The $1.5T Ticking Time Bomb and Our Return to a “Normal” Housing Market

Dave:
Welcome to On The Market, everyone. I’m your host, Dave Meyer today, joined by Henry, Jamil, James and Kathy. How’s everyone?

Kathy:
Great.

Jamil:
Phenomenal.

Dave:
Good. Well, I’m glad to have you all here. What we’re doing today is we are going to be doing our regular segment, the correspondent show, where everyone comes with a story that they are following closely in the world of real estate investing. We have four great, interesting, very good topics to discuss today, but first, we’re going to play a quick game. We’ve gotten away from playing games recently, but I’m glad that we’re bringing this back.
Today’s game is going to be an inflation station where each of you is going to have to guess the price of three different, somewhat volatile items to see if you know how they have been trending over the last couple of years, and we’ll also have an inflation pop quiz to see if any of you have been paying attention. Okay. First question, the average cost of a new vehicle in the U.S. was $42,380 in 2021. What do you think it was in February of 2023? So, two years later, how has inflation changed the price of a new vehicle? Jamil?

Jamil:
Well, I mean, I-

Dave:
Picking on you.

Jamil:
It depends on what kind of cars we’re buying. Are we buying James Dainard cars? Are we buying the average car? So, I’m going to just go with the average car here, and I’m going to say I know that everything has gone up with cars, $46,750.

Dave:
Okay, 46,000, but Jamil, didn’t you buy a Rolls-Royce?

Jamil:
For taxes?

Dave:
Just want to make sure-

Jamil:
Gosh, yes, I did.

Dave:
… that you are buying James Dainard cars too.

Jamil:
In that case, $452,750.

Dave:
Precisely.

James:
For the record, I buy all my cars used, one year old.

Jamil:
That’s smart.

James:
Yeah. I don’t believe in new cars.

Dave:
What does a Lambo cost one year old?

James:
I kind of run my cars like an old man. I’ll run them into the ground. I go five, six, seven years on my cars.

Kathy:
Oh, I’m the same way. I’ll go 10.

Jamil:
I’d sell a car once a corn nut drops in the seat.

Dave:
All right. Well, Kathy, you might be the longest since buying a car, so what’s your guess?

Kathy:
Well, I’m just going to just … I added up on my calculator 8% inflation, which would be 6,700 on top of … I don’t know. Somewhere around nine, eight, 8,000 more than it was.

Dave:
So, you’re saying like 50,000 will be your guess?

Kathy:
Yeah.

Dave:
Okay. Kathy. What about you, Henry?

Henry:
$51,445.

Dave:
Wow. Very precise. All right, James?

James:
I’m going to go with 10% a year, so I’m going to go … We’re going to be at roughly 51,000 bucks.

Dave:
Okay. A lot of clumping around there. We have a winner, and it is Ms. Kathy Fettke.

Jamil:
Wow.

Dave:
The average price for a new vehicle in February was 48,763. Had we waited a little bit longer, you would’ve been even closer, Kathy, because the price of cars has actually been falling over the last couple of months after peaking a couple months ago, but they’re still up obviously a very large percent over the last two years.

Kathy:
Well, I’m glad I’ve got my paid off old car.

Dave:
What kind of car do you have, Kathy?

Kathy:
Okay. It’s a Tesla.

Dave:
Can’t be that old. They haven’t been around that long.

Kathy:
It’s a leftover because my husband, he does like a good car, and so when he gets the new car, I get the old car, which is fine because I get to choose the house.

Dave:
Still sounds pretty nice. All right. Our second question, Kathy, I’m going to make you go first. What is the price right now of a dozen eggs?

Kathy:
I just bought eggs at the farmer’s market, and I spent $20, so I have no idea. I’m going to say that they went down … I know they’re fresh from a farm somewhere. There were 18 of them, so I don’t know what that ends up being, but I’m going to say it went down for the regular eggs, that factory eggs with all the chickens crammed in there.

Dave:
Yeah. Okay, so sorry, I should have given you the context. In December, just back this past December, it was 4.82 a dozen.

Kathy:
Okay, I bet it’s gone down to 3.82.

Dave:
Okay, Kathy’s at 3.82. James?

James:
I’m going to go to 4.12.

Henry:
That’s literally the number in my head.

Dave:
All right. Henry, I’m booking you down. Do you want to just screw James and say 4.13, 4.11?

Henry:
Yeah. $1 above, $4.13.

Dave:
All right. 4.13. Jamil?

Jamil:
I’m going to say $6. Eggs have gone up. Them little angry chickens are costing more these days. $6.

Dave:
Wow.

Kathy:
See, that’s why I pay more for the happy chickens, but I also cannot walk by a booth at a farmer’s market and not … I don’t know. I got to support small business. Got to do it.

Dave:
Well, if anyone listening to this has a farmer’s market stand, invite Kathy, I guess.

Kathy:
Yes. Invite me.

Dave:
Kathy, you won again despite having seemingly no understanding of how to buy eggs or what they cost.

Kathy:
Support farmers.

Dave:
Eggs have dropped since December down to 3.44. They’ve dropped 29%. So, Kathy was again the closest, and I think wins this game, but we do have one last one, which is the price of a gallon of gas, which as of one year ago was $4.12. Henry, what is it this year?

Henry:
Ooh. I’m going to go down a little bit to 3.87.

Dave:
Great choice. Jamil?

Jamil:
I filled up yesterday, and it was over $5 a gallon. I’m in Phoenix, so I’m going to notch it down a little bit because it’s a little higher here possibly. I’m going to say 4.82.

Dave:
4.82. All right. James?

James:
4.06.

Dave:
All right. Kathy, for the sweep.

Kathy:
I know. You know I drive electric, so I don’t check gas prices even though they’re the-

Henry:
LOL gas.

Dave:
Oh, do you have one of those obnoxious license plates that say like no gas or zero emissions or whatever?

Kathy:
It says go grateful, which maybe is worse. I don’t know.

Dave:
No, that’s better.

Kathy:
All I know is that I’ve been booking flights, and they’ve been really expensive, so I think gas has gone up, but I don’t know how much. California, it’s already ridiculous, usually a couple dollars more than everywhere else. So, if I were to say California, I’d probably say it’s up to $6 again. So, on the average, let’s say 4.85.

Dave:
Okay, the winner is Henry Washington. Very close. So, the actual answer is 3.68, so it’s dropped 10% over the last year down again from 4.12. So, we’re now at 3.68 for a gallon of gas.

Henry:
Jamil, are you allowed to put your own gas in the Rolls-Royce? Do they laugh at you when you pull up in a Rolls-Royce and pump your own gas?

Jamil:
Pump your own gas? They absolutely do. Yeah. They do laugh at me, and I laugh at myself too.

Dave:
All right. We have a bonus question. Let’s see if you’ve been paying attention. We talked about the most inflation resistant toy on the entire market.

Kathy:
I know this.

Dave:
All right. Well, I think you all … I know Kaitlin’s going to get mad because I’m going to ask you all to yell over each other, but I’m going to see if you all know it by asking you to yell over each other, which makes for great audio for a podcast. So, when I say three, tell me if you remember it. One, two, three.

Henry:
Hot Wheels.

Jamil:
Barbie.

Kathy:
Little cars.

Dave:
What did you say? Henry got it. What did you say, Kathy?

Kathy:
Little cars.

Dave:
You’re right, but Henry actually knew the name of it. Hot Wheels. They are little cars, so that’s correct.

Kathy:
I’ve got like 60 of them in little corners of the house. I’ve got a grandson.

James:
Oh, hitting those [inaudible 00:08:26] late night in the bathroom, that I do not miss. Under four. Oh, those things hurt.

Dave:
All right. Well, we’re going to take a quick break. Congratulations to Kathy and Henry for having some sense of what things cost. We are going to take a quick break and then come back and get to our stories about the investing climate right now. James, what story did you bring for us today?

James:
So, I brought … It’s from the New York Post. It’s called default risks grow on 1.5 trillion in commercial real estate debt, analysts say. So, what this article talks about, and I think we’re all … it’s another doom and gloom article that I feel like right now as people think we’re going into a recession or we’re kind of into a recession, they’re just looking for that meltdown area. So, commercial real estate seems to be the hot topic right now for that, but what it does talk about is retail property valuations could drop by as much as 40% while nearly 1.5 trillion in debt due by the end of 2025.
So, what the article talks a lot about is that there’s a lot of risk in the commercial market right now because, A, obviously work from home has been detrimental to the income. So, how you look at commercial properties is it’s based on income, right? How much income is it producing? What’s the cash flow? The rents have dropped, right? Work from home has not came all the … Working back in the office is not all the way going, and so the rent costs have dropped. Now, what’s also happening is debt is getting … it’s substantially more money.
So, they’re saying over the next four years that the maturities will peak in 2027 at 550 billion in the short term that there is about 270 billion being due in 2023, but one thing that I think is interesting in these stats, because everyone’s really focused on the office side and the commercial side, and then you’ll hear these big steps or big stats about how 270 billion is coming due, but if you really break it down, only a third of that is actually office at that point. So, out of that 550 billion coming due, if it’s using the same percentage, that’s about a third to a fourth of that is actually office space.
So, I’m starting to wonder if this is really going to be as big of a deal as what everyone’s saying it’s going to be. Yes, there’s a lot of things being matured, but is it product that will get refied and stabilized anyways and it’s just going to kind of go through the motions? Is it kind of that 2000, 1999 to 2000 tick over where they’re waiting for it to, it’s going to be detrimental, and then it’s going to kind of just work itself out?

Kathy:
I personally think it’s going to be detrimental to certain banks and obviously to certain investors, but overall, look, we survived 2008, right, and here we are in a similar situation this time more in the commercial realm. Anytime rates go up that dramatically, it’s going to affect anybody on a short-term loan, and a lot of commercial is on short-term balloon notes or just adjustable rates, and there’s going to be pain. I think a lot of people are still in denial about how much pain and that values are going down. A lot of people just don’t want to believe that values are going down in commercial, but they will. So, I think it’s a big deal. It’s not going to take down the economy though.

Jamil:
I think there’s going to be a world of hurt in the multi-family sector. There was just a lot of people. Commercial, I think people were a little bit hesitant to jump into office and retail, but when it comes to the multi-family sector of commercial, I think there was a lot of inflated confidence jumping in at the end of … When I was going to buy multi-family, remember then that time?

Dave:
Yeah.

Jamil:
There was inflated confidence at that time, and I truly believe it was at its peak, and now we’re going to going be … It’s going to to implode the multi-family market. I don’t think it’s going to be across all commercial, but multi-family is going to get hammered.

Dave:
Yeah. I think when you look at, James, that staff that, yes, it sounds like it’s peaking in 2027. It’s hard for me to get worried about something four years from now because we could be in a totally different economic climate, and valuations could crash and recover by then when it comes to some of these things, but I agree with you. I think that generally speaking, that valuations are going to go down, but I just don’t think this type of … There’s any evidence right now that this is going to take down the banking system or anything like that, but there is going to be some significant pain.

James:
Yeah. One thing I was wondering about on these cities, they’re so dependent on tax income, and if the property values do go down 30, 40% in these metro cities, what’s going to happen to the tax revenue in these cities? That could be a massive domino effect that shocks the whole market because that’s a substantial amount of income that will actually also hit this at city level.

Henry:
Yeah. One of the followup questions I had for the group was, who do you think this crash really impacts? If the notes come due and the investors can’t pay, then the banks are stuck holding the bag. They can’t … I mean, somebody else can’t come in and buy it because they still have to buy it at an inflated interest rate, right? So, if there is this massive multi-family crisis, who gets hit the hardest here?

Jamil:
I think the original buyer and partially, the bank.

Kathy:
Yeah. In my last report, I talked about how a lot of the big banks sold these off, so it’s really investors again. These were sold off, commercial mortgage-backed securities and packaged up and who knows? Maybe they’re, again, same thing, A rated. So, it’s going to be institutional funds that bought those or investors that bought those. It’s the smaller banks that didn’t sell them off, and they will be more hurt.

James:
It’s going to be a rough day for them.

Dave:
Yeah, and just generally speaking for our audience, a lot of what James is talking about, we have sort of shifted the conversation into multi-family, was about office and retail like when we were talking about big declines and things coming due, probably not as applicable to the average retail investor. As Kathy said, these are mostly institutional investors. Obviously, people who listen to this are probably more in invested into multi-family, but from the article James is talking about, the most acute risk seems to be in office, then retail, and then other types of asset classes including multi-family but also industrial, medical, all the other stuff.

Kathy:
Just one thing about the office downtown, it seems that suburban office is doing better, but the cities with all the high rises and that would bring in people into the city, and then all the retail around those big high rises, those are the retail in the downtown is what I’m hearing would be affected because people aren’t going into the office so much if the offices are empty.

James:
Yeah. There’s a lot of vacancy. It’s like I was reading something else last night, and they were saying that a lot of offices, occupancy was around like 75 to 80% in 2018, and right now, it’s hovering around 50%. So, that’s a huge drop in income.

Dave:
Wow, oh, my God.

James:
At least, that was too, because Brookfield, which is a big fund, had some issues, and they just gave some buildings back, and their occupancy rate had dropped that much. They just turned it over at that point. It’s pretty … I mean, that’s a substantial hit to your bottom line.

Dave:
All right. Well, thank you for bringing this one, James. It’s really interesting. Just for everyone listening, we’re going to bring on an expert. His name is Richard Hill. He’s going to be coming on the next couple weeks. If this topic is of interest to you, he knows all about commercial real estate debt, and he does a really good job breaking it down by different sectors, when different types of loans are due, how much liquidity there is in the market. So, if you’re interested, then make sure to check that out in a couple of weeks. Let’s move on to Kathy’s story. What do you got for us?

Kathy:
Yeah. Mine is a divided housing market. Zillow says these 294 markets will see home price gains while 102 markets will tick lower. So, these kinds of articles, I think, get investors’ attention because, of course, do you want to be in the market where there’s price declines, or do you want to be in the market where there’s growth? A lot of it is not surprising. My goodness. I just wanted to bring this article because we talked about it a year ago, and things really haven’t changed that much from what we were predicting a year ago, which was that there were certain markets that had bubbled up. They were pandemic-fueled markets like Boise, like Phoenix, Austin, these markets went up. Oh, my gosh, it’s just shocking when you look at it. 50 … Let’s see. It was 53% in Boise’s. Austin was 61% increase in prices over the pandemic period, and Phoenix, 59%. So, that’s a huge increase.
In this article, John Burns Real Estate Consulting was the most concerned about those markets, thinking that at least half of those gains would disappear, and that may or may not have already happened. Then, the Southeast being the areas where there’s probably going to be more growth over the coming year. So, in this article, again, the Southeast looks to be growing along with the Midwest, but the West where there was already so much price increase and where people are already stretched so thin, where interest rates make a big difference, you’re already struggling to buy that million-dollar house and then rates go up, there’s no way, but does it make that big a difference on the $200,000 house or the $300,000 house in the Southeast?
What I kind of took away from this was in an area where there’s rising inventory, and it’s obviously very popular, lots of people pouring in to buy and live there over the last few years, I don’t see it as a bad thing to be buying in some of those areas where there is inventory growing. I know we got two people here today who are in those markets. Jamil’s in Phoenix, and Jimmy’s in Seattle where you’re still buying deals and maybe buying deeper than you were.
So, again, it’s not necessarily bad news if you look at it from an experienced real estate mindset. I’m buying in the Southeast because I like to see values go up, but if I were buying the way you guys do, I would kind of think I’d want to be in those markets that are a little bit distressed and where inventories are rising. I don’t know. What are you guys’ thoughts on that?

Jamil:
Well, just to speak to Phoenix right out the gate, we did have a shock to the system for like a compressed period of time, and then the market just started to go again. When you look at days on market, when you look at inventory, when you look at the indicators of demand, what I’m seeing and what we continue to see here is, yes, we did have a correction. The correction was not nearly half or all of the gains. It wasn’t even close. In fact, so far, what we’ve been tracking is that we’ve been somewhere between 10 and 15% here in Phoenix, and it’s stabilizing. Not only is it stabilizing, but demand is upticking, and things are chugging along. So, I think if you are smart and you are really paying attention to where there’s opportunity in a market like Phoenix, you can buy deep, you can hold for a little while, and in a couple of years, realize incredible profit.

Kathy:
Yeah. I would love to hear your thoughts, James, too, because these are obviously markets people want to be in, right? That’s why they grew so quickly over the last few years. We know that you’ve been … I saw your last Instagram post where you made a ton of money on a flip. I was very jealous.

James:
We’re seeing the same thing up in the Pacific Northwest, what Jamil kind of was talking about. We saw this compression. Now, it’s flattened out, and now, we’re seeing inventory getting just eroded right now. There is nothing for sale. Days on market have dropped 35% in the last 30 days up in the Northwest. I actually think this is 2023. The end of 2023 could be one of the best times to dispel off a flip property because what’s happening is that inventory is tightening so much, and really, what’s out there, a lot of the stuff that’s sitting in the market right now is also just overpriced junk.
People just slap big numbers on really not great properties, and that stuff’s going to sit there, and it’s going to skew the data, but I would say there’s 50% of the inventory in our market, and we’re seeing the deep buys right now. I was trying to … It’s like every quarter, we’re changing our game plans, right? So, I’m like now, I do think rates are going to be down. We’re already seeing the market tighten up, and I think rates will be lower by the end of the quarter, and that’s going to add to a frenzy.

Dave:
I think it’s super interesting when you look at this just generally speaking at this split of the market that Zillow who, questionable forecasting record, says, is forecasting that either way, up or down of the next years, they see markets by either going up at the max of 5% and down at a max of 5%. So, to me, that’s actually a kind of normal market, right? In normal times, that’s sort of how a housing market behaves. Some go up, not crazy double-digit numbers. Some go down, not crazy double-digit numbers. So, this seems to say that they are expecting things to return to a somewhat normal, relatively stable market over the next year, which is pretty interesting. I thought in January, I would’ve never guessed that, but I think the data and evidence they’re basing it off of is sound, and there’s a reasonable chance that the market is going to stabilize.

Henry:
Yeah. I think if you’re an investor who is looking to invest for appreciation in markets that are strong and markets that are popular, this is a great time. You should be looking at those areas that are blue on that map, right, where the prices are down because I mean, we all know you zoom out, and real estate’s going to go up. So, if you are in a cash flush position and you can hold, then what a great time to get into some of those more expensive markets that you may have thought you were priced out of.
I see the same thing in my market that James and Jamil are saying in their market. The stuff that’s sitting on the market here, it’s overpriced to begin with, and it’s just not great product, and isn’t the sign of a healthy market? If it’s overpriced, then it’s crap, then it sits. If it’s priced well and done well, it goes fast. That’s what a healthy market should do.

Dave:
Yeah. We’re like, oh, crap is sitting on the market. How interesting. Of course, that’s what’s supposed to happen. That’s a very good point. All right, so along these lines, Henry, it seems like your story is sort of a continuation of this discussion, right?

Henry:
Yeah, absolutely. So, my story is about the 2023 housing market correction, right? So, it’s essentially forecasting the rest of the year. I like the article because it touches on a few key subjects within the real estate industry and how they think it’s going to go. It was really, it seems like, in my opinion, a good representation of what I’m currently seeing, right? So, it starts to talk about how buyers are going to get some leverage, and that kind of goes to what we were just talking about. Crap sits on the market, so buyers have some leverage either to negotiate price or to negotiate concessions or some repairs. We are seeing a lot of that in our market.
It also talks about home prices potentially declining in some markets, but then kind of zooms out and says it really just looks like it’s stabilizing because we’re still above 2021 market prices in most markets of the country even though it may be looking like it’s coming down in some areas right now. It also mentions inventory increasing, and this is one that we’ve touched on a little bit, but I truly, truly believe. James really said it. If the interest rates do start to come down a little bit, I think we’re going to see a frenzy, and I think you’re going to see more inventory and more buyers out there.
Then, the point that I really liked is it says a sense of normalcy will return. We talked about this as a group a while back when interest rates were really surging. I think the sense of normalcy just means if we sit around five to 6% interest rates for six or seven months, people will just realize this is what homes cost, right, and then life will continue to happen. People will still need to move for whatever reasons they want to move. I think the only thing that may have an impact on this sense of normalcy is all of the people who locked in at two, two and a half and 3%. They’re probably still going to sit on those interest rates, but most everybody else is going to get back to normal life. Things will feel normal, and you’ll start to see a more healthy real estate market in my opinion. So, I’m curious to know how you guys feel about these predictions.

Jamil:
The thing, Henry, that I want to jump in on real fast is that segment of those houses that are like two to 4% mortgages. Pace and I, who is a … Pace is a creative finance genius, and we’ve been talking like is the two to 4% mortgage going to be a new asset class, right? Is it going to be something that people are going to be trying to collect and hoard and hold because we’re not going to get these types of rates again in a while or ever. So, I think that right there is going to be the deciding factor that’s going to hold a lot of inventory off of the market, and I don’t think it’s going to get put back into the market relatively quickly or at all. So, I think that factor is really important to look at and keep in mind.

Dave:
One of the major things that is impacting the housing market, and I think why it hasn’t crashed and there is some speculation that’s going to go up is this inventory question that Henry and Jamil have just touched on. Jamil, based on what you said about the two, 4% mortgage, do you think the inventory levels we’re seeing now is sort of a new normal because we’re getting back to a lot of other variables in the market that are normal, but inventory is still nowhere near where it used to be from pre-pandemic levels?

Jamil:
Absolutely. Absolutely. I think those houses are locked. You know what, there’s companies now that are out there, helping the homeowners who have those homes turn them into rentals because if you’re … Say, you’ve got a professional life and you’re like, “I don’t want to rent this house.” Okay cool, got a 2% mortgage. We’ll help you figure it all out. Now, there’s an entire new industry, there’s an asset class created out of that. It’s going to do its own thing. It’s going to help rents come down a little bit. I do believe that that little … that segment of properties is the deciding factor, and things are going back to normal because of it.

Kathy:
Yeah. Technology has so much to do with that too. There’s uses for housing that just didn’t exist 10, 15 years ago. I was looking for a place for our corporate retreat, and I decided to use Peerspace, a place where you could just rent a house for eight hours. Normally, we’d always go into a dingy hotel room meeting space. Now, we get to be in a beautiful house along the beach that might be Jamil’s. Then, there’s shared housing with Ember and Pacaso where you could buy a vacation property and share it with other owners. So, all these different uses of technology that allow you to use homes that used to just be homes, right, and then you add onto it the institutions that are getting into our industry and planning to buy a lot more billions of dollars’ worth of single-family homes, that’s not going to help the inventory issue.

Dave:
All right. Well, that is one of the biggest variables, at least in my mind, about this forecast that you’re sharing, Henry, is this is a huge impact on the market, but there is one other major variable that will really depend or dictate what happens with the market in 2023. Jamil, that’s the focus of your story.

Jamil:
Yeah. Man, I hate this article so much, but I had to bring it to light. Realtor.com said, “Mortgage rates just jumped. Will the spring real estate market survive?” It’s like survive, that’s the word you use? So, you mean it’s going to die, right? The opposite of this is things are going to die.
Okay. Well, let’s look at the data because the facts are is that rates went up to … What are we looking at here? Like 6.39 up from last week, 6.27, which are still lower than where we were at 6.48. So, I mean it’s not as bad as it was. It’s better than then. It’s a little worse than last week, but okay, so what are we really talking about here? Let’s see how that affected the market. So, when you’re looking at weekly housing, the housing trends, the median listing price is up two and a 5%. New listings are down 5%. Days on market are 16 days longer, 16 days longer. What is two weeks? Two weeks. Mortgage rates, and then they use the word survive.
What I pictured was like, imagine this, okay? You’re in a hospital. There’s doctors, and the normal heart rate is 72. That was like the 5% mortgage. 72 beats per minute. Now, we’re at like … You’ve got a guy sitting on a heart rate monitor, and he’s at 88, and all of a sudden, his heart rate goes to 91, and all the doctors are like, “Will he survive, or will he die?” Guys, get out of here. Did these people hire their writers from the National Enquirer? What is happening right now? This is what is so troubling to me about articles like this. It’s like journalism, do better.

Kathy:
Read the data. Read the data. The headlines are absolutely clickbait. It’s meant to get your attention.

Dave:
But then Jamil clicked on it. You clicked on it.

Jamil:
And they made me so mad. They made me so mad.

Dave:
You shared it, and now, you’re promoting it. Now, you’re rewarding them for this.

Jamil:
They did. They got me.

Dave:
Oh man, but yeah. I mean honestly, I just think I talk about mortgage rates all the time, but the reality is that until the Fed stops making moves, it’s just going to be volatile. Honestly, the swings that are 10 basis points, 25 basis points are going to impact the housing market a little bit, but the question of whether it’s going to survive, it’s like if it gets back above seven and stays above seven, that may change housing dynamics, but it’s been living in the mid-sixes for a while now, and spring activity is starting to pick up, and I think we’d have to see a much bigger shift in rates than we’ve seen in the last few months to really change the momentum of the market in a real way.

James:
I feel like the buyer’s mindsets are, the fear has … They feel like the shoe has dropped. Everyone was kind of like, “Is it going to keep crashing?” because they saw this compression real quick, and now it’s leveled out. I don’t think rates swinging a quarter point’s going to matter whatsoever. There’s so many more bodies looking at real estate again that it just … and the properties all sell. They’re getting picked off. Every time one sells and a buyer goes, “Well, that’s not going to sell that way,” you get a little bit of FOMO, and you start … The overall whole mindset of the market has changed dramatically in the last 60 days.

Dave:
All right. Well, great stories. Those are great conversations. So, it sounds like everyone sort of agrees that the market is starting to pick up, and these forecasts, these revised forecasts that everyone seems to be doing, we talked about Zillow today, but all these major forecasters seem to be upwardly revising their housing market forecasts right now. Even if they think there’s going to be a decline, it’s less of a decline. People, generally speaking, are more optimistic about the housing market. Obviously, we will keep you very informed about that as the year goes on.
Before we get out of here today, we have a user question today from Michael Italia who is talking about something that everyone is talking about right now, which is of course AI and ChatGPT. The question is, have any of you started using AI or ChatGPT in your business, and if so, how?

Jamil:
I have. Interestingly enough, just in the early part of the year, invested in a little company. What it is, is it’s a software that reaches out to real estate agents and has a conversation with them about listings that they have or potential listings that are coming up. We use ChatGPT to spin the conversation so that they’re dynamic and they change all the time, and it responds to real estate agents robotically or through artificial intelligence.
Once the property or once a property becomes available or there’s a conversation to be had, it kicks it back to the user, and then we get on the phone and have the conversation. So, lead generation has been completely taken over by AI and this technology, and it’s smashing. We are getting so many deals from it. People I am teaching are getting so many deals from it. It is phenomenal. I love it, love it, love it, love it, love it.

Dave:
Cool. Nice.

Kathy:
I was kind of mad at ChatGPT because I put in predictions for 2024 and 2025, and they came back. They, she, he, whatever it is, came back and said, “We don’t do predictions.” I was like, this is not helping me so, but yeah. We actually do use it in some of our blogs and writing to get it started. Then, I want the personal touch of editing it.

Henry:
Yeah, I use it. We use it in our business, helps us write our descriptions for our properties that we’re either going to list on Airbnb or as long long-term rentals. Let’s see. We use it for some email marketing, and so it just, it’s made some smaller tasks easy. I’m not using it anywhere near to the potential that it has, but yeah, some mundane tasks have become much easier.

James:
You guys see how much of a struggle it is for me to get on the podcast.

Henry:
Yeah.

James:
I have not used the Chat … but I know my staff is, and they’ve been exploring it like crazy. I can’t wrap my … I’m so old when it comes to that stuff. I can’t wrap my brain around it.

Dave:
James is still learning how to use email so-

Henry:
I don’t buy it. We literally still can use ChatGPT to look up the answers for the quiz the beginning of the episode so I don’t-

Dave:
He still didn’t get any of it right.

James:
Yeah, I’m doing something wrong here.

Dave:
I have not used it yet, but I also wouldn’t admit that on this podcast that employs me full-time, so maybe I have.

James:
I guess we are using it. They were telling me, our social media manager, he was telling me that they use it to fix your eyes now or-

Dave:
Oh, yeah. That’s cool.

James:
They also run our audio now through it, and it fine-tunes because I mumble. So, I guess it’s working for that way, but that’s about as far as we’ve made it so far.

Dave:
All right. Well, thank you all so much for all of your information and insights today. Let’s just do a round, and remind everyone where they can find each one of you if they want to follow up and learn more about you. Kathy, why don’t you go first?

Kathy:
You can find me mostly at realwealth.com but also on Instagram, @kathyfettke. I just learned how to green screen, so my technology is [inaudible 00:36:48].

Dave:
I saw that. It was really good.

Kathy:
It took me like an hour to figure it out, but hey.

Dave:
Now, you’re good forever.

Kathy:
Maybe.

Dave:
Henry, what about you?

Henry:
Oh, you can find me @thehenrywashington on Instagram or you can check me out at henrywashington.com. Is ChatGPT the new Ashgps? Is that like what that is?

Dave:
Yeah. They’ve spent the last 20 years perfecting Ashgps, and this is what we have now. Jamil, where should people find you?

Jamil:
I’m at youtube.com/jamildamji, J-A-M-I-L D-A-M-J-I, or my IG, @jdamji.

Dave:
All right. James, if you want to connect with him, please mail him a postcard or call him on a rotary telephone, and he’ll pick up.

James:
We do have walkie-talkies at the house. That’s for real.

Henry:
That’s because his house is so big, he needs it.

Dave:
He gets lost. Oh, no, for real, James, where should people find you?

James:
That’s where you’d probably find me is on Instagram @jdainflips or at jamesdainard.com.

Dave:
All right. I am @thedatadeli on Instagram, or you can always find me on BiggerPockets as well. If you have any questions or thoughts about this show, reach out to one of us. Let us know what you think or if you have any ideas on how we can improve topics you want to hear. We’re all here to listen and respond to all of you. Thanks again for listening. We’ll see you next time for On The Market.
On The Market is created by me, Dave Meyer and Kaitlin Bennett, produced by Kaitlin Bennett, editing by Joel Esparza and Onyx Media, researched by Pooja Jinda, and a big thanks to the entire BiggerPockets team. The content on the show, On The Market, are opinions only. All listeners should independently verify data points, opinions, and investment strategies. (singing)