The American Dream: A Deep Dive into Housing Affordability

And in today's podcast I have two returning guests and today we're going to talk about the future of the mortgage market and the mortgage industry . These are two mortgage professionals .

I have Ed Parko , and Ed is an accomplished professional in the mortgage industry with nearly 30 years of experience , advanced degrees in marketing and international business , a military background and an advocate for financial literacy and real estate education . I have also back here Quinton Harris , and Quinton is the VP of Northeast Florida for the Bank of England .

He's been in the mortgage industry for over 20 years . Under his leadership , the BOE of Jacksonville team earned the number one branch and organization wide for 10 consecutive years , while simultaneously gaining the number one market share in Northeast Florida for 2020 and 2021 .

And I'm actually moving to Florida , brother , so I negotiate a good deal , so maybe you can give me some pointers and help . We'll talk off air . Yeah , man , according to both corn logic and Zonda . So , gentlemen , welcome to the podcast again .

Both of you have been on here before and I really respect you , both of you , gentlemen , and your opinions , and I wanted to have you back , so let's get right into it . Gents , we just saw the feds two days ago come out and hinted that they were going to cut rates . Man 2024 , crystal ball . I'm going to start with you , ed .

What do you have to say about that , brother ? What are you thinking ? What are you saying ?

We've already seen the . So the bond market moves way before the Fed moves . That's the difference . So what the Fed is doing is they're lowering short term interest rates , overnight rates , the banks what most people see on the prime rates of the HELOCs , the credit cards , those kinds of things , is what they adjust . They're always late to the party .

They are the ones who slow stuff and you know , and purchase mortgage backed securities and do other things that actually help with the rates . But what they actually do was lowering rates is always after the fact , and so I see next year going to be really good . But the biggest problem we still have is it's still about inventory . We're so short on inventory .

It doesn't matter what the rates do , because the more the rates go down , more people come out of the mark , come into the market again , and if you don't have the inventory . That just means values are going to go up , so it's not going to help a lot of people unless we have more inventory come on the market .

You know we have offers overaccepted . We still have things like that . I'm in Northern California , I know you . I think you said I was in LA , but I'm actually in Northern California and it's a totally different market than anywhere else in the country . It's all regional , so every place is different .

When I say it's going to be better , it's going to be better for interest rates , so interest rates will be lower . But we're not going to see probably the you know , the 3% we've ever we saw before in our in my lifetime .

I don't think we'll oversee it unless we go into another thing like a pandemic or something like that that happens again , where they shut down the country .

The things I'd add to that are , to his point , the Federal Reserve and the Fed funds rate when they move that up or down , while it doesn't have a direct bearing on mortgage interest rates , there is lag time for a lot of those policies they put in place and I think what we're seeing right now is a massive disparity between the 10-year Treasury and what the

30-year fixed rate mortgage should be . Traditionally speaking , you could take the 10-year Treasury at 150 or 175 basis points to it and that's your 30-year fixed rate mortgage . Right now , with a lot of the volatility in the market and the uncertainty on the secondary side , you're not seeing that normal ratio .

You're seeing about 300 basis points added to the 10-year Treasury , which is why the rates are highly , or what we call more inflated in what they should be . You know , I'll take just a second here . I just want to share a screen that kind of shows and represents .

You know what I'm talking about there , because you're going to see that if you go back to , let's say , go back to I'm trying to pull it up here , pull up in a minute Anyhow if you go back to 2021 of December , you'll see that the 10-year Treasury was about 1.54 . The 30-year mortgage rate was 3.10 on an actual average .

If you take today's 10-year Treasury , we're about 3.9 , and you heard my counterpart here just say you know he's seeing 6.625 . That's not 150 basis points .

We've seen some of the disparity disappear on yesterday's announcement from the Fed , combined with consistency of mortgage applications being up and job loss claims reports being either in line , modally less or greater . But we're seeing more consistent economic data come out and with that consistency you're starting to see the removal of that disparity and interest rates .

So you know to everyone's point , rates will come down . You know a shameless plug here Our episode 115 on our podcast of what's your One More is a Crystal Ball . It actually breaks down each quarter . We give you the exact interest rates we think it's going to be on each quarter and overall interest rate at the very end of that as well .

Inventory , I think , is an issue nationwide , especially in our backyard . It seems that the California market and the Florida market represent the same . As far as lack of inventory , the demand here is just off the charts and I think you know it's probably to say the last generational demand in the millennial generation is much higher than other generations .

We've kind of missed that move up buyer has left the market , but that first time home buyer is still real and you're looking at about 46 million first time home buyers right now that are competing in the market . And if those rates come down at all and the affordability gets more in line , we're going to see a demand like we haven't seen before .

We're not just getting multiple offers , we're maybe getting 20 multiple offers and tens of thousands over price . That's what's on the horizon , since the builders cannot backfill this inventory .

That's far more difficult and not normal 500 and below that first time home buyer here in our market and you've kind of seen the builders pivot towards making that home and getting out in front of it . But there is a lag time in that , you know property going from land to vertical and that's kind of what we're seeing right now .

I think I saw a stat from Zonda that showed 58% of all first excuse me , 58% of all new construction sales right now are first time home buyers . So that kind of speaks towards that , that that demand that buyers are looking for in our market in particular . And that was all Florida from that construction front .

Our biggest problem is land cost and permits Just permits and everything getting going . We're about $125,000 into the and , having started on anything , so my big push is for the and then I'm gonna say to government but they need to do something better , kind of like they just did in Las Vegas where they don .

They donated land so they could build affordable housing from the federal government . They sold it to the state .

But you know that the what they're talking about household formations in America right now is more household formations this year and next year than we've ever seen before , meaning that the age of 26 years old or higher have moved out of their home , creating a new house , and the first time home buyer now has gone from 33 years old to 35 years old nationwide .

If you take the amount of people between 26 years old and 35 , that's 46 million people just shy of 46 million people that are looking to purchase a home . We don't have that kind of inventory available , which is also adding rent pressure to the rental properties out there as well , because those individuals have to live somewhere .

So that's demand and that's lack of inventory , and that's part of the issues that we're seeing right

now .

New York City they went from 4,090 , step five to 4,000 to 3,900 , something like that . I don't feel bad for them , but it's an indication of what's happened in the country .

What impact do you guys see , or what is your crystal ball , say , gentlemen , as it pertains to real estate investors that are holding properties right now , where we had proformas with these high , high level numbers Right , and now we're seeing rent softening .

I like to get your opinion on that and I like to get your opinion , both of you , on what you think it's going to happen with these maturing commercial loans coming due in the next year and how that's going to play out . And is that what you guys think ? Do you think that's the reason the feds are kind of being ?

Eventually you're going to have a disaster on your hands , and I think the Federal Reserve has said hey , listen , let the lag time effect .

Typically , policy takes 90 days to get through the monetary system , especially on the credit tightening side of things , and so to think that they're pausing to see what happens in the commercial market I don't think that's the case . I think they're seeing indications of a soft .

Yeah , I remember the Fed has two main primary objectives are trying to get inflation , the target inflation rate , to as low as 2% or 2% as possible in the PCE core , as well as softening of the labor market . Softening is just a fancy word for deterioration or job loss and they're starting to see those things happen .

They're not at the magic number of 2% , but they're darn closer than they were at 8% , and so I think they're seeing the lag effect make its way through the system and I think adding any more medication in the form of an interest rate hike I think would be ill advised and I think they're starting to see that and see the effects of what they're done .

The last thing they want to do is shock the system . That would be a bad thing . Their goal is to try to achieve a soft landing . Adding any more interest rate hikes could put us in that recessionary acceleration and a hard landing .

And you're seeing it happen right in front of us with Powell's comments for the first time at the poll yesterday excuse me , at the podium on Wednesday . He actually had comments that he didn't say we wouldn't patent himself on the vaccine hey , listen , we've achieved it .

But he did indicate saying we're starting to see progression and for the first time he didn't come out and actually contradict some of the Fed statements coming out of the FOMC . He kind of went with it and let the market kind of absorb it and not contradict it and that was the real , real big move for the bond market as well as mortgage rates .

And he specifically has been asked in the past . You know there's a lock-in effect in mortgage loans right now and housing plays a big role in the GDP . Is the Fed considering , you know , any type of rate cut or quantitative easing based on that acceleration of that lock-in ?

And he specifically said you know our policies aren't dictated based on you know housing and what people's mortgage interest rates are . And I would say that would probably go with the commercial lending aspect as well .

One of the reasons where we are right now is because , all right , I looked at this . It's like a budget on a . You know the Fed and the . You know the administrations , what they've been doing . If you look at it , it's like a budget and a family you have two people , and if they're both on the budget , it works faster .

If they're not on the budget , you have the wife on the budget and the husband not . Either way , then it takes forever for this to happen , and that's what happened right now . We should have been through this a lot longer , but the administration has been shoveling so much money out there , free money to all these different things .

We finally ate up all that money and now what the Fed is doing is finally affecting and working , even though that is what happened . And then also the unemployment rate . It's different wherever you're at , like in California , where , I think , where it's 6% overall , and that's just because a lot of employers don't want to get rid of their people .

They have a feeling that it's going to get better and they've been holding on to their people a lot longer than they normally do I think the last as a BLS report came out saying there was 8.5 million jobs still available out there , and normally when we go through this , we don't have that many jobs available .

We don't have an employment rate go back down to 3.5% like we just had . So there's so many things that are in play here that it's most of us go . We really don't know what's going on . We can only say what we think was going on and what we think is going to happen next year .

It's just a very unique situation where we came out of a pandemic and this is where we're at and then we spent so much money and finally that money has gotten eaten up , and so what the Fed has been doing is finally working .

You can just say if this , then that and all bets are off if these things happen .

But I will also say to your point about commercial loans is that there's a lot of notes coming due this year and you ask that question and I think that if these rates don't get in line , I think you're going to see there's going to be some challenges to refinance that for debt servicing , I don't know that some of the rents that are out there are going to

cover those rise in interest rates .

Now to every commercial loans benefit if these rates come down , it may just even itself out , but I think if they remain heightened and some of these notes are coming off a three and a quarter rate and even if they get a five and a half , that's still a substantial difference on the note and the debt servicing that has to be covered by that .

Because that's where we're going in the commercial space on the art map , with all these bridge loans that are out there and bridge loans and those commercial loans coming due that are on their five year or seven year that coming due . Where do we need to be at ?

What do they need to go down to for us not to see a crash in the apartment and the commercial loan space in you guys opinion ?

But I think it's going to depend on where we are in the middle of next year and where rates really are . And did they move the way they said they're going to move and the way we think they're going to move , and how fast their Fed reacts . I just I don't know in that market myself .

It's on the finance side , right , that's where the challenges is you guys , the bankers , having appetite for anything commercial . My banker locally here , that's got , we got a $3.8 million loan with them . She flat out told me we are not lending to new customers , they're a community bank . She straight up told me we are not lending to new .

We are lending to new customers any commercial deals on commercial loans and we're only going to loan to we're only going to existing customers right now . And she explained to me some complicated math on the overnight rate and I was like you guys are making a ton of money on my loan here , like she was like , well , not that simple .

And she thought , explain it to me and I grasped what I could . But in your opinion , gentlemen , do you guys believe or you are in the cap that we , that history will tell us that we experienced a banking crisis in 2023 ?

And that was one of the issues , because there's not a lot of banks who went under besides that one , but that one we everybody knew because the way they were reacting to certain things and not focusing on business , like you just said . How much am I making off these transactions in our bit in the mortgage industry ?

One of the issues with rates and more we were 300 plus basis points over the 10 year is the cost to originate loans

and what we make off those loans . And then also , when I'm giving you a loan today and I need you to buy that loan , I got to give a premium to you because you know that thing's going to be refinanced in one year , two years , five years , so it's not that .

So you , I'm paying you a premium to take that loan today because you're going to make that money up front . Short , short term money is the most expensive money out there . If I was investing in 30 year notes , you know I'm going to be paying you a premium to take that loan . I want them to be there for a period of time .

If I think it's gonna be gone in a year , why am I buying them ?

So they're still holding back premium and holding back and creating that disparity out of lack of uncertainty . And that's what I was describing earlier .

And the show is that we just need more consistency in that market and more downward you know Pressure if you made , and from better economic readings that need to come out to justify what's been done in order for that disparity be removed .

Once that comfortability takes place in the capital markets , you'll see things like you know , the 6% coupon and the 5.5% coupon come back out that just aren't there yet we're still trading on a 6.5 .

But this I mean , if the Democrats stay in power , what that means . If the Republicans or somebody else gets into power , what does that mean ? Those are two things that we don't know .

Well , you know , first of all , he allowed this , so this is insane .

When you get to that Debate and when you get in front of the polls , you want to be able to stand in front , say I've done the following this is where we were . Now , here's where we are . You know , we're supposed to have an independent Federal Reserve , meaning that they don't answer to any governing body , both the form of what their decision-making is .

Now I think we can all agree that they're probably not independent like they should be , and that probably goes back beyond this administration . But that's , that's the ideology of what they're supposed to be .

And they're not , because if they were , they would have gone to Congress and said quit spending money , quit undermining our policies that we're putting into place , because every time you print a dollar , you're making our job harder . And they didn't do that . And they didn't do that because they're not independent .

So there's there's our first , you know , issue that I have with that . The second thing is regardless of whoever gets in , whatever side of table you're on . There's gonna be issues that have to be addressed Inside of where the current economic condition is , and even 2024s , I think that .

I think that the idea of Homeownership , whether it's the Republican or Democratic Party , is still at the heart of both campaigns , and I think that's part of the American dream . So I think both are going to try to push For that and I think the the idea of avoiding a recession is gonna be on the table for both people .

But this national debt situation it doesn't matter . Going all the way back to the Clinton administration , it doesn't matter if it's Republican or Democrat we have spent a significant amount of money , way more money than we have . Our . Our own debt has been downgraded , and rightfully so , because we don't have the money to pay it .

I think that's the topic that's going to be the hot button in this debate more than ever before .

I think that's gonna get thrown in a lot of people's faces the amount of money that's been spent and and the amount of money that has not been properly Handled as custodians of the American budget , and I think that's gonna be the big topic here , the big issue .

Where we are right now with this administration is I can do whatever I want , I can spend any money I want for anything that we want , and I don't care what you really care about . That's , I'm sorry . That's just what people are thinking , and if that doesn't change , then none of the policies are gonna change .

It was like when we had the recall for the governor in California . I wanted it to go through just so they would stop what they were doing . I don't care if it's a Republican , democrat or independent . We're all pretty much in the middle . There's only a fringe on each side out there . We we don't .

We just want to live our lives , you know , have our families happy , grow money , get wealthier that kind of that's what we really want and take care of people around us , right ? If this doesn't change , that current administration won't change . That's what I'm worried about .

I don't care who gets in , but it can't be the same way it's been going forward or we're not gonna come out of this the way that we need to come out . We spend more money out of the country than we do in the country , and I don't know about you I Florida might be different , but you come here in California , go to San Francisco . It's horrible .

The only time they clean it up is when the Chinese , chinese , china man is coming Correct , and then it goes back to the horrible way it was before this , and that's not just in San Francisco , that's all the big cities all the way down the coast in California . So we need a change .

I don't know who that change is , but we can't keep going the way we're going or we're gonna continue having more problems down the road . Yeah , that's my little political speak .

I mean , this interest rate situation is Dilling the , the , the budget right , because they we got a foreign interest as well . We can't afford it .

You know you're getting ready to give , you're getting ready to make the second largest cost in the national budget interest payments on the debt . I mean , that's , that's literally happening right now . And you know again , no one wants to stand up on that podium and talk about tax cuts , reduction of special programs .

You know , not not only friends with this one , but social security . You know there are benefits , there are things being done right now that that are going to have to be reduced and cut in order , because otherwise you're not gonna that debt's not gonna go backwards . This is not gonna happen .

You can't continue to go down the same path and expect it to get better . I mean it's just doing the same thing over again . We all know definition of insanity .

If we spent a lot , if we looked at certain things , wars are started to have us look at other things , while there's a problem with administrations usually , and then we'll get involved with it so that we look at something else instead of what's happening on the side . You look at our border we .

If you add up all the people together , that's the seventh largest state in the United States . If you put everybody's come across our border to the state Since this administration's being , that's a lot of people and we don't know who those are . We don't know anything about them . So there's so many things that we could be on here for two hours talking about .

The most important thing is none of the administrations . In the past , five administrations have worked cared about homeownership .

the median price in America they need to , the median household income , needs to be a hundred and fourteen thousand dollars . At the current interest rates . The median household income and I'm not don't quote me on this is somewhere between 65 and 70 or something like that . You guys are probably no more , but I know it's not significantly more than that .

So what does this do to regular working-class Americans ? Either real estate has to crash , rates have to come down and Is it over ? Is the American dream dead , yes or no ? Why are ? Why not ? I don't think . I don't think . I'll add .

One of the things that we've ran into is when we got into home ownership when we were younger , it was always a difference than the rent payment . You were like I don't know if I can afford $500 more a month than what I'm paying rent During the pandemic in those 20 , 21 , 22 , half the way most people goes .

You know , this is cheaper than renting I should buy . This is the same payment as renting I should buy . But the moment it gets $300 , $400 , $1,000 difference , everybody thinks , oh , it's so stupid to own a home Now . The owning the home is security in your future .

Eventually your payment will be lower than what the rents are eventually over time , and that's how it's always been it . Just during those three years was there a difference , when everybody jumped into home ownership or tried to ? I should say I completely agree .

The fact that we turn to social media as a form of knowledge is sad , and I really do feel sorry for people that do that , because you've got all the people in there going oh , the market's going to collapse , you've got a housing boom , bubble , this and that , and I mean it's not happening .

And it's not going to happen because , to our point at the beginning of this show , it's a simple economic formula to supply and demand and it's been the test of time . There's far less supply , far more demand . That's not going away . And even in the height of interest rates in the last decade , home prices went up , the loan limits increased .

These things are facts and those that are sitting around waiting have actually lost out on opportunity and momentum , and it's because they're listening to the wrong people . You know , I grew up and my parents used to tell me show me your friends , I'll show you your future . Give me your circle of five and I'll tell you exactly what it's going to look like .

And if it's social media and it's naysayers and it's people that are constantly telling you what's going to go wrong and it doesn't .

Then at some point you got to back up and say maybe I'm listening to the wrong people , maybe I'm filling my head with the wrong stuff , I'm not educating myself , and I think there's a lack of that , and that's the failure in the American dream , not necessarily housed .

But I heard this guy with Sacramento saying this , this and this and this . How come that's not going to happen ? And that's okay . But there's even a guy out of Las Vegas who've been talking about how everything's going to fall apart , how Airbnb is going to destroy the market . Did that happen ?

No , I'm like please put those homes on the market so I can have a buyer go into that home , because right now we don't have inventory . And if we don't have inventory , in California we're 2.5 million , probably 2.7 million , short on homes that we need to build and we're not building them .

And once we get , say that we built enough to get caught up over the next 10 , say , 20 years . In 20 years from now , you got the pandemic babies coming , which is almost as large as the baby boomer generation . We're never going to get out of this . We can't build our way right now out of this . Good for us investors . We're owning homes owning .

That's why I told people do not sell any real estate that you own . Hold on to it and buy the real estate for your kids now If you're at certain ages . You have kids who are , you know , five , seven , buy them , buy the houses now because by the time they're old enough , it's looking at our parents , our parents .

I've been in California since 66 , left a few times , came back . Every time we came back to California we couldn't afford the houses in California as a kid , right , it's always too expensive . There's no different than now . It's the same issue . It's just people . You have nurses . You have to get into professional degree .

You have to can't work for , you know McDonald's . You can't work for those type of jobs . You got to get a real job to afford a home these days and that's how it's always been . But people want to do these other jobs and so , long story short , it's not dead . It's just you need to get educated on how to get into homeownership . And I'm a plug .

I put my book out Financial Freedom Building Personal Wealth for Homeship came out in February , got bestseller in two categories home buying and selling and mortgages . It tells you how to get through that process and how to understand credit and all that stuff . That's what you need to do Educate with people who know what they're talking about .

I mean , you're talking to a gentleman that had been in the game for a long time . Both have the experience here . Absolutely Both have the experience and in your category right , we've been doing this for a long time . We have the expertise to say the things we're saying . There's people that have been in the real estate game for less than a year .

They're just saying crash and doom and gloom . That's not the case and , quite frankly , people are putting stuff out there for likes than they are for educating .

I mean I cannot believe that . I've never seen rates go up 5% in that short period of time that they did the last time . Normally we have rates go up but they don't go up that much . So this was a very anomaly . But we also had the lowest rates we've ever seen in our history because of the pandemic we were in .

There was no way we could stay with those rates for a long time . Prior to the pandemic , the best rate I was ever able to give somebody was a veteran at three and a quarter . So we might get back to that , but that's going to take a long time , you know a couple years .

So some markets are getting not hit , but they grew too hard , too hard , too hard and too fast . There is markets that from my studying I don't know how far you are from Riverside I know Riverside is also getting a little bit beat up in California there are markets Tampa is also experiencing some softening , but not there are in all of our states .

Right , we're seeing some softening , but why haven't we seen a crash ? I think the closest thing I've seen to a crash has been Austin , texas , where the numbers are just off the charts . What's happening there with building and values and just property sitting there ? From your , both of your perspective , both of you , all of us here , experienced the last .

You know , the great financial crisis , right , gfc all of us were in the business then . Some , like both of you mentioned on

social media and in different platforms , were like we're headed to a crash . I always said we were going to correct , but I never thought of a crash . Why hasn't that happened ?

You don't have property tax but you have a 3% tax rate for your property tax . Your property tax go up 10% a year . So in 10 years your property value will double . Yes , I didn't know that . So whatever value your house goes up in Texas , if you live in it , it's 10% max per year . In California we're at 3% .

So for our stuff to double it takes a long time . If you look at if you own investment property in Texas , there is no limit . So your whatever the value of that home goes up , that is your new tax rate . Austin was huge on Airbnb's . All these investors bought them and then the properties doubled . Then they didn't pencil anymore .

So from what I've seen on numbers , I've seen about 9.95% drop in Austin , texas . I haven't seen the 20% , but it was from what I read and what I've seen . I was more of that , those corrections of that and plus again , austin was an artist community .

That's what it was originally , and that grew to where people couldn't afford and now tech companies are coming in . But that's what my take is . People didn't realize when I moved to Texas . These are things that I have to deal with . First of all , humidity , heat . Now you have to deal with taxes that go up ridiculously , because you didn't understand that .

So I always told people do not sell your house in California until you've lived in Texas or wherever you're moving to , for one full year and see how that whole year was . If that's someplace you want to stay , because the appreciation you get in California is unheard of .

I think the next place like it is California and New York , but that's all I'm just saying . So our biggest thing , it's all about inventory . We've been saying this forever the great recession or it wasn't a depression , they just didn't want to classify it . We overbuilt homes .

We had these loan programs that allowed people to buy two and three homes in these housing tracks as they were building in and we thought we needed all those homes . And there's even more to it . I talked about it before .

If you look at and Barry Habib talked about it where , if you looked at if you go back 30 years , because the average age for someone to own a home back then was 31 years old . If you went back 30 years , we had the row versus way that came in and plummeted at birth rates for the next 10 years .

People didn't put all that stuff together to realize these people aren't coming of age and they're not coming here to buy homes . But we have programs that allowed them to buy two and three and four homes . They're big short . Watch that movie , you know .

You have the stripper on the pole saying she's closing on her fourth home and he's like how are you doing that ? They didn't have to qualify . There was a totally different thing . Currently it's still . It's all about the inventory . We don't have enough inventory and that's why we're not going to see a crash , or nor we're ever going to see a crash .

So there's your issue there in Austin , summed up perfectly earlier on . You know the thing about the supply demand . I know I feel like we're being a dead horse here , but the reality is it's if we were on the same build track that we were in 2008 , we still couldn't meet the demand . Today we're actually building at a rate of 1992 .

So you know it is going to take time to get this inventory backfilled . It's going to take time to get this demand curbed , if you may , and that's not going to happen in the next five years . So imagine a scenario where rates do go down and say they get comfortable in the fives , the mid fives , maybe the lower fives .

You know , we just don't know without discount points , say that environment happens . It's going to be an absolute feeding frenzy . And if you're a buyer and you're listening to this and you haven't bought yet , think about this you're going to be having 46 million people to compete against during that time , nationwide , when those rates drop ?

And if you're a mortgage originator you're listening to this are you scalable right now ? Can you handle when that happens ? And if you're a real estate agent , same thing . I mean , the reality is it's going to be a fury . I believe in 24 , all the way into 25 . I don't think we're going to have to wait until 25 .

You know , there's this monitoring our industry right now survive 25 , which I just I don't necessarily agree with . I think there's tons of opportunity coming in 24 . And I think we just got our first glimpse of it on Wednesday . And so you know , I do think there's a

. I don't think there's a crash on the way , and the reason I think you don't have a crash is going back to that economic form though supply versus demand .

We didn't do that . That's why we're so far behind . So we can't I don't know how we catch up , maybe building them in factories , where I don't know if you've seen that where you can build , they're building houses in factories . They can get them done in six weeks and bring them out on site and finish them where .

So I think that's what we're going to see more factories , more built . You know , 24 hours a day , three shifts , supervisor there . They're building everything , they're shipping it out on site and they finished the last 10% .

I think that's where we're going to go to be able to catch up on this , or even printing the homes with the concrete and all the other stuff that they're trying to do . Those are the other builds of the future and that's how we're going to get close to getting caught up .

You know you have all these huge department stores and other thing that nobody's using anymore and to convert that into some type of units the columns are in the wrong place , that this is in the wrong place in them . What you'd have structural things that you have to do with , it's too costly .

Some of that stuff that works for old hotels and other places like that that were converted because they had you can take two rooms and turn them into a little studio or what bedroom , one bath kind of thing . Go ahead , you're going to ask a question .

We all agree inventory is low and those rates go down and the buyer demand goes even higher . So I know you're both saying that there is buyer demand . I'm not personally seeing that . I've seen a tremendous slowing , slowed down in my market for buyer demand . Now we still have low inventory and but still buyer demand has gone down .

What happens when those prices go up ? As demand goes , you know , gets hot again and those prices keep going up . Yes , the interest rates might have come down , but I still have an affordability issue . How do we solve for that ?

Because if I'm listening right now to this conversation , I'm saying , great , amazing , I'm not ready , I'm saving my money , I won't be ready for two or three years when I'm going to be ready . If I'm least listening to these experts are saying in two or three years the rates are going to go down , but I'm going to be competing with 46 million other people .

Holy shit , that's kind of scary . What's the solution ?

This is , I know this is the perfect time to buy . I can always refinance later . I can afford it . If , even if I have to get my family involved , whatever it is , and split the equity , I don't care , I need to get in . Then you have those four riders behind him trying to catch him . That's where we are right now . Okay , I'm not for it .

So it's not a bad time . Yet I've seen a huge change this week . Like you would not believe , I've been working until nine o'clock at night , starting at six in the morning , trying to get through all the people I need to qualify , and the next issue is going to be that Peloton of those riders .

If you ever watched Tour de France , that's what's happening with this 46 million people that are going to become whatever that number was . Sorry , I can't say 46 million , that's right . I haven't had my cold plunge today , so I'm not on it . I'm serious . If you haven't done cold plunges , they're very addicting and it's amazing how much it helps you so much .

So where that Peloton comes , we're going to have a lot of demand , so there's going to be 22 . So I fell into this . When one of the people was selling a house recently , they had 22 couples come in and they all said we're going to wait until rates come down . You could have one of them buy that house and then refinance

it later . So they're going to wait until 22 other people want that same house and they're going to bid that thing up and only one person can buy that house . That's what's going to happen . I don't see that the volume of business is going to grow that much .

We're just going to have more people trying to buy the same house and until we can get to a point where we're building more homes we don't have that in California . Other places are building . We have not built enough , or do we have enough places that take so long to build a house in California ?

The permitting process from the moment you want to build a track to whatever it could be 10 to 20 years . It takes forever . In our state , we're always going to have this problem .

I know you said you put a lot of content and then I'm going to let you answer the question , quentin , in a moment here .

I'm going to speak specifically for the state of Florida , but we have 17 different programs that allow you to borrow significant or gain free of charge , significant money towards that down payment , and the rates are super favorable . They're just as good as what you would get if you're not using that program . Get into that now .

All of those will allow for a nonoccupying co-borrow because , as you heard from Ed on the show and myself , these prices are going to continue to go up . So get into this now and gain the momentum of the value of the asset . You could have more than one borrow on a loan application .

I mean , there's multiple ways to cut this thing but from an affordability standpoint besides switching jobs and getting more money what you would do anyways you don't need our advice for that that's really the hardest thing .

If you look at affordability , it's made up of three different things the rate in which you're financing something , the price of the item in which you're financing and then the income to support that . That is the definition of affordability . That's purest of those three things .

The one thing that takes the slowest to increase in that equation is the income to support all of that . The thing that rises the most is going to be the interest rate . That has the higher chance of rising quicker than anything . We just saw that happen . So I think that you have to take into account that the rate is going to come down .

But if you want to secure the American dream right now , this is the way to do it . But help is on the way . I want your listeners to know that so they don't lose faith . The prefab homes that Ed was describing those are coming in all regions and they're going to be fantastic . There are a lot of manufacturers , such as Clayton Homes .

When you look at what they do for a prefab home , a lot of people go , ah , that's a manufactured home , that's a mobile home . It's not . It's completely different .

They're single family resident and they are building a quality of product that if you put it side by side with another non-prefab home , you would not know the difference , and that is going to reduce costs and allow those price points to come down .

Your nationwide builders , like DR Horton Lenard , kb Homes they are all focused right now on building that 350 and below home to get that affordability out there . There's a massive push for that . But , as Ed mentioned , there are a lot of county barriers for licensing , for permitting . That stuff is taking time , some areas way longer than it should and others .

And so you know I sit in Duval County , now in our neighbor St John's County , and then you know Nassau County , rimbaud's . Of those three counties you got one that you can get things done in lightning fast time because they want to see that growth , and then another one you got it where the red tape is a little bit more difficult and they're side by side .

That shouldn't be the case but it is . So I think that I think you talk about the administration and what's on the forefront . I think affordable housing will be a huge topic going into 2024's election and the push to make that happen .

That's something I see both sides looking to make happen and I wouldn't be surprised if that is also one of the hot buttons going into this election .

I did because just to justify everything you both and Ed just said so we were looking in the Tampa Florida market and we found the house that we love . I don't fall in love with real estate , my wife does , right , I just real estate . For me , it's just like I buy so many houses and I do rents . It's just a house , emotionless . Yep .

We found the house we liked , that I liked and my wife just loved it , and the rates were just crazy , right , it was sitting on the market for a while and I knew we both knew that if we waited until rates came down , it was going to , we were not going to get that house . So what I did was I went and I made him an offer .

Quinton , I made him an offer with a lease with the option to buy it with a significant down payment 24 months . You ended a subject too , yep , lease with the option to buy it . But I gave him a significant down payment because it's a pretty big house . Right , it's a pretty big house . I gave him a significant down payment .

I said , hey , we know we're going to buy this house , but we just don't want to buy it right now . We don't want to commit to a mortgage right now .

Right , we're going to give you a significant , we're going to give you a down payment , we're going to pay the mortgage and then we're going to have we've got 24 months , with an extension of another year if we wanted to .

We wanted to wait the rates out to go get financing right , and that's the way that we were able to get into this house without having to get a 7.5 or 8% mortgage . I'm at the camp that I believe that the rates are going to come down again . I'm in that camp . All the data shows me .

I just I study this stuff , like you both and Ed , and it just it's unaffordable for most Americans and the feds have to bring it down . They have to bring down the rates and they've already told us they will . It's a matter of not if , but when .

One of the things that I did , you know , talk to , talking to lenders , and so the news this week was really good news for me as a buyer on that front , and you know we're selling our house here and we're just really , really , really excited about that .

Episode 116 , we talk about a different type of financing , subject to how to buy , assume a balones , how to find them , how to possibly work within the assumeable means , and then obviously , how to how to do the least own , and those are all options that you're referring to there that are creative .

They do require some sort of down payment , but you can turn this into a win , win , win for you , the buyer , the seller , and for the , for the market itself , and you can take advantage of leveraging that current homeowner's lowest rate by stepping in and doing a subject to to your point , which is exactly what you did .

You'll always have to come with a substantial amount of money .

You teach that seller how to become the lender on that particular aspect , write a five-year balloon note with a guaranteed price point , and the seller will ultimately take that offer because they're tax-deferring all of their profits five years down the road as well , and that is a huge win because they'll meet the long-term capital gains .

Now , I know that sounds like a lot . You might go Quinn , I don't know how to put that together but if you tune into you know Martin's show here and you turn into my show , you'll hear how to do that and you'll absolutely learn how to go out there and take advantage of this market if you can't go purchase a home right now .

So when the realtor tried to negotiate with me , oh , we got . Yeah , I think yeah , sure , you got more , you got . Oh , sure , you got another offer , Okay , sure . And of course , they came back around to my offer because they shut it down at first , because realtors don't understand this stuff and we had to spend some time educating them on them .

Like , hey , listen , why , why aren't you just buying it ? I'm like , listen , do you understand economics ? Like , do you understand where the rates are ? You know , I'm a business owner . I operate on cash flow here , Right , Cash flow matters , right .

So if I could take advantage and lock this in and take their payment , give them some money , you know saying , hey , I'm going to get financing , but I need it's not the right timing right now , it's not the right time . So so , yeah , brother . So thank you so much for being here , Quinn . I'm really , really grateful I'm .

It's always , it's always an honor , it's always fun to spend time with you . I mean you always always sharing some good stuff , man , I'm constantly following you , following your stuff on social cause . You know . You just sharing really , really good stuff there , brother , and you got a great , great , great podcast .

And , by the way , congratulations on your top 1.5% . I saw that . Hey , thank you , my friend , Appreciate it . I'm 25% globally , so make sure you guys go check them out . If people wanted to connect with you , Quinn , how do they find you ? Where do they find you ? How do they connect with you ?

We'd love to get the comments and the five star reviews and then check us out on our socials . We put all of our graphs , all of our information on YouTube as well , so you can chart that out and follow us . But again , it's a girl .

We've only been around for about 14 months , so we're pretty stoked about the growth of it , and we are a big education platform . That's where we stand with the subject matter we put out .

I'm going to definitely invite you back on the rebrand . You got it , you got it . So , as this market continues to unravel itself , I want to get your take on it , my brother . So thank you so much , guys . Thank you so much for listening . Thank you for being here . My friend , thank you so much for coming on . Really , really appreciate you .

Yes , sir , why ?