2024 Housing Market Trends and Common First-Time Homebuyer Blunders | Ep. 307
In this episode of Money Talk with Tiff, host Tiffany Grant sits down with special guest Dave Ball from House Rich. They dive into the 2024 housing market and the top mistakes that homebuyers make.
Dave sheds light on the uncertainty of future interest rates and the impact on the housing market. He emphasizes the importance of budgeting before embarking on the home-buying process and outlines the significance of interviewing realtors and lenders.
Tune in to gain valuable insights and tips, and find out how to connect with Dave for more expert advice.
About Our Guest
David is a Navy veteran and graduated from the US Naval Academy with a degree in Econ. He also has seven years of experience in the mortgage industry as a loan officer and underwriter. He saw a lack of accurate and detailed home buyer education online and decided to fill the void through his platform @coinsnculture. His goal is to break down the sometimes-complicated mortgage process into layman’s terms and help people buy their 1st home strategically.
David also hosts House Rich: The Real Estate Show on YouTube and all podcast platforms. There he breaks down a mortgage topic weekly and also interviews a subject matter expert in various aspects of real estate.
Connect with Dave
Website: https://www.houserichshow.com/
Facebook Group: https://www.facebook.com/groups/fthbschool
Instagram: @houserichdave
YouTube: House Rich – The First Time Homebuyers Show
Connect with Tiffany
Website: https://www.moneytalkwitht.com
Facebook: Money Talk With Tiff
Twitter: @moneytalkwitht
Instagram: @moneytalkwitht
LinkedIn: Tiffany Grant
YouTube: Money Talk With Tiff
Pinterest: @moneytalkwitht
TikTok: @moneytalkwitht
Timestamps
[00:00] Rates likely to drop to around 6%.
[04:46] Market timing is impossible, refinancing is an option.
[10:04] Tips for finding affordable homes and property taxes.
[10:45] Calculate monthly payment based on property cost.
[16:07] Larger lenders have community perks and grants.
[18:37] Podcast on home buying guidelines and mortgage.
Key Themes
- 2024 housing market trends
- Interest rates and inflation impact
- Budgeting for a home purchase
- The importance of interviewing realtors and lenders
- Understanding real estate markets within markets
- First-time homebuyer mistakes
- Where to find more home-buying tips
Copyright 2024 Tiffany Grant
Transcript
It. You know what it is. That's right. It's time to talk money
Speaker:with your money nerd and financial coach. Now, tighten those
purse strings and open those ears. It's the money talk with TIFF
Speaker:podcast. Hello. I
Speaker:am so excited because I have Dave ball on the line from house Rich.
Dave. And I have Dave on to talk about, first of all,
Speaker:the 2024 housing market and what, what that's looking
Speaker:like, and then also the top two mistakes that homebuyers
make in the process. So. Hey, Dave, how are you? Hey, good morning. Good morning.
Speaker:Thanks for having me on your platform. Yeah, no problem. Honored to have you
Speaker:here. So let's just hop right in for the audience. When we're looking at
2024, what are the trends? Or what is the
Speaker:market doing? So the big answer to that
Speaker:one is no one exactly knows. Like, not the definitive answer
I think anybody was looking for, but that is the actual answer. So, actually, this
Speaker:morning I was researching this topic because I figured it was going to come up.
Speaker:And I want to read you a few hitlines. It says, fed will hold rates
until July. That's from one source. Feds are likely to cut rates in
Speaker:2024. Another hitline, feds cut interest rates as early as the first half of
Speaker:2024. Fed likely to cut rates four times of 2024.
Here's when the Fed will cut rates. Blah, blah, blah, blah, blah. So
Speaker:depending on who you ask, you'll get a different answer.
Speaker:But I think what folks need to look at is kind of like their own
goals and kind of work from there for a little bit of perspective. Like, when
Speaker:I got into the real estate industry in
Speaker:2017, like, a normal rate was
5%. During COVID
Speaker:the Fed cut the benchmark rate,
Speaker:which is the cost for banks to borrow money. And so they cut that rate
down to, like, zero point 25%. Usually it hangs around about
Speaker:2.5%. That's why rates were, like, super low in the early
Speaker:2020, 2021, and the housing market kind
of went out of control. Home price went up like 43%
Speaker:at one point. What that caused was inflation, which hit
Speaker:like 9.1%, like in June
2022. And so since then, as we've seen, the
Speaker:Fed has been increasing that benchmark rate in
Speaker:order to combat inflation. So what the Fed cares about as far as interest
rates is cutting inflation. And so we were at 9.1. I
Speaker:think right now we're somewhere between, like, three and 3.8%. But the goal
Speaker:is to get it down to 2%. And the reason I talk about that is
because the Fed doesn't really care about the housing market. They
Speaker:don't care about interest rates. Their goal is to combat inflation. The housing
Speaker:market is just unfortunately a casualty of that.
And so from what I've seen that the people from the
Speaker:Fed have actually said, like Jerome Powells and other people that are part of the
Speaker:Federal Reserve have said that they're just going to follow the data. And
so they'll make a game time decision, like every time they meet,
Speaker:typically once every two months. So they'll look at the data at that present time
Speaker:and say, hey, we will keep rates steady. We will cut rates based on what
the data says. We're not going to make any predictions in December
Speaker:and January and February on what's going to happen in June,
Speaker:July and August. But most likely from what I've
seen and based on the trends that are going and inflation being kind
Speaker:of going downwards, that most likely, worst case scenario is that they're hold rates.
Speaker:And so rates right now are like in the 7% threshold. All the
information I've seen from reliable sources like Fannie Mae,
Speaker:I've seen Morgan Stanley, it says that rates will, unfortunately for some, being
Speaker:like the 6% threshold, probably at the lowest throughout the course
of 20 to 24. So I think where folks are looking at the housing market,
Speaker:we need to normalize like 5%, 6%. Rates
Speaker:are just the new norm. And I say the new norm, but they're kind of
honestly the norm norm because as I mentioned, like back in 2017,
Speaker:rates were 5% when I got into the industry and nobody was freaking out
Speaker:about that. Folks kind of are freaking out now because rates used to be two
and 3%. But yeah, the housing
Speaker:market, there's no signs of a crash. The housing market inventory
Speaker:is super low. Depending on where you read. We're like somewhere between
1.5 million and 6.5 million houses
Speaker:short. So if you just go back to basic econ 101, the
Speaker:supply is super low, even though the demand is a little bit low
due to rates. So housing market
Speaker:2024 rates may go down, but there's still going
Speaker:to be a demand. So there's no data that
supports any sort of housing market crash that I think some
Speaker:folks are waiting on in order to buy their first property.
Speaker:So to me, just focus on your budget, and if you're ready mentally
and financially, I would jump into the market because there's never a perfect time
Speaker:to buy a home. Yes, I'm so glad you
Speaker:said that because I tell people all the time, you cannot time a market. I
don't care what market it is, it's impossible.
Speaker:And I jumped in in 2017 as well. And one thing
Speaker:I did do during the pandemic was I refinanced. So I was
able to get that good rate. So that's also an option
Speaker:later on down the road, if they ever go back down
Speaker:to where they were, you can always refinance. So I
wouldn't let that hold you back. Another thing, to your point
Speaker:about the inventory, actually, and I was
Speaker:not thinking about this interview when I did it, but yesterday,
I just looked up how many houses were available in my area,
Speaker:and it was like 40. And I was like, oh, wow, in the whole
Speaker:city. So, yeah, to your point, it's definitely a very
strong market for both sellers and
Speaker:buyers. It'll probably be competitive, but you can get a
Speaker:house if you want a house. Yeah, sorry, one
more tidbit. And I think what folks, a lot of folks don't realize
Speaker:unless you're actually in the business, there's markets within the
Speaker:market. So even in your local market, like, I'll give an example
here. I'm in the Dallas market. So
Speaker:the market, like, between $300,000 and
Speaker:$200,000. That market will never crash. That market is always
on fire. Rates could go to 10%, and that market would
Speaker:still be out of control. Earlier this year,
Speaker:I helped somebody buy a home that was $200,000 here in
Dallas. We looked for like four months, and we put in
Speaker:offers of homes that had 44 offers, 19 offers, 16
Speaker:offers, 17 offers. And this is back when rates were like, at the high high,
almost close to 8%. So even in your local market,
Speaker:their markets within market, and whatever the bottom of your local market is,
Speaker:that market will never crash because home prices continue to go up, but
wages don't. And so folks are always fighting at the bottom of that
Speaker:market just kind of fy, depending on what price bracket you may be looking
Speaker:in. Yeah, that's a really good point. And another thing,
too, because I thought about selling my house a couple of
Speaker:years ago, actually. Was it 2022? Last year? I
Speaker:thought about selling my house, and when a realtor looked
up comparatives and things like that, I would have been the
Speaker:only single story house available
Speaker:in the whole city. And I was like, whoa.
So to your point, with the markets within the
Speaker:markets, depending on what people are looking for, it could be
Speaker:favorable for you. So now that we've talked about
trends and what's coming up next, now let's get
Speaker:into the mistakes that some first time home buyers
Speaker:make. And so what is one top mistake that they
make. So I think the biggest mistake I see first time home
Speaker:buyers, and honestly, sometimes second time home buyers is
Speaker:not knowing how to budget for a home. So I'm a realtor now, but I
used to be a lender. Sometimes folks, I used to work at a bank. Sometimes
Speaker:folks are coming to the bank. Sometimes folks apply online for
Speaker:a home. When they apply online, they say, hey, I want to qualify for
a $400,000 home or whatever it is. And so I do
Speaker:the pre call for them online, then I give them a call. If they're
Speaker:approved or it didn't work, I will give them a call either way. And then
at some point in the conversation, I would just ask them. I'd be like, okay,
Speaker:yeah, you're pre approved for $400,000.
Speaker:Just curious, what do you think the monthly payment is on this property? And
it was always crickets in person. Kanye, shrug. Like, folks
Speaker:never knew what that payment was. And so here's the
Speaker:issue with that is always tell folks, start with a monthly Payment
in mind and work your way back from the home price. Because when you start
Speaker:with the home price, you're going to talk yourself into whatever
Speaker:that number is. Because what happens is when you're looking at $400,000
homes on Zillow, now, you're looking at, there's
Speaker:this nice restaurant down the street. Look at this school district, look at the pool,
Speaker:look at what I can get for $400,000. You've already mentally moved
into that neighborhood. And so what happens is when I tell
Speaker:you, hey, that payment is $3,300, but your budget was
Speaker:$2,500. You're just like, hey, it's only $800.
I'll probably get a raise next year.
Speaker:I can do DoorDash on the week. You talk to yourself. You just convince
Speaker:yourself about all this stuff that you'll never do to
the side hustle and stuff like that, you basically end up
Speaker:blowing your budget. And that's where I hear about folks that are
Speaker:often like, house poor. It's just like, hey, I spent way too much on this
home. And my initial thought is always, I'm pretty sure this person started with the
Speaker:home price of mine and not the budget. So that's what I suggest
Speaker:to everybody. Start with a budget and work your way
backwards to the home price. And this is just a quick way on how to
Speaker:do it. Let's say your budget is, you want a
Speaker:$2,000 monthly payment, just go to Google
and type in the word like mortgage calculator. And a mortgage calculator will come
Speaker:up on Google and then start putting in loan amounts that get you
Speaker:to about 60, 70% of
$2,000. And so let's say you
Speaker:put an amount of like $200,000, interesting enough, and they get you like a
Speaker:$1,200 monthly payment, 60% of
2000. And then now you just got to go to Zillow or
Speaker:wherever you go to realtor.com and start looking at
Speaker:$200,000 homes in the area you want to look at. You'll find one of
two things. You'll find that there are no $200,000 homes in the areas you want
Speaker:to look at. So you got to kind of make a decision there. Or you
Speaker:may find like, hey, okay, I can kind of work with these homes, these
$200,000 homes in my area. It may not be my dream Home or
Speaker:my ideal home, but hey, I can kind of work with this and then just
Speaker:go to click on a couple of homes. And then now you can look at
and find out what the property taxes are on those homes. So now you have
Speaker:a principal and interest payment and you have the property taxes. It's going to give
Speaker:you the yearly amount. Just divide by twelve. Insurance is a little bit harder to
figure out, but you want to just use whatever number zillow has. I say
Speaker:that and just add up those three numbers, your principal and interest payment that you
Speaker:got from the Google calculator, your taxes, and then add up
your insurance. And it may be above, it may be under
Speaker:$200,000, but you can kind of finagle those numbers
Speaker:in order to find out a monthly payment that's kind of within your
budget. And I say when you work backwards that way, it may not be
Speaker:like the price range you want it in, but that's the price range
Speaker:you can afford. And so that gives you folks
a better starting point for the home search. Because like I said, once you start
Speaker:with the price in mind, you're going to talk yourself into whatever that
Speaker:budget is. And I know that with like 100% certainty because pretty
much it's rarely that someone balks
Speaker:when I tell them what the price is, even though it's well above their budget
Speaker:a lot of times because I can see like their debt to income ratio, which
is very high usually. But it's not my call to
Speaker:tell folks what they can and can't afford. Right. And
Speaker:I love that you bring that up, having your budget in mind first,
how much you actually want to spend first. And I see this translating
Speaker:well to cars as well.
Speaker:And having people have what is going to be
that monthly payment and then working your way from there. I love
Speaker:that advice. So now that they have that out the way,
Speaker:what is another mistake that they could be making first time home
buying? So one of the other big ones is not actually
Speaker:interviewing your realtor or your lender. It's the biggest
Speaker:financial decision that most people will make. And I always find
it od that folks rarely interview
Speaker:my platform. I always say, hey, interview your realtor.
Speaker:Interview your realtor. Interview your realtor. I've actually not had a single person, maybe
because I put out a lot of content online so folks feel they don't be.
Speaker:But I've not had a single person ever interview me. And I'm like, oh, how'd
Speaker:you find me? Social media, how'd you find me? I found you on YouTube and
I was like, oh, did you watch the, the videos about this and that? Yeah.
Speaker:I was like, okay, well, I'm not going to tell you to interview me. Maybe
Speaker:folks, they feel like they know me because I just put out so much content.
But yeah, interview your realtor. Because some basic
Speaker:questions you should ask your realtor is just a basic how long have you been
Speaker:in the business? And I always say there's no right or wrong answer to that
question. The person that's super new may be super hungry and
Speaker:ready to go in above and beyond. I know when I was super
Speaker:new in the industry, I would drive anywhere.
Somebody told me I'd drive an hour to show them one house. I would
Speaker:do all this stuff now, and I'm a little bit more. I value my time
Speaker:a little bit more. I'll just say, like, we need a plan before we start
driving everywhere throughout Dallas to find home. But interview them, figure out how long
Speaker:they've been in the business, figure out what areas they actually specialize in. Because a
Speaker:realtor will tell you pretty much, I'll tell you, they can go anywhere as
long as their car can drive that far, which is cool. Sometimes.
Speaker:Like, the first home I ever sold was in Fort Worth, Texas. I'd only been
Speaker:to Fort Worth, Texas, two times in my entire seven years in Dallas.
But I was like, hey, man, I'm going to find you home in Fort Worth
Speaker:because this is my first client. Like, it worked out for that client.
Speaker:But honestly, I probably was not the best realtor for him because I didn't
know the intricacies of the Dallas Fort Worth market. But hey,
Speaker:everything worked out because I did a lot of research on my end. I would
Speaker:say, also ask them what price ranges they work in. Once again,
no right or wrong answer, but if someone's working
Speaker:typically, like, in maybe a $300 to $400,000 price
Speaker:range, they may not be the person to help you with that million dollar
listing, and vice versa. If somebody is just like, hey, I'm doing million
Speaker:dollar homes, you may not get the same attention if you're looking, like, in the
Speaker:200 $300,000 price range. So definitely interview your realtor. And
I would also say, same thing with your lender back when I was a lender.
Speaker:So some questions you should ask your lender are one, just a basic one. How
Speaker:long, what hours do you work? Because some lenders, believe it or
not, they're just like, hey, I work nine to five. That is what it is,
Speaker:Monday through Friday, which is their prerogative. But if you need help on the weekend,
Speaker:they're probably not the lender for you. I would say, like, what loan
programs they actually work with. I'll give the example.
Speaker:When I was a lender, I never ever did a USDA loan in my four
Speaker:years as a mortgage lender, but I would not tell anybody that
unless they specifically asked me. So if somebody was looking at a
Speaker:USDA loan, I'd be like, yeah, I can help you out with that,
Speaker:but I probably would have fumbled my way through the process because I had no
idea what I was doing. And that's a complicated loan. But if someone specifically asked
Speaker:me, like, hey, how many USCA loans have you done? I would have told them
Speaker:zero. And so I'd be, you know, I'll probably need
some help from my manager if there's some struggles here. But yeah, ask them what
Speaker:loan programs they actually specialize in. And also, if you're looking for
Speaker:down payment assistance, ask them specifically
what down payment assistance programs are you
Speaker:the customer eligible for, not which ones they have. Because those
Speaker:are two different answers because lenders have to actually qualify
in order to give out certain down payment assistance programs. Ask them which ones
Speaker:you are eligible for because that may not be a fit
Speaker:one quick tip or hack. Typically
like your larger lenders. I know folks are sometimes scared of big banks, but
Speaker:typically, like, larger lenders will have something as part of their community
Speaker:reinvestment act, which if you're
purchasing a minority neighborhood or maybe a lower
Speaker:income neighborhood, they have big perks or
Speaker:big grants and stuff that they can give you. Like, I know lenders that have
like $5,000, $10,000, $15,000 grants
Speaker:literally just for buying in a certain neighborhood. So make sure you're actually
Speaker:interviewing your realtor and lender, because, Jessica, you may say, hey, my
friend recommended them to me. I don't need to interview them. But I always say,
Speaker:like, your friend probably has friends that you're not friends with, right? So
Speaker:they just may not be the right fit for you. Just make sure you're
interviewing at least one or two realtors and
Speaker:lenders. I think another mistake that first time home
Speaker:buyers don't make because I always hear folks say, hey, my realtor sucked or my
lender sucked. I'm like, well, what was the conversation before you guys
Speaker:embarked on this home ownership journey? It probably was none.
Speaker:Yes. And I can definitely attest to that. When I
bought my house, I didn't interview anybody. I just went off of my friend's
Speaker:recommendation because she was going through the whole process. Now, granted, I lucked
Speaker:up. I had a bomb team, and I'm so grateful for them
still to keep in touch. But I could totally see how that could have went
Speaker:south. And I didn't know anything about the process. And so they could
Speaker:have easily gotten over on me if they wanted to. Luckily, they
didn't. But it could have been a possibility.
Speaker:And I say that not even from like a get over you aspect, but just
Speaker:sometimes you just have different needs. Let's say your friend could
have had maybe some credit challenge, or maybe, let's say your friend had no credit
Speaker:challenges, right? They had an 850 credit score somehow, and maybe not
Speaker:you, but just a listener. Somebody had credit challenges. Well, maybe you needed a lender
that was a little bit more judicial when it came to helping you with
Speaker:credit or things like that. So just something simple like that is why I
Speaker:say always interview somebody. Because just because your friend
scenario may not necessarily be your scenario. Like, no matter how
Speaker:great they were with your friends, right?
Speaker:Yeah, I think those are great tips for the audience if
they're looking to buy a house, whether it's first time, second time, third
Speaker:time, what have you, I feel like those tips are definitely
Speaker:applicable. So, Dave, if people are interested in learning
more about you, more about these tips or anything that you
Speaker:have going on, where could they find you? Yeah. So since
Speaker:you're listening on a podcast platform, you can check me out.
I have a podcast and YouTube channel by the same name, house
Speaker:Rich, the first time home buyer show. So every week I break down some sort
Speaker:of home buying news topic because a lot of times you see hyperbolic
hit lines and I break those down from a factual standpoint and also just break
Speaker:down mortgage guidelines in layman terms. So right now I'm breaking out
Speaker:my 2024 home buying guidelines. So those would be like my next six
episodes. I'm breaking down like the FHA loan program, conventional,
Speaker:Naca, Va, USDA, et cetera. So if you want to get
Speaker:some details on that, you can check me out there. If you're on social media
and looking for some short form content, you can check me out at
Speaker:Houserich, Dave on IG
Speaker:or TikTok. So I put out information there. Same thing, but
just in those 60 32nd slots. If
Speaker:you're in Dallas, feel free to reach out to me if you're looking to
Speaker:purchase a home so you can just dm me directly for that.
Got you. Well, thank you so much. And I'll make sure I have all of
Speaker:those links in the show notes, so don't worry if you didn't get it. Check
Speaker:those out and you can get in contact with Dave. So thank you so much
for coming on the show this morning. Oh, what's good? I appreciate you having me.
Speaker:Thanks for inviting me on the platform. My pleasure.
Speaker:Bye. Adios.
Thank you for listening, joining, and being a part of the Money talk with TIFF
Speaker:podcast this week. You can check Tiff out every Thursday for a new
Speaker:Money talk podcast, but if you just can't wait until next week, you
can listen to previous podcast
Speaker:episodes@moneytalkwitht.com
Speaker:or follow TIFF on all social media platforms at
moneytalkwitht. Until next time, spend wise
Speaker:by spending less than you make a word to the moneywise is
Speaker:always sufficient.