Tuesday Sep 20, 2022

Four Reasons Real Estate Just Picked Up Again

What is happening with interest rates? Realtors' businesses are picking up steam, even though we know rates are ticking up. The 10-yr Treasury just hit a high since 2011 (3.51%), and Sweden just raised their bank rate by 100BPS last night! As the FED gears up to meet again and controlling inflation remains top of mind, they've got a .75-1% FED rate increase on the table. We know the recession is coming, and the FED is trying to fast-track it so that consumers will finally stop spending!

But if realtors are seeing a pick-up and are anticipating a solid October, WHY?

Employers calling employees back to work
Employees finding another job (getting an average 10% raise)
First-time home buyers seeing the opportunity
Investors

The text number is 855-930-0377. Text UPDATE to be added to the list

Some of what you'll learn in this 18-minute episode includes:

"If I purchase a median home last month in August, the median DMAR 11-county area home price was $579,900.

I buy a $579,900 home with 5% down, I'm putting down $28,995.

If I get a 6% interest rate and I get a 3.8% appreciation because that's what Core Logic is expecting that we're going to see for the next year forward, 3.8%, not the crazy double digits that we've seen.

Historically before the pandemic, the United States appreciated 3.6%. So we're returning back to normal.

So if I have a 3.8% appreciation in five years, I have a gain.

If that stays consistent with principal reduction every single year, knocking down my loan amount and a little bit an increase in value of 3.8% because I only put a limited number amount down and the power of leverage. I have the opportunity of that entire home value going up at the purchase price, not my down payment.

That's going to give me a net worth of $161,000.

I can't make that in the stock market in the next five years, unless your chooser is spot on because mine's broken. I can't make $161,000 in the next five years. And even if we see a dip and a slowdown, which again, because we have so limited supply, but even if the whole secret is don't sell, don't sell. Hold on through the dip and for the next five years. And that's where you're going to regain this opportunity.

In fact, year one with a 3.8% appreciation and the principal reduction based on a 6% interest rate, I actually make a 102% on my down payment.

I put down $28,995. I'm going to net out in equity gain $29,588.

That's just math, right? That's not a motion. That's just math."

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