05-27-22 Tech in Real Estate News | Home Price Drops

Today we're covering a range of topics, such as 30 year versus Adjustable Rate Mortgages, cities with a high likelihood of home price corrections within the next year and three ways on modernizing real estate.

Transcription

Ariel Herrera 0:00

Hey everyone. Welcome to the tech and real estate news podcast. Today we have some interesting topics to discuss, including 30 year versus Adjustable Rate Mortgages, cities with a high likelihood of home price corrections within the next year and three ways on modernizing real estate. My name is Ariel Herrera analytics aerial channel, we bridge the gap between real estate and technology. The tech real estate news portion is fairly new. So if you enjoy this type of content, then please subscribe as well join the Facebook group so you get the latest news. For our first article, Redfin did an analysis in comparing arms versus 30 year fixed rate mortgages. They say that homebuyers can save over $15,000 In five years of an adjustable rate mortgage, but it comes with risk. What are the differences between fixed rate and adjustable rate mortgages? Well, fixed rate mortgages are typical use of the ones that most homebuyers whether they're a first time homebuyer or an investor would use its 30 years at the same rate that you're paying, and it protects you from sudden changes in mortgage rates. Now adjustable rate mortgages. Someone may want this paper that because they're actually set below the market rate. In this article. Redfin touches that a 30 year fixed rate mortgage as of May of 2022 is 5.3%. Whereas the five one adjustable rate mortgage is 3.98%. So we're talking about a 1.4% difference, which could really mean a lot going down the line. Now, adjustable rate mortgages, typically are cheaper within the first three to seven years. However, there is a reset period for these rates, which could make it risky in the future, as we remember, in 2008, arms had a huge factor in terms of bringing down the economy. Some of the bars were drawn to arms in the early 2000s, due to their low initial teaser rates and option for a zero down payment. However, it became problematic when rates reset higher and many buyers can no longer afford their monthly payments. However, in Redfin's article, they detail that this is a different time period. So even though arms are very risky, then banks do a lot more due diligence today to check if buyers will be able to cover the increased costs when the loan resets, for example, Redfin's own Bay equity home loan, so their own mortgage company requires a downpayment of at least 5%. So there has to be some money down, and a minimum credit score of 620 and a debt to income ratio of no more than 50%. So even though this type of loan could impose some risks, there are a lot more guardrails around it now, the analysis that is done from all the way to 2003 to 2022, shows that arms can be considerably beneficial based on the spread as we could see, between May of 2011 all the way to May of 2018, there was a fairly big spread about one to 1.5% between knees, with a break between 2019 to 2021, were fixed rate mortgages and arms were practically at the same rate. But now we see that disparity again. So arms made up 10.8% of all mortgage applications in the first week of May. So we see that people are actually taking advantage of this large spread in order to minimize their payment. And this is the highest share since 2008. I'm definitely going to keep arms in my radar, I'm also going to be keeping 40 year mortgages in my radar as this could really mean a difference of increasing cash flow based on lower payments. The next article is published by Forbes, and they stated the odds of a home price correction just spiked. So they received an analysis from CoreLogic, where CoreLogic measure 392 regional housing markets, and they basically did some sort of forecasting to predict the chance of a price dip within these markets between now to next year between March 2022 and march 2023. Overall, CoreLogic predicts that us home prices will rise another 5.9% that as we know, real estate is hyper localized. So just because the overall market may rise doesn't mean particular areas well. So they have this really awesome chart where you can visually look to see what areas are at high risk for having price drops. And why do we care about price drops, we'll say if we're looking to buy or acquire properties, this could be your way to get properties at a discount. However, if say maybe we're a flipper and we're looking to sell this could really destroy our profits. So it's important to understand trends and prices within your market of those markets with a high chance over 70% of their price dip.

There's only a few but they're located on the west. Those markets include Lake Havasu City, In Arizona, Prescott, Arizona, Stanford, Connecticut, as well as Hawaii, even though I'm not in these markets, my best guess is that after the pandemic, a lot of people moving from California to these other states, like Oregon, Arizona, they were exploding prices. We have engineers that are making north of $300,000 a year. And they can buy some of these properties all out with cash. So prices were really, really exploding in these areas more so than others in the country. I think that's a big reason why we see that these artificially high and these price drops may come sooner for these markets, I do want to highlight some other top markets. So specifically for the South East area, Florida, which is the market that I'm in specifically in Tampa, as well as Texas, and then the Carolinas, we could see that as a very low. So zero to 20% chance that these markets will see a decline, there's still a lot of demand. We do have a lot of baby boomers that typically moved from northern areas like Chicago, Detroit, states, like New Jersey, New York, and they come down to states like Florida or Texas to retire as we know baby boomers one of the largest populations that we have. So I do agree with CoreLogic thought even getting to look at the data but just understanding trends that these areas are likely to continue to see increases. Our third article, the modernization of multifamily real estate, three technology trends that Forbes highlighted. Of those three, I think these are very, very important. Probably the most that you can capitalize on right now is CRMs. Specifically, chatbots have been really imperative to help avoid a lot of those manual tasks, such as data entry scheduling appointments. And this helps for sales agents, real estate agents to be able to focus more on converting leads, rather than that manual upfront process of acquiring or of just setting up a meeting with the lead. Then for virtual reality. This is a space that became really imperative, especially after the pandemic, during the pandemic, there were a lot of no in person showings or rental properties throughout the country. In this case, a lot of these tours became virtual, whether using FaceTime or actually setting up virtual reality or Matterport. In order for those to feel like they're actually there, even though not physically present, linked to space is going to crease even more, especially with new development, there was a recent apartment building owned by I believe 11 that they're trying to create. And they've already sold out 90% of this new development that hasn't even been built yet, just by allowing investors to see what the building's going to be like, as well as the units through virtual reality. Now for one of the most important parts that we could use today, our CRMs CRMs allow us to capture our whole flow of our deals to lead generation, creating documentation, and ultimately being able to track our analytics. If you're still doing things only in Excel sheets, please please, please get away from that because there's room for our and it's not the best practice and starting up a business if you're a wholesaler, or a real estate agent, or an investor looking to acquire properties at scale. So Forbes actually conducted a review of more than 1 million leads. And they found that if a response from an agent's like a real estate agent comes between one and six hours after the initial inquiry, the prospects are 32% less likely to convert. So that means if there's a lead who's interested to sell their property, and you're not immediately texting them safe in the first minute to 10 minutes, they're most likely have 1/3 chance of just not converting and then after six hours, the likelihood of a conversion is less than 50%. So you might be asking, alright, well, how do I even get started into making sure that my leads get responses for me right away?

Maybe you're working a full time job, or what if a lead reaches out to you just outside of hours. So on the AI front, there's chat bots, which we discussed with Hardik. So definitely check out that video. But then on the CRM front, we can actually automate these flows, sometimes even without code to make sure that when a lead responds to us, we'd send something back automatically as well. CRMs make sure that we don't actually have anything that falls through the cracks. So we can have automatic tasks that are set up based on where our lead is in the pipeline. We can set up automatic reminders. We can even put gamification in our CRM to make it really fun to actually complete day to day tasks with if you have a larger team. And lastly, CRM platforms allow us to measure how well we are doing a meeting our goals. If we're exceeding our goals, we're just meeting them or we need to maybe pivot our approach because we're not meeting our goals. If you again are a wholesaler, or you have a business of some sort in real estate, you need to be tracking your analytics. I've been playing around with several different CRMs to try to find the right one where I can pull data from API's, and also be able to have my own custom flows. As of right now, I've gone through Podio, as well as HubSpot, but ultimately, I think I might land on Zoho just because I can write custom functions within a language called dilute. And so far, I really like it. It's not Python, but it's still pretty easy to interpret. And I'm able to pull data from Zillow. All right, so what are some upcoming content for the analytics area channel. One of the things that I've worked on and is coming out within the next week or two is how to get off market property details from Zillow. So I've had several videos in the past of pulling data for sale, as well as sold data from the Zillow API's. But here I'm going to detail a little bit more of how to acquire that for off market properties. It's not as simple as just hitting a button, you actually have to find the ID for these properties. So I'm going to show you how to do that in three steps. One is going to be with Python. Second for a no code solution will be with Zapier and the third will be with CRM with Zoho. Another thing that's upcoming is finishing up my recordings for the US real estate course. Super excited for it to almost be complete, and it will be out this summer then for a weekend plan. Super excited MD W weekend have Friday off so it's going to be a great time have one of my friends coming to visit in Tampa. And then I'm also going to look to drive for dollars while I'm already going to be out and about going to the beach driving around. If I see any properties that look somewhat distressed, maybe some tall grass and hasn't been cut, or mail sticking out of the mailbox. I'll be sure to write down those addresses within Prop stream and then later feed them into my CRM system. So hope you have a great weekend. And if you haven't already, please join the Facebook group tech and real estate and Subscribe. Thanks