Welcome to Mortgage Talk with Mark Harriston, the program that not only talks about mortgages, taxes, and interest rates, but Mark and his guest talk real estate trends and your home. He also answers your mortgage questions to help you make the right financing or refinancing decisions. Now here's Mark Hairston.
Happy to everybody, and welcome back to Mortgage Talk with Mark. And I'm really excited to bring back a guest who was on I don't know six months ago, maybe a year now here. Yeah, yeah, and it's by popular demand. Ken's back in the house with me, you know.
Ken Renner, by Mark's demand.
Yeah, mind demand. Ken Renners in the house with us today. And Ken has two ends, by the way, just to make sure we understand that part. But Ken is not only an expert at what he does in real estate. But I want to talk about your experience and welcome you back to the show because we have a lot to catch up on. You know, this has been a crazy couple of years, and you know, I really want to get your feedback on what's going on and let people know what's going on so they can make informed decisions.
That's the whole point of the show is to help people make deformed decisions around their real estate or other things they need around their home. So welcome, Ken Rinder. Tell us about you.
Shit, thank you, Mark. Yeah, we go way back, Mark. I think I met you in the early two thousands. We're doing some speaking and I think we're helping first time home buyers back in the day because that's where the market was kind of like where it's headed now. But I've been doing this now for four decades, forty two years. I got my first license in nineteen eighty three.
You got me by two years. By the way, I know this is about fortieth.
I got a little more gray hair, got good hair. I got a little bit more gray. You're catching up to you there. But yeah, so you've been forty years
and we've been through it all. I mean, I've been through booms and bus in four different states, and really it's just a matter of what we're here to give people hope and that there is there are solutions, you know, And that's the whole thing is that you want to work with somebody who's been professional, it's been through one of these kinds of ups and downs and knows how to navigate the market and talk about financing. And I
used to own a mortgage company. You've known there for many years, that's.
Right, that's right.
And so it's called River City. It was River City Home Loan. Now.
I will always tell us about the name. I love the name. Take it.
Yeah, well that's you can have it now. Yeah. I was going to write a book how to get out of the mortgage business there. So I've written some books and things like that, real estate books and some goals setting. Even have a book on Christian goal setting, which oh that's awesome called So it's so yeah, I like, I like to share, and I'd like to see but we're using my you know, my years of experience to be able to see over the horizon. I think that's what
people why they gravitate to use me. Because when you have this many years like you do in the business, you you not only have you these networks of connections. We call it good old boys, right, you know that
you just it takes years and years to develop. And so what's great about our vendors and people I've been working with when I picked when I call them, almost including you, almost every time they picked up the phone because they know there's going to be someone's going to be needing help on the out of line with right where transaction is going to happen. So yeah, So I've been doing a long time, over half a billion in sales.
Wow.
And a lot of that came thanks to the pandemic. So we I did one hundred and twenty million between twenty twenty and twenty twenty five, and that was almost near just about almost five hundred homes. Wow. So we were selling. We were just selling a lot of new construction, and we're taking advantage of the interest rate, atmosphere and everything. But we we kind of really stopped buying in Austin
during that crazy time, stopped really focusing on Austin. We didn't stop buying it, but we stopped focusing on so much because between twenty twenty and twenty twenty two we got so crazy.
If you didn't get prices in Austin.
Yeah, prices in Austin from nineteen twenty nineteen to twenty twenty two probably went up, but it went about eighty percent, almost double. That's crazy. And that's that's that's ten well, it's ten years of appreciation crunched into two years, and so now we've had an adjustment down of about twenty percent from the very peak, which was June of twenty twenty two. So it's it's it's down twenty percent. That's what you see in the news, and that's what that's
what that's where we're here to give the good news. Yeah.
Yeah, I'll want to back up just for a second. Yeah, because you mentioned some just a minute ago. That's that's so important because people don't realize how much experience matters. Yeah, and going, this is my fourth recession, if you will. You know, I went through one in the eighties and I thought we'd never get out of it, and then by ninety it started to turn. And then you know, Austin has always done well over time, over time, you know,
it's never been hurt. And but you know, for you to come on and talk about your experience from that perspective looking across the horizon, right, you know, what could be possible here, you know, in the next couple of years.
Yeah, well, a lot of that has depends on a lot of different factors. So I'll just finish what I was going to say about the about the twenty about the twenty percent drop you see in the news that.
Which is a real thing.
It's a real thing. We're not but it's twenty percent from almost one hundred percent. Yeah, right, So if you bought in twenty nineteen twenty, you had almost one hundred percent value increases and so you drop twenty percent, so you're still up eighty percent. Right, So it's great anybody has their houses. But before twenty one or twenty, I'd
be glad to talk to you because you got equity. Now, the ones that bought in twenty two, I really I pray with them and let them cry on my shoulder because they probably they could have probably lost their down payment or a good portion.
Of it, or they could be upside down.
And some of them are upside down, which means means like actually, when you owe more than the houses work. And that's what happened in the seven eighth. Don't know that that was all. That was a mortgage driven crisis, not not what we're dealing with, that's right, and so so that that was that was, that was where prices dropped, and so we went through that and everybody, the whole industry was it was. That was a tough time. Now, that was an apocalypse.
We're not.
We're not an apocalypse now.
Correction correction, normal economic correction, right.
Right, but that still hurts, you know, and they're apparently I'm feeling it. I understand there's going to be somewhere between five and six million loans that are going to be in default here. Pretty I didn't know that that's that's a stat that came out. It kind of blew me away, but that that's the US crossed the nations around the country shore. Yeah, so Austin itself, you know, we have our medium price is about flat.
Let's up there on the statue. You're a stat guy. Yeah, Well it's good, importantly.
Important, Yeah, because it also it feeds where the future is. That's what people come to me. Let's see just a little bit over the horizon, because we like Wayne Gretzky, I'm not we're not going to go where the where the puck is. We're going to go where it's going, right.
Sure.
So so right now we're looking to be the medium price and Austin MSA is four forty nine, about four fifty, and we talked about before the show. It made it almost a six hundred at the peak, five five seventy, I believe, and so that's only down like way, what media is media is half the homes are selling for more than half our CNC for less. So we have it was about down one point six percent. So it's basically flat from what it was last year. And so it's not it hasn't hasn't gone down a whole lot
hasn't gone up. And that's that's probably if everything remained the same, it's probably what would happen. But it also depends on inventory and what sellers end up doing, because right now they're flooding the market with with properties for sale. You've got two different kinds of sellers, resellers and you've got you've got your builders. Builders are good motivated sellers because they have to sell.
Their product, right and they have to keep building too.
And they have to keep building. Now. They will pull back, sure, but they can't just turn it. They can't just turn the lights off, right because they have.
Because they already purchase these properties.
They got land, they got they got labor, they've got all their crews and they got it. And a lot of them are just cutting their margins. And that's where we're seeing. I mean, we talked about it before the show. They had up to words of twenty two percent margins and now they're down to you know, maybe thirteen or fourteen percent. They're using that difference in margin to buy the interest rates down, get them down in the in the in the fives and the fours. They're they're slashing prices.
They because they do have margin, a lot of And that's the thing if you are a seller in this market, you need to be realized that I tell them my clients is if you if you don't need to sell, it's probably not a good time to sell. So because those that are actually selling, they need to sell.
They need to get out. Yeah, and they're relocated, or they're right job.
And a or yeah I got a new job and we have all we have those conversations. Okay, so you you know you've got to move, then you know then you then you need to sell. So the thing is you have to you have to price it right, you have to stage it right, you have to talk about incentives you and these are why you need that experience real turn.
They've been through.
These can have these hard conversations like I'm having every day that you don't want to chase the market down right and.
Get ahead of the market.
Yeah, the stats are that you know, back in January, back in December January, we had ninety six hundred homes on the market, which isn't.
Best a few months ago yes, oh wow, but.
Now we have fourteen thousand and six, five thousand, five thousand more homes on the market. So we're at fourteen thousand and six seventy three as May.
And what does that cover?
What area? The five county Yeah, Williamsey County, Williams Travis, you know, yeah, got home all so so that's the five county radius. So that that is a very It's up seventeen point five percent in inventory from the previous year. That's those are that's a that's a big number. Now look at the closed sales. There was only three three thousand closed sales. So if they keep putting, then it
was fifty seven hundred new listed listing. So you have they have two thousand month twenty seven, you have twenty seven hundred more listings then you have closed sales. So for just the month, just say yeah, right, so you're you're looking at you're looking at fourteen thousand, six hundred and that number will probably go up, be on fifteen closer to sixteen thousand, and that that that's where supplying demand is going to stay. Say say that prices are
going to have to adjust down. And so what I'm telling my clients is get ahead of that adjustment. You know, take take take your take it what what's worth?
Take your all.
We're saying really is if you're going to listen to, probably listened five percent under the last comp and if you look at the close to the average close to list price ratio is ninety four percent. So even at a good price, they're still taking another five percent. So if you have a five hundred thousand dollars listing, you should be listening at four seventy five right now, and you probably may want to. And that's exactly what's happened in the Santa Rita ranch.
Were you listing that I have?
Yeah, a great property on Glen Arbor and this property is absolutely amazing, unique house backing up to a lake. It's twenty four hundred square foot, four bedroom, three bath with a study, three car garage, Perry built home, you know, custom house, yea, And we listed it for four ninety five,
gotne offer right away, but it didn't pan out. And then and then an how we're at four fifty yeah, and and so this is this is unprecedented that you took to took ten percent off and and we're still not seeing a contract, right, So.
This was a good reason around that is holding cost. You know, you maybe got a mortgage payment. If not even that, you're gonna have tax insurance holding cost.
Yeah.
Yeah, So there's expenses holding a property.
Yeah yeah, yeah, And and and properties are and they're not meant to be vacant. They they're meant to be you know, the dishwasers are meant to be run, you know. So so that's the thing. Then we have to have the conversation, Okay, you can leave it vacant or do you want to rent it out? And you might have a three percent interest rate on that. And that's the conversation I have because I'm an investor and I've kept a bunch of my previous homes I lived in and
I still have the one in Round Rock. And what it is I'd teach my first time home buyers, this would be a great proper for you to keep. Yeah, ask your grandfather, ask your father, or your grandfather. You know, if would would you keep your first house? Absolutely, And I've never heard anybody Usually it's one of those like heck, yeah, you know, give me another one. You know.
Well, at first house was in nineteen ninety for ninety thousand dollars. Yeah, twenty four and oh kill twenty four and scare feet off waven Ken, you know, yeah, yeah, it's worth more than that today. Yeah, I sold.
It, Yeah, I do so. Don't you wish she kept all those houses? So that's what that's what really started a whole business plan for me that I started working with first time homebars. But then I found out those first time homebar product that the entry level housing was great for investment. So in the nineties I started doing presentations at Renaissance Hotel, and you saw that doing marketing, I would have first time home buyers on the first hour.
In the second hour, I would have investors the same product, different buyer, Yeah, yeah, and and so yeah. And then what happened in the late late nineties things slowed down here and so I but I saw the market in California was way up here in accelerating while we were kind of.
Which is for you hail from is California.
Yeah, from California. So I've got a big I got roots. I was born in San Mateo, so so I have a big I have more. I actually have more clients in California and Silicon Valley in southern California and back east and Chicago and other cities than I do actually in our hometown because I go out there and visit with them and shake hands and kiss babies and and make them feel good about you know, you could. It's about five to one ratio. You can buy five houses for the price of one, so and that and that
that's very attractive. We've had many people that have sold their their Bay Area property or their one that they inherited or whatever and bought ten ten houses and frame clear tax text to first.
That's a beautiful thing.
Yeah. Yeah, so I one guy, we went from thirty six hundred income for the his Salmonteo house and he went to when he closed with me, there was a thirteen thousand, six hundred gross in cole times for the same equity.
And that speaks to another reason people may want to hire you because you have a larger network. Yeah, that's nothing networked in Central Texas. Yes, your networked all over the coast.
Yeah, yeah, and then and we we That's another strategy of for me going to California. There's so many relocations coming this way, as I wanted to be the go to person, get in front of them while they're there, rather than wait for them to get here, because usually get hooked up with somebody already by that time. So it's been very it's been a very lucrative and enjoyable. And yeah, lots of cultural buyers. So I've learned a lot. And oh sure, and I really under I really enjoy
the differences in cultures. And that's what makes America great is that that they they they a lot of the different cultures think differently about real estate. And I like the way they think they like real estate, yes, yeah, and they hold on to it a lot of smart bar Yeah, they're smart buyers. They there and their homework, well, you know a lot of people came from other countries. They they had to work, they had to be really kind of the most educated, the most the most motivated,
uh disciplined. Uh, and to be able to get.
Here, right because they won the lottery.
Yeah, you kind of do. That's kind of the that's kind of the you know, a lot of we joked as they their parents always say you're going to be an engineer or a doctor. There is no other choice, right. Yeah.
A good friend of mine who has been uh in industry a long time as a software engineer, went to work for Apple recently. He says, Mark, you know, now I go into the to the dining area or whatever, and probably three out of four are from different countries. Yeah, you know that have come here for for the opportunity in the country.
It's absolutely it's absolutely amazing. It's great, and you know, for the but they love it, love it or don't love it. It's it's it's here.
It's reality and its.
Reality and and it's at the well we're the tech one of the tech hubs, you know. So right and once again our houses are twenty percent of the value of the houses and there.
And that speaks to the economics of Austin. Central Texas is still pretty strong. It's still very have a strong job line. Even though we have the highest prices median in the state. We're also but we're about where the medium prices across the United States. So it's it's all relative. So and so yeah, we're seeing great. We we still have some really amazing deals like that Glenn Arbor house went from four four five hundred to four fifteen. You can't even touch it, there's no there's no there's no
new construction that beats it and everything like that. So I hope somebody is listening because that house is a great deal and he's gonna he's gonna turn around. Speaking of listeners, let us know how to get a hold of it. Yeah, house today.
Yeah, absolutely, yeah, give me a call. Well, we part prayer as part of our as part of our strategy. So yeah, it's Ken Renner ky and n ri E n n E R and it's my emails ken k E double n at my website by Austin dot com. So ken at by Austin.
Rate great website.
I got that in nineteen ninety five. Wow.
Yeah four websites for ignorant Yeah yeah thing.
Yeah yeah so yeah, so yeah buy Austin dot com and five one two four two three five six two six, and we'd love to chat with you and you know, and discuss strategies market tax ramification implications, sure, how to shelter your taxes, all that kind of stuff.
And you've worked you speaking of that, you've worked with hundreds of not thousands of investors and talk about a strategy where they can take money from one property in tax defer to buy them.
So it's a ten thirty one tax deferred exchange. People. One of the biggest benefits of real estate is the tax benefits. And as you know from home ownership, sure you know that one of the things you pitched to your home buyers is that, hey, this is going to be a tax deductible mortgage, right, but in real estate investing, there's all of it's deductible, along with another thing called depreciation.
So your depreciation really saves on taxes depending on what tax bracket you are in this there's there's strategies on that. But also if you're taking an appreciated property and then you've got a lot of equity, if you sell it today, you're going to pay anywhere in fifteen to twenty percent capital gains, plus you also have to pay back some
other things depreciation, recapture and things like that. So so why you know, you've bought this great property and now you're going to you maybe went up to from five hundred to a million. Now you got to you got to spend one hundred thousand dollars in taxes or whatever
it is. And it's like, there's a way to, uh, to defer that by taking that that investment property and selling it and doing what's called a ten ten thirty one tax deferred exchange and taking that's what we're seeing with a lot of our clients that will take that one property and well, in the case of mister Bill in California, took us one property ten thirty one that in exchange it into ten property or nine properties here
are yeah in Temple Belton in a different areas. So and so that that's that's a way to defer taxes and not even pay it. And eventually, actually when you give it to your kids, they get what's called a stepped up basis. So yeah, you know, you say you can't avoid death or taxes. Actually you can't. Can't you can't well, taxes ever lasting. So yeah, yeah, but you can you can actually defer the taxes until the point where when when your kids inherit. The problem is a
stepped up basis. I'm not a CPA, and so here's my disclaimer. I'm not leaving legal or tax advice. If you want to know, call me and I'll connect you with my CPA.
There you go.
He has two PhDs. He's a pretty smart guy.
Good now, let's think of speak of economics. Let's go back to some of the basics about what drives markets. And in our case, I think in real estate it's going to be first time buyers.
Oh it starts, okay, talking about the cycle, the cycless so real state, you know, real estate is that's what's nice about being able to predict the market and not really it's just you study of the cycles, history of repeats, right, so you always have it's common. You have your you have your what we just went through as an expansion cycle, then you have his adultery.
Is a long cycle?
Well last expansion, well it actually was. It was from twenty twelve to twenty twenty two, ten years. Usually it's just seven Yeah, it's just seven seven to ten years. But then you had another ten years worth of appreciation in twenty twenty, so you really had was it was. Now you're seeing just if you look at the chart, it actually if you watch the normal price increases, which is great, healthy market for Austin and all of a sudden, you had this big spike, but then it drops down
a little bit. It's still on the same trajectory. So we're starting to see, yeah, it's still it's starting. It's going to go like this and then it's going to start going back up again. And that's just a common thing. But here's the steeper the climb, the deeper the fall. So you know that we're making national news. Is one of the biggest countries with the biggest cities in the nation, that the biggest drop, but we also had the biggest increase for sure.
Percentage.
Yeah, yeah, so it's all it's all studying. You know, when to buy in the market right now? I would say, is it time to buy when prices are low, when people are giving their houses away, or is it time to buy when it's peeking out it's about ready to drop. So right now is the time as people are sitting on the sidelines waiting, waiting, waiting, there there's gonna be opportunities, and there opportunities are happening right now. And uh, just a one percent drop in interest rates, Mark, it's all
your fault. One drop one percent drops on remember last September.
Yeah, what happened. Yeah, for about a minute, it went a bit.
It showed me the chart.
Yeah, I had a ten year treasure chart up before we got on the show, and it went down. The ten year treasure is really were people need to look at treasure if they're looking at the the trend of interest rates, it's mortgage backed securities are usually based on the ten year treasure, not directly but almost.
Yeah, it's very easy to find. In fact, we follow on a daily basis.
Yeah, mortgage absolutely, we've we fell below four percent last September, maybe three point eight percent on the ten year, and mortgage rates came down below six And for about a week we were really busy.
Really every applications there comes to. People were out. Auto homes were filled with people like that. Yeah, because there's the the you know, they hear that the good there's good prices, which there are, and then almos gonna hear a good interest rate. So that's going to change. That's going to really help.
Few psychologically well and economically. Yeah, let's face it.
Yeah, and so the new administration very much looking for the benefits of real estate ownership, and so that's what you know, that's all the all of the things that Trump put back in twenty seventeen. He is trying to get them renewed for twenty because there are a lot of them were expiring. These tax cuts for real estate, so very much a real estate friendly administration that we have, and that's good and yeah, and because we need it.
Guess what, we're still four million homes short that for what's actually needed in the market or actually a nationwide I.
Didn't know that four million house and millions.
That we don't that. So the population keeps growing. The population that people are now our kids are starting to have kids, They're looking for their home, they want to set up their nest, you know, they don't want to continue renting. Now we're seeing a lot of builds to rent where people are much you know, opt to rent over, which is another trend. But the market opt to rent over over buying. But but a lot of people want to settle in. They don't want to they don't want
to be a renter. So so now that's also mentioned before.
My son, my youngest son. I've got three boys and two of our own properties. My youngest Sun's thirty two. He's well educated, he's a CPA and he's been renting. He's on the side line. Yeah, but I guarantee when the market shifts as far as interest rates, he's going to take advantage of it.
Yeah. Yeah, Well, we're also telling people that live in higher appreciated markets like the like Bayry or southern California, where they can't afford they can they they can rent for the three thousand dollars a month, but if they bought that same property, it'd be twelve thousand dollars a month in a mortgage. Absolutely, So take the difference and invest it in real estate there where it's going to appreciate. Yeah, including our places here in Austin. Be a good time
to buy. But numbers still a little tough on making the numbers work for rent wise because rents are down a bit. But in our sub markets doing great. Our sub markets, which would be Temple Belt in these are fifty.
Mile sub markets. People don't really understand.
Yeah, well, I mean fifty miles south and fifty miles north on I thirty five. You've got great cities New Bronfos and San Antonio. You know, San Antonio's the seventh largest city in the nation, and it's prices about one hundred thousand less than Austin on average, and.
We're buying down I thirty five really right from Waco possibly down Yeah.
So we look at those good metros where they have really have their own economy that are not based on high tech and and diversity to versify and an attractive place where people want to live and jobs, all those all the stuff that why we invest and those those those prices are literally fifty percent of the medium price we're buying homes. We just closed several of them under two hundred thousand for a three two about two car garage fourteen hundred and fifty square four is that new
bron Fuels and yeah wow. And then and then Temple Belton with the whole medical thing that that's always been a great place to invest in and we're seeing we're seeing great deals in there's about mid fIF two fifties to forties, very forimable, Yeah, very foid. About halfway we are in Austin.
And one of the beauties of central texts if you and I read a stat one time from Waco, which is bill where Baylor is, down to San Antonio, which has a lot of colleges through Boston of course, there's four hundred thousand students oh yeah in this corridor. Yeah, who want to will be graduating someday and who want to stay in Central test it's most likely yeah, you know, not always, yeah, but you know, so there's always going
to be buyers out there. We just have to wait until things turn around a little bit.
Yeah. Yeah, so, and that's that's the thing we have. We have seventeen thousand realtors in Austin right now, and we have only look, we have fourteen thousand listings, which is that's that's less than one per person per realtor, and you have twelve of them. Yeah, I got twelve of them. Well, that's good. The percentage really is. It's interesting.
It was a sad stat. I pray for my industry because it's you know, the realtors fifty percent did not sell any real estate last year, right, sixty two percent sold one or none. So that's not they can't make a living, no, no, So obviously that goes back to you want to work with a five percenter, You're a five percenter. I'm a five percent. Five percent of us are handling about eighty percent.
Of the business. We've been around for a long time, yeah, forty years.
Yeah, and back in the day, a couple of years ago, we didn't you just put a sign in the yard to go open door. You know, you know, all those models don't work anymore.
No, and you gotta have a pro.
Yeah it is. And you're basically paying pretty much the same about the same spectrum on on compensation. Sure, uh you know then why not? Uh? You know you're you're a specialist. Do you get as a as a doctor? Do you get paid more as a specialist?
I look by cardiologist. Yes, yeah, it's a four million dollar house in Westley.
Yeah yeah, yeah, yeah, you're putting his kids who we.
Will got in a minute or so. Talk about your network, your B and I for Christians.
Okay, yeah, it's called it's called Kingdom Entrepreneurs. We've had Kingdom Entrepreneurs and it's a it's like a it's a networking group for for Christian business owners and salespeople and anybody or entrepreneurs that want to get into the into business. Uh. And we have a live luncheon every month. It's at the Vineyard Church. But it's a multi you know, it's multi church. People come from all over Yeah, we've between
forty and fifty people. And what we're on the we do it on the second Wednesday is the online meeting, which is which is a zoom.
It's great zoom.
Yeah, and for about a hour we'd get to really get to know each other. And then the in person is on the fourth Wednesday of every month. And so uh, that's where it's kind of a we have a luncheon or we free lunch. We bring bring in a good barbecue, a good speakers barbecue uh uh and even somebody kind of homemade. Last time we had homemade stuff, so uh.
And then we we we listen to a good motivational speaker like Mark Harriston and uh and then also and then and then we network just like a B and I if you've been at B and I where you actually changed look, but it's more about getting to know each other and and being in a safe environment where we can talk about our faith. So yeah, so I appreciate that it's Kingdom a t X dot com ATX dot com Kingdom at X.
I highly recommend you check that out if you wanted to, uh, just you know, let kin.
Know Mark You're gonna be our speaker next next month, the month after that.
All right, well were we are wrapping it up. Great to be with you, Kim, and I will always wish you the best like this has been.
Mortgage Doc with Mark Hairston. Mark is a mortgage advocate with the Texas Mortgage Source LLC, offering personalized mortgage solutions, fast customized quotes, great rates, and service with integrity. Contact Mark at Markhirston dot com. Mark Hairston dot com. You can call our text Mark at five one two seven eight nine sixty nine sixty seven. That's five one two seven eight nine sixty nine sixty seven and come back next week for more mortgage talk