Why Buying a Home in 2026 is Great Idea

0:00Hey Mike, how are you doing today? I'm doing good, man. This is going to be fun. You get to ask me a bunch of questions. Yeah, I like being the one that gets to ask questions instead of answering questions. The host, right instead of being on the hot seat, you get to be the host. Yeah, sometimes easier. I don't know. We'll see. So look, obviously today, Thursday, we're filmed every Thursday morning and a lot has happened in the last week in regards to, I would say online kind of scare tactics, which can be true or not. You tell me, but there's a lot of articles out there about hitting mortgage rates specifically 14 month highs. I'll validate that that is true if you're looking at a average 30 year conventional loan on a primary residence, right? But what do you take from that? Do you think it's going to only get higher, lower, short term next? We call it three months through the end of the year to 2027?

1:00Yeah, so I think there's a couple of things in that there are a little nuance, but important. It is factually correct where to 14 month high. I don't know about 14 months, but the last 12 months, I got the numbers this morning. The last report was 6.87 or something like that. 12 months ago, we were like 6.41 or something. So yes, it's higher, but not meaningfully higher, right? If you have a $200, $300, $400,000 mortgage, a 30-bip spread is, or basis spread is not that much of a difference, but it is higher. And it is certainly reversing a trend where for much of the year, we were lower than last year. So the trend is meaningful. I think there's a couple of things. I do not see how we stay below 7%. I think we're going to have a 30-year mortgage with a 7-handle on it sometime in September. Now I don't see us going to 7.5.

2:00So something with a 7, but low 7s. And it's really interesting, because if you look at the mortgage data this week that comes out on Wednesday, purchase applications were up week on week. Even though we were at a 52 week high, why is that? Well, folks, I told you this was coming. If you want to get mom and dad off the sidelines, give them fear of a 7-handle, not hope of a 5-handle. When mom and dad have a hope of a 5-handle, they wait. They sit on their hands. But they take action when they fear a 7-handle. So that's why purchase applications were up week on week. Again, the consumer is remarkably predictable. But I think we're going to be in this range for quite a while, higher for longer. I can't see currently over 7.5, 30-year mortgage. I don't see us go below 6.5 over the next 12 months, barring a significant recession or AI blow up, those two nasty caveats.

3:04But we're in a higher for longer environment, which to me means if you're a seller, flipper, wholesaler, anybody who sells real estate, it sucks. It's going to suck. Certainly through the spring. So call it the next 7-8 months. But if you're like most of the people on my channel, probably most of the people you deal with, if you're an investor, I mean this with every fiber of my body, you should be smiling. Because you and I don't care about rates. I wish I could snap my fingers and rates were 9%. I want less competition. I want more supply and I want more motivated sellers. Congratulations. For the next 6-9 months, you'll get all three. So get off your ass. Do the work. Write offers that make sense with 7 handles. And let's go make some money. That's what I would tell people. And you made me think of it. This wasn't going to be the question that I was going to ask next.

4:04But I actually had a conversation late last night with one of our clients in his real estate agent. You know, they are two weeks into escrow and ultimately negotiating with the seller for either a $25,000 price reduction or a $25,000 credit. Okay. Now this happens a lot. And I want to know your opinion. And we'll call it just in today's market because I think it can change depending on your app in timeline. What's better? 25 credit, seller credit. We're trying to pay price reduction. So there's lots of us. We're going to assume the building appraises, right? We're going to assume it appraises without the credit. We just have to make that. It came back just a little bit under 700 right at purchase price. Okay. That's what we're dealing with. Okay. So it appraised good. It's not like you need to come down because of an appraisal issue. So I would say for most people in most circumstances, assuming you could use all 25,000 credit, you

5:08should do that because that's cash. That's cash out of your pocket. A $25,000 reduction really means you're only benefiting five grand in cash because the rest of it's just a smaller loan balance. So for most people, most of the time, barring in appraising issue, appraised all issue, I think a credit makes the most sense. You get rate buy downs, you get sell or you get concessions, you can get repairs. I would take the 25 grand, which is cash, versus a price reduction in most cases. Now, and you nailed it right on the head with what I agreed with it. With the conversation we had last night and for those listening, when you said 25K cash or just saving 5K, that's kind of assuming a 20% down payment. So all you're really saving by a 25K price reduction and what I brought up was that and that fact. And then I'd rather have money now than later. The 25K price reduction will be 25K when I'm right. Sell it, when we find whatever it might be. And I'll tell you right now, there's a very high chance that $1 worth today, versus now,

6:12is going to be much better today. So inflation is a feature, not a bug. But what was rare and why this was maybe a one off two degree, one of you see mostly when you're negotiating with sellers, price reduction normally isn't equivalent dollar for dollar as the credit. Right? A lot of the times we'll see a price reduction usually, okay, that's going to be more than a dollar amount than the credit the sellers will end to offer. Well, it really depends on where you're when you're negotiating, right? If you're in the initial contract writing purchase agreement, absolutely. I think most sellers are sitting on gobs of equity, so they'd rather see that there. But if you're into the process, escrow's already open, you did an appraisal, you did some inspections. I think at that point, a dollar is a dollar and you're negotiating net at that point in the cycle. So it really depends on when you're negotiating.

7:13But if it's your first offer, I do think more people are open to a price drop or something that's under asking. But if you're in the process and escrow's been open for three weeks and now we're talking about a 25K repair, that 25K repair can come from all kinds of different buckets. Either the seller does the work or a credit or escrow or it could be handled very differently. Love it. All right, so mortgage rates, we just rift on that a little bit. But moving forward, I think it's maybe repetitive. Everybody knows this already. But we'll call it the four biggest kind of market rate movers right now, inflation, jobs, Middle East and the feds. What are you hoping for gets fixed first if you are hoping for lower rates? You got to put yourself, I know you were asking for 9%, but we were hoping for lower rates. What's got to happen and how long do you think it's going to take for that to happen?

8:18So you might get your first steps. Again, this is all assuming you want lower rates. So we're going to get an inflation reading in 10 days. I think it's the 13th. It might be the 14th. But inside 10 days, we're going to get the next CPI reading. If you're hoping for lower rates, and frankly Christopher Waller said it this morning, Christopher Waller this morning is talking down rate height. The rate height odds yesterday were 67%. Today, they're 48 because of Christopher Waller's Fed talk or Fed speak. So if you want lower rates, you need CPI to come in low. And let's be clear, we're not talking year on year. Christopher Waller was very specific. He said the 90 day annualized run rate needs to be below 2.8. So that's 10 days away. And that's certainly possible. If you're just going to create a small window of three months and then annualize it, yeah, it's possible to get CPI under 2.8.

9:18So that's the first thing. That's only 10 days away. And frankly, just Christopher Waller's talk track of pausing already lower the odds from 60, whatever is 7 to 48 and seemingly going lower. So just that idea with that. So that's the first thing. The ultimate one that again, if you're hoping for rates to drop is somewhere out of nowhere, a peace agreement is struck with Iran. And I mean true peace. True peace. Right. We're not talking, you know, tolls on the straight of her moves or any of that other nonsense. It's got to be like it was before the war. Free passage, no mines, nobody loving bonds at each other or drones or shit at cargo. It needs to be wide open. And that will have an immediate impact whenever that happens. Jobs really is a nothing burger in this equation. All the jobs have to do is stay not terrible. Frankly, if jobs went like if the unemployment, a weekly unemployment claims, which is with

10:23this morning was 206, I think, if it jumped to 306, like next week, that actually could lead to lower rates because the job market could be seen as breaking. Obviously, you don't want that because that just hurts so many people, a weakening job market like that. And then the Fed of the fourth one, I think Christopher Waller painted the picture this morning. I think the Fed doesn't want a hike. You know, again, President Trump says lower rates, yada yada yada. So I think the Fed's going to be looking for any nook and cranny or story to not hike. That's very different than a cut though. Let's be clear. I think at this point, people would set her for no hike. So yeah, inflation, we're going to get a reading in 10 days. Then the war, then the jobs not blowing up in the Fed's kind of the four. How I see it. Would you agree with the four that I brought up right there? I'll put this one in there. No, I think jobs is a nothing burger. And I think war said that for a while. It's not about the labor market. We got 4.1% unemployment.

11:24Weakly claims it 206. It's like we can ignore jobs for a little bit. It's all about inflation. It's all about the war. I guess the other one we should throw in there is tariffs. We're obviously potentially having another trade war this time with Canada. Yeah. So let's not do that, right? We don't need more tariffs. We already knew what happened two years ago and we're still paying the price for tariffs on other things. So I think we'd add tariffs as a fifth thing. That's fair. All right. That's a question. While we wrap this up, which is probably why a lot of people tune into this wonderful channel is what would what would Zuber do in the next three months if he was a real estate investor? If would you sit on the sidelines? And this is just strictly for purchasing, not for refi because refi is different. There's a lot of equations. Yeah, but for purchasing, are you still out there just as much? Oh, in terms of. Okay. Yeah. I mean, anything different? I think you're doing it.

12:25I would go harder. Again, I've been in the game for 25, 27 years now. And this is my second real buyers market. I know that's wild to think about. I've had more sellers markets than buyers markets in my career. Buyers markets generally don't last long. This one's going to last another six months, in my opinion, in most of the country. There are exceptions, the Northeast and the like. But for most of the country, it's a buyer's market. And also, I love the fact that most people say today is a bad time to buy. I think it's like 81% of people think it's a bad time to buy. I'm like, that was my people. You go sit over there on your hands. I'm going to go find the motivated seller and make a gazillion dollars. So I would tell my people to go hard, right? Disrespectful offers follow up 17 times and go get your deal of a lifetime. It's out there. Most of my people only need to do one deal a year. For the next six months, let's go get that one deal. And again, don't pay list price, get seller credits, get everything you can.

13:28This is the time to take advantage of a seller who needs to sell. Go get an amazing deal. Love it. Sorry, one last curveball because he fell that one that was too easy. If you are looking for your first home primary residence, that 80% of people saying it's a bad time. That's what made me ask that. What are you telling them? So that's a little bit of nuance in that. The same strategy applies. Yeah. What were most people fall down is they fall in love with the house, like the location or the cute bathroom or the perfect side yard or whatever. And that generally doesn't work with numbers. So what I would tell the first time a home buyer is don't look at it as your forever home. Look at it as your first home and ideally your first rental home after you move out in a couple of years. And then still make it about the numbers. I think a lot of people buying their home, they just fall in love.

14:29And then once you do that, the numbers don't make sense and you do irrational things. If I was a first time home buyer, I would go just as hard. And you know, I would get just an amazing deal. I would probably have to select something that's not perfect for me. But again, it's only, I'm only going to live there two years, maybe three years. And then I'm going to convert it to a rental. Right. Unless you're like 60 years old and you're buying your forever home, let's just treat this as a wealth building thing. Because again, the more you own, the more wealthy you get. That's what the math says over years. So I would tell her first time home buyer, FHA buyer, VA buyer. Yes, you're going to live there for two or three years. But look at it like an investor. The first one doesn't have to be perfect. It just has to make financial sense. That's what I've told them. I love it. I love it. Well, look, everybody knows how to get a hold or seen Michael's beautiful face. But if you want to reach out to me or John for anything more, get related.

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