SPEAKER_01: 0:00

Welcome to First Time Home Buyer Podcast. Today we wanted to give a bit of a market update here. We're through the second half of 2025, just about into that fourth quarter, and we're starting to see some general shifts in the market, of course, but nothing drastic. And I've got with me, as always, Dat, who is going to give us a couple insights into what he's seeing and some advice as well. So let's get straight into it. What's the outlook for the rest of 2025?

SPEAKER_00: 0:33

So here it is, Phil. Plain and simple. Home prices aren't crashing at best. Probably going to be in the mid-six and maybe low six percent for conventional loans and FHAs and VAs. I honestly think that you know you might see them under six percent. I would say inventory is finally improving. So buyers have more choices, but unfortunately, affordability is still a little tough. That's where the outlook is for the rest of 2025. So steady market, no fireworks.

SPEAKER_01: 1:28

Yeah. And as far as home prices, I pulled a little bit of data just to get an idea of what we're looking like. And we have August numbers. Last year, August 2024, for California, we were looking at about$900,000 was the average sale price. We're at about 910 right now. We're not seeing a huge change. Uh this is this is pretty much on par with normal increase. It's a like 1.1% increase. You know, sometimes we see that go up two to four percent. So we're not seeing a huge movement up. We're not seeing a huge movement down. Now, again, that's single-family homes in California. But overall, what else are you seeing as far as home prices go?

SPEAKER_00: 2:22

I mean, most forecasts point to slight growth, like one to three percent nationally. I mean, some say closer to half a percent. I mean, Goldman Sachs is on the higher side, saying maybe three percent. But you know, you got companies like Zillow saying there'd be a mighty may be a small dip. So um, but here's the thing, Phil. It really depends on your market. So cities like Miami, Orlando, Nashville, Dallas, you know, you maybe see bigger pullbacks, you know, maybe over 5%. Uh, meanwhile, stable markets like the Midwest might still see gains. Orange County, where I'm from, we're still seeing growth in real estate as well. It's definitely a little bit slower, but we're still growing uh here in Orange County. So if you're waiting for a national crash, uh probably not happening. Um, but if you're in one of those you know markets that's a bit overheated, uh, you might see some breathing room if you're a buyer and you know, you may need some credits or from the seller to help you with closing costs.

SPEAKER_01: 3:27

The uh Orange County numbers are up 1.6% year over year when we're looking at August. So um, yeah, a little bit higher than like, let's say, overall California. But like you said, it's very dependent on the specific market. And I think that that's something that you really have to consider when you're listening to news stories or anything like that, that 20 miles away could be a completely different market, neighborhood to neighborhood, county to county can be a very different market. And so, you know, as much as we all would love to see home prices go down, we're not really seeing a whole lot of indicators saying that if they do go down, that they're going down by more than just a couple percentage points, which in the scheme of things is really not going to affect your overall purchasing power by very much. Yep. What can affect your purchasing power a lot are interest rates. And that's what everyone's glued to. So what's the rest of 2025 looking like, according to you, Dad?

SPEAKER_00: 4:33

So this is a big one because you know we've we see headlines about the Fed cutting rates here in September and December. Um to keep it simple, interest rates, we predict that it's going to go down to the low six, like I mentioned, maybe under six percent for some loan programs. So I would say it's about between six point three to six point five for most uh programs. And then, you know, could could we see rates in the high fives? Maybe uh, you know, on a good day, but I just don't see it breaking under six percent for the rest of the year. Um, and what's scary, Phil, that most people don't know about or most buyers don't know about, is for every 1% dip in interest rate is huge for affordability. That means that let's just say interest rates right now are 6.5% and it goes down to 5.5%, that 1% difference just unlocked 5 million eligible buyers into the market. So, yeah, if you're on the side alarms right now, you may want to consider looking into buying again and you know, see if it makes sense for you as we start to go into a lower interest rate environment in the next, you know, by the end of this year, in the next 12 months, and next few years. Um, so that's where we predict interest rates are going for the rest of the year is is gradually lower, but not a lot lower.

SPEAKER_01: 6:10

Okay. Yeah. It's in some areas it is a buyer's market, some it's still a seller's market. Um, but when those interest rates drop to 5.5 or lower, um it's just it's gonna be a frenzy. They there's just gonna be millions and millions of more people that are going to jump into housing and they're very likely going to be likely in that same kind of price range that you might have been looking at. And so there's gonna be a lot more competition, which means those homes are not gonna be worth any less because there's gonna be so much more demand for them. So you can expect that the starter home price will go up a lot more where there's going to be a lot more competition. So, Dad, you talked about rates changing. Can you give us just a real high-level overview of what kinds of things the Fed looks at when considering changing the rates and how that affects market rates?

SPEAKER_00: 7:11

Okay, so Phil, I'm gonna try my best to keep it very short and high level. Okay. So two main things, unemployment and inflation. So the Fed has to look at the inflation numbers. So inflation is high, but they have to keep rates high in order for prices to stabilize. So not go down, but stabilize, okay? And then unemployment or the labor market. So if you start to see unemployment rise, that gets the attention from the government or the Fed, okay? And when they see that, they need to lower rates or they start to consider lowering rates because they don't want it to get out of hand. So those are the two main factors. Yeah, there's other factors involved as well, but those are the two main factors that drive interest rate. Inflation is the main one, and then unemployment is the second. So, you know, inflation drives mortgage rates. That is what drives mortgage mortgage rates at the end of the day.

SPEAKER_01: 8:28

What can you tell us just to sum up what the rest of 2025 looks like to you?

SPEAKER_00: 8:35

The rest of 2025, I'm going to say that well, one for mortgage rates, it's it will gradually decline. Not a whole lot, but it'll gradually decline. But with the unemployment rising, we may be able to see a bigger improvement when it comes to mortgage interest rates because the Fed is really watching that right now. And then also when it comes to the real estate market, we're entering a cyclical uh season where homes tend to stay in the market longer. Not many buyers are out there looking for homes because everyone's back to school. Um, so that's the rest of the outlook uh for 2025 in a nutshell.

SPEAKER_01: 9:16

On average, we're seeing in Orange County homes are on the market 19 days, which is up 58% from August of last year. So they were on average uh 12 days, and now they're at 19. That's a a lot longer on the market, and that again is like an average. So we're definitely seeing homes stay on the market longer. Um, interest rates have not changed drastically in you know the last several months here, and I think you're right on the money there. Like we'll see a slow decrease, but we're not going to see anything drastic. Uh, but depending on what these unemployment numbers come out to be, inflation numbers, um, those those, if they're not what the analysts are expecting, then uh rates could change drastically. Keep an eye out on those rates, but if you are on the sidelines and with the current rates, you can afford a home, it's a good time to buy because the home prices uh right now they're they're on average running at about 98% of list price. So that's going to get you homes at or slightly under what they're listed at. Whereas they were definitely, uh, when we were looking at this, like some of the numbers from 2022, they were at 7% over list price. And so these are huge changes when you're talking hundreds of thousands of dollars. That's gonna definitely be something to take into consideration when you're planning out when you're looking to buy a home.

SPEAKER_00: 11:00

If you are considering buying a home and if you have the budget and you do find a house that checks the boxes for you, I, in my opinion, I would say the next one to two years may be a good time to buy.

SPEAKER_01: 11:16

All right, Dad. So give it to us straight. What's your advice for buyers listening right now?

SPEAKER_00: 11:23

For buyers, and this is what I say to everybody stop waiting for the perfect time. It doesn't exist. You know, if the home works for your budget and your life and your family, go for it. Rates are going to drop, they're gonna go up, they're going to go down, you can refinance then. Homes will always be for sale. It and just think long term. Real estate's not a week-to-week stock pick like a lot of people think. It's about where you'll be in the next five to ten years. So that's my advice right now if you're trying to buy your first home and you're listening.

SPEAKER_01: 12:00

Love it, Dett. Thanks for cutting through the noise. Always straight, always clear, to the point. Now, if folks want to connect with you, figure out their own situation, where should they go?

SPEAKER_00: 12:12

Yeah, you can go on our website, you can email me. Um, I do have an Instagram too. Uh my Instagram's uh, you know, personal and business, so you get to see some of my hobbies, but uh it's uh at datloans. And just hit the link. Um, you'll be able to see you know some of the uh courses that we have, uh, some of the links that's my useful calculators. Um you have a quick call, run numbers, and know exactly where you stand.

SPEAKER_01: 12:38

Thanks everyone for listening. That's your 2025 market outlook for the rest of the year. Until next time, stay tuned. And we will have an episode that's going to go into a lot more detail about the Fed and rates, if that's something that interests you. Um, definitely let us know and we'll put one of those together.

SPEAKER_00: 12:59

I am definitely excited for that one. Um, for those of you who want to know why, um, because I'm a big proponent of why things happen and why we think a certain way instead of just telling you. So if for those of you who want to learn more of how the market works and why what drives interest rates more in depth and what causes the feds to do what they do, um definitely tune into that episode.

SPEAKER_01: 13:24

All right. And we'll have Datt on for that one to give us some good information that uh for those analytical types out there, I think you guys will really enjoy. So again, thank you for coming on, and everyone, thank you for listening.