There are few topics that have received
as much attention over the course of
the past year as the housing industry.
It has been a sellers
market for quite a while.
So what can we tell about the industry now?
What does it look like?
Are things changing?
Joining me right now is Ted Jenkin,
the CEO of Oxygen Financial.
And why could the housing
market be now in crisis soon?
And and should people be
concerned about this, Ted?
I mean, is that ultimately kind of a
bellwether of where the economy is going?
Yeah. Well, good evening, Jeff.
And and I've, I don't necessarily think
we're going to be in a crisis soon,
but I do think that we're
gonna hit a correction. I mean,
people have to remember that interest
rates just a year ago or about 3.3% now,
they've grown to north of 6.6%.
And what happens is that this
interest rate growth, it really puts
downward pressure on housing prices.
So new home sales are down
about 30% year over year.
Existing home sales are down 20%.
I think, Jeff,
what we're going to see in Atlanta.
Is a game of stalemate
between buyers and sellers.
The sellers don't want to sell
because they want those high prices.
The buyers are waiting for
the market to come down.
So that's why I don't think
we'll necessarily see a crisis,
but I do think a 10 to potentially
20% correction is in line.
This median home price of $400,000
was quite high and it's probably
going to come down a little bit.
And again, it depends on your zip code.
I mean, in town is booming at such
an extraordinary way that in all
probability housing will be less.
Impacted in terms of decrease
because of the amount of industry
that continues to come here.
Yeah. Well, that's true.
And this is always about the
law of supply and demand.
So some areas will be more
insulated than others.
And obviously, people that are at
the million plus level are going
to be hit first because of these
higher increases of interest rates.
But let's talk to the average
atlantan about what this means to you.
If you bought a $300,000 house, Jeff,
and you put 10% down, only $30,000,
you'd have to take out a $270,000
mortgage a year ago when interest
rates were roughly 3% your payment.
Between principal and interest would
have only been $11138.00 today at 6%,
it's $16119.
That's a $481.00 difference,
or over the life of the loan,
it's $175,000.
So This is why, in part,
you're going to see home values come down,
because as mortgage rates go up,
it puts pressure on those prices because
the homes still have to be affordable.
But there's great concern here is,
is I hear you talk about rising
mortgage rates and all of that, I mean.
Residential real estate really is
a major engine in this country.
I mean the trickle down is to how
we buy cars, how we buy appliances,
you know, how we buy building supplies.
I mean it really impacts all elements in
all quadrants of the American economy.
Yeah, I mean, this is true, Jeff.
And I think, you know, people need to
remember this is not about housing,
it's about taming inflation.
This is why all this is happening
to begin with, because still
last month inflation was at 8.3%.
And when you look at the job of the
Fed and what they are supposed to do,
they're supposed to make prices
stable and they're supposed to
keep us at full on full employment.
So employment is still at 3.7%.
That's good.
But interest rates will continue
to rise in all manners.
Credit cards,
you're going to see it on your auto loans.
Going to see it on your home equity
lines of credit until inflation is tamed.
It won't be like 2008 because I
don't think a lot of banks wrote bad
mortgages like they did back then.
But I do think, like I said,
we're going to see a correction
and the cities that experience
Jeff this pandemic housing boom,
ones like Boise, ID and Austin,
TX,
they're I think they're going to
feel it the worst.
Do you think there's some other
parts of the country also that
gets hit pretty hard on all this?
Yeah, absolutely. You know,
I I wanna call it South by Southwest,
but you know, if you think about
everything between Phoenix and
Arizona all the way across the Texas,
all the way to the people who left
those high income tax states to move to
Florida where they had zero taxation,
all of those states are going to get
hit harder and prices right now because
beach towns for sure, they soared.
They soared, Jeff, during the pandemic.
You think it still makes sense
to buy a house or or should
people delay? What's your view?
Listen, I have no problem telling
everybody at home that I bought
my first house in the 90s with
almost a 9% mortgage rate.
And if you're gonna own a
home for a long term,
you have to factor in your tax deductions.
It's still a great thing to do if
you're going to own it for the long term.
If thinking about buying a house
and flipping it in a year or two,
or you might change cities or
changing jobs or your family,
then you may want to hold off a little bit.
Yeah,
in 1984 I bought a house.
Off of North Highland in the heart
of Virginia Highland for under
$100,000. Think think I would
like to have that back.
Yes, yes you would. Right.
Alright Ted, thanks Ted Jenkin
with us as always. We appreciate it.
Alright. Thanks Jeff.