Is it Over For First-Time Homeowners?! The HOUSING CRISIS Just Flipped (How to Buy a Home EP 100)

Welcome in, gang. 100 episodes. All right. Time to party. Celebrate. Hell no. That's not what you come here for. Let's talk about how to buy a home in 2022 and 2023. And we put the podcast out every week. So if you're looking for current updates on what's going on in the housing market, click subscribe. Smash that bell. Get those notifications every week from the how to Buy a Home podcast. What's happening? My how to buy a homies. Can you believe it? 100 episodes. This is. This is insane. So welcome to, I guess, my centennial episode. I'm your host 100 times over, David Sidoni. And it's time to get you educated, empowered, and fearless in your home buying plans and process. Let's crush that confusion. There's so much that we've gone over and so of course I'm going to be a little reminiscent in this episode. But most of all, I'm also going to be a lot thankful. A lot thankful. A hundred episodes. So I speak good now. I'm going to be very, very thankful to all of you out there for all the support and most of all, for letting me know this is really helping you. I can't do this without you guys and understanding that we're actually making a difference out there. But before I get into all the reminiscent mushy stuff, of course I'm going to give you what you came for information. After all, it's called how to buy a home, right? So let's dive right into A Mid Spring 2022 Big Housing Nugget or information. You the market is hitting a tipping point. Now, I'm not saying it's stopping. I'm not saying it's crazy. I'm not saying it's completely going the other way. I'm just saying it's slowing down. Now, is it going to tip over and slow into an actual decrease in prices this summer? Next summer, in a couple of years? Well, that is tough to say because there are so many opposite economic factors working against each other right now. It's really an insane time if you study the economy. Here's a thought from our old pal Uncle Larry, Lawrence Yoon, the chief economist from the national association of Realtors. What's up, Uncle Larry? What's he got to say? He says, quote, the worst of the housing shortages ending, but market equilibrium between supply and demand is still some ways off. Builders are responding to higher mortgage rates and are chasing rising rents with fewer home buyers and more renters being forced to renew their leases. Wah. Wah wah. Sound like anybody out there? Don't worry, gang, we're going to work a plan. Uncle Larry continues. Even before the rise in interest rates, apartment vacancy rates were at historic lows. And you know what that means. Means rents were accelerating. Some degree of return to the office is also fueling back to the city living where high rises are concentrated. The homes for sale inventory in March was essentially still at an all time low with. Get ready for this, gang. That was me, not Uncle Larry. He doesn't say that. He said there are less than a million homes on the market. Before the pandemic, we had 1.5 million homes on the market. So let's see, do the math on that. What does that mean? We're down a third. Even as home sales look to trend back to pre pandemic levels after the big surge of the past two years, inventory will not return to pre pandemic conditions. That means home prices will continue to get pushed up even higher in the upcoming months, albeit modestly, given the supply and demand imbalance, unquote. First of all, kudos to Uncle Larry for using the word albeit so well in that sentence. But the albeit that he was talking about is albeit modestly. So, yes, we're at a tipping point, but that tipping point is just slowing down, not depreciating. So we're going to talk about the projections, the interest rate spike that has created this minor slowdown right now. But remember, this is slowing down from a scorching hot bananas market to a pretty cuckoo market. It's less insane, which means that it's actually a little less competition, but it's still incredibly competitive. Prices are still going up, they're just not going up, oh, I don't know, a hundred thousand dollars from the house that was sold last week down the street. I want to help you interpret the news that's going on because anytime there's any change in the housing market, suddenly we see headlines like this. They're going to read, housing finally stops insanity. Unaffordable housing finally hits reality and home prices dropping. If you go back and you look at the history Since World War I, if you average the ups and downs, the average house goes up in appreciation about four, four and a half percent a year over a seven to ten year period, no matter what that is in history. So since we went up 19.5% just last year, and then we kept going up 3, 4, 5% so far in 2022, yeah, it's going to go down, but it's going to go down by comparison. It's slowing. How fast it goes up? Does that make sense? It's not going down, it's just slowing down. How fast it's going up? Woo. 100 episodes in and I still can say all kinds of confusing crap. See, the arrow will be pointing up, just not up as sharply. Hey, and if that was confusing to you, go back to episode 92 where I talked all about that stuff. Now, when it comes to the headlines that you're going to be seeing, scary sells. So the interpretation of this scary headline, housing's going down. Those headlines that are out there interpreting them, what it actually means is that it's still increasing, just not at these unsustainable, insane numbers. So don't be fearful, be enthusiastic and excited. Okay? So in preparation of this, I want warn you this is a warning. Everybody. There are two scary headlines that are going to be coming out soon. When you see this on your phone, do not freak out. Stay calm. Two big scary headlines that are coming are recession and bad housing market. So let's chat about the first one, recession. Let me remind you of something the great investor guru Warren Buffett said. When people get greedy, be fearful. And when people get afraid, get greedy. Now I'm not telling that. I want you to start thinking of homes as an investment. Start flipping them for profit. Actually, I'm telling you exactly the opposite. See recession and bad housing market headlines. They're going to get all the clicks because the information is being put out there that the average Joe or Jane homeowner who owns a house already, they're concerned about the economy and the value of their home. So when you hear recession, don't get all salty and let that news slow you down on your home buying plan. Remember, that news is for the home seller sellers, the people who own their houses. And in this crazy new renters market where it's skyrocketing, for most average renters, the best time to buy instead of rent, well, that was yesterday. And when it comes to the recession, a recession does not equal a housing crisis. Those of you watching on YouTube, take a look at this. In the last six recessions, in the last four decades, housing appreciated four out of six times and only dropped two times once in the 1990s and that drop was less than 2%. And the other drop was the most recent recession that had everyone so scared because it's so fresh in their minds. And it was partially because, if not majorly because the mispractices in the housing market. That's why that one was so terrible for housing and the numbers are so awful. But understand the full data and know that this pre recession housing run up that we're in right now because the recession is coming. So this is pre recession housing run up. Know that four out of the last six times we didn't go into recession and this is nothing like the one time we dropped big time. It's not bubble like like the last time. It's not going to burst or crash like the bubble in 2008. It's going to slow and correct. In the other four recessions, housing prices actually increased by an average of 5.55%. Weathering storm and protecting renters in volatile markets, owning a home is your best hedge, your best safety net against infl. You get a fixed monthly payment, tax benefits, a forced savings account using a monthly payment that you already pay as a renter, but it goes to you instead of just going out the window. All right, headline number two. Bad housing market. Bad market. Those of you watching on YouTube can see my sweet air quotes. Bad for who? Remember when I was telling you since episode one, the system is rigged against first time home buyers and the entire real estate industry is so slanted towards the sellers that almost everything, I mean almost all of it is geared towards people who already own a home. So the information isn't out there for you. The information isn't designed for you and the adjectives are not designed for you, they're for the sellers. When you hear the real estate news, they're talking about them, not you. That's why I put out a hundred of these bad boys to start the revolution and give you the first time buyers, the correct interpretation of the headlines. So a bad market. It's like my boys run DMC say it's not bad meaning bad, but bad meaning good. 52 year old orange county white guy rapping sweet. Bad is bad for sellers and that's good for you. Remember guys, real estate is clueless to your power as a group and they ignore and mistreat you. And I'm in the minority so I'm going to sound like the crazy man scientist screaming at the city council meeting. But this is the way. Because the real estate industry is broken and run by greedy and lazy people who think that listing homes and selling homes is the best way to make money. So all the news is geared towards the sellers and bad for them is what you're going to hear in the headlines. But bad for them can be good for you. Not bad meaning bad, but bad meaning goofy. I tried to rhyme you and goud that's cheese. And all the Wall street folks and the rich ballers believe in what Warren Buffett said about being fearful when people are greedy and being greedy when people are afraid. Why? Well, break it down. What does that mean? It means to sell high and buy low. That's all it means. The average people without a trust fund supporting them and piles of money to invest, regular people, they end up getting greedy way too late. When a thing has run up for years and they've had enough time watching it to go, I'm going to jump into that. They don't have piles of daddy's money to invest, so they have to spend their time working to make their money. And because of that, they don't pay any attention to the market trends. So by the time they hear about the things that are these great deals going up and up and up, well, that's when they decide maybe it's time for them to jump in and get what everyone else got. But that's where they're getting greedy. Because they think it's going to keep going up. Or worse, they think it's going to last forever. Oh, it's not. And when things go down, that's when they freak out because they can't afford to lose anything. So they sell to avoid more losses before it's going to keep dropping. And they would never buy then because they think, why am I going to buy something that's going down? And it's because they don't have a real grasp on the understanding of the history and the long term data. Things always bounce back. And the people with the money who could afford to ride out the bad times, they don't stress out when they're buying something going down because they know it's coming back. That's when they buy. And when things are up, the people with the money, that's when they sell. Because maybe they don't even need that asset anyway. So to an average Joe who's been seeing prices go up for a while and due to fomo, well, now they decide to jump in at the exact same time that the rich folks are selling. See how it works? That's why in real estate, when the market is described as bad, when it's bad for sellers, that's bad for the average Joe home owner. But for you, if things get bad and you play the long game, understanding that it will come back bad is good for you there. So how's that for our celebration of our 100th episode? A whole bunch of stats and data and remedies and A crap cavalcade that is definitely coming your way soon. Woohoo. Pop the champagne. I hope that you heard my constant message. No matter how you see this going, and no matter what your situation is that you're in right now, there's one thing, thing, one thing for sure that I can guarantee. If you rent for a while, either by choice or by circumstance, yet your plan is to someday give up renting and you want to buy a home. There's one guaranteed tip to help you make money in the long run. Plan with a pro today. Oh my God. 100 episodes. How many times have I said this? The more planning you do, the more options and choices you're going to have. No matter where the market goes. Good, bad, normal, bat, guano, insano. The more you plan, you save, you get educated, and you get guided by a pro. Let me say this clearly. The more options you will have. Again, the more, the more, the more options you will have. Someday after you buy a home, you're gonna look back on this and go, oh my God. Sudoni was right. The options thing, that's a big deal. Trust me. I've heard this from hundreds of clients and now thousands all over the country. I know it doesn't make a lot of sense to you today, but. But this will be something you'll be talking about. You're gonna want options. Those options are gonna help you get the right loan, the best deal, the right view, house. Or it's gonna get you more freaking shiplap than you could ever imagine. And you get more of that if you plan and set yourself up the right way. Options equal. Better for you. The end period mic drop. Once again, I cannot drop the mic. It's on an arm and there's nowhere to drop it. Okay, 100 episodes. Time for some celebrations, right? Let's celebrate some victories. With over half a million downloads and hundreds of people just like you, listening, learning, using the tools, the tips, the techniques from this podcast that got started by an angry old man in his kitchen and dining room in the middle of the night. We have, dare I say, started a little revolution of the people getting what they deserve. So I want to do a big compilation of all the victories that have happened since day one and give some shout outs to the people who heard you can do this. And then you know what? They freaking did it. And I consistently hear from many of you that you really enjoy hearing from the other listeners and about all their stories. I love that. I want you to see it. With the right guidance, this is possible. So Let me share some of the feedback I've gotten from some of our rock star listeners. There are some warm fuzzies in here, but also some wisdom nuggets. It's not going to be all cheese. And by the way, those wisdom nuggets super tasty with honey mustard. Seriously, we've got hundreds of these great stories that have come in, but to celebrate my hundredth, I just picked a few. Here's a DM I got just today from an OG homie Gino. Gino originally hit me up in 2020, but he DM me today because he told me that he heard my cussing rant on all the haters in the most recent episode and it cracked him up. And then he gave me a 2022 update. But before we get to his update, let's go back to the beginning. January 21, 2020. Gino wrote in and said, hey David, I started listening to your podcast a week ago. It was awesome. Very informative and fun at the same time. I used to think that I have everything I need to know to buy my first home by just saving and a good credit score and I'm good to go with shopping houses. I was wrong. Now I just finished all the episodes that you have in your podcast and it flooded me with more questions. I was confident before I came across your podcast and it hit me with all the real life stuff that you put out there for free. I felt nervous because as you said in your podcast, I'm about to make the biggest financial move of my life. So to cut to the chase, I was afraid to contact you because maybe I'm not ready or maybe I don't know what to say, but I want to man up and do the first step of buying a home, which is send you an email. I need your help. Awesome. That was back what I say. January 21, 2020. So we reduced the fear for him. He manned up. His words, not mine. Don't cancel me. And then he bought a home with only a three and a half percent down payment. And so then in today's dm, a couple of years later, he said, dude, I kept listening to your podcast. I refinanced my home, locked in a 3.3% mortgage rate, and removed my PMI. All that only one year after owning it. My property is appreciated a lot and it all worked perfectly. Like you said back in 2020, magical. Okay, so that was one of the early ones. Here comes to a recent one. Hey David, we closed on our first home last Friday. Holy crap. It doesn't seem real. None of it would have been possible without you and your podcast. It's only been five months since I even thought about owning a home. A few weeks of pinching you in my ear holes, a week or so of consolidating all the info into a CliffsNotes version for my fiance. And then we created a unicorn bubble and floated into home ownership. They continued along, got the keys a few hours before closing to do a final walkthrough, and started the small renovations the next day. Planning on moving in this coming weekend. Thanks for being awesome. And I still listen to your podcast so I can sound smart to my friends when they have questions. Thanks again. Awesome. Oh, and this is my favorite one of the reasons I put it in here today. They added a P.S. p.S. You need shirts that say I'm Sidoni's how to buy a Homie Feels a little possessive and weird, but I'm still down with the idea. I love it. So anyway, my gal Margarita was working with unicorn for a while and asking all the right questions, and her unicorn one day finally just looked at her and said, what is the deal? It's like you went to graduate school for buying a home. That was awesome. Now here's another great celebration from 100 episodes. Hey, David, Brian and Diana here want to let you know that last week we had our offer accepted on our dream home. We're over the moon with excitement and cannot wait to close, which with our unicorn agents and lender will be May. You got it. We had our meet and greet with our unicorns on April 2. We locked with a lender a week afterwards. Our offer was accepted on May 2nd and we're closing on May 26th. So in this market, we had an offer accepted. One month today of meeting our agents. Three weeks of looking at homes and we will be closing earlier than normal. We are extremely humbled to be in this position and we still think we are dreaming. While we know this could not have been possible without our unicorn bubble, we owe this all to you. Oh, that's nice. None of this our bubble will be possible without you. Is that my new title? The Bubble Maker? I'll take it. You have no idea how much you've impacted our lives. We looked at 12 houses. On our fourth offer, we hit the jackpot. Gorgeous home along the river with backyard. You could have played a pickup football game. And ooh, call me, I'm down. While we still have to close. It would mean the world to us if you could spread our message across the country. In the world, nothing would Be more satisfying than giving a real life example how it is possible to buy in this market with not only a unicorn bubble, but also listening to every one of your episodes. To all the homies out there. Wow. Okay. I did it. Done. The world knows. Everybody heard your story. Fast, quick and easy with a unicorn bubble. Couple more stories and they both have some really good lessons in them. This one came to me, I think, pretty recently. Miguel and I received your package and your sweet note in the mail today. The fact that someone who we've never actually even met or even talked to in person would send such a thoughtful and sweet Griff gift is incredibly touching. And then they said they actually teared up when they received the little housewarming gift from me. Miguel and I closed on our house this morning. It's been a long journey and right before finding the house, we were at the point of wondering if we should give up. How many times have I heard this in 2022? But we gave it one more shot. Trusting your inner unicorn and trying to trust the process. And now we have the keys to our new home. It feels like the stars are aligned. Thanks for everything you do. Thanks for the podcast, the networking, the unicorns, the kindness, the hours and the days of research that you do. And also just for caring so much. You guys did it. I just said some words in a microphone. One more and I promise this has series tips and hacks, not just mush. I mean, this one's got some real tasty nuggets. So get your honey mustard ready. If you're thinking you want ketchup instead, turn the podcast off immediately and go see a therapist. Help figure out what bad choices you made when you were younger to get to the point that you want to put ketchup instead of honey mustard on your chicken fingers. Seriously, you have a problem. On April 20, a great house popped into the market location that we were targeting and it was priced at $295,000. This price of 209, $295,000 was above our price range. The next day, our unicorn got us a showing via Zoom because they were still in Portland and it was hitting up the other agent for information. The agent was going to leave it on the market through Saturday, but they got a strong and clean offer that day. So that means that these guys had to make some fast decisions. The house was built in 1893 and only had two owners. So they researched the agent for the sellers and the previous owners and got some good information for their offer because they were going up against that strong and clean offer. Their big concerns were going to be the foundation and the roof. So they decided that they would not waive the inspection. Good for you. So that they would feel assured about the foundation. Their escalating offer went up to $311,000 and we kicked in another $5,000 to the seller's closing costs. Yes, love that trick. Kick in some extra money for the seller's closing costs as opposed to raising your price because it works for the appraisal gap and it keeps the appraisal down, but you're still getting the same net for the seller. Did you understand that? No. Cool. There's 99 episodes to go back and listen where I explain it all. Anyway, so they put in $311,000 with 5,000 back for the seller's closing costs. And after a sleepless night, they learned on Friday morning their offer was accepted. And better yet, the second highest offer was $305,000. So they were able to get it because their escalation clause of only $360,000. And did I mention that this was the first offer that we put on a house? Incredible, huh? And remember, they're all doing this from another city. So they flew out for the inspection on April 29 and there weren't any serious red flags. But they did learn the roof was much older than the seller's agent originally told them before they made the offer. So they didn't have immediate reserves for a full roof replacement. So they went back and forth on whether or not they should back out on the deal. But they got a roofer to give them an all clear assessment of the roof. Good shape and probably still has three or four years left. So we decided to go forward with it. Our unicorn at that point, because of what was going on, was even able to negotiate back another $5,000. They got back the $5,000 they committed to the seller's closing costs as a credit for the roof. And then the appraisal came back at $312,000. So no gap, no appraisal extras to pay. We did have some unexpected issues with our lender. But after holding our breath the last couple of weeks, we today that our loan application went through underwriting and was approved. So things are looking great. But I have a question I was hoping to get your sage advice on. Are home warranties generally a waste of money for buyer to pay and are they a scam? I know it's not another episode. Not been giving a lot of big cheesy stories, but you didn't think I was going to end with just a whole bunch of this feel good mushy stuff. No way. It's guidance time. Before I answer the question about home warranties, they went on all the home appliances are old and the inspector couldn't test the air conditioner because it was too cold that day and so he couldn't check it the day of the inspection. I haven't heard you talk much about home warranties on the podcast, but have you heard from first time home buyers whether they regretted paying for a home warranty or they're really glad that they got one? And are there any companies that you want recommend that we steer clear from? It seems like there are two very distinct views of home warranties on the Internet. Either they're great or they're a scam. Also, the moment you fill out a quote trying to figure out who you're going to talk to online to get it, you get bombarded with phone calls from the desperate salespeople. And then she says we're trying to make the decision on the home warranty by tomorrow because there's a 30 day no claim window and we're scheduled to close on May 25, so we're already being the place a bit before we can use it. I'm inclined to pay for a warranty because we already have quite a punch list from the inspection, but my wife is more skeptical and has read a lot of bad experience from other homeowners. Unfortunately we don't know anyone who has one. I know you're super busy, but if you have any advice we we'd love to hear it. Thank you so much for your podcast and what you do. So I responded to them and the good news is it was a very happy ending. To the question, is it a scam? Hard? No, not a scam. Now is it going to cover everything? No. But let me once and for all put to bed the whole Internet reviews on home warranties. There are two distinct views on the Internet. Great or scam. Get ready because I'm going to sound like a crotchety old man. Drink. Let me drool out some knowledge out of, you know, my old decrepit face. The Internet is a blessing and a curse and you can indeed find options that will help you avoid age old scams, crappy businesses and greedy non caring corporations. And that's an awesome power that I wish I had in my 20s. But the Internet is also a place for the negative people to thrive and complain about everything as loud and as often as possible. The imbalance of sad, unhappy insecure and just crappy people venting online versus satisfied people on the Internet is truly inconceivable to me. Me, I love the people who stood up together and are fighting against the corruption and helping each other out with the warnings. But the sad trolls outweigh the satisfied customers by the millions. Haters gonna hate. That's what they do. But what is worse is that people that are not happy are out there louder than everybody else. You know the type, always complaining. Guess what? Their favorite thing to do is make sure that everyone else knows how miserable they are because they get some sick, soulless and having randos validate them in their pathetic so sure, sometimes people don't love their home warranty and some people may have truly gotten what they were entitled to. But I can tell you from personal experience that in general, those people wouldn't be happy if the warranty replaced their fridge with a freaking solid gold appliance filled with cash and chicken nuggets with a lifetime supply of honey mustard. They would still find something to complain about in most states. Quite often in our market, the seller pays for the home warranty. Did you hear that? The seller pays for it. But they're still finding ways to whine about it. Usually it's hundred, not thousands of which is a screaming deal. You consider that if you have a kitchen appliance or a water heater that breaks, you can usually get one replaced for the deductible. The company that I use here in California, the deductible is only 75 bucks. So for a year, most of the time sold for by the seller. If the dishwasher or the water heater or a washer dryer breaks 75 bucks, you get it fixed. So even if you have to pay for it as the buyer pays for it, instead of the seller and the competitive market, you pay. I always recommend to my people pay the four or five 600 bucks and rest easy your first year. It's a giant commitment. Now is it going to cover everything? No. But are you going to feel better about just having the chance of something being covered? Yeah. So if you want a good company, most of the time the buyer gets to decide who they use. So instead of asking the Internet how to use and getting bombarded with all those phone calls, ask your trusted unicorn realtor. We know it's part of our job now. Here's one little caveat on it though. In a year the home warranty company is going to ask you to renew and wait till you see the price they try to stick on it there. Oh, it's usually way more expensive, and that's where it kind of gets not worth it. Get the freebie for the first year. Don't expect it to cover everything, but be delightfully surprised if it does. And in the meantime, save up an emergency fund and be ready to accept the responsibility of owning a home. And please ignore the sad, pathetic haters. Okay, before I close out my 100th podcast gang, I have to thank you. I try to live with gratitude, and I can't thank you enough for the support you've given this show that I started in my kitchen with no idea what I was doing. I read every review, every email, every text. And after three years of this, you have to know that you and your stories, from your struggles to your trials, triumphs, they're what bring me the greatest joy. They're what keep me going. I'm humbled by your listenership and honored to be a voice for the people. The past three years and a few months have been a struggle for so many. And I honestly feel guilty for all of the incredible, joyful stories that I get coming my way when I know a lot of you guys out there were maybe forced to some pretty dark places. So I started this podcast out of a desire to share this information that I stumbled upon while I was trying to do my job job, and I wanted more people to get it more easily. And yeah, at first I was venting a little bit about all the injustice and the crappy business practices that are going on in real estate, but, you know, we'll let that go. Thanks to all of you for always helping me keep my eye on the prize, making sure that I've got my thoughts on the big picture. Empowerment is a strong drug, and I want to keep slinging it like the biggest dealer in town. I promise to keep bringing price practical positivity for 100 more of these episodes and beyond because it brings me so much joy to say what I believe and to know that it can help others. And now, thanks to you, these crazy little words are doing just that. I had no idea I could do this. But, you know, I always knew, you can do this. It.