When will homes be affordable again That's exactly what we're going to try To answer today you guys and we're going To take a look at what things in the Economy need to change for things to be More sustainably affordable and what Things we can change as consumers to Make it to where we can start affording Houses again and I have Melody Wright With us here today you guys this is a Very special recording this is our day One on our next Metro report video and Right now we're in San Antonio so happy Wednesday wish us luck on this trip and Super excited about it uh before I begin Millie how are you this morning I'm Doing well Travis happy to be here Excited for what we're going to see Today don't forget to go to Melody WR Substack that's a great way for you to Support us on these Metro tours and also Get more insights from Melody now what I Want to talk about first Melody is is Maybe you can give us an idea of from Mebe you know quantitative tightening Standpoint economic standpoint systemic Standpoint when do you think homes are Going to be affordable again for the Normal American yeah so you know I think Uh my base case is that this year uh we Actually have a about a 5% decline in Home prices by the end of the year um And at the end of the year reporting so We'll probably get those numbers in
January February of next year um but I Really see home prices uh decreasing More materially in 2025 um you know and I think Honestly then you'll probably start to See some deals now if you're in an Oversaturated market right now like in Florida for instance I think if you are A skillful negotiator um and and you Have the capital and you're not taking Out a ton of Leverage that you would be Able to find something uh right now I Mean I know that's but that's a if You're in a different Capital position I Just want to be clear about that because I wouldn't want anyone to take on Leverage at the moment um just because Things are so shaky and so you don't Know what your value is going to be and I I may I don't know that I've shared This with you but I believe 25 we we Drop about 12% and then the next two Years uh we we continue to kind of like Chop down just a little bit to bottom Out you know um basically about you know 4 years from now so um but I do believe If you're smart and you don't take on Too much leverage you might be able to Find a deal before then of course and You know Melody and then this is to the Viewers as well and I find there's a lot Of divide in our community with this Subject but um you know she's very Adamant when she's trying to tell you
Guys basically if you're well positioned Right it's my situation is not the same As someone that has $3 million liquid Cash right and that's really what Melody Is saying and also I would say that you Know I would agree with her even though There's not a lot there are deals to be Had the important thing guys is Understand understanding what a good Deal looks like and that's why I Constantly train and preach for people To take my home buyer class so that we Can learn how to use Simple data it's Very simple Mathew guys subtraction uh Uh subtraction addition division Multiplication right is that it's very Very simple math but the point to say Right but uh you know there are deals to Be had right now I've always said this From the beginning it's how we wait that Matter so if we're waiting right now We're learning about our local housing Market is a good thing and don't forget We usually talk macro data you guys want To go hyperlocal which is subdivision Comp analysis okay now I don't know if You guys caught it but basically Melody Is thinking and it's funny I said 5 to 8% in 2024 and then I think 15 maybe About 15 2025 that was my uh projection I think back in December or January with Jason Walter I did a video but she's Thinking 5% in 2024 on average median Okay okay a nationwide yeah and then
2025 12% maybe 5 to 10% in 2026 and 2027 can I ask to Melody why do you Think that and and why do you think that We'll have price decline this year During an election by the way yeah so You know I I just believe we have to Correct back to the meain and I think That that's really I you know looking at Timelines looking at historical Cycles Um that was what I used when I looked at My model and so you know history can Teach us lessons it can't tell us for Sure uh what the future is of course and So to me it um I I think more about path And and and so for instance something Could accelerate that home price those Home price declines um so you know but It's historical Cycles really is how I Kind of derived my model on uh home Prices okay and go ahead um so just for The viewers so that they understand too Why would you say that in you know in 2024 comparing to 2025 we would have Double to Triple the property price and Value decline in 2025 versus 2024 is That because the lag effects or or yeah I think that's that also just uh the Election year uh I believe that honestly Last year I mean we had the worst Mortgage Market um that we've seen and I You know I don't know when it was bad I Because looking at the numbers um if you Just look at the the count versus the Amount of money we had the worst
Mortgage Market much worse than in the GFC last year so um you know I I believe If things just persist and continue and And not even job losses but it's just The the election there there's so much Noise there's so much money still out There for down payment assistance They're I mean they're still trying to Push that FHA product you know very Aggressively so I think and they're Doing all kinds of things like VA Moratorium so I honestly believe that Everything is going to be you know kind Of uh there's going to be a lot of Forces a lot of headwinds um against Those price corrections but sometimes You know things just get disorderly you Can't manage it and I think that's Actually what's happening down in Florida right now it's starting to get a Bit disorderly as people try to offload So okay so you know in other words guys I don't know if you picked this up just Depending on your situation your goal Your Market you may want to wait a Little bit now you know a little bit of Background on Melody she's you know Really a tremendous experience Tremendous amount of skills behind the Scenes when it comes to servicers or Really the people that have mortgages Like the lenders that purchase mortgages So she gets to see behind the scenes What's going on with foreclosures with
Notices of default uh and just overall Performance of portfolio so I definitely Think you know obviously we don't have a Crystal ball is what I'm trying to tell The viewers uh but you know I would Agree with you I think it's going to be A good idea to wait we obviously are in Quantitative tightening it's not like we Don't know that quantitative tightening Is not normal they're intentionally Trying to battle inflation right what's With the rush you know and so you know You know go yeah go well I didn't answer The second part of your question which Why 25 and 24 um so I'm starting to see In my mortgage books that I my my Clients have um just stress in the Consumer and so last year uh there was a Catchup uh during the tax and bonus SE Season and it kind of lasted till June But we've been seeing people really Start to struggle uh last June and That's been building building building And so this seasonal catchup this year Was very light and it already I'm seeing Um for my clients record delinquency That we haven't seen since 2020 so Stress is building in a system it just Takes time and that's your point about The lag effects and so we've got the Election year that's a huge you know Everybody needs things to be okay but Once that's done you know I I believe And also you're going to have a lot of
The buy Downs start resetting and so you Know bu Downs really started Aggressively in 22 if they did a 321 um You know those rates are going to be Hitting people property taxes insurance I mean I still listen to bware calls They I mean people are flipping out over These uh increases in taxes and Insurance which you know we talked about Very recently so I just think every uh Everything is against housing and and 25 You know everybody says stay alive till 25 but I honestly believe the 25 is Going to be the worst of the distress Yeah I mean it certainly what's going on Right now Melody we've not gone through This I mean we've went through the GFC Uh this looks worse to me you know I'm a Survivor through the GFC I'm not trying To just say that I mean it was horrible I didn't like it but the thing is is the More that we're prepared right now the Easier it will be to find a great deal Absolutely and make it through a Recession and I wanted to ask you before We move on to Consumers you know when we Really boil down the data and we compare We look at things 70s 80s GFC even a Great Depression I think we can kind of Sum down what price decline would look Like as far as like what would Trigg And in correct me if I'm wrong I would Say there's two things mainly needed Which is investor liquidation which
We're set up nicely for that right we Have the sdrs long shortterm we have the Bands we have the higher interest rates Less cap there's skyrocketing property Taxes insurance and then the other thing I would say and you may disagree but I Think I think we're going to need some Defaults I think we're going to need it To go up uh I think it's at 3% with Credit cards right now it's a 12E High Um what are your thoughts on those two Ingredients needed to really kick off Any type of collapse if you will well I Think the defaults are going to look Different this cycle and I've been Saying this for a little while just Because of the all cash buyers so I Think Travis that defaults are going to Be different the cycle they're going to Look a little different than the last Cycle and we got to you know so we we Need to understand the war we're Fighting not the one we just fought and I think that um the all cash sales I Think that we're starting to see these Delinquencies and bankruptcies first Because you know they got that cash from Somewhere was it a refi was it a Wealth Management Group like PNC was really Pushing those loans uh to give its Wealthier clients uh money to go buy Houses but you're seeing trouble now in Wealth management uh units Morgan Stanley just came out talking about
Trouble there so you know I think what's Happening is instead of seeing them in Foreclosures because the other thing That happens between you know between 2012 and now there all these single Family loan sales so what Fanny Freddy FHA will do is when they have these Defaults they'll actually sell these Defaulted loans to investors um who have To abide by certain rules uh one of Which is not to for close for sometimes Two sometimes five years so I think We've got a lot of stress in the system That it's just being hidden and we don't We don't see it but absolutely I mean We're going to have those defaults we Have those defaults I you know my Concern is I think they're going to Build materially for the prime borrower By uh June of next year I I honestly They're going to start building through The year but I think that's when Everyone I mean we are going to be in a Default crisis at that point okay okay So you guys heard Melody you know Essentially we're saying this is what's Going on in the economy you know this is What we think based on our experience She's on the back end I'm on the front End we share similar you know opinions I Would say that I thought it would have I Personally that would happen a little Bit faster in in 2023 obviously we had The bank term funding program that
Didn't make things any more affordable Right the money print doesn't make Things more affordable uh but I think Again being that we understand that There are Lag effects from quantitative Tightening it's just going back to Patience as a virtue consumers need to Be patient and and you know let's move On to Consumers I had a subscriber on a Lot Jeff m i talk about him all the time He made a comment and he's more cons he Doesn't think there's going to be a Nominal crash in prices he thinks There'll be a real crash adjusted for Inflation guys and he made a comment and I was like this is one of the realest Things you could say right now for for Most consumers and what he said is like Hey guys if you want a 30% crash in the House market to be able to afford houses Then you need to re-budget right then You need to work on your bills and your Spending habits and I was like Jeff That's brilliant like I still think it's Going to be a nominal crash versus real But you know can we talk about what Consumers should be doing like right now To increase their purchasing power so You know God willing when rates go down And prices go down at the same time it Should be at the same time you know God Willing there'll be a lot of people that Are already qualified that can get off The sidelines and purchase that have
Been disciplined can you talk about what Consumers can do as far as spending have Purchasing power to make things more Affordable in the future yeah yeah no so Just think about it actually if you if You stop buying that one Starbucks a day For a year that is an $1,800 mortgage Payment like that's crazy or $1,800 for A down payment I I know guys I believe Me I used to be a doom spender I I Understand what that's like not feeling Like you're ever going to get ahead you Can't you make good money but you don't Feel like you can buy a home and so you End up spending on vacations and things Other things and I just would encourage People not to do that don't give up hope Keep saving because the last thing you Want in a cycle like this is to have ex Excess leverage because what what's Happening with these credit card Delinquencies is it's a terrible game Where as the interest rates Rose you Know they they were maybe paying down You know that those payments every month And then that interest gets higher they Can't they're paying less and less on Their principal and then they have less And less room and then suddenly you know They're kind of over the limit so my Point is these things you don't want That during uh a hard time if if you or Your spouse lose a job I mean that's Just that leverage can Crush you so you
Know I think just making little Different choices one thing that I think I I said on your show is just use your Debit card instead of your credit card For a couple weeks just do it just see If you can do it because it changes your Spending habits when you know that that Is reducing the money in your bank Account you really actually make Different choices and so I would just Encourage people not to give up and um You know some of these things we learned In Co like you know I started cooking Like crazy I mean I don't even really Enjoy going out to eat anymore because The service is so bad and the food's not Great so just think that through like You know can you have a couple different Kinds of experiences do fun things at Home I mean I I know I sound like a Public service announcement right now But you you can make it fun at home and And and not go out there Doom spending And that would be my biggest advice yeah I mean the reality is guys is most People are going to spend to the end and That's just how Society is I I feel like Every generation that goes by now and Things get worse spending habits get Worse and really if you can't save right Now right when things are relatively Okay the labor market at least still has Jobs although part-time jobs you know It's it's probably going to be harder
Going into a recession and so this is What I this is how and why people get Hurt so badly at least this is how I got Hurt so badly right before the last GFC Great financial crisis I spent like a Madman I was chasing that lifestyle that I was accustomed to from 2002 to 2007 I Was making a ton of money and I was Spending and spending spending like Crazy to to try maintain that lifestyle But what again I tell people Melody what I should have done is re-budget saved my Money and prepared for a Slowdown that I Knew was coming but I didn't do that I Chose not to listen to the people that Were being cautious I chose not to Listen to the people that said change Your life just right now you can get Ahead in the future storm coming I Didn't listen to that and so I think That one of the most important things People could do right now is consider What we're saying and we're not saying Spend your money it's opposite the rest Of society is telling you guys spend Money every single person in the Industry is going to Resort back to like Buy right now yeah we're saying and Honestly people like Travis you're Saying this for money for views and the Reality is guys if I could make so I'm a Realtor I've been licensed for two Decades I'm really good in real estate If I wanted to make crazy money I would
Just say bye now but I'm not I'm taking A hit on my Income and I'm trying to people yes what Not to do right have good credit you Know all these things but you know I see The defaults happening I see it Happening at a trajectory that it's Going to catch up I think you're right About 2025 I don't know exactly how They're keeping things so well propped Up 2023 2024 absent the deficit money Printing but it is scary people are Concerned people are frustrated people Like you been talk about two years I've Been talk about this two years and one And a half months they're like you're Wrong but I'm like we're not we I Miscalled to be quite Frank what was it In 2023 maybe two quarters in 20123 Where it blew up it doesn't mean we're Wrong what this is going on now guys is The quantitative tightening the lack of Sustainability is working its way Through the system and it is taking Longer than a lot of us thought but then Again we can't fathom the amount of Inflation and money Printing and the and How powerful that was with the injection Into people's account consumers account And so honestly like it's amazing Melody A lot of times all we need to do to get Ahead to get a great deal and stay Disciplined yes when everyone's not you Know like everyone's buying right now
The malls are full everyone's going Crazy that's when you don't do that and Then when everyone's get smashed because Unemployment no one can buy that's when We go by right but in the meantime what We're also saying you guys is you in Places like Texas we're in Texas we're In San Antonio where it's still dark Outside we're about to hit the metro and Give you guys Extravaganza really Excited about these Mentos actually uh But um I guess what I'm trying to say Guys is the bottom line here is is you Got to figure out what works for you What deal you're looking for there are Diamonds in the Rough right now but let Me explain what a crash means is there's Going to be diamonds everywhere that's Right but if you don't have the Purchasing power to buy that diamond a Metaphor obviously you can't you're Going to have to walk by the diamond Right and there's going to be all over But again we're not saying that you Can't find that right right now in fact I know you can depending on your Metro So long as you're using subdivision Analysis it's so important guys not to Get stuck in the macro data I mean the Macro data is important right right Quantity of tiing they're both important Right yeah the micro is super important Because you don't want to you know one Of the things that concerns me so much
About the new builds Travis as I've seen So many of them you have two obviously Is that one couple that moves in and We've talked about this you know they Think they're getting a great deal Except uh they bought and none of the Other homes actually sell uh somebody Decides to turn them into rentals maybe Or they leave them vacant suddenly this Young couple is you know exposed for Crime and and and then their home equity You know their their home prices are Going to be decreasing because suddenly The neighborhood turns to a rental we Have seen on the road these transition Neighborhoods where they had started out As homes for sale and they transition to Rentals and you know we've also seen how They've degraded uh in terms of just They don't I mean newly built and they Look really trashy already so it's just You have to know the micro you have to Look at that subdivision and you have to Know who you're buying from you know Just you you need to do your due Diligence this is the biggest purchase Most people are going to make in their Life it's not something you can close Your eyes and hope for the best yeah but So many people do close their eyes and Hope for the best and last question Melody Now obviously different people different Goals different Financial uh strength
Right what do you think from a Standpoint of affordability we're Talking about the average consumer not The above Average what do you think is more Important for affordability do you think It's the system or do you think it's the Consumer what do you think's more out of Whack like horrible spending habits Consumer or greed corruption fraud in The market they're probably equally Balanced I mean you know uh consumption Is 70% of GDP uh we talked about this so Every dollar you spend is a vote for Your reality um and so think about that And and we are voting for this reality Every time we excessively spend when we Don't actually have the money and that Is the system is set up to push this Push you into debt think about every Time you go to a Macy's and you say I I Want to you try to pay with your card Your debit card and they look at you Like your scum like you need a Macy's Card you don't have a Macy's card like Get a Macy's I mean our entire system is Set up to put us into debt yeah so when We talk about this you Know it's time to shake off the shackles Of debt and and to be free free to make Decis better decisions for your life you Know take the job you want not the job That pays you know $20,000 more or you Know work for yourself these are all
Things that you are can be a reality If you don't kind of you know become the Dead slave so I do think that we have a Lot of agency we just don't even know it Um so I think there's a lot of fraud I Think there's a lot of corruption I Think there's a lot of you know pushing People into things that you know into Homes when they shouldn't but we also Have agency and we need to be Accountable ourselves 100% And I'm going Just let me end here guys there's one Thing that I'm doing to make my life my Life we're talking my life now not Buying a house but my life more Affordable which helps me buy a house um You got to stay ahead of the inflation And you know there's ways to use the Inflation to get ahead and some of the Things I'm doing to use the inflation to Get Ahead instead of buying you know I don't Know junk and trash I'm buying t- bills I get 5% back on my money that helps me And then I'm also I'm using my credit Card to get cash back the important Thing about doing that though is Understanding that I pay the whole thing Off bills so I'm not getting any finance Charges right I'm responsible enough and I'm using a Wells Fargo I think it's Called active cash I get 2% back on all My purchases I get a couple hundred two Three depending on how much I spend $2
$400 back a month and so all of these Things help but the most important thing Is is like learning how to help yourself And I'm going to say that's more Important than what's going on in the System because the system I mean we can Break it the consumers are in in control We're the majority here and so I'm like It really kind of crazy it is crazy and It we could break it so you know it Starts with those guys and that's really What we're trying to say obviously it's Hard out there we're not pointing our Finger but more than likely you can save Money by rebud getting yes more than Likely you can U now other than that Melody anything you want to say to close Us out no I mean I just I you know it's It's great Travis to find a friend in This and that you know we kind of share This we both it's because of are bad Experiences um my I've made a lot of bad Choices the way I spent money before in My life um you know because I didn't Have a good guide there's no Financial Education in this country and so that's A big passion of mine because I think if Anybody truly understood an amortization Schedule they likely would probably Never take out a Mortgage and so I just you know that's What we're here trying to do is to give You like you say you know we can't make The decision for you this is
Your life you understand um but we want To arm you with the tools so that you Can go out there and get the information You need to make a good decision for the Largest purchase you'll probably ever Make so I'm just glad to find a friend In that yeah and I'm excited for today I'm we're going to see a lot of great Stuff so yeah absolutely absolutely well You guys you know don't forget go to Melody substack if you learned anything Give us a like shoot us a bunkers below Let us know what you learned if you did Learn anything so we know what to talk About um watch the Metro videos Hopefully they'll be released by the Weekend I think today by the time They're watching this is Wednesday so if It is Wednesday happy Wednesday if it's Not I'm sorry and other than that if You're out there investing in real Estate you guys know I wish you luck and We hope you win
