Mortgage Rates Hit 7.5% and Experts Say It's Getting Worse

0:00Meet the Red Bull Dragonberry Emergizer. It's one of the many new drinks out now. Who knew ice cold drinks could be so fire? Try them all, only at McDonald's. 30 or mortgage rates right now are 7.5, even if you got a 750 credit score in some markets. And so Tom, I'll read the story and I'll come to you. Mortgage rates had highest in 20 months, okay? 20 months. The average rate on 30 or fixed right now is 7.03, the highest in 20 months and up more than a percentage point. Since the Iran War began late February, Freddie Mac shows data rates last top 7% in January 2025. Each percentage point rise at thousands, two tens of thousands of dollars, and annual borrowing costs depending on the home price. And the climb tracks the surging oil prices and treasury yields with a key treasury rate, hitting its highest level in years and amid inflation fears. The timing is brutal for the administration housing affordability,

1:01was already the country's sore spot and the war-driven rate spike is pricing out exactly the first time home buyers. Both parties claim to champion with the midterms weeks away the 7% print turns the affordability crisis from a talking point into a monthly payment time. So the 30-year mortgage, whenever you see the tenure and you see them talking about the tenure, and let me look at the gap here. The gap right now on the tenure treasury, take 2% at its point. So Vinnie, whenever you see a headline, this says, tenure treasury, suddenly at 5 and a quarter, just say to yourself, wow, that means mortgages are at least 7 and a quarter. Oh, damn. You just add 2 points to it. Yep. They're lined up together. And so right now, it's even more difficult. What you have, we also mentioned that Florida had the most number of homes for sale. Well, one of the reason the most number of homes for sale is the people willing to sell them have them on the market,

2:01but people can't afford to buy them. And also Florida also still has a bit of an insurance crisis on homeowners insurance. So headline, Florida's got more homes for sale than anybody else. Well, you have to go look around Orlando and Lakeland, and they overbuilt that area. And with people conserving on spending and going to Disneyland, Disney World, some of the jobs at Rinn Orlando a little bit constrained. And so you don't have as many houses for sale. But right now, Pat, this is tough times. We have 4.3 million homes right now in the market, okay? 2008, when the crash hit, and we all saw the video of what was going on in Riverside County with 64% of homes were, you know, empty. And it was just a very, we saw the movie, and what was the movie called, the Big Short. The Big Short. And of the 4.3 million per capita, the state that has the most homes right now for sale is the state of Florida. I think Carolina's top five, but Florida's one of them. I think Florida has one of the biggest plus minuses on value going up

3:03the last five, five and a half years since COVID. And so... But there's three Florida's. Panhandle, there's for sale. Central Florida, there's a boatload for sale in Orlando. And then you get down to Palm Beach, Broward, and Dade County, known as the Gold Coast. And the for sale rates are consistent where they were before COVID. So it's really a tale of three cities in Florida, but there's a ton of things. Why do you think Orlando's getting hit the most? Orlando, they reacted, and they gave fast permits, and they hyperreacted to what they believed was going to be job growth up there. And there has not met as much job growth up there. And the people moving to Florida are moving down to Palm Beach, Broward, and South Florida. The people moving with jobs. The people without jobs tend right now go to more to Tampa. Tampa insurance is crazy, because the insurance rates went up after those two hurricanes over the last four years. So central Florida, they overbuilt the jobs didn't show up there. So you're getting discounts in central Florida, a lot for sale,

4:03if you can afford the seven and a half percent. And South Florida prices are down a little bit, but not bad. In Miami right now, there are 12-month supply of condos for sale today, and it's 2.7. If you're going to go down by a condo at today's sale rates, there's 12.7 months of supply. Forward, this is Miami. Yep, Dave County condos. Tell me what that means, 12.7 months. Means if you took the number of condos sold this month, it would take 12 months like that to sell everyone that's for sale right now. How did they calculate that? They basically look at the number that are being sold right now per month, and they look at the total that are for sale, and they divide it. So if there's a, there's 1,200 for sale and you're selling 100 a month, that means they'll take 12 months. But this is not a bad time to buy a penthouse in Miami. You could get a good discount on a penthouse in Miami. As long as you're in one of the better buildings that's been inspected and your HOA isn't way up because they're anticipating maintenance. As long as the balconies are locked and all of them are staying at the risk.

5:05I don't worry about with this. Yeah, well look, buying a house right now isn't that expensive. The money that you need for a mortgage is expensive. It does a difference. So I have a little checklist that I've used before, and I recommend that most especially young men out there who are considering buying a house, factor this in. Do you want a house or do you need a house? I speak to a lot of guys out there like I really want a house. I really want to buy a house. It's like, yeah, I know that you want that. But is that actually something you need and can you actually even afford that? So what I recommend and I would highly recommend this is rent. Save that money, save the difference, invest over the next three to five years. So your wealth can accumulate so you can save up for a down payment. And when rates go down or there's a buyer's market at that point, then you can buy. I always just say this. Unless you absolutely need to buy the house, just rent, save the difference, and circle back. That's my advice. Yeah, if you do to math per percent, Tom, per percent of rates going up,

6:06on a million dollars is what per percent? A thousand dollars give or take something like that month. Yeah, a month. So per percent, if you take give or take, it could be $1,200, but everything included. So, you know, if you're looking at a million dollar home, at 3%, you're looking at $3,000 a month, 4% 4K month, 5% 5K month, 6% 6K month, 7% 7K month, 7.5% for a million dollars, $7,500 a month. That's crazy. Just so you know. We still got taxes and everything too on top of that. And the $7,500 a month is after tax money, which pre-tax money to have $7,500, you've got to divide times 0.3. So if you take $7,500 a month right now, divided by 3 is what? 0.3. To make, no, no, no, it's divided. So it ends up becoming, so you're looking at around $10,000 a month you need to make. Let's just say 30% taxes you're paying $10,800 a month you need to make to have the net $7,500 to make that mortgage payment.

7:07So it is a weird time. I will tell you if I was a buyer right now, I would use that as leverage and I would ask better questions from the realtor. So I would ask the realtor, my realtor, I would say, can you ask the sellers how motivated are they? Are the sellers moving to another house? Are they going to rent? What is the life-changing? Like when I walked into the house we bought, I know this is going to sound weird. The first thing I did is I went into the master bedroom because they were still living there and I went to the closets. And one side of the closet, all the, you know, women's shoes were there. The other side of the closet, there was no men's shoes. Oh, gotcha. So I'm just saying, this was a house I'm looking at in Dallas and I'm like, hey, if one side of the closet, it's only women's shoes. All this stuff with the guy wasn't there and it's an open closet. You kind of have an idea. So that is a, and as much as it's, because we, you know, you can be on both sides as you're going through it. As a seller, you don't want the buyer to know that that's what's going on. So the buyer today has to have a better lens to look at. If you got a better lens, I actually think there's opportunities today.

8:10I actually think there's opportunities today because unfortunately, what happens when there's financial stress? People sell. Why do the, what happens when people have financial stress? Life-changing events happen. Typically, what gets affected first? Their marriage. And if the marriage gets affected, what is the wife asking for? Money. And where's most of people's money tied to in their house? In their house. So guess what he has to do? And if he sells it, guess where he has to move to? He has to move to an apartment. Because the 80% of people when they're going through this, they don't have the livelihood to go just buying other house. At that time, all they're thinking about is I just need an apartment. I want to get this thing over with. That's the mentality. I want to get this thing over with. I want to get, it's like the scene from wedding crashes. You see, if you want to throw some miles out of it, you know what I'm gonna say. But unfortunately, when it happens, the person that's going through it, the main thing on their mind, guess what they're saying? The line is, I just want this to be over with. So. They can just break even. You know how to times. That's right.

9:10So in those moments, unfortunately, people, like there's a lot of people that are buyers of companies, guess what kind of companies they buy? The stress companies. That's their specialty. They come in and they build it up. That's a massive business model. It's like I have a buddy of mine is very, very big and real estate in Miami. And he goes, I don't buy real estate. I rob real estate. All I do is look for. Now he's a criminal. That's a different story. That's a different person. He's going to go hang some events from time to time with. He gets, he gets distressed assets and he sells them. But you actually motivated me. I'm going to go looking in houses as a, as a prospective buyer. I'm going to go into the closet. You will never. And I'm going to go the same way. And I'm going to go into the guys closet. And I'm going to go get some new clothes out there. Maybe that's a nice little come up. Yeah, but you, but you'll see when you go in, unfortunately, the seller's job is not to tell you anything. Yeah. And the buyer's job is to not say any motivation to them that you like them. When, like, when you go to the house and if I take my kids, oh my god, I love this house. Can we move here? Like, I just want to try it. We have to buy, buy, buy, buy, buy.

10:11You don't take your kids. We want to look at one of the houses. Yeah. I'm bad telling you. I'm like, I walk by something like the theater. It was amazing. And the guy's like, huh? And I like this. I just walked out. You know, you know who else doesn't know how to do that? Malva doesn't know how to do that. I don't think I know because like daddy look and kids don't know how to do. Yeah. This is. It's going to be my room. You could be looking at a high-end house and a nice community. You got the poker face. And then you look in the backyard and two of your three kids are in the swimming pool fully clothed. We never have that. Listen. They seem to like the backyard. We looked at a house in Stone Breyer, which was in Frisco, where you know, a guy named Danny Nelson was telling me, hey, you may want to come and look at this place. We had a meeting with him. The son of the coach. And so we go look at this community. And we look at one house that had a lazy liver in the backyard. A lazy liver? A lazy river. Oh, yeah. So I'm sitting there. I like lazy liver as well. But so I go, I'm middle eastern. But so we go there and I tell Tikhon Dylan in the car. Hey, listen to me, guys.

11:11I'm telling you right now. You cannot jump this this house as a lazy river. I want to be able to trust that I'm bringing you here. You guys can't jump in. Know that? Why would we jump in? I said, great. Because if you jump in, there's pop out. I'm not going to jump in. And we know we don't know pop out. So we go. And they see the lazy river and all you see their eyes get this big. And they're looking at me. I'm like, delete. Tikhon, I told you. I'm going to jump in. I'm going to jump in. I'm going to jump in. I'm going to jump in. I'm going to jump in. And we know we don't know pop out. And they're looking at me. I'm like, delete. Tikhon, I told you. And you know who starts it? You know who gets the other one to do it? I bet you can't guess which one gets the other one to do it. Tikhon told me to pop out. He could get the other one. Now here's what happens. So then I'm like, guys, just go over there. There's a shoot of basketball. Go over there. You know, look at some of those trees. I'm going to shoot. So we go inside the house. And I'm on the second floor master bedroom. They're showing me that. What do you call it? The balcony. I'm outside. All I see is Tikhon, Dylan. And the lazy river going around. And we didn't bring towels. Oh my god. And you're going to go into the escalator. I'm like, these freaking kids.

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