Will Housing Market Explode if Rates hit 5.8%??

All righty, folks, we are going to talk mortgage, mortgage rates, Barry Habib, his call on mortgage rates over the next six months with Mr. Stephen Dow. How are you doing, sir? I'm doing fantastic, and yourself? I'm doing really, really well. Why don't you do that marketing thing so we get it out of the way and we get into the meat of our conversation? Perfect. Although I work very happily for Velocity Mortgage Capital, all the ideas and topics discussed on this channel are that of my own. So let's get it going. The first thing I want to ask, I just want to remind people, Stephen, how long have you been doing mortgages? Let's see, around 1995, late 1995. So we're going- So we're talking 30 years, right? You've been in mortgages 30 years. Almost. And again, you're not in the business of forecasting mortgage rates, but you've been around the block enough to understand the tea leaves. And you probably have a decent feeling if mortgage rates are going up or mortgage rates are going down, right? Is that reasonable to think? I mean, I try to pay as much attention to certain metrics that usually tell you, because it's just, you know- Yeah, it's math. Yeah, it's just simple math. And if you've studied enough, history kind of typically repeats itself. If you can see the markers, yeah, it's not like predicting, it's just educated decision, educated guess. Yeah, like you said, it's cycles, right? Things move with the wind, right, if you will. Right. Nowadays, when you have access to a lot of different platforms where you can get information, you can almost sense where it's going, and then you pick up on other certain factors nowadays with geopolitical events and other local or national events that could impact your business. So if you stay pretty well informed, you can kind of make a pretty good guess. Yeah. Yeah. And that's what I do, right? I've been studying the economy for the better part of 30 years as well. But I want to talk about something, Barry Habib. Again, I want to give Barry Habib all his flowers. He deserves the credit. He's won the Crystal Ball Award multiple times. He is the shit when it comes to mortgage rate prediction. So all of that said, Barry Habib is calling for 30-year mortgage rates, Stephen, to be 5.8% in six months. What say you? Five? Wait, you said 5.8? Yeah, in six months. Today, they're 7.1. Yeah. I mean, he must be very, very, you know, positive or, yeah, I think he's just optimistic for maybe the new administration coming in. I don't know because this is hard because, you know, from my hometown, stuff like that, just a lot of going on, you know, over there. And, you know, I got family back there. My sister, who still lives near there in Sherman Oaks, she's having to do all the smoking stuff. So just a lot in my mind. But, yeah, I mean, how to get to 5.8% from here, not to then? It could. I mean, you just never know, but I don't know if there's going to be a resurgence of, you know, new... Is it fair to say that that would not be your call? You would not... That would not be my call. That would not be my call. No. I mean, but I'm not really, like, a super big gambler guy either. You know what I mean? But that wouldn't be my call either. Well, what I wanted to talk with you about, again, Barry Habib deserves all his flowers. He's the best of the best. Let's be clear. I hope he's right. I'm not Barry, though. Yeah. Yeah, right. I hope he's right. I'm calling 7. Barry's calling 5.8. Barry's got the hardware. Barry's right a lot. So, you know, it is what it is. But I just wanted to talk to you because, again, the beauty of this is I think we have evidence. More importantly, I think we have multiple pieces of evidence that if mortgage rates are even close to 6, let alone below 6, that demand's about to go bonkers. What do you think? Oh, yeah. Below... I mean, anywhere below 6, I mean, it's going to go bonkers. It's going to go ham. Yeah. Because there was a lot of people that had to take certain loans that they didn't want to when, you know, it spiked up really, really fast. And I think that that's a good marker to where you're going to get a good swath of people that are able to refi that makes sense. Otherwise, it moves just a little bit in the cost. But if it's significant enough and it's long term, they might just pull the trigger because it's about the cost at that point. I think it's multifold. I think you're absolutely right. And again, I love giving credit to people that do good work. Mike Simonson on Housing Wire did a great article I read this morning. I think it came out yesterday, talking about 17.2% of all mortgages are over 6%. Wow. Yeah. And that's the highest since like 1994 or some crazy... like 2004, some crazy number. So years ago. And oh, by the way, the longer rates are over 7. That rate, that only goes higher from here, right? Every new mortgage makes 17.2% get higher. To your point, though, if you're at 7 and six months from now, we're at 5.8. Let me just ask you this. If the average mortgage rate is 5.8, with your 30 years of experience, would it be unreasonable to think with a couple of points, you could get to 4.99? Oh, yeah. Oh, yeah. Yeah, yeah. And so, like I said, it would make sense. Yeah. I mean, there are some, you know, new construction for developers around my area right now. I mean, they're buying their rates down to like four or something. Yeah. Yeah. I mean, for a little bit about 3.99, but it's now around 4.99, 4.875, something like that. So, you know, but if you can get that on a refi, oh my God, just buying some points. Yeah. Yeah. That's what I'm thinking, right? If Barry's right, and let's all hope he is, right? I, you know, if you're at seven, and you know, you like your home, you just do, you don't even do a cash out refi. You just do a rate and term. You spend two points to buy it down to 4.99. You must be saving a thousand bucks or 800 bucks or something. Pretty close, depending upon what your balance is. But yeah, I mean, it's just simple math and what's really impactful to your life as far as the, you know, payment relief and what makes sense. Sometimes you can refi, and I used to work for a certain, you know, mortgage or brokerages where it was just all built in. There was like no money out pocket. It was instant refi, super fast, streamlined. Uh, you know, I would just tell them how much you save. And since you didn't come out of pocket, I paid for the appraisal. Wham, bam, thank you, ma'am. I was done the loan in like two weeks. So yeah. Yeah. If you're dropping rates that fast and all people just, all I have to do is just call and just. Yeah. We will do streamlines. Like we did FHA and VA streamlines were a big thing in, in, uh, 24 for a couple of months. Right. They'll do streamline conventionals. It'll be, it'll be wild. That's what we used to do. It was automated. Everything was just like, I didn't even need a lot of, you know, you call someone up and say, Hey, you want to save $777? They called us. It was like, you know, like a trophy number. They called it. And we just feel the cause. It was just like, you just had to share it and make money. That's all you have to do is just, you know, and I talked fast. So I was like one of the top guys, but, um, yeah, but also let's talk purchases. Purchases are going to go through a roof. How many people are on the sideline at 7% that aren't on it. Right. But there's going to be a ton because yeah, there's going to, there's still a demand. It's just what's affordable. That's the real key. It's not like, Oh, there's no demand demand out there because it's not affordable, but life cycles, people need to live someplace. People need to expand. They're having families. They, you know what I mean? So that's never going to stop. It's just whether or not they can afford to buy at those prices. So you're going to have the ebb and flow don't know if sellers are going to get the, the, the, you know, get, get, get, uh, uh, get stuck down with reality and get kind of, you know, with the program, maybe we might have a little bit more, more action now, but we'll see. Well, that's the other key that people need to realize is if you get rates down to four nine, nine, what might happen. And I actually think it will happen to some extent is the move up buyer unlocks. And that's why the freaking real estate markets in a depression because the move up buyer is stuck, but you know, you, you have a three nine, nine, but you need a bigger house. Cause you just had another kid. You might take a four nine, nine, but you're not going to take a seven, nine, nine. Yeah. No, that again, that's where a lot of stuff is just locked in. And so, um, but again, I think that goes back to what you were saying before with the, you know, uh, higher for longer kind of a thing. And once that drops below that, like 6%, that's kind of like the psychological number, you know what I mean? Yeah. We're building a big compression. Yeah. You know, like it's almost the exact same thing. If I'm selling 6.125 or five nine, nine, essentially, you know what I mean? When it comes to the trigger, the five, nine, nine, the five handles. Yeah. You know what I mean? So that's the key, but, um, no, it's going to be interesting, man. Again, that's why I kind of like working in this business. It's always pretty exciting because there's certain things that you can do to prepare. And then there's certain things that just totally out of your control and you're just along for the ride, you know? Yeah. At the end of the day, folks, this is going to be very interesting. I think we should all, I don't know. I don't know. You tell me in the comments below folks, should we hope Barry is right or should we hope Barry is wrong? Cause I can look at it both ways. I think for the real estate industry, for mortgage brokers, clearly we want Barry to be right. Right. Um, if you're a real estate investor, you're probably okay with him not being right. At least not being right. Cause I think Barry's going to be right long term. Right. I just, I mean, that's almost everybody will be right long term at some point. It's like, Hey, I told you so. Yeah, but it took 30 years. Let me be more clear. I think Barry will be right in the next 18 months where I, where I kind of just go is the six month call. Yeah. Cause it's so fast, man. I mean, look at how fast 2024 went by when he's saying six months. Bro. Come on. Yeah. Yeah. I mean, it's, it's just getting like the world's just getting crazier and crazier as we get closer to, to, to Trump getting the actual office. You know, he's not even actually an office yet in the world. A little crazy. You know what I mean? Dude, I'm just, you know, preparing. So six months, man, we'll see. Um, I hope he's right. I mean, let's, I have, I, I, I am too. That's where the, the, you know, the temperature is, you know, in the market that should trickle down to me. And so if that trickles down to me, I'm now selling better rates. And so good for you. Yeah. So folks, at the end of the day, this was a fun conversation about what's coming, but don't forget, you can do business now. Velocity mortgages does portfolio loans, 50, 40 tens, uh, flip loans, all of that stuff out there. Stephen, if they want to talk shop, what did they do? Just email me again. What's on the screen. Um, uh, that's doubt at velocity mortgage.com in the subject line, please put the acronym O R A T which, uh, basically the acronym for one rental at a time, just so we make the past the firewall, um, body email, brief description, you know, what you may be looking for. Property address is super helpful. At least city and state to make sure I lend there. And then your mid FICO score best phone number to reach you at. And I'm pretty much all caught up now. Um, there shouldn't be any other delays. I was for about a small window, about a week where I was about a week, week and a half behind only because it was just, yeah. I mean, I was gone for 20. It was bad, dude. I don't know if I'll ever do that again. And that's, I'm just still working on a vacation, but this was the first time ever in my life where I totally, truly, actually I lied. I was, I plugged in for a couple of days, but the majority of the time I was fully off, but never again. Cause you come back and just all hell breaks loose, man. So, I mean, you have a team that tries to help out, but they got their workload and you got my, you know, avalanche of workload and they're like doing the best they can. So, you know, but they were wonderful and I appreciate them anyway, Michael, thank you for everything. You have a wonderful weekend, brother. Later, man. Take care.