Recession Who? Create your own market to succeed in!

Video Transcription

Jared Wright:  Hello. Here we go. It's the Andy and Jay Show. What's up, Andy?

Andrew Scherer: What's up?

Jared Wright: Pretty good, dude. That was pretty good.

Andrew Scherer: It's always fun.

Jared Wright: Yeah, it is.

Andrew Scherer: That was awesome.

Jared Wright: I don't know if I can do that again, but I've definitely enjoyed the times that we get to spit our knowledge and share.

Andrew Scherer: You've got to throw some beats behind that, dude.

Jared Wright:  I know. We need to get on that, dude. I'll talk to Addie, dude. We'll get some beats behind that. Here we go, it's the Jay and Andy show.

Andrew Scherer: That's our intro song.

Jared Wright: Let's do it. I love it. Yeah. It's been a couple weeks since we recorded a little bit of content and threw it out here. And I thought we could piggyback off an email the Share Group sent out last week. A little bit of some data we got from Redfin and talking about a couple of things. And my take on this whole thing is recession who? Question mark. Don't let that be a stepping stone or a speed bump in your business. It needs to be still business as usual. Why are you smiling?

Andrew Scherer: Who put the question mark on the teleprompter?

What is the Average Day on Market?

Jared Wright: I love it. Yeah, exactly. Yeah. Recession who? Question mark. And the data that talks to it. We'll keep it pretty basic, but then I want your expertise, Andy, on the take of this. But the last 10 years, number of days on the market. You're listing your home for sale. The last 10 years, statistics show number of days on market has drastically declined to the point where in June of 2022, the average day on market is 18.

I mean, that is freaking ridiculous. When I sold my house in 2017, we were 90 days. And that was what the trending average was for such a long time. Well, post-pandemic things change a little bit and the days on the market are becoming a hot number. Well, that's not new news. That's not really new news.

But what is new news is inventory is becoming more accessible. Houses, there's more to choose from. There's more to pick. You're not blind buying, you're not buying from a financial decision like you said. I think the combination of extra inventory and still buyers out there. We're still short of houses for the American dream of home ownership, is a really cool combination for realtors to go out there, combined with some really good data to hit it out of the park.

And so, you're in the trenches, Andy, you're talking to successful agents every day. Everyone's talking about a little bit more inventory?

Andrew Scherer: Yeah. The long and short of it, yes. The preceding markets, Vegas, Phoenix, some of the Cali markets, some of the Florida markets as well. These are some of the markets to be watching in terms of some of the leading indicators of a plateauing market.

Listen, I don't necessarily want to even use the buzzwords. Recession for me, for whatever it's worth, if we're just talking about economic recession, we're pretty much already there. But the fact of the matter is... And this is the disconnect, I think, and this is where a lot of real estate agents tend to get their... I'll keep it PC.

Jared Wright:  Andy...

Andrew Scherer: I mean, tend to get uppity a little bit on this thing. This is not like 2008. It's a completely different leading cause of the recession. This is not mortgage default. This is not loans that have defaulted. This is not subprime loans. This is not pay option arms.

Back in 2008, it was a completely different scenario. Now, it's more of an economic push. It's more of an economic pressure. In all honesty, it's coming down to who are the motivated sellers and the buyers? And those are the folks they're going to coming on.

The other factor of this is we're sitting here and actually needing to spread a decent message to consumers. And we're missing the boat simply because we're all sitting here listening to the news and saying recession and challenge and crisis and all those things, dude. But when it comes down to it...

Jared Wright: Right. The scary mug words. Yeah.

Andrew Scherer: Yeah. I mean, inventory is absolutely coming up. A balanced market, just so people understand this piece, and I'm hoping that they do, but it's four to six months of inventory is a balanced market. That's a healthy market.

And then past the six-month time period, and we have a ways to go before we get past there. National average of inventory right now is just under two months. We're still in a strong seller's market. The fact of the matter is when agents go in and price out homes right now, they're being overly aggressive and pricing out homes. So it's making it feel like when price reductions come through, they're just taking overprice listings. It's not the fact that home prices are coming down, they're just taking overpriced listings. End of the day, I mean...

Jared Wright: Right. Right. The history of that has been, the short history at least, is really allowing that and dictating that, I think.

Andrew Scherer: Yeah, so I mean, end of the day, yeah, that you can look at days on market. I think that's all well and good. I think you can look at inventory, that's a leading factor to look at. But the other piece of this that the agents want to look at is rental rates. Rental rates start to drop. That means that the home prices will start to drop. We're nowhere near a market crash, a challenging market. The only thing that we're near right now is agents getting out of their own way and making their own market and having success that way.

Jared Wright: There you go. And not letting a couple of hiccups or a couple of glitches, like a high interest rate. Or you getting played because big picture is history shows maybe those rates will go down.

Andrew Scherer: But even that.

Jared Wright: Or the terminable loan can change.

Andrew Scherer: And I apologize for talking over you, man.

Jared Wright: No, no problem.

Interest Rate

Andrew Scherer: But I do think it's a good conversation to have, the interest rate side of it. Even talking about a high interest rate, it's not a high interest rate. This is actually a reasonable interest rate.

Jared Wright: There you go.

Andrew Scherer: And when we get to tens, yeah, all right. I got you. That's getting up there. But seven and a half, eight and a half. I don't want agents to have a conversation about what was, because this is culture shock for people. Have an understanding that this is basically sticker shock. And help people be educated around, "Hey, listen, that just means that we need to be more mindful of budget."

Jared Wright: And knowing that what you can move into and managed financially.

Andrew Scherer: Heck yeah, man.

Jared Wright: Is living on the edge like Jar bear over here, but...

Andrew Scherer: Nowhere near crashed.

Jared Wright: No, totally. It's something that still shouldn't be in the way.

Andrew Scherer: No.

Jared Wright: Especially as inventory is increasing. The options are there to maybe take it a $20,000 bracket down and you can build off of that. I strongly believe, and I've said this before, that I don't think the value of property is ever going to be lower than it is now.

Andrew Scherer: Well, I mean even if.

Jared Wright: Unless it's a distressed property or something happening.

Andrew Scherer: Right. Yeah, yeah.

Jared Wright: But in general speak, I just think that the value of the homes today will never be cheaper now.

What's the Average Recovery Time Period for a Recession?

Andrew Scherer: I mean, talk through that. Right. The average recovery time period for a recession is what?

Jared Wright: I don't know. What?

Andrew Scherer: Six months.

Jared Wright: Is it? I don't even know. Yeah.

Andrew Scherer: Six months. Yeah. The longest length of a recession has typically been about... Well, was 18 months. In the history of real estate that is a blip.

Jared Wright: Right. Right. A tiny little blip.

Andrew Scherer: And then, inside of a recession, if we truly are there, home prices on average have only dropped between two and 4%.

Jared Wright: Yeah, totally.

Andrew Scherer: I mean, not for nothing.

Jared Wright:  Even if you drop a little bit, I get what you're saying.

Andrew Scherer: Yeah. But again, I'll take a 2% drop. Think about it as a stock market. I'll take a 2% drop if year are over a year for the rest of the seven-year cycle or 10-year cycle, or this last cycle was way longer than that. It's going to go up on average three to 7%. Yeah, I'll take the investment no matter what.

Jared Wright:  There you go. Yeah. I think it's just good conversation to have that, as overthinking as it can be, as intimidating as the national news is, it's just about living each day and doing the work to build your business and find sellers and find buyers and build your market. Rely on people like Andy to coach you along the way. To call, to schedule and utilize something like a Share Group for data. They...

Andrew Scherer: You guys are going to come in huge during this time for agents. And I don't think that they understand how close of a relationship they need to have with people like you guys, because it's that constant... I mean, we do this every week, week. I mean, literally, you and I meet with the team every single week and we talk about some of this stuff. But that close-knit relationship that people have with their data person needs to be on point because they will need to find more motivated people and people that are actually ready to sell or ready to buy.

Jared Wright: Yeah, 100%. Yeah. It goes hand in hand, one way or another, for sure. I love it, Andy. I appreciate you once again, dude. We're spitting some knowledge. It's the Jay and Andy show. Here we go. But yeah, most definitely much love. Yeah. We'll talk some more in a couple of weeks.

Andrew Scherer: Amen. Looking forward to it.