Sep 20, 2021
The Federal Housing Finance Agency (FHFA) recently published their House Price Index (HPI) for 2021’s second quarter, and today Matt and Garrett are doing a deep dive on the report. The FHFA HPI is a broad measure of the changes in single-family house prices based on data from all 50 states and over 400 American cities that extend back to the mid-1970s. Our hosts break down the most fascinating and relevant findings so that you can educate yourself and your clients about what’s currently happening in the real estate world, and solidify your position as a trusted, knowledgeable advisor.
Matt and Garrett discuss rising and falling real estate trends over the past two decades, and review the current top five and bottom five states for appreciation. They talk about the difference between how we view the marketplace in terms of supply and demand and transaction volume versus what's happening with prices, and they encourage listeners to follow up with your own research on the transactions behind the trends. They review the most interesting trends happening in cities like San Francisco, Idaho, the City of Boise, and El Paso, and Garrett explains why you should always “Follow the beer”. You’ll also hear about changes in average home prices versus annual income, accessible equity, and using this information to become “the source” of knowledge for your clients.
As Matt and Garrett point out, there is always so much going on behind the numbers, and it doesn’t take much to sit down each quarter and educate yourself on the bigger picture, whether that be in your own backyard or across the country. This is part of the value you bring as an agent, and helps set you apart as a professional who’s on top of important shifts and changes in the marketplace before they even happen.
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Episode Highlights:
- Today’s episode is all about knowing your stats and data, reviewing the numbers so you can be fully knowledgeable for your clients and demonstrate your professionalism
- Certified Ninja Coach Mark Johnson is great at reviewing Federal Housing Finance Agency (FHFA) reports and distributing them to the rest of the team
- The most recent FHFA House Pricing Index report on Q2 (download here) revealed what happened through COVID and immediately after restrictions started being lifted
- This PDF is an extremely useful tool and can be helpful with real estate reviews
- Page 10 illustrates the Monthly House Price Index for U.S. from January 1991 - present
- Matt and Garrett discuss rising and falling trends over this time period, including the 2008 Financial Crash and plateau in 2011
- There is a lot going on behind the scenes that is making people want to buy real estate right now
- Top five states: Idaho had a 37% appreciation rate in one year; Utah was 28%; Arizona 23%; Montana 23%; and Rhode Island 23%
- Alaska is currently the worst state for appreciation in the United States - 8% appreciation for the entire state
- Coaching through COVID actually became somewhat uneventful because every state was experiencing the same market
- We have been in a very strong seller’s market
- There are different ways to use this report - the key takeaway is to use it to educate yourself
- Q2 2021 was highlighted as the best quarter for the entire United States at 4.92% growth in just three months
- There’s a difference between how we view the marketplace in terms of supply and demand and transaction volume versus what's happening with prices
- Try to look into the transactions behind pricing trends and look deeper into the data
- Do not make real estate decisions based solely on this, but use it as a guide
- Appreciation trends in San Francisco, Boise, Idaho, and El Paso
- Remember the lily pad in the pond example - the goal is to notice changes coming before they’ve already happened
- Garrett’s mantra of “Follow the beer” - look at where businesses like breweries or tech companies are setting up shop
- It doesn’t take a lot to devote some time every quarter to review these trends and educate yourself on what’s happening
- The average home price has grown to $390,000, but average income has not grown at the same rate - how long is this going to be sustainable?
- Use this information to build your knowledge and help guide your clients accordingly
- Accessible equity and reinvesting in your own home
- You don’t have to have all the answers - this actually forces you to ask more questions and do more research
- Learning everything you can helps you “be the source”
Quotes:
“We are going to talk about some stats today. We're going to talk about knowing your numbers, knowing what's happening out there in the real estate world so that you can be smart, educated, trusted advisors, not necessarily reliant on everybody else to hand you the information.”
“When this was having this huge ramp-up [in 2006], the people that were educated in the marketplace were watching it and going, It's a false market. It was based off of lending that was getting out of control.”
“There's a lot more going on behind the scenes that are making people want to be buyers out there right now.”
“Idaho, ranked number one right now - 37% appreciation in one year! Twelve months - 37% appreciation.”
“For right now, I need to know the top five and I need to know the bottom five.”
“Coaching has been a fascinating thing through COVID, because it got a little boring. And I mean that in the best way possible.”
“This is why you see this in these numbers right now, is that we have just been in a very strong seller's market for the most part.”
“The grand conclusion is - be educated. Be educated on all this stuff, so that when somebody is out there going, Wow, man, the real estate market’s really doing well right now, you can be like, Yeah, let me tell you about how crazy it is right now.”
“I also like to look at the quarter appreciation, which Q2 2021 highlighted as the best quarter for the entire United States at 4.92% growth in one quarter - in just three months, which I think is very interesting to see.”
“When you're looking at this stuff locally, in your own markets, start to look into the transactions behind these pricing trends.”
“Do not go and invest in real estate based on this, but use it as a way to help guide you with what's going on.”
“If they continued at minus 1.5%, it's going to take a couple of quarters for you to see any major changes in their annual appreciation.”
“The goal is to notice that the pond is filling up with lily pads on the 15th day. Most people notice it on the 28th day, a couple days before the whole pond’s full and the change has happened. Our job is to notice it on the 15th day.”
“It's interesting, to watch San Francisco go through what it's going through, to watch Boise City spike the way that it’s spiking. There is a lot of money moving there right now, there are a lot of people that are pulling out of some of their other states.”
“There's a lot behind these numbers. And once you start to educate yourself in this, then you can start to see bigger trends, do a little bit more research. And it doesn't take a whole lot. Just ask questions, ask yourself questions and then that'll take you down a path.”
“My job is to know what's happening with real estate - in our backyard to across the United States. And you can all do it. The numbers are there, the information’s right there. It's presented to you every single quarter.”
“There's a lot of numbers coming out about growth, and you'll hear anything from, 17 to high 18% year over year, which is massive when you think about the average across the country. And it has brought the average home price up to $390,000.”
“Don't let the data scare you or put you in a position where you're saying, Oh my goodness, the sky is going to be falling at some point. Just use it for what it is - it's information and use it to build your knowledge. That's it.”
“Just from a personal finance perspective, be careful. Never over leverage yourself, no matter what the markets are doing.”
“You don't have to have all the answers. That's actually probably the best part is when you don't have all the answers. It forces you to ask more questions, which then helps you go explore so you can learn more, so that over time you can start to become the source.”
“If you're the source, talk about the attention you can get in the marketplace and the confidence with your clients - then you'd be able to do more business and smooth out your business. So no matter the market, you're the guy or the gal.”
“You have to slow down, do the work, educate yourself.”
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