is really the [new] subprime mortgage market
Wright: Fort Lauderdale is in for a world of hurt - I mean, when I was there, I just couldn't believe the speculation, in a whole neighborhood there was hardly any people left, it was just all either being flipped, or in the process of being flipped, vacant, I mean, that was your option in what used to be middle-class neighborhoods, where families lived, so yeah, Fort Lauderdale is in for a lot of trouble.
Wright: I think multifamily is going to absolutely overtake office as the biggest issue. It’s going to be a blood bath out there, because you had so many people get involved that had never done this before. They became syndicators, and they're just falling apart right now. The things I'm hearing are just unbelievable, and the capital calls, they can't get it, and these multifamily - when I was on the road, and this was in February, so almost a year now, I would see huge multifamily complexes completed and completely empty, and nobody was talking about it. I mean, you know, they'd be out in the exurbs somewhere, very much like Evergrande style in China, and so yeah, this is absolutely - it's starting out as the quiet killer, but I think pretty soon we're all going to be talking about multifamily.
(Havenstein: Apartments are my candidate for a CRE grey swan.)
Wright: [re: mainstream RE reporting] Not this article, but a similar one in Bloomberg today - basically I just said let's stop trying to read the chicken bones, because it's almost comical some of these articles. Redfin's saying maybe a 1% drop next year, you know, like these guys, I can tell you absolutely have no idea what rates are going to do, and they've never been right. Take any of them from the industry, go back, and look at their track record - they have always been wrong, and and wrong in a big way, and so please keep that in mind.
Sachs: I'm not trying to be the expert that knows - I don't have a crystal ball, but I can tell you that we are in a different market today than were back in 2022, thank God, because the pressure on the buyers was unlike anything else that we've seen. You knew there was an open house, ladies and gentlemen, because there was a traffic jam. It was the most ridiculous thing. I was actually in open houses, hosting open houses, where I felt physically uncomfortable and had to kick everybody out because it was so stuffy in there, you were bumping elbows with people, that's how many people were in the open houses. You don't see that right now. In fact, we're looking at houses that are coming soon and that have just hit the market that don't have one showing scheduled for the next week.
Wright: I would just caution people to question what is the data source, because something like Case-Schiller is repeat sales, and that's not going to be your new builds where we were seeing those price concessions, and then as well for the new builds, they're not entering in all those price concessions, but essentially by paying your solar, giving you a new washer dryer, paying your HOA dues - that is a price reduction, and so yeah, mainstream narrative has been that it hasn't been as drastic, but that's on purpose, so question the data sources, question the narrative.
LeVie: We’ve got another question - what cities are most insulated across the country?
Wright: I would clarify what you mean by “insulated”. I think that there really is no city that's going to be completely safe, even in these cities that didn't go crazy with these double digit price increases, they still have these new build sites like in Pittsburgh, just pockets of them, but there's not the demographics to support it. I do think even places like Cleveland that people talk about - oh my gosh, you can still get a deal there - and you can, when you go look at these homes on the listing sites, but their delinquency is rising very quickly, much more quickly than some places, and, you know, their inventory is rising, so I think that this is going to be a national story.
I think there will be areas that will be better than some, and it really would be those areas that didn't do the double digit price increases I would say, and that's mostly the Midwest places like Ohio…
[Ohio’s] affordability looks okay, but the problem is apparently there's not enough jobs to sustain it, because their delinquency is rising, and their foreclosures are rising, and so I think that's the other thing people forget.
If we were all living in a work from home, you know, fully work from home society, then yes we could choose where we want to live, but the reality is yes, we'll still have work from home for some, but a lot of it won't be, and if you aren't living somewhere where you can find a job, then that housing market is not going to have a bright future either, and that's Cleveland, that's Ohio, that's here where I am, Johnson City, Tennessee - there is no industry, there are no jobs, the median income is $45,000, and you can see it here in Johnson City, the investors are fleeing - you can tell by what's on the listing sites. It's like those Class B or C Apartments you were talking about - you see a lot of that for sale here, and then you see a lot of what were, you know in the middle of a fix and flip, and then the new builds, that's what's inventory for sale here in Johnson City, because the investors realize it it's time to go.
One last recurring theme from Melody Wright, via another recent (bad sound quality) podcast:
They've really not done any homework, and they look at Airbnb - when you search a city, it'll say a thousand properties plus in the top left corner, but what they won't tell you is that there's over 14,000 AirBnb’s listed in Austin, for instance…
"Taylor Swift Scored Big This Year, But So Did Airbnb Hosts—Here’s How the Eras Tour Impacted Markets Across the U.S." https://www.biggerpockets.com/
She just needs to pick it up a bit and start doing two shows a day and ABNB will be fine.
That 2006 commercial is priceless! At the end she says "are you kidding me?" as if she didn't think all along that the badgering and questioning of his manhood would work. That's an abusive relationship dressed up as a real estate commercial lol.