Tune in to this week’s edition of Money, I’m Home as Lynne is joined by Consumers mortgage expert David Pendley as he forecasts the housing market for 2022.

 

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0:00:06.5 Lynne Jarman- Johnson (LJJ): Money, I’m Home. Welcome in, I’m Lynne Jarman-Johnson with Consumers Credit Union, from finance to fitness, we’ve got it all. And today we have a very special guest, David Pendley, he’s our Vice President of Mortgage Lending, and that means houses, everybody, houses. And I’ll tell you what, we have had quite the year and heading into 2022, David, we thought we’d touch0base with you and see what’s going on in the marketplace.

0:00:30.4 David Pendley (DP): Well, that’s great. Good to be here, Lynne.

0:00:32.6 LJJ: Tell us a little bit about in the last, I’d say, six to nine months, all of a sudden… Now we know there was always an issue with inventory, but it feels like, boy, this market’s tighter than ever.

0:00:44.4 DP: Yeah, it’s like a convergence of a perfect storm with these low mortgage interest rates, a very robust economy, whether it’s real or not, or subsidized or not, we don’t know. But it’s quite robust, everybody feels very bullish about their jobs and their job opportunities, which is causing a lot of demand on the housing market, and we’re just now starting to see houses sitting, gosh forbid, over three days or four days on the market, but they’re still selling very quickly. And so when you see a nice house with not a lot of oddities about it, maybe a good location, fairly priced, they just don’t last. And so, it’s still a great time to sell a house, and it’s a great time to buy a house, but the key is to find the right house at the right price without overpaying.

0:01:39.1 LJJ: You know, that’s what’s so interesting to me is the overpaying, because the numbers that I’ve been hearing that are coming back are almost staggering to the point of you’re thinking, “Well, how can that be effective long-term?”

0:01:52.2 DP: Yeah, no, that’s a great point. And I always tell people the endgame is not to buy a house, the endgame is to buy the right house for you. We’ve had people where they get in bidding wars, they lose one, lose one, lose one, and then they finally find a house and they get it and they accept it. And then after closing, they’re like, “I don’t even like this house.” They thought the game was to get a house. “Yeah, I got a house,” but it wasn’t the one they wanted. I really like to encourage people to be patient, the market will open up, the inventory will come back on. It just may take three, four, five, six months. We’re starting to see it come back on, more houses entering the market on a daily basis, once we turn the corner and enter into 2022, all projections are that the inventory should open up a fair amount, but you don’t need to overpay for a house and you don’t have to buy a house that you don’t want. Find the right house.

0:02:49.1 LJJ: Do you have any stories like, I know you have so much rich history in the mortgage industry, is this timing like… Can you remember any time like it?

0:03:00.7 DP: No, I can’t. I’ve done this for many, many, many years. We used to think how long our house is generally on the market, they call it turn cycle, 45 days, 60 days is a fairly quick turn cycle. Homes are on the market and then they sell within 45-60 days. Right now, we’re measuring them in hours, they’re not sales, they’re auctions. So, you’ll see a price on a house, only just completely disregard what the price is, because it’s probably not going to sell for that if it’s normal and there’s nothing weird about it and so forth. So no, in my 30-plus years career, I’ve never seen anything like it. I would say it would be sustainable if it was happening in isolated pockets of the country. Let’s say, we’ve seen this in Seattle or San Francisco or just different pubs, it’s literally happening in every single market. So, the concern is there’s only a finite number of buyers, ultimately and someday, the buyers are going to work their way out of the market and demand will not be as high, and then they’re going to have to actually lower prices on homes. So, it’s just a time where I would not get caught up in the euphoria and understand that I want my house to be worth what I’m paying at least a year or two down the road.

0:04:15.4 LJJ: Right, right. Hey, so 2022 is coming along and the pandemic, we still are talking about this, David, which is something that we thought, “My goodness,” you know that it was going to last this long. I think that has had something to do with the housing market too, don’t you? Didn’t people like really take stock of what their life was and where they wanted to be? Has there been a lot of movement with that?

0:04:39.2 DP: Yeah, I think there has. It has created more of a nesting environment. “I want to find my house, I want it to be my fortress,” if you will, “My safe place.” We’ve seen a lot of people buying homes and improving them and doing the new kitchens and the finishing the basements, and really making it “my true, true home”. What’s been interesting is the concern and/or fear of the COVID variant, it’s kept rates low. Right now, we’ve had full intention we were going to be in the fours or maybe bumping against 5% right now, but this new variant, if COVID is bullish for the mortgage bond market, which is keeping mortgage rates at that 3%-3.25% range. It’s not too late if you haven’t refinanced, my goodness, call Consumers now, because you have not missed the boat. As we turn 2022, there’s a really good chance, if you’re buying a house in the first half of the year, you will be in the threes. So COVID has had a multi-variable effect on the housing market, it’s kept interest rates low, it’s also kind of changed the way people are shopping and looking for homes.

0:05:54.0 LJJ: Tell us what are the top three things that people can do. It sounds to me like you’re thinking, “Hey, patience is a virtue in a market like this,” and it’s okay to be patient. But if someone really is ready to do something, whether that be refinancing or getting that mortgage to get that house, what are the top three things they should do?

0:06:13.7 DP: Well, I think the first thing you want to do is talk to a trusted lender, like Consumers. Have somebody in your corner who’s going to advise you, we call our mortgage loan officers, sometimes we refer to them as mortgage planners, because they’re planning the comprehensive view of the debt side of your plan. So somebody, and talk to them about qualifying and what’s the best way to set the stage for me to buy my house. A good mortgage person in your corner. The second thing I would say is to start really identifying what do you want your home life to be like. And geographically, do you want… Are you an urban setting or are you a country, or you want to big house, a small house, how are you going to actually use them. And really think through that and come up with some non-negotiables, “We are going to have a basement. We’re going to have a large backyard. We want to live in an urban setting,” whatever the… You’re not going to compromise, you’re going to wait if it takes us six months to a year, that’s fine, you’re going to find the right house. So, you identify those variables.

0:07:14.2 DP: And then the third thing is to try to find a strong realtor or real estate team to help you find that house. They know what’s coming on and what’s going to be coming on, and they can be your advocate and help you find those key variables that you want in your house. So, if you got the financial part of it all out of the way with your lending team, you’ve kind of identified what you want and then you’ve got people out there actually bird dogging and helping you find that house, so you’re ready to move when the right house comes on the market.

0:07:46.8 LJJ: Well, I love the fact that you say “team”, because that collaboration between a mortgage loan officer and a realtor and you can become really the make or break to get that house.

0:07:57.2 DP: Oh, absolutely, absolutely. And you want to reach out to people who you really feel they have your vested interest. Most professional realtors and loan officers, they know that they’re going to probably work with you at some point, so they set their needs aside and they really want to serve you in a fiduciary responsibility and really care for your needs as you embark on this huge purchase.

0:08:21.1 LJJ: Well, David, thank you so much. Hey, you know what, we are going to, in 2022, make a very serious effort to make sure that we have you on once a month to talk a little bit about what’s going on and out there in the industry. It is the most important purchase that you are going to ever make in your life, and we want to make it so simple.

0:08:37.9 DP: Great, it’s been a pleasure to be here.

0:08:40.0 LJJ: Thank you, David. Hey, thank you for listening, if you have a topic you’d like, just send it our away, and I’d like to thank Jake Esselink. Jake, thank you so much for your production skills. Everyone, have a wonderful week. I’m Lynne Jarman-Johnson with Consumers Credit Union, Money, I’m Home.

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