What's up this way up with ange La Gee, I'm here and my girl Darrol Fairweather is here, chief economist at redfin Okay, welcome back.
Thank you for having me. I'm so excited to talk to you again.
This is an exciting time because last time we spoke, you know, the housing market things were a little bit dismal for people. But now it looks like things are on the upswing.
Yes, the fact just cut rates and that means that mortgage rates have come down, which means it's actually a lot more affordable to buy a home than it was just a couple of months ago. Four hundred dollars last a month for the typical mortgage.
And now I also know people are definitely refinancing at this time too, So I saw that happen like immediately right.
The refinance applications they just popped today or popped this week.
Now, you also have a book that people can pre order Hate.
The Game, Yes, Hate the gamebook dot com if you're looking for it.
And I want to say, I know Freakonomics was a book that really inspired you. But what I love is when people read this book, I feel like this will have the effect on them the next generation their freakonomics on you.
You know, that book is why.
You became an economist, which is something you hadn't necessarily considered before, and there were a lot of things at play that made it feel like it wasn't going to be something that was the best idea. I want you to talk about that too, because a lot of what this Hate the Game book is about is helping people learn how to make career decisions and things are kind of like.
A game, so to speak.
But why was being an economists according to your parents, you know, your grandmother, even not the best idea.
Yeah. So when I went to college MIT, I thought I was going to be an engineer. But then once I read for economics, I realized that I really wanted to study economics. It's not just about you know, prices and stock market. It's about the way that people make decisions. And that was really interesting to me putting that to putting logic to that and having some structure to that.
But when I told my dad, he was disappointed. He thought I was going to be an engineer, and he thought that would protect me from facing discrimination, like if I went into something that was more objective, where you know, you could tell of a play flies or not. It's like very simple, but when you're writing an economics paper, there's a lot of subjectivity to it, even if economists don't want to admit that. And I decided to go through with it even though my dad and my grandmother
told me not to. My grandmother was actually the first black woman to be licensed as at architect in New York and California, so she for sure knew the barriers that I would be up against, like being one of the first. I was actually the first black woman to get a PhD in economics from University of Chicago.
That's why Pat Daryl, let's go okay.
Right, So, but it's hard. It's hard to be the first. It's hard when you don't have role models, when you don't know if what's happening to you is discrimination or if it's just hard for everybody. So I wanted to write this book to inspire people to learn more about
economics because it is so useful. It's the thing that can help you understand, you know what is in your control and what's out of your control when it comes to things like finding a job or getting a promotion or getting a raise, understanding economics can really put all that into perspective and help you feel more empowered.
Right because, as you point out in this book, a lot of times there's advice that people can give you, but it's not a one size fits all type of thing. You know, you can't say, Okay, you need to go and negotiate for a higher salary, and women don't do that as often, which is true, right. Women don't negotiate a salary, a higher salary as much as men do, or even what their salary is going to be when
they first get hired for a job. A lot of times they may just take an offer, but there's a lot of other things that are a play too, and knowing what the other issues are can also help you figure out how to navigate that.
Yeah, So the advice I heard when I was starting my career was you need to be more confident, you need to ask for more. And when I started asking, I start getting rejected. And that's what I realized. I need to understand, like what is the other person's perspective? And I think game theory, which is basically the building blocks of economics, can help you understand that. Understanding. You know, when you're in a negotiation, what does the other person want?
What are their options? And how what are your options? And how can you improve your options that you can go in and whether the person agrees or not, you're gonna know you're gonna be well off and you're gonna feel confident and the decision that you make, yeah.
Because sometimes it is just go someplace else and get a better salary at another place.
It's not gonna happen here for you.
Absolutely. And I know so many people who have gotten stuck in jobs where they are undervalued because they don't realize how many other better options there are out there. They think that if one person tells them no, that everyone's going to tell them no. And that's just not true.
You know what I love to you compared some of these negotiating and barters and and.
Games to the movie too.
Can play that game that movie clearly that which was so funny to me, but it was very interesting. You talk about Vivica Fox and Morris Chestnut and the things that they did to each other because of the value that one person had, but why it worked, and this is early on in the book, but just so you guys can get a little taste for it and why you're gonna love this?
Can you explain that analogy?
Yes, if you've seen the movie too, can play that game.
You hasn't seen who can play that?
It was my first introduction to game theory really, because what Vivia fox is ca character does is that when her man is stepping out on her, she doesn't get mad. She doesn't like yell at him. That would make him want to leave her even more. What she does is she goes and she improves her outside options. That's a game theory term. She goes and she finds other men, she flirts with them. She kind of throws it in Morris Chestnut's face, and then he's worried about her leaving.
And that's exactly what you want to do. If you are asking for a raise at work, go out and find your other options, find those other suitors and figure out what they're willing to offer you before you go to your boss and ask for a raise, because then they know that you're for real that you will leave if you don't get that raise.
Now, another thing as a woman is you also talk about being pregnant while at work but getting a promotion, but not letting them know right away that you were about to be I think in your second trimester. So a lot of people talk about how being pregnant and having a family it does affect women more than men in the workplace. Yes, and I know a lot of
our listeners can attest to that. Sometimes people put off having a family because they're like, Oh, I don't want this to affect you know what they're going to say about MEO work? Is that going to mean that they're gonna give me worse reviews? So talk to me about what that experience was like for you when you were at work and then you had to go on maternity leave.
Yes, I was working for this huge tech firm when I got pregnant, and I was in the middle of the promotion process. Like I knew that I was likely going to get promoted, but I was so afraid to let people know because I thought that if I told people that my worst and my chances of getting promoted. So, you know, I kept it under the lid and I
didn't tell anybody until after my promotion was locked. And then when I actually went out on attorney leave, I felt like, you know, I was kind of being I guess a little bit looked over at work when I got back that the opportunities weren't as good for me when I got back to work, But knowing that I had other options made me feel more confident, because you know, I think that if you're in a workplace and you feel like you're not being treated fairly as a mother
or as a pregnant woman, you should know there are other options for you. There are other workplaces that I mean, they don't care if you took maternity leave or not when you're starting a new job. So if you see yourself from the outside perspective, like what other job could I get? And I think you'll feel less stuck. You'll feel like you don't have to endure discrimination or endure unfair treatment if you know what's available to you.
You know, I've always said, like when it comes to my career, I've strived to put myself in a position where I never felt like I needed to be in a certain job or in a certain position, to know that I have other options and to be in the position at some point where if I decide I didn't want to have to work, I'll be okay, you know, And so that's always been valuable for me, but it took a long time for me to feel that way.
Yeah, And I think the hard part is actually understanding what is that you are what you want out of a career, because it's not always about having the highest salary or the best title. Sometimes it's about work life balance or doing work that's meaningful for your So once you understand your own values, it's a lot easier to make decisions that put you closer in alignment with your values.
And then nobody can take that away from you if you know if you have the things like internally that you want.
And I want to talk about this.
This has been a headline that I've been seeing a lot of different places where more people with high net worths are renting instead of buying. So I want you to discuss that with me. Is that really true? Because I see that headline in a lot of different places.
We're seeing more of that, And it makes a lot of sense because owning a home, you might be able to fix your mortgage rate, but there are other costs that are kind of out of your control, like maintenance costs, insurance costs, and if you want to have flexibility, then renting can be easier and if you don't want to have to fix your own sink, then renting can be easier.
So we're seeing more of these lifestyle renters. Sometimes it's younger people Gen Z and millennials who feel like they can't afford a down payment, so they're going to rent long term. And if you're going to do that, that's fine, but make sure you keep saving for retirement your other life goals. And then we're also seeing older people who have owned a home for years and years selling getting their equity out and deciding to rent because it's just a lot easier to do that than to maintain a home.
And so what was your first home buying experience?
Like, well, I bought a home back what was it twenty fifteen, and I feel like I was pretty nig even going into it. I locked into a home before I realized that I was going to quit my job in move cities, which is not the best idea. It was challenging. I feel like next time I bought a home, I was more aware of what things to look for. So it's important to do your research ahead of time and understand the housing market and especially knowing like are you going to stay in this home? For five years.
That's one of the most important things for building equity.
Yeah, you give some valuable information on that too, as far as purchasing a home and what type of offers you even should be making depending on what the market is like.
Yeah. So when I was buying a home in Seattle, it was a very competitive market and there was a structure too where there was actually like an auction for the home where you put in a bid and other people might be putting in a bid too, so you have to think about, well, what are other people going to value this home at. But the most important thing is to make sure that you're paying a price that you can actually afford to not get caught up in
the hype. And also there's so many biases that you might run into, like falling in love with the home before you actually own the home can put you in a position where you might do something irrational like overpaying, right.
That is very true, and especially because they always tell you like play it cool, you know, with the broker, because you don't want to be like, oh my god, I love this house.
Is the house in my dreams and then they're.
Like got them, yes, yes, I saw California.
The real estate.
There has been you know, absolutely crazy with this Amanson
text everything happening. I saw, there's been a lot more fraud, and I think the issue also is that a lot of people are doing everything online right now, and so what would you say to people about protecting themselves because I've seen a lot of stories about this also just come through where people are like, Okay, there's been people who are such high level cyber criminals that they're sending you emails and you really think it's coming from your bank,
and then you're wiring money because it looks just like an email from your bank. How should people protect themselves?
Well, I think working with an experienced agent is really important. I know some people feel like they can do it all themselves, all the informations on a website like redfin, but having an agent guide you through the process and tell you what to look out for is really important. And they will tell you that if you are sending a wire, make sure you call the bank and confirm all the wire information, confirm that it's actually going to
the seller. But those little things, I think an agent can really help you with making a strong offer, identifying homes that you might have problems making sure they get an inspection done. All that can save you from a lot of headaches.
And let's talk about real estate agents for a second, because people are very confused now about what's going on with this new ruling from the nar right and so what does that mean now as far as real estate agent commissions and what people who are buyers and sellers, how are they affected by this new ruling.
So it used to be that if you were buying a home, you didn't really worry about how your agent was paid because that would be paid by the seller. Once you pay the seller, they take a percentage and give it to the buyer's agent. But that's all changed now when you are working at the buyer's agent, you have to agree on how they are paid at that first tour at least have some guidelines set about how
that will proceed. And a lot of people are intimidating to buy that because I've never had to consider how their agent is paid before. But I think it's ultimately going to be good because people will learn, like what services to expect out of the agent and understand that they that they're not free even though the seller was paying it, you were paying indirectly before, but now it's a bit more transparent, and it's a bit of a
difficult time because of all the rules are changing. But I think if you just have an honest conversation with your agent, talk to multiple agents even and understand what they're offering, then you can end up getting even a better deal potentially.
So are we in a situation now where buyers may be paying agent fees.
Well, some buyers will opt to pay their agent with cash, and some buyers are going to put in the contract that they are only basically going to make offers on homes where the seller will pay the buyer's agent. But I think this is going to create some shifts in the market where the people who have cash might be more successful. That's what we've seen in our data is that if you're making a cash offer, it's usually more successful.
And if you're telling the seller you don't have to worry about paying the agent, I'm going to pay the agent with cash, that might make the offera more successful too.
I think my cash office has always been more successful though, Like people love an all cash offer, no.
Yah way, yes, yeah, And I think if.
You're not waiting for a bank mortgage to come through, right right.
I think it's going to be the same way with the agents, where people who are kind of paying the agent and not asking the seller to pay might be more successful, which might create some more inequalities in the market. But we'll see how that plays out. That was one concern about these new rule changes.
Now, another thing that I've been noticing is Miami. The real estate.
Market in Florida too, by the way, in general, yes, but with the condos, right and now there's been a new law in Florida, and I see there's been a lot of condos that are on the market, some of these older condos because the HOA fees are about to go up.
Yes there are, there are already going up, and it's because of this law change. If people remember, there was this huge condo colops, the surf side condo clops that happened a couple of years ago, and after that was investigated, they determined that we need stricter rules for these condo buildings,
so they're actually maintaining the properties. And it kind of go back to climate change because the reason was erosion essentially, and we're probably going to see more storms, more rainfall, more basically maintenance that needs to be done on homes and condos and that's going to make it more costly for homeowners and it's gonna unfortunately suppress home values and sales. And that's what we're seeing so far. This is kind
of early days. We're also hearing from our agents about how insurance costs are going up in Florida and how that's been really difficult for home buyers to wrap their heads around just how expensive home insurance is. And right now it's really a Florida problem in parts of Texas, but I think this is going to be more of a national problem, how expensive insurances and how expensive, yeah, it is to maintain a home.
And I'm nervous about all of this and HOA fees.
I want to discuss HOA fees and so those are never negotiable, right like when you are buying something, the hoafee is what it is? What responsibility to does your HIA have Because I hear a lot of people complain about, well, I'm paying all these fees, but what is it going towards and what are they even doing?
How do you hold them accountable?
Well, if there is a home owners association and you buy into that, you will become a voting member. So it's important to keep up and attend those meetings and understand what's in the documents. The documents should tell you how much money the HOA has in savings, how much they expect to be spending on maintenance or other expenses
for the condo building or the home association. So read those documents and be like a good citizen is how I would put it, and vote for the types of investments that you think are going to increase your home value. Hoas that usually have a leader who is making all the decisions, but sometimes those leaders aren't so great, so it's important to keep on top of it and hold them accountable for the things that they're supposed to.
Do, kind of like voting in general. Exactly exactly, but complain.
But it's like, are you going out and voting, Are you going to any of these meetings? Are you holding people accountable who are in office that is supposed to handle things for you? How do you think this election is going to affect things? Like, Okay, let's just say when God willing win Kamala Harris wins, right.
How do you think that will affect the market?
If you had to predict, well, Harris has an extensive housing plan. She's talking about building three million homes in her first term, and we've seen the numbers and the housing shortage is around four million homes, So that's going to put a huge debt in the housing crisis. She plans to accomplish that by giving subsidies to builders and eliminating red tape when it comes to new construction, and also giving down payment assistance to first time buyers twenty
five thousand dollars in down payment assistance. It's a really big plan and all the pieces kind of work with one another. We'll see what happens with Congress, because when something goes through Congress, it has to be negotiated, and we'll see what happens in the final bill. But I'm just so excited that a presidential candidate is talking about housing and talking about solutions that will actually work, because for the longest time, politicians have kind of been like
lying to us. They've been telling us that this is going to solve the housing crisis when economists know that it won't. But for the first time, a presidential candidate is talking about the housing crisis the way that housing experts and economists talk about the housing market and.
What is Danna Chump's plan.
It's a little bit hard to understand the things that he's topic.
Can understand both sides, right.
So one thing that Trump has talked about time and time again is protecting the suburbs and not letting low income housing go into the suburbs. And I think there's a lot of dog whistles going on there, but it's basically the opposite of what you would want have a housing solution. He's saying that he's not going to support these new housing units that could potentially be affordable to protect those single family suburban neighborhoods.
You know.
He's also talked about cutting red tape the way that Harris has, but he hasn't been as specific. It's a little disappointing because I know he's supposed to be a builder, but he hasn't had this build, build, build message that the Democrats have had.
Right, A lot of people will discuss, oh, this isn't getting done, that's not getting done, But the main thing they say is not in my backyard. I do not want this happening in my backyard. How do you get around that? Because, like you said, there is a you know, we all see this housing crisis that's happening right now, and we do need to build in a lot of times. In these suburbs is a lot more space than there is in the city, but people are so against having
developments and things built and affordable housing where they live. Yeah.
I talk about this in my book. It really comes back to like economics and game theory. People are making decisions for themselves are basically being selfish. They think that if I bought this home in this neighborhood, then I get to control everything that happens in the neighborhood. I don't want new people coming in. I don't want you know,
apartment buildings or different types of people. And it's really selfish, I think to put that over people who are housing and secure, people who are potentially like won't be able to commute to their job or won't be able to access schools. Some of these suburbs have the best schools, and unfortunately, because of the way that housing has segregated, how you have to spend you know, five hundred thousand dollars even a million dollars to buy into certain neighborhoods.
That exclude certain families from participating in those schools. So I think it's really important for people to see the big picture and kind of think beyond their own preferences. It's more important that people have housing. That is that, you know, you don't have to deal with more more people at the super Yeah, more people at the supermarkets, stilly things like that.
Now, do we expect these rates to come down even more? Because I see people are still sitting waiting, like, okay, you know right now the rates are going down, but it's gonna go down even more, that's the expectation.
Yes, we're forecasting that rates will continue to go down, not by a whole lot. I think people are hoping that it'll go back to this three or four percent.
I don't know, people forget that before that it's never been right right that low.
Okay, yeah, I think that we'll get down to around five and a half percent for a thirty year fixed rate mortgage by the end of next year. Right now, mortgage rates are at around six point one percent, so not a huge drop, but it is back to kind of normal territory. That's around the rates that we saw in twenty eighteen, twenty nineteen when the housing market was in you know, a more affordable place. Unfortunately, prices are much higher now right, So even though rates are coming
down that makes things more affordable. What will, unfortunately happen is more people will get into the housing market, more people will be competing and bidding up homes, and we'll see prices go up again. The only way to really get out of this is to build more housing.
Now. I got to ask you, you know, early on you discuss how your dad your grandmother did not feel like economics was the right move for you. Your grandmother even said even to find a husband, yes, that was the best major.
I thought that engineers make the best husbands. That business people are too they're too obsessed with status.
But how do they feel now?
Well, unfirst till my grandmother has passed away. My dad is obviously very proud of me and how far I've come. I think he would admit that I made the right decision. I think that's the advice I would give to most young people is pursue what you're passionate about, what really gets you excited, because that's what's going to get you through those challenges. Even if I decided to be an engineer.
I'm sure I would have faced challenges too, but having that drive and like knowing what I wanted, I think that helped get me through even those challenges.
Now I know we can pre order the book Hate the Game? Now, when does the book come out?
April Eleventh's actually coming out on the twenty year anniversary of Freakonomics.
Oh wow, was that planned?
Yes?
Very coincidentally.
No, But it's amazing how And I'm telling you guys, like I haven't finished the entire book yet, but you can see I've been reading it and it's fascinating to me because I do love understanding how different things affect the decisions that we make. And you know, I'm all about like my financial wellness and always trying to level up.
And so I think that for anybody, this book is something that is very relatable because you talk about your own life situations, you talk about going to school, you talk about after that, but all of those things that can help people understand all the different ways that you should make decisions. You can make decisions.
Yeah, and I hope it's fun too. I talk about Beyonce, I talk about all the things that I enjoy in life. That make economics fun. So I hope that people enjoy it. It should be an enjoyable read and hopefully you learn a lot too.
I'm telling you, guys, if you see how she loved the book, I guarantee you there's going to be people that are like, this is the book that inspire me.
So I told you this.
When I first met you, I was like, if I would have met you when I was younger, I probably would have been like, I want to be an economist because you're the only person I've seen that looks like this in this position, like a woman, you know, a black woman that is doing this, and so I just feel like sometimes they always say if you could see it, you could be it, and it was never anything that I would have even considered.
But you make it cool.
Thank you, Thank you. That's the goal, and you make me cool. All right.
Well, you guys, pre order this book now. I love every time you come up here. I always tell you when you come into town, I need you to always come and sit down with me because so many different things should one more thing, because you know, I have my real estate license, but people acted like it was a bad time for me to even do that. Because it's so different now and that it's been a lot harder for realtors to even make money. What's your take on that like the future of real estate agents.
Well, I think the housing market is going to pop off next year now that rates are down, so there'll be more activity for agents, and the role of agents is changing. I think that now that people are going to have to negotiate with their buyer's agent up front, buyers agents will have to show their value, will have to say what they're going to do that the other agent won't do in terms of taking you on tours or educating you about the process or having you have
the best offer. I think people are going to understand more what agents are bringing to the table, which will hopefully make agents better off too that you know they are being valued directly instead of indirectly.
All right, all right, well, Daryl Fairweather again, make sure you pre order Hate the Game It comes out April eleventh.
Hate the Game book dot Com. Okay, Hate the Game
Book dot Com, Go there and put your pre order in its way up, way up,