Tracy
Hey, welcome to Albuquerque Real Estate Talk, the go to radio show for all things real estate in the heart of New Mexico. I’m your host, Tracy Venturi, and alongside is my fantastic co host, Tego Venturi of Venturi Realty Group, of REAL broker. Together we’ll be your guides of this exciting journey through the ever changing world of Albuquerque Real Estate. We’re so glad you’ve joined us. Whether you’re a first time home buyer, season investor, just curious about the market, we’ve always got you covered. So sit back, let’s dive into the latest news and trends right here on KIVA 1600 AM, and also on Facebook, YouTube, etc. Be sure to give a like or follow. And Tego, welcome. This morning, we have a very special guest.
Tego
We do have a special guest. Thanks for joining us again, everybody. We appreciate it and love talking about real estate. I saw a stat last week, 19 % of all the United States economy is driven by real estate. Wow. It’s a big number. One fifth. Big number. Yeah, it’s big. Well, the reason… Okay, let me set this up a little bit. So anyways, it’s Tego Venturi. And a lot of news stories hit this week. I’ll give you a couple of the headlines relating to mortgages. One of the headlines I saw on Fox Business was “real estate experts shredded Biden rule punishing home buyers with good credit. It is madness”, was his quote. I saw some others’ things. A lot of them were the right leaning media bashing on Biden, the Biden administration because of these rules. But basically, this is something that I’ve known about, we’ve known about for a while. And it’s these loan level adjustments on mortgages depending on credit score and other stuff. So anyway, I wanted to get the real story on it. We brought in the expert, Man Phan from here in Albuquerque. He is the area director, the Division Director for primary residential mortgage here in Albuquerque, one of the most experienced and smartest real estate mortgage brokers that I know in the Albuquerque area.
Tego
And so, Man, great to see you. Great to have you on and to break this down. And what is going on with these mortgage rules?
Man Phan
Thanks, Tego. Thanks, Tracy. There’s a lot of madness that’s going on, of course. Now, I’ll take it back a little bit. In the last few years, we’ve seen a lot of loan level pricing adjusters. What they are, they’re risk adjusters for us to price out a rate. What it does is it allows us to adjust based on pricing if a client is credit worthy, then it may be a cost a little less for that client to get into a home. But with the recent adjustments where it can be a political football is what you’re pretty much seeing right now is pretty much take from the rich and give to the poor. And that’s the reality is what’s going on out there. And it’s actually pretty damaging to certain homeowners and they cost it to certain homeowners. To give you an idea is that prior to a basic client that has maybe a 720 credit score with a 20 % down with this new adjustment, can potentially cost him by an additional half a % in interest rate just with the new changes which is going to be rolling out on May 1. These are things that has been going on for a few years now.
Man Phan
I don’t think that we noticed as much because in 2021, the average interest rate was 2.96. But Tego and Tracy, I’m not sure you guys remember, but buying an investment property, they started with a new LPA for buying an investment property or a second home in March of 2021. The difference in cost for a second home with a 20 % down would have cost you 2.25 % extra in points. And what points is the percentage amount. So you’re buying a $100,000 home, it will cost you an additional $2,200 just to buy a second home. Now, we don’t see that as much or is as impactful during that time just because rates are so low. And now, of course, with margin compression and everything that we’re dealing with, it comes to light. Now, I think that’s where I think where the news can really pick up on it, and it has impacted us. And there’s another adjuster I’m not sure if you recall, but there’s a debt to income adjuster that was supposed to roll out in February, but that was pushed back. There was a lot of push back from the National Association of Realtors and the Mortgage Bankers Association.
Man Phan
So it resulted in a delay and they pushed that back. And I think that’s going to be starting on September or August first or September first. And that’s anything over 40 % debt to income ratio. Now, saying that with all these different adjusters, it’s going to be very costly. You have the DTI adjusters, you add the credit score adjusters, all that stuff is going to be very impactful to us. Now, there are some pros and cons, and you can stop me anytime you ask questions, Terry.
Tego
Yeah, go ahead, Tracy.
Tracy
I was going to say, let’s find out your contact info and your NMLS number just to tell people how they can reach you.
Man Phan
Man Phan with Primary residential mortgage. My NMLS number is 492564. My phone number is 505, 2174032.
Tego
Awesome. Well, thanks for that. Okay, yeah, I got questions. Of course you do. I’ve got questions. So the way this is being reported is it’s basically punishing people that have better credit and giving people that maybe don’t have as good of credit, maybe don’t have as much of a down payment advantages over people that have a higher down payment and better credit. I guess the question for somebody that’s looking to apply for a mortgage, what is the sweet spot? What should they be looking for? Because we’ve always said if you’ve got a 740 plus credit score, that’s going to give you the best deal. Is that still the case?
Man Phan
Not necessarily. Now that out, you would prefer to actually put less down. So if you have a 740 credit score with the new adjustments, if you put 20 % down, it costs you an extra three eighths of a point in loan level pricing adjuster. But if you were just to put 5 % down, you actually get a quarter % in long level pricing adjuster. And now that’s our basis points, which equates to about an eighth of a point in rate. So actually, we warranty to put less down if you had a 740 credit adjusters. Now, some of the stuff don’t make sense to you. This is where it gets pretty complicated because there’s not really a sweet spot based when I’m looking at this because if a client where the adjusters are, where the improvements are is that you have lesser credit score. If you have a 660 credit score and you’re putting 5 % down, well, there’s about 100 bps savings in loan level pricing adjustment. Well, the problem with that is that you’re going to have still high cost when it comes to mortgage insurance. So there’s other better options when it comes to that.
Man Phan
You might go with an FHA loan. I don’t want to get into details in specific, but I just think this is more… Look, I hate to put my own thought process cost is behind this, but in the end, I think it’s going to be a net negative for everybody when it comes to this. And especially with the home buyers putting 20 % down. It’s going to be a bigger cost because the client’s not this doesn’t affect every client, but the clients with lesser credit, even though they put less down, I don’t know that’s going to be the best option for as far as conventional loans still. I mean, there’s other options because I was pricing out some mortgage insurance with a 5 % down with a 660. Well, it’s going to cost you? I think, 1.8 % on mortgage insurance, and that could go as high as 2.2 % on mortgage insurance. So it’s going to be costly. I just don’t know how much it’s going to benefit just anyone. I understand what the idea behind it. Now, there’s some great things that they wrote out where they removed… There’s an LLPA waiver for first time home buyers that meets 100 % area median income.
Man Phan
But again, it comes down to is I don’t know this is actually a benefit for even a first time home… I’m sorry, for lower credit scores buyers is what…
Tego
The thing that’s interesting… The thing that’s interesting is this is coming from the federal level and they’re just tinkering around with all these little things to do all these different things. And I think the big takeaway of what I’m hearing is talking to you that you live this, you do this every day, you train your team, you’re talking to your people about this all the time is you really need a loan officer that understands all.
Tracy
This stuff. You’re stealing my thunder. I was trying to get in on this conversation and say, We’ve got this financial genius on our radio show today and a brainiac sitting across from me. You guys are talking way above my head. What I take from all this conversation is why we encourage people to use local lenders and smart lenders like Man Phaninto here that we’ve got on who’s not going to just take a loan application and say, Here’s the program for you. They’re going to look at all the different circumstances around your situation and make sure you get in the right program that works for you. You might have 20 % down, but he might say, You might do better to do 5 % down and pay extra every month on your mortgage and you’ll have it paid off in 20 or 22 years instead of 30. So the benefits of local and someone that can really look at it are so huge.
Tego
Yeah. So I think that’s the takeaway here is it’s getting more complicated. We know that in the real estate side, there’s always more stuff going on. And just one last word I want to say on this is we have a housing shortage, we all know that. We have a housing affordability issue. It’s much more difficult for the median income person to find a home to purchase. It’s tough right now. They’re doing all this tinkering, but the issue is, in my opinion, it’s a local level problem. It’s local planning and zoning departments, it’s local regulations, it’s making it really difficult for builders to build, I think is what it comes down to. I know the city of Albuquerque’s got a whole bunch of stuff that they’re working on right now. This whole Housing Forward initiative, I think, again, same thing. They’re tinkering around the edges, and some of it may be helpful, like putting an extra casita in your property and stuff like that. But it doesn’t really get down to the core issue that we just don’t have enough housing units and we need to be building more. Let’s talk about mortgages real quick, Man, just in general and what’s been going on in the mortgage markets.
Tego
I know you’re, again, pretty wonky on this. You follow it all the time. Mortgage rates have been in this mid six range, I guess, for more qualified borrowers. What are all the prognosticators saying about mortgage rates here through the summer?
Man Phan
It’s most likely going to decrease. We’re seeing with inflation continued to drop, we’re most likely going to experience a relief in interest rates and mortgage rates. I really do feel, and I’m following pretty much all the experts here that by the end of the year, we should be seeing in the fives again, which is, I mean, again, I can’t predict it, but we have seen some relief in the last couple of months. I’m sorry, the last couple of weeks it crept up a little bit, but that’s going to be an ongoing process. But I do feel as long as it’s stable in the mid 60 s, I think the market is still going to be fairly strong here. Again, you’re dead on when it comes to it’s still inventory. It doesn’t matter what the interest rate is. There’s no homes to sell.
Tego
I was going to go into that data here just in a minute. In Albuquerque, it’s not good. Just people aren’t selling their homes as often. They’re not moving as often. And so there’s not a whole lot of things to choose from for people. But there were still 600 homes that went under contract in the last 30 days.
Tracy
In Albuquerque. We’re stealing your thunder here, aren’t we? Yeah, I know. So Man, any last words before we thank you for your time on the show this morning?
Man Phan
I appreciate it. I think this is a great… It’s still a great market. I’m still very optimistic and I always tend to try to be optimistic during these types of times and we still tend to be fairly busy. But I appreciate your support and how you support the market and letting us know what’s going on. Actually, I listen to you a lot of what you get to say. I know that data geeks like myself and Tego, we tend to try to speak over a lot of people and use a lot of language a lot of people don’t understand. But it’s like Tracy, you got to bear us down and make us reinunctiate pretty much everything that we read the day before. So I appreciate that. So thank you guys. But yeah, anytime you need to feel free to reach out to me, I’m with the primary residential mortgage. My contact number is 5052174032.
Tego
Great. Thanks, man. Thanks for all your support and thanks for all you do in the community as well here in Albuquerque. So we’re going to let you drop off and we’ll continue on. We’ll catch up to you later.
Man Phan
Thank you guys. Talk to you later.
Tracy
That was the perfect lead to your stats because you were talking about homes and that you had a whole summary. So let’s dive.
Tego
Right into that. Let me give you this. Again, it’s Tego and Tracy Venturi with the Venturi Group of Reel Broker and Albuquerque. We are doing show number 443, did we decide? Yeah, here in late April of 2023. And if you want to reach us, you can call us at 505 448 8888. Okay, there was a commercial. I know we don’t do commercials in the middle of our show normally, so we just go right.
Tracy
Through it. But I forgot at the beginning of the hour to say call us at 448-8888. There you go.
Tego
Such a.
Tracy
Good number.
Tego
Such a good number. Who picked out that number? That person was really smart.
Tracy
Yeah. He is very smart.
Tego
Okay, so get this. In Albuquerque, Greater Albuquerque area, there were 995 homes that came on the market in the last the last 30 days. Of those 995, 605 of them are off the market, meaning they’ve gone pending or they’ve already.
Tracy
Accepted a contract or closed.
Tego
Yeah, exactly. Which means there’s 300 and some that are active, still 300 and whatever it was, 390 basically, that are still active. But a lot of those just came on the market this week. So there’s that.
Tracy
So there’s time for them to go off the market by the weekend, right?
Tego
Yeah. So there’s only 163 of that 995 that are still on the market after 14 days. I looked through those and most of them, well, you’ve got a lot of higher end homes. We’ve got some really high end homes that are on the market, and then we have some lower end homes too. It’s that middle area is still doing really fast. But what I wanted to get to was the speed at which homes are selling. 506 homes sold in seven days or less. That’s 50 % of the homes. 50 % of the homes.
Tracy
That came on the market in the last 30 days.
Tego
When under contract within seven days are basically sold immediately.
Tracy
From my perspective, running the sales end of the real estate team, what that means to me is we have to be really great helping our buyers make sure they’re ready. They’ve got their lending in place, like what Man Fon was just saying, that they’re ready to be a buyer and that they can move on a house that they see. Otherwise, it’s going to be sold. They can’t wait. We had a client last week and they wanted to see a house nine days after it had come on the market. They called right away, but they said, We can’t see it till next weekend. And we were like, Well, let’s do a virtual showing, or let’s get you on Zoom and we’ll walk through it, or let us get you information because by nine days from now, is there any way we can get you in that house sooner? And of course, that house went off the market before they could see it. So we just have to make sure from our real tour standpoint that we are helping people be ready because if half of the houses are selling that come on the market within seven days, they need to be ready buyers.
Tracy
And if you’ve got a loan, we need to make sure you’re like a buyer with cash because the lender is a strong lender. And we have that letter from the lender that says, you’ve already applied, we’ve checked your credit and your income and you’re ready to go.
Tego
And speaking of local lenders, like we were just talking to Man there about working with local lender. And that is critical because it does matter. Who the pre approval letter comes from is going to matter when.
Tracy
The listing.
Tego
Agent and the seller when they’re evaluating multiple offers. A lot of little tips there on that.
Tracy
I derailed you, but just one more thing on that since we’re talking about the lending piece. There’s some great online lenders, no doubt. But when clients get online on some online site and put in their information, they get back an approval letter, it says you’re approved for this. They don’t typically have that long conversation with a vendor in person or on the phone because if they’re local, you can sit down in their office, which is great, and have that conversation about other loans that might work for them better. It just spits out what the system thinks that loan should be. That’s what we were talking about with Man F on. Go ahead, tell us more stats. Well, I.
Tego
Just wanted to talk about, again, it’s late April. I don’t have full April data yet for Albuquerque, but I will tell you this, it does look like sales are going to be down. We know that. This is the number of homes selling. We’re down about 30 % if I compare last April to this April so far. Again, same period. The number of people selling and the number of homes exchanging is just down, and we know that. However, at the same time, home prices right now for April median price up 6 % versus April last year, which is right in line with everything I’ve been seeing. There was a big story this week, Tracy, about this whole idea that people just are not… And actually, that’s a really good point. So what I wanted to say was the number of new listings is down 30 % as well. And last year it was very low. Again, if you compare April of this year to April of last year, April of last year…
Tracy
April of the year.
Tego
To April of the year before, it’s like people are just not putting their homes on the market as much. And so there’s been a lot of stories about that. Realtor. Com just did that study, right? Right.
Tracy
It was a very interesting study. You sent me the story. It talked about people who may have been sellers, but they’re not selling their home because they’re loan locked. They’ve got that lower interest rate and they really have to have a compelling reason to move. Of that, they said that 82 % of the people looking to buy and sell a home feel locked into their low rates, so they’re juggling. But the thing that was interesting is 25 % need to sell their home for some personal reason. There’s always a reason. There’s always a reason why somebody would want to sell. But part of it is also finding the right house. So if you sell, you can make sure you buy. But it also says that about 90 % of the people that are going to be selling, the ones that need to sell or decide to sell will also be buying a new home again, not just becoming a renter or moving into some other situation.
Tego
Yeah, that’s one of those funny things in the real estate, e con world. Some people equate real estate in the same way like a stock sells, like somebody sells a stock or a treasury. You sell it and then that’s it, you’re done. You don’t go and buy something else. Well, in real estate, most of the time when somebody sells, they’re buying something else. So it’s not like even if you had a whole bunch of people decide to sell right away, they’re still going to be buyers as well. So it’s this… What’s the right term? And I’m sorry, I’m not able to articulate this better, but it’s not a zero sum game. That’s what I was looking for. Right. So I.
Tracy
Said about 90 % are intent on selling and also buying. The numbers 86 % in that Realtor. Com survey. And since most of those seller buyers will be signing up for a new mortgage, it’s going to be a higher interest rate and their new home purchase will likely put an additional strain or change their budgets a little bit because their payment might be higher. Interesting study, but we knew it. But now there’s numbers to it that show it that people aren’t wanting to sell if they don’t have to because they don’t want to lose that great interest rate. Although we have helped quite a few people this spring that have given up a lower interest rate and have made the move.
Tego
Well, and the other phenomenon that we’re seeing is a lot of people that don’t need to sell to buy and they’ve got a moderately priced house, they become landlords. Now they’re going to keep that house, keep it as an investment property and purchase the next house.
Tracy
One other thing just along the same vein, Tego, is for people who want to sell but they’re worried, I don’t want to sell and not find the house that I want to buy. There are some really great loan programs out there right now where you can do some bridge loan different ways so that you can buy and then sell. Even if you normally wouldn’t qualify for the two mortgages, there’s some products out there that are great that could help people feel more confident in buying, knowing they also need to sell, but they want to make sure they find the place to buy first.
Tego
Exactly. That is a challenge for people. That’s one of the reasons we offer the instant offer cash offer option for people. If that makes sense for them, if they have to have a drop dead close date, they have to know exactly what they’re going to be netting out of the home. That is something.
Tracy
We offer. Great option because you can choose your date and you can put it out there a little ways. That’s a great option. Okay, what else?
Tego
I posted this. I did a video on it. I posted it on our Facebook as well. And there was a study that came out from the National Association Realtors just this week. And it talked about the wealth gains for homeowners and how it broke down by not just across the board, but it’s also based on different income levels. And then also by race as well. And it was pretty eye opening. It’s some of the stuff that you and I know about. One of them that they found is that homeowners have 40 times, not 40 %, 40 times the amount of net worth than renters. Now, and like I said in my video, we could debate cause and effect here, right? But the numbers are clear that homeowners do have a lot more net worth. And so in Albuquerque, the number was at the lower end, which is 80 % or lower, it was up to 80 % of the median income. People that owned a home in Albuquerque in the last 10 years, they’ve gained about 50 some thousand, 52,000 in just net worth just by owning a home. That was the lower brackets. The middle bracket, which is the 80 %, up to 200 % of the median income, it was like $89,000.
Tego
Then in the upper bracket, which is 200 % or higher the median income, it was $122,000. So over the last 10 years, we’re going back to 2012 now, homeowners have done pretty well in Albuquerque. It’s actually lower than some other markets, which in my, from a total e con standpoint, I like that because it’s slow and steady.
Tracy
Yeah, slow and steady.
Tego
The other thing that was interesting is that the time, the ten year, the time that people stay in their home, the average time in their home, people in the lower income brackets was longer. It was 19 years where the upper income bracket was 14 years, which is still a lot higher than we’ve always thought. There used to be this thing everybody said, Oh, average time in a home is seven years. It’s like, No, it hadn’t been that long. It hadn’t been that way in a really long time. People stay in their home a long time. Going back to what we were just talking about, I think that’s going to go up. People are going to be staying in their homes longer, especially if they’re locked in at those 3 and 4 % mortgage rates. Interesting study, but 19 years on average.
Tracy
That’s a long time.
Tego
The home.
Tracy
Ownership numbers are interesting, too. Good information to go.
Tego
Yeah, it’s good stuff. Tracy, if somebody wants to reach out to us, just talk about getting their home listed and sold.
Tracy
What do they do? Well, sure. The first thing is just reach out and we’ll talk about what the goal is and how they want to be worked with. Do you want to come into our office and talk about the process? Do you want an appointment at your house so that we can go through it with you and talk about how we market and sell and talk about your goals and your timeline. A lot of times people think every one of those first appointments about selling a house has to be in their house. And that’s not true. We’ve done plenty of in office appointments and gone through everything, and we focused on the goals versus their house.
Tego
And of course, a few years ago, we did a lot of virtuals.
Tracy
We did do a lot of virtual a few years ago, and it worked really well. So we can still do that. So we can do virtual yet today and have you walk us through your house if you want. But a lot of people, their house isn’t ready to be on the market yet, and they’re hesitant to call and reach out because they think their house has to be show ready by the time they do that. And honestly, we’d rather see your house how it is to help you put together and find resources for you if needed, so that your house can be show ready when the time comes. Because a lot of time goes into getting your house top dollar condition, right? To be ready and have it presented as best as you can. We know not everybody presents their house in the same condition. Sometimes we’re working with the state properties.
Tego
Well, I want to talk about that because I think it’s critical because I think some people may be hesitant to call a real estate agent, realtor, because they feel like, Oh, my house is a mess and I don’t want to show it. I don’t want anybody in my house. But we have options for that. We have ways we can help people with that.
Tracy
We absolutely do. The best thing is to schedule a time to talk with or meet with one of our main home selling partners on the team that really specializes in working with home sellers. Sometimes it’s me, sometimes, most of the time, it’s one of our home selling specialists because that’s what they do every day and that’s what they’re best at. But scheduling that appointment, whether it’s a phone call first, an in office appointment first, or in the home first, or via electronic means, Zoom or FaceTime or something like that works as well. Yeah, for sure.
Tego
There are a lot of people that aren’t real estate professionals that aren’t licensed that are doing a lot of marketing to say, I will give you cash for your home. You see the signs on the side of the road? Cash for your home. I just want to caution people to proceed cautiously with that because we do see some deals going through where people could have sold their home for a lot more money. Even with.
Tracy
Another cash offer. Exactly. Not necessarily with all the showings and things.
Tego
Exactly. It’s a really.
Tracy
Good point because we have a lot of ways to get somebody a cash offer or an offer with a loan that might net them a lot more than some of the cash offers. One of the things about working with the realtor is our code of ethics is honest and ethical, and it’s very important to us. That’s our livelihood, right?
Tego
Well, one of the things in the realtor code of ethics is we have to give what we feel is the true value of the property. We can’t undercut it or overvalue it for some reason to benefit.
Tracy
And we’re going to give data that the agent the best we can because not every property is easy to say this is the value of that property because of the variables and we’re looking for other properties that are like kind. Hey, we’re in New Mexico. It’s hard to find something very similar to some of our unique properties. But in any event, when people are working with cash offers, it’s always best to also call us and have us get some information and maybe present a different cash offer to make sure that you’re being well taken care of.
Tego
Yeah, it worries me and bothers me when I see people maybe leaving money on the table when they didn’t have to. Even though they’re in a bad situation, distress, whatever, they just want to get done with the home, I get that. But even in those cases, they should be shopping around for sure. Yeah.
Tracy
I think we’ve come to the end of our time here today. We’re done.
Tego
Tracy, how to get people get a hold of us if they want to talk real estate. Give us.
Tracy
A call at 448 8888. Obviously, we’re online at welcomehomeabq. Com. If you need Man Fond’s contact information, we can certainly get you that as well. Always happy to be here and presenting our take on real estate.
Tego
Appreciate Man being on talking about mortgages and what’s going on in that world. There’s always something fun going on in the real estate world. We’re the Venturi group with Reel Broker. You can reach us at 505 448 88.
Tracy
Make sure to watch us on YouTube. Follow us on Instagram. Give us.
Tego
A subscribe on YouTube. I really could do some more on that. Actually, we’re doing pretty well there.
Tracy
This was KIVA 1600 AM, and we’re always happy to be here. Until next time. Thanks.