Podcast

S1 E15: How is this economy affecting mortgages and housing?

Transcript:

Announcer 0:00

Branch NMLS number 33041 Rick Ripma’s NMLS number is 664589. Ian Arnold’s NMLS number is 1995469 equal housing opportunity some restrictions apply.

Advisors Mortgage Group is proud to present Indy’s Real Estate Gurus hosted by Rick Ripma, the hard working mortgage guy, please contact Rick for all of your mortgage needs at HardWorkingMortgageGuy.com That’s HardWorkingMortgageGuy.com. Now, here’s the hard working mortgage guy, Rick Ripma.

Rick Ripma 0:40

Welcome to Indy’s Real Estate Gurus. We appreciate you joining us. This is Rick Ripma, your hard working mortgage guy and this is Ian Arnold with Advisors Mortgage Group. I want to talk about the APR real estate market along with a little bit on interest rates, we’re also going to get into how today’s economy is going to affect home purchases and mortgages. But to start, we’re going to do a recap. This is from MIBOR the Metropolitan Indianapolis Board of Realtors, it’s for the major metropolitan Indianapolis area. It’s not through the entire state, but it covers most of the state. And the rest of the state is in kind of harmony with this. So I think we’re in pretty good shape. First, let’s talk about the median sales price, the median sales price month over month, so March to April went up 3.8%. That to $275,000. Now that’s the median price, it doesn’t mean that your home appreciated 3.8% just means that more expensive homes sold than the month before and obviously has a little bit to do with our value increases, but not exactly. It isn’t exact, you know, oh, my home went up. Also, close sales for April were up 5.6%. So the price was up 3.8%. close sales were up 5.6% to 2987. And that’s a pretty big number in Yeah,

Ian Arnold 2:16

I mean, but it’s basically what we talked about last month, when we went through this we saw there was gonna be an increase when it hits springtime. Because people are wanting to move now. I mean, for instance, my kids are out of school next week. So guess what, if I wanted to move now, this would be the time to start going.

Rick Ripma 2:35

Yeah, because then you can get into your house and get everybody settled before school starts again. And I was looking at the school calendars. And one of them. They get out on the 27th of this month. And they start about the 10th of August. Is that about the time your Yeah,

Ian Arnold 2:50

my kids go out this week, and then they start on August 5.

Rick Ripma 2:53

Okay. Yeah. So it’s right in that timeframe. That’s about two and a half months that they’re off. And so many people want to start there. They want to start the school year, they don’t want to move their kids during the year they want to move them at the start of having started with the rest of the kids. You know, along with that. We have the year-to-date sales, we have 10,318 year-to-date sales for the four months, and we had 12,520 year-to-date residential listings. So that gives us a current inventory active inventory of 1979 homes. Now that sounds like a lot of homes. But when you start splitting it up by price range and areas, there really aren’t that many homes out there. No, not even close. I remember seeing back when I was a new home sales, there would be 12,000 homes available. And even new homes under construction, it was a much bigger number. This number is incredible to me. It was already low. But the average number of days on market for April was 15 days.

Ian Arnold 4:10

Yeah. And when you look at that 15 days, we dropped in one month, it dropped four days. That is crazy. So like we said even last month if you’re not ready if you’re not jumping in soon as that house is listed on the market and jumping in there to see that day that not the next day, you’re probably going to be out of luck.

Rick Ripma 4:28

Yeah, all these numbers, every single one of these numbers is saying that if you’re going to go looking at homes, you have to be ready to make an offer. And it’s exactly what we’re seeing when we talk to the real estate agents, you know, in the pre-approvals that we’re doing in the purchase agreements that we’re getting, they say that if you see a home you want, you better send an offer in right away. Do not hesitate. And there’s it’s really tough on people who are just starting because that’s a hard thing to do when you’re spending that much money to just go and say, okay, I like this house, I want to buy this house. Because you don’t want buyer’s remorse. You don’t want all those other issues. And it’s a tough situation for people. But it is the reality. If you don’t, you’re not going to get the house.

Ian Arnold 5:15

No, I mean, to say, oh, let’s think about it tonight. Yeah, that doesn’t work that might work in the car business, and we’re gonna go buy a car. But right now, in the housing market, that is not working,

Rick Ripma 5:27

I don’t even think it’s working on cars. My son wanted to buy a car. And he’s put it on hold because he has in dire need of buying another car. But he went and he found a car and drove it. He wanted to think about it. And then he decided, Okay, I’m gonna go buy it, it was sold. I mean, there’s just no inventory, most of what you’re buying is on its way in its are being built or scheduled to be built.

Ian Arnold 5:55

Especially when it comes to new cars, new cars, with that chip shortage, and you can’t find anything.

Rick Ripma 6:00

Right, it’s devastating. The month’s inventory is .7, which means that for what we have, it only takes .7 of a month to sell every house that we have on the market. That’s crazy.

Ian Arnold 6:16

Looking at it that way. So, .7 for the whole entire market and houses are selling in 15 days. So if you look at it, all the houses on the market, and what that’s roughly new listings is 3800. So almost half, a little over half of those are gonna be gone in 15 days. That’s crazy.

Rick Ripma 6:37

It is crazy. Mortgages have gone up, rates have gone up a little bit, the average back in April was, you know, somewhere in the low to mid fives every day, it’s so it’s such a hard thing to know what rates are going to be the best thing with rates is to, you know, go to HardWorkingMortgageGuy.com HardWorkingMortgageGuy.com. And go there. If you want to know what rates are you got all our contact information, get a hold of us Ian and I will you know if we don’t answer we’ll try. If you send us an email, we’ll get right back to you. We’ll do the best we can. And we’ll go through get your information. And that’s really the only way to know what rates are. But until you lock the rate, you just don’t know. And we’ll probably give a little bit more update on rates here in a little bit. But what about the actives and solds?

Ian Arnold 7:26

So like you said when we’re looking at the active to sold. And so the solds, I will say this right now are far outweighing the active right now. So I mean, again, like we’ve been saying the sales, but here’s where the main range is where it is, is most, the average is between $200,000 to $299,000. That’s just where Indiana usually stays. And that’s the middle ground. Most of the houses are selling are anywhere between $100.000 to about $400,000. And then you start getting to the outliers. I mean, so for instance, Tony Stewart’s house is like 47 million or something, a bunch of that one’s probably still on the market. So if you have that, go ahead and find it. But it’s I mean, but the mass majority of houses in Indiana right now are selling between that $200,000 to $300,000. Mark.

Rick Ripma 8:22

That sounds like about $400,000, that’s kind of our sweet spot. Yeah. But you know, I’m noticing higher and higher-priced homes, and you can tell that our prices have gone up, because conventionally, FHA, all raise their lending limits. Our conventional lending limit is almost $647,200. It is, it’s way up there. And that means you can buy so much more houses conventionally, FHA is way up. So these numbers are much higher than they have in the past because prices have gone up. The other piece of this is that when you’re looking at all this, you’re realizing that you really need to you’re if you’re going to go look at homes, you’re going to need to be prepared. So what is the first thing you need to do to get prepared? “You need a pre-approval letter?” Absolutely. That is the very first thing every agent I talked to every realtor I talked to tells me the same thing. That’s what they want, they need a pre-approval letter. So if you’re thinking about going to look at homes, even before you go look at them, you need to get with us HardWorkingMortgageGuys.com That’s HardWorkingMortgageGuys.com get our information from there, give us a call, send us an email, send us a message. And we will get back to you. We’ll run through the information. We have to get a lot of information to be able to provide a pre-approval letter. But even before we do the pre-approval letter, we want to talk about it and get an idea of what you’re after and what you’re trying to accomplish so that we can help you get there. For some people there’s work that needs to be done to get to that point sometimes There’s not enough money saved, or how can they come up with the money, or there are credit issues, some people, there’s nothing that’s there ready to go, everything looks great. So, it just really is worth going to HardWorkingMortgageGuys.com and contacting us. The other piece of this, I thought was interesting. You know, we talked about the four days, we dropped four days from March two to April on your days on the market. But the new listings, the new listings went up some. In March, we had 3618 new listings. And in April, we had 3870 new listings, that’s 7%. And the pending sales went up also, but they only went up 4.6%. So we actually should have a few more houses on the market today.

When you say few you actually do mean a few.

Because of the time of the year all, that’s expected and there are more buyers on the market. So it’s going to be interesting to see how this plays out. For our May numbers that we get in June, we’ll have to be interesting to go over those numbers. And those were kind of the biggest issue or the biggest thing I wanted to go over on the market you know before we get into the how the economy what’s going on in the economy, what’s going on what’s affecting mortgages and our in our markets. We’re gonna go to break and after the break, we’ll talk about today’s economy.

NMLS number 33041 Rick Ripma’s NMLS number 664589 equal housing opportunity some restrictions apply?

Are you someone who has not yet refinanced? Well, interest rates are at an all-time low. Good news. It’s not too late. Call me Hi, this is Rick Ripma your hard working mortgage guy at Advisors Mortgage Group, you’ve heard me on freedom 95 for nearly a decade now, I believe in freedom and I believe in you having the lowest mortgage payment possible with fast turnaround times. This could mean extra savings in your pocket soon, call me at 317215 7600 and we can get you locked in while the rates are still low 317-215-7600 or visit hardworking mortgage guy.com.

Announcer 13:15

Brought to you by advisors Mortgage Group where we believe the more you know about financing a home the less stressful buying and refinancing will be

Rick Ripma 13:22

Welcome back and thank you for joining us. This is Indy’s Real Estate Gurus. And I’m Rick Ripma, your Hard Working Mortgage Guy and I’m Ian Arnold with Advisors Mortgage Group. And we really appreciate you being here today and listening. If you have any questions, you want to talk to us, you have anything you’d like to discuss, or you just want us to discuss something on the radio, please go to HardWorkingMortgageGuys.com That’s HardWorkingMortgageGuys.com. And let us know and we will do our best to answer your questions and hopefully put it on air. And now it’s time for our question of the week.

Ian Arnold 13:55

The question of the week is sponsored by debt crusher mortgage, relieving financial stress that comes with life. If you have a mortgage or own your own house, contact the experts at Debt Crusher mortgage.com To have them put together a free savings report for you. So the last question was I can fly but I have no wings. I can cry, but I have no eyes. Wherever I go, darkness follows what am I? I asked my kid this and he actually got it right took him a couple of guesses. It’s a cloud.

Rick Ripma 14:26

Well, he’s smarter than I am. I couldn’t figure it out.

Ian Arnold 14:30

So for all you numbers, people out there here’s one for you. I add 6 to 11 and I get five. Why is this correct? Again, if you want to go to HardWorkingMortgageGuys.com and email us we can go ahead and tell you if you’re right if you don’t want to wait till next week.

Rick Ripma 14:51

Yeah, it’s these are great questions. You put them together and they’re great questions.

Ian Arnold 14:56

All right. So let’s go ahead and talk about what’s the economy doing how does that affect normal people and also the mortgages and stuff like that? I mean, you and I talk about it. So we’ll start with the first one that I Oh, I see you, you’ve seen the whole transition because you’ve been in the business for a long time. But I saw the late last part. So but the main thing we see, we don’t see people anymore. Most people do everything online. So whether it’s sending us document signing disclosures, people don’t realize you can be at your work, we can send it to you can do everything and send it right back. You don’t have to stop in the office, which is weird.

Rick Ripma 15:36

It is weird. And I’ll tell you, for me, it’s not just online, we’re on the phone, we do a lot of conversations with people on the phone, we do a lot of conversations via email, we do conversations via text, we do conversations like I do a lot of videos that I put out, specifically to people in my emails, so that I just find it easier to communicate sometimes by talking rather than writing it down. But it is it’s a totally different world back in, you know, back when I got started. Everybody came into the office. And it was much harder for them. Because you had to get the time, figure out the time, schedule everything take time off work. And yes, now they don’t have to do any of that they can do it at night, they can send it to us. You know, we had to do a zoom call, we can do zoom calls. I mean, there are so many options today to talk to people. It is I think very helpful. And makes it a lot easier on people to do that piece, the mortgage piece, and the paperwork part has changed a little bit because of some of the changes that they’ve made and the conventionally with what they require. But getting those documents and things has also become a lot easier because you don’t have to drop by you can put everything in we have secure areas to upload documents. So it’s really, really helpful.

Ian Arnold 17:06

So that’s where it’s affected us now, when is affected customers and stuff is we see a lot of people that can work from home, we see a lot of people that even have a hybrid system. So for instance, my wife got to let her bought her company got bought out. So she started looking for jobs. It was funny, she said when she was looking at jobs, she didn’t mind working in the office, she didn’t mind. But when somebody said that they were at home, most people all wanted to everybody applied there. But people who said that had worked in the office companies said they had to be there. She said they were it was probably like 10% of those numbers. Wow. And I thought I mean, at first you’re thinking well, where we were used to working at home. But now people don’t want to. So what they’ve done is they wanted to work from home and then transition their home into parts of their home into an office. So I know you’ve seen quite a few of your customers try to remodel and stuff like that. Which, hey, if it works for you, great. I’m not a person that loves working at home, I like coming to the office. I like to chit-chat and the whole camaraderie of seeing people but that’s just me.

Rick Ripma 18:18

Yeah, I agree. I prefer to work from an office. I don’t know in this whole time if I’ve spent more than eight hours working at home, other than, you know, on the weekend or evenings when I have things I got to get done, which I always did. But I don’t you know, I even when I put in my schedule, I’m gonna stay home I can it’s just easier to come in for me. But I also think it does matter what your house is like. In other words, if I had a designated area that it was made into an office that I could shut the door and really preferred I have something outside you know, like a little shed type thing that was all fixed up and you had air and all that stuff. I could do it because I just need to getaway. I agree with you though. We’re social people. So we want the camaraderie we like to be around people. You don’t want to go back to one of the other things you had we are talking about you know how people are online and over the phone. What about you know, the most people are a lot of people start their shopping online. However, the problem with shopping online is you don’t have all the information. When you shop online. There are a lot of nuances to a mortgage. You really need to talk to somebody.

Ian Arnold 19:34

Well, you have to look at it online is when you go online, all they’re trying to do is give you all the good stuff, and when I don’t mean it as like good-bad, but they are just trying to sell themselves. When you actually talk to somebody they can break down because what you have and I’ve always discussed everybody’s situation is different. Everybody has their own story. So with your own story comes your own Credit, things you have not everybody has a 750 credit score. Why do you have a 740? Well, guess what if I got you a 760, you get a better rate. Okay? That’s awesome. I mean, or what happens if I just tell you, Oh, if you did 20%, down, there’s this. That’s what you select on your calendar. But if I told you to 25%, down, your rate changes. Whoa, whoa, hold on to that. So it’s to have all the information, not just a little bit of the information,

Rick Ripma 20:28

right? Do you want the knowledge? Yes. And it goes even farther than that, which is a number that most people don’t even think about the debt-to-income ratio, which can change what your rate is. Yes, right. Easily. Everybody knows their credit score can change the rate. Most people know, maybe, maybe not. They know that maybe how much they put down can change the rate, you know, what they don’t know is if you put 19% down, you get a little bit better than if you put 21% down or 20% down. And then you get a better rate when you get to 25% down or at least better pricing, you know, so it does matter. But let’s get back to you know, working at home, you know, what do you think you think gas prices and all that have anything to do with what people want to stay home?

Ian Arnold 21:09

I think at this point in time, we’re What is it almost $5 I think that’s going to basically have a huge impact, where people are not going to want to drive as much. I mean, unless your company’s paying for your gas. I mean, if you live two minutes away from work, okay, you’re an outlier. But most people are going to live like 30 to 40 minutes away and drive constantly. And what most people don’t realize is when this happened back in Oh, eight, guess what happened? All SUVs tanked and sales price, right, everybody went to cars. I haven’t seen that this year, which is kind of shocking to me. So either we’re just getting used to it. And just but I believe that if somebody walked into an office like, Hey, can I work from home at least a couple days a week, so I don’t have to drive as much because gas prices are if you can easily do it, bosses are going to say yes. And one because they don’t want to lose somebody. Because it’s hard to hire people. And if they’re working at home the same as they work here, then what’s the big difference?

Rick Ripma 22:11

I think that a big piece of that is there was a lot of fear that people would work at home and they wouldn’t actually work. And now that we did that, for so long, so many people work from home. Every place Everybody I talked to the numbers showed that the people who worked from home actually work just as much if not more, they got more done. Whether they worked as much, I don’t know. But that’s, to me, that’s never been the important thing is getting everything done, they get everything done, and everything gets done correctly and all that I think that’s a big benefit. Because we have several people who work from home and it just works for them. And I know that it makes them happy, especially with the gas prices the way they are. And, and then a lot of people because of all this not just the gas prices, they did this before, but because of the pandemic and being stuck at home. They bought bigger houses where they can work out of their house.

Ian Arnold 23:05

Correct, I mean, imagine if you’re not spending that money on gas. And then so you’re saving, let’s say you spend $30 a week on gas. And I’m saying you’re driving a small little car, you’re not driving there much. So you multiply at times four weeks, a year, or four weeks a month. That’s $120. All right. Well, there’s some savings. Measure what your house you were there. Now then imagine if you’re working from home all the time, your wife’s working from home all the time, how many cars do you need? One may be, because you guys are going very far. I mean, not saying everybody’s getting rid of their second car. But that saves quite a bit of payment in there too. So yeah, we we’ve seen it. I mean, even a couple of my friends, worked. They both all work from home, and they don’t they they went ahead and upgraded. So they got that extra bedroom, you know, they took that extra bedroom into made into an office. So they set up the triple screens that they needed and all that stuff and they’re happy go lucky there. And I’m like that works for you. Great. But as you were saying one reason that they might be a little bit more productive is when you get to work. What do we all like to do as coworkers if you like your coworkers if you’re talking to them when you’re at home, who you got to talk to your dog?

Rick Ripma 24:20

And you know, that’s a good that is a really good thing to talk about or to the point that you’re making, because the one thing that I have heard is companies are worried about their culture.

Ian Arnold 24:35

Yes, I can definitely see that.

Rick Ripma 24:36

Because the cultures are changing because employees are not around each other. And I also think that another issue they’re having based on what the people I’ve talked to is you don’t feel a connection. So you’ll change jobs. Because there’s I don’t have a connection to this company. I don’t even go there. I don’t know anybody. I can’t imagine how hard it was for people to start jobs and never meet anybody, only on Zoom, that, to me, would be very difficult.

Ian Arnold 25:10

Another thing is what’s with the increase in inflation? Think about how that’s affecting people. I mean, that’s also I mean, even every price of food, you go buy or clothes, everything has gone up. With that, especially in the elderly community, we’ve seen a lot more reverse mortgages. Because what they were anticipating on making in with social and pensions, they’re not, they’re not, that’s not going as far-right, so they’re doing a reverse mortgage, to help offset some of this inflation costs,

Rick Ripma 25:43

Right. And because of the increase in the values of our properties, there’s a lot more available equity to use for the reverse mortgage, because the reverse, you don’t, you aren’t going to go to 100%, you know, you’re not going to go to 80%, you’re going to be capped based on your age and a variety of things. They cap them because they continue the mortgage, if you don’t make payments, which you don’t have to the mortgage continues to increase. But it is a phenomenal mortgage for somebody, you have to be 62 or older, in the proper situation where they need either additional cash or you don’t want a mortgage payment, and you aren’t prepared to pay off your home, it is a great option. So it is a place to really help cut the effects of inflation on somebody who’s really on a fixed income, correct.

Ian Arnold 26:34

I mean, and then the last thing really is, we’d like to is low inventory. So with the low, what’s caused the low inventory, we’re the first it was low, right? So when the government lowered the funding rates back and forth to the banks, well, that lowered our rates. So that what that meant is you were getting houses for like two and two and a half percent, far lower than what you were ever anticipating. So houses just started going way off the market. And then once that happened, now the people who want it needed to buy a house. Well, now they’re short now everything is going fast. So that’s a huge reason why the low inventory has caused this.

Rick Ripma 27:16

Yeah, and the low inventory has been caused by a variety of things. So it’s, you know, it’s, we have to look at that, and I know one of the charts that we were gonna go over, we’re running out of time, we probably won’t be able to go go to it too much as the demographics chart. We’re back in 1989. Well, actually, from 1981 to 1989, we saw an increase in birth. And because of that, 33 years later, if I could talk, it’d be great. 33 years later. That’s the average first-time home buyer 33 years old. So we’re seeing that increase in buyers. We also have seen, you know, it’s going to continue, it goes down a little bit, but it continues for another 15 years. So we’re going to see this for quite some time. Well, with that we’re running out of time. So we wanted to let you know, that we do appreciate your joining us today. If you have any questions you want, to talk about mortgages, go to HardWorkingMortgageGuys.com. That’s HardWorkingMortgageGuys.com. You can contact either Ian or I from there. And if you have any needs for mortgages, or have any questions or have any questions that you’d like us to talk about on-air, we would certainly appreciate it. Thanks again and have a great day.

Unknown Speaker 28:29

Well first off, thank you for joining us, Danielle. I appreciate it. And I just was curious, how did you come to find out about Rick Ripma and advisors mortgage,

Unknown Speaker 28:37

I was looking for a mortgage for myself for a brand-new home that I was building. And I wasn’t sure the direction to go, I didn’t have anybody in mind. So I kind of just spoke to whoever I could speak to. I got their number and everything seemed to be exactly what I was looking for. So I went with them. The thing I liked the most about Rick and his Advisors Mortgage is that I could go and upload things online. And I didn’t have to always be on the phone with them or send them documents or try to look for certain things that I needed to get the process going. Which was really great for me. I had a processor named Mark Coleman, who really helped me out in making sure I had everything I needed because I didn’t know the first thing about having a mortgage. So it was awesome to have so much help. I think probably what I’ve benefited from the most is really just the understanding that sometimes I would get busy and maybe I forgot to upload a document or I forgot to do a certain part of the process in a timely manner and they would get right back with me and it wasn’t like a hey, we really need this right now. It was always Hey, just wanted to make sure you still remember that we need this.

Unknown Speaker 29:49

Well, you don’t get that too much in this day and age. It seems like most people are either, you know very demanding of something they need from you and they need it right now. And I agree I’ve seen that in Rick’s attitude toward us. Over the last 10 years, he’s very patient but also helps to get the right things he needs. So, exactly in conclusion is Rick Ripma and Advisors Mortgage somebody that you would use in the future and or tell your friends and family about?

Unknown Speaker 30:15

Absolutely. And I just want to thank them for all the effort they put in to help me find my dream home.

Announcer 30:20

Branch NMLS number 33041 Recruitment NMLS number 664589 equal housing opportunity some restrictions apply.

Rick Ripma 30:26

I’m Rick Ripma You can go to HardWorkingMortgageGuys.com

That's hardworkingmortgageguy.com. Now, here's the hard working mortgage guy, Rick Ripma. Rick Ripma 0:30 Welcome, this is Rick Ripma, your hard working mortgage guy with Advisors Mortgage Group. If you have any questions or would like to talk to me about a mortgage, probably the easiest way to get a hold of me is to go online at hardworkingmortgageguy.com. That's hardworkingmortgageguy.com. Or you can call at 317-215-7600. That's 317-215-7600. There are so many interesting things going on in the market today, we've had quite a few shows about what's going on. It's amazing how much it changes periodically, even week to week, day to day sometimes. One of the things I want to go back and look at is the January 2022. MIBOR puts out what they call their snapshot, and it's a snapshot of our market, I think this is important to look at. Now, the first thing they have is the median sales price. You'll hear the news media talk about this a lot. And the median sales price in the 16 counties was $246,000. That's actually down 3.5%. So, does that mean we lost three and a half percent of in our appreciation? Or when it goes up? Does it mean that it appreciated at that amount? That’s what the news media would like you to think and that's how they report it. But what it actually means, since it's a median price, is that lower priced homes happen to have sold than the higher priced homes. It's not a reflection of our appreciation, or what our houses have done in value, just understand that, but the median price was $246,000. I think it's important. It's nice to know, but it's not telling us anything about appreciation. In fact, our appreciation, at least in 2021, was 19%. So, I don't know, I haven't seen the number for February 2022 yet, but close sales in January were 2161 homes. Now, that was down 35.8%. That's a huge drop in the amount of home sales. Obviously, the pandemic spike kept people at home, I was one of them. While you have it, you don't go out. And I think that might have had a lot to do with it. In 2021, we set a record on the number of sales, but we had a lower close sales volume in January of 2022. That's actually when you close them in January, you actually sold most of those homes in December, and maybe even mid, you know, from mid-November through December, most homes close in 30 days, some are 45. Some are longer than that. So, it's an i gives you an idea. It's not an exact the real estate that we close 2161 year to date sales and year to date residential listing. So, what were the listings, and this is the thing that is kind of amazing is we only had 2495 listings. We came very close to selling everything, the number of listings on the market. That why our turnover is so, so great. What that means is what the turnover, what's the month's inventory of homes, and the inventory of homes is point eight months, less than less than 30 days you're going to, on the average, sell your houses and that is a huge, huge number. It's very important to know that so if you're listing a home, your house is probably going to sell very quickly. On average, it takes .8th of a month, normally you seeing three and four months, five months, six months, there are times we've seen back in 2007 and 2008, we saw we saw numbers at six , seven, eight months, depending on the price range of the home. And today we're at .8. Part of why we do not have a bubble. If you hear the news media talking about there's a housing bubble. There is not a housing bubble. You don't have a housing bubble when you're selling houses. Your average listing last .8 less than a month. That is ridiculous. The average days on market is 29 days. That's the average days on market, and that is somewhat inflated because of listings from builders who will list their specs from the ground up. And since there's not many houses on the market, that has more effect on our average days on market than what you would normally expect, and it also is affected by how some of the houses are being sold today, because it is so hard to get a home. They're putting it on the market, they're giving it X amount of days for people to see, and then they demand, you have to get your offer in at a certain time. So that could also be pushing those numbers. Our average time on markets 29 days, and our average inventory, the amount of inventory we have, is eight tenths of a month. That why, if you're looking to buy a home, it can be a little tough right now. The mortgages, you know, back in January they'd gone up. They've gone up even more. The market, as we've talked many times, the mortgage-backed security bond market has been getting hammered by inflation, which is a lot of what we're going to talk about today. I want to talk about inflation and what it actually means and what things have done. I think that's really important to talk about. And that's part of what is the major factor in what pushes interest rates up. So that gives you a real good idea of what's going on in our real estate market, or did go on in our real estate market in January. As soon as I get the February update, I'll update the February. You know, so we'll talk about that. Another thing, and this is part of what our problem with inventory is. I've talked about the birth rates and that the average first time homebuyer is 33 years old, and we had a big influx of births, about 36 years ago, and it ran to about 30 years ago that it dipped a little bit, then it goes back up. So we have a huge group of people coming into our market at the 33 years. You know, in that time frame, again, that's just the average, some are gonna be younger, some are gonna be older, but that's the average first time homebuyer. So, one of the things that has really affected our housing is in 2007, we were at the top of the market and building homes at a very high rate. We were number of sales was about 2.2 million homes were built in the United States. From 1999 to 2008 we built 16.7 million homes in those 10 years and from 2009 to 2018 we built 9.65 million homes. Today, we're looking at building about 2.3 million homes in the US. So, with that number, that's where we've dropped, so we've dropped all that. But in that timeframe, we've gone, from 300 million people in the US to 330 million people. We've increased the amount of people, we’ve increased the number of homebuyers, with the birth rates and all of that yet, we haven't been building the home so we there just aren’t the homes on the market, and this is just the new construction. This doesn't even give us the idea of you know, where did these? We didn't get the houses built, but what about the existing homes that were destroyed, were knocked down. We really have a lack of homes to even have on the market. It's a big problem. And it's part of what is creating the issue right now. Which has its positives and its negatives. The positives are it's really increasing the home values for people who own homes. The negative is that it’s taking those home prices and making it somewhat difficult to purchase for first time homebuyers. Because of the interest rates going up, and the prices of homes going up, we have started to see a few people dropping out of the market, but nowhere near the amount that's going to really slow down our market. Hopefully as spring comes on, the anticipation is we're going to see an increase in listings, and hopefully that'll help ease our market a little bit and help us get to that point where it's not so difficult for a buyer to find a house, in that you have to compete with 1,213 other offers. Announcer 11:20 Licensed by the Indiana Department of Financial Institutions NMLS number 33041 Rick Ripma’s NMLS number 664589 equal housing opportunity programs very. Rick Ripma 11:31 Welcome back. And thank you so much for joining me, I truly appreciate it. If you need to get a hold of me, have any more mortgage questions, you need a mortgage, you want to talk about refinance, you want to talk about a purchase, maybe remodeling or rehabbing a home, or you want to buy an investment property, please give me a call or contact me you can you can call me at 317-215-7600 That's 317-215-7600. Or you can go online at hard workingmortgageguy.com. That's hard workingmortgageguy.com. You can listen to the show if you would like to, under my podcast or radio show podcast tab. Or you know, you can get all my contact information. And you can contact me from there if you prefer that. I want to talk about the inflation. Specifically, I want to talk about inflation because it's really one of those things that is on everybody's mind. It is definitely increasing mortgage rates. And we had a record setting inflation number for March. I mean January, I can't even get my month straight. For January, we had 7.5% inflation, which is the highest number we've had in 40 years. The highest number since the early 80s. And I don't know, maybe a lot of you have, but I can remember back in the 70s when things went crazy. We had crazy inflation. I think it was 18%. I know in mortgage rates were in the 17, 18, 19. I've talked to people who paid 20% on their mortgage. And that that was a very, very difficult time. Gas went way up, there were lines at gas stations, that was rationed. We couldn't just go to the gas station anytime we wanted, like we can today. And we had to, you know, I think there were certain days in certain areas, even in Indiana, which is where I was at the time. But it was it was early in the in the 70s. And I wasn't quite old enough to remember it exactly. But I can tell you it was a it was a major change in what we were used to, and a lot different than we've all been used to. But we're starting to see that inflation come up. And the Feds now are talking about which, if you've listened to the show, you've heard me talk before. And you've heard me talk with John Iacona. You know, they've started their quantitative easing, and that's going to end in the middle of March. And then there we expect them to raise the federal funds rate, there's some expectation that they'll raise it, they could raise it as much as a total of 1% by July. If they do that, there’s only three meetings between then, we either have to have at least 50%- or 50-point increase, half a point increase and the federal fund rate on one of those meetings or they'll do an increase in the middle of their meetings. Normally they just increase it at their meeting. But most people, and the media, is going to tell you is they raised interest rates and how terrible that's going to be. And the reality is that's not what they did, they raise the federal fund rate. The federal fund rate is the rate that member banks pay to borrow money overnight. That's very short term. and it directly affects prime which is three percent over the federal fund. That prime is at 3.25. That's what it affects. That is the short term of the interest rate curve. And if you take the long term, the 30 year, fix the 15 year, fix the 20 year, fix the long term interest rates, they are not as affected by that short term. In fact, if you look at history, you look back in the late 70s, early 80s, late 90s, early 2000s and in 2015 -2016 you'll notice every time that the feds raise the federal fund rate, mortgage rates came down. History tells us that the mortgage rates come down when the Federal Reserve raises the Federal Fund rate because that tends to lower inflation. And that's if it does start to decrease the inflation, then interest rates should first level out, then they should come down. I am not saying that I think interest rates are necessarily going to fall in the next three or four months. But I think there's a possibility it could be late this year, or it could go into next year. That's a hard thing to tell. But it is something that we think is going to be important. I know most people have felt the inflation. You go to the gas pump, and you can feel the inflation, gas prices are up 51%. If you were paying $1 for gas, we're now paying $1.50. If you were paying $2 for gas, we're now paying $3 for gas. You can see where that's happened. We were what, 2 to 2 and a quarter, now we're in the mid threes. For gasoline, of course every area is a little different. Gas has really gone up. But one of the things I want to talk about, because I want everybody to understand the real effects of inflation because it is very, very bad for our economy. It's very bad for the for the US. And it's really bad for the world. If it's too high, you want some inflation, but you don't want this incredible inflation. The, and this is a little old, but meat had increased. And I think this was three months ago, it increased by 24%. And I know it's higher than that today. But we're just going to use that 24%. Let's say you spent $4.20 on a hamburger. And then it increased by 24%. That 24% means you went from paying $4.20 to $5.81. That has a huge effect on budgets when you're spending that extra money. Now you obviously can cut that out. But if you don't cut it out, that's what you're paying extra. It cuts into people's budget, it cuts into what they can afford in a car, it cuts into what they can afford in a house. It just really makes it harder. Now let's talk about cars. Let's talk use cars. And again, this is a little old information but used cars have gone up 26%. So now we're talking about a much bigger number. If you were looking a year ago at a $10,000 car, it's now $12,600. Personally, I spent five years in the car business. I love cars. I love the old cars. I just love cars. But what that does that mean? I've never seen that before. I have never seen used cars going up in value unless it's an old car. But this is new cars used cars, they can be more expensive than a new car. I had a friend who went to buy his son a car. And it was less expensive to buy a new car. Exactly like the use car he was looking at. And it was less expensive to buy the new car. Now that's crazy. Now the other the problem is you can't get new cars. They're very difficult to get. Drive down the road and you look at these dealerships, and there's no cars in the lot. I have never, ever seen that in my life. That is incredible, but there are no cars. If you're looking to buy a car, you may have to pay more and you buy a used one. If you can find a used one. There's just not that much out there. That's why they’ve increased; its supply and demand. I don't know if any of you can believe it. But I am shocked at the at the at the additional cost of the vehicles. I have to travel. And I have to rent a car. Not for very long, just for a couple days. And I was shocked at what it cost me to rent a car. I don't rent many cars; I will tell you that. But I remember not too long ago, I rented a car. I rented a van for an entire week. And it was for $450, $500. I'm renting a small vehicle for two days. And it's almost $250. It just shocked me. They don’t have cars either. There are no rental cars. In fact, I heard somewhere where there's an increase in people stealing the cars they rent, they just are trying to keep them. They can't get cars, which I understand. But that is just, it's just unbelievable. This is causing hotels and motels to increase by 26%. Now these are things that, if you travel, they're going to affect you. But how about laundry equipment? If you had to buy laundry equipment, that's increased by 15%. And that's if you can get it. Natural gas, if you're heating your home with natural gas, that's increased by 28%. Remember, in total, it's increased, the inflation rate is 7.5%. But some of these things have increased significantly higher than that. Bacon is increased by 20%. Furniture and bedding have increased by 11%. But let's talk about furniture and bedding. We, my wife and I, we actually went into a store. They had them sitting in the show room. We wanted those. And they of course didn't have them in stock. It was just two end tables, no big deal. We wanted the tables. So we bought the end tables. And they said Well, they'll probably be in in 8 to 12 weeks, but calling me isn't gonna hurry it up. We waited 18 weeks before I contacted him. And after a big run around and everything else 18 weeks, I was told 10 to 12 weeks, they finally came in about 20 weeks. And then when I went to pick them up, he sold one of them to somebody else. And they had to give me the one off the showroom floor, which I never understood. They could have given me that one the first place but that's not my point. My point is: not only have products gone up, it's also very difficult to get the furniture. Wood’s gone way up, houses have gone way up, all of that, even eggs have increased by 20%. I'm sorry, by 12%. Eggs increase, when this was printed, by 12%; that is huge. All of this information Is by visual capitalist, which is a great website if you want to get detailed information and graphed out information on what's going on. You know, it's funny, I'm looking at the graph for inflation. And you can tell it's starting to increase rapidly. Rents are way up; it was pretty steady up and down through 2012 to 2021. And now it's gone crazy. In 2022 It's just shot up. And it's really is making it much more difficult for renter. The Year over Year change energy commodities this went up 49.5%. We’re talking about our energy that we all have to use has gone up significantly. Inflation is just becoming a really difficult thing to handle. We already talked about gasoline went up, you know, natural gas went up, used vehicles, meat…… all this has just gone up. So is this going to influence our spending according, to a recent survey. 88% of Americans say they are concerned about the US inflation. Here are the top five areas where consumers plan to cut back on their spending. Number one, we're going to quit going out to restaurants and take-out meals. 48% of the respondents to the survey said they were going to cut back on that area, which is already an area that’s hurting because they don't have the employees. And many times, you go to a restaurant you can't get in, yet half the tables are empty because they don't have the waitstaff, they don't have the kitchen staff, they, they just don't have the people 30% of the people say they're going to keep their current technology, their phones, their tablets, and instead of upgrading. So rather than going and spending the money to upgrade, and add that there, 30% of the respondents said, we're not we're not going to upgrade. 29% they're gonna budget food and cut back on grocery buying. So we're going to cut back, you know, probably cut back on what we buy, cut back on the products, not just the products, but maybe we buy the store brand, rather than the big, big major brand, just to save a little bit of money. That's going to be an interesting thing to see. But of course, we have to do something, because our incomes are not keeping up with that, we’re not keeping up. Purchase less clothes and accessories. 29% percent of the respondents said they're going to purchase less clothes and accessories, and 23% are going to put off home repairs/ renovation or home upgrades. 23%, which kind of surprises me because the home upgrades and renovations have increased tremendously. But I will tell you, we're looking at doing a little bit to our house, and we're talking to a contractor the other day, and they are slammed, they can't get product, we were talking to him a week ago. And he said the soonest they their people would be available would-be June to July before they could get anybody who could do any work. And they said even then that you still have to get the product and, and they can't price anything, they can price the labor, but they can't price the material because they don't know what the material is going to cost when they can get to you. It's a very, very difficult thing to get through and to go through, because you really don't know what you're going to spend. Because of what the feds are doing, because we believe it will lower inflation, we think that inflation is going to slow down. And maybe it’ll start to level off and then and then actually come down. Part of that is because these inflation numbers are year over year inflation numbers. And when you're looking at year over year inflation, we were looking at topping out. We believe we will top out with a March report because that was the last low reading of inflation, the next level for the APR report that's dropping off a point 6%. If the inflation rate comes in under point six, the year over year number will decrease. We believe that inflation is going to come down, especially if the feds do what they're going to do, and actually start to start to not that they are tapering, but start to raise the federal funds rate. The other piece that we don't know as well, not only with the tapering, but if they start selling off what they've bought, in other words, the first thing they do is they sell off, they stop investing in the new money. They stopped buying new bonds, and using new money to buy those new bonds. The second thing they tend to do is when they get a loan paid off, right now they get loans paid off, they go and they take that money and they buy more bonds. If they stopped buying bonds, that could be bad for interest rates. It's going to be a play on how this actually works out. It's going to be interesting to see how it plays out and see how it actually affects us. We'll just have to see how that plays out Announcer 30:57 Rick Ripma, heard every weekend at 3:30pm on Freedom 95 branch NMLS number 33041 Ripms’s NMLS number 664589 equal housing opportunity some restrictions apply

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