The SINGLE MOST IMPORTANT MESSAGE About The Real Estate Market (St. George Real Estate Morning Drive Radio Show)
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Jeremy Larkin and The Larkin Group @ Keller Williams Realty can be reached by calling 435-767-9821, or emailing email@example.com.
Mike: KDXU News Time. It is 8:36 of the news time morning news, and welcome. Glad to have you with us. Thursday morning. And of course, that means it is time one again for another edition of the St. George Real Estate Morning Drive with the voice of St. George Real Estate Jeremy Larkin.
Jeremy: Good morning, ladies and gentlemen, girls, boys, real estate fans. I can definitely declare that I am going to be stopping at Daylight Donuts on my way by this morning. I just had that inspiration coming up Bluff Street.
Jesse: Then you have got to do it then.
Jeremy: I know. I realize it may not be the best choice. We will see. Let’s see how I feel in 24 minutes. We will see how I feel then. It is a wonderful day. I have got Jesse Poll, Jesse Poll in studio with me.
Jesse: You can call me whatever you want.
Jeremy: Yeah, I have got JC, my good friend, here. Good morning to all of our lovely listeners and Facebook friends and fans and people. It is going to be a great day, and part of the reason we know that is if you look outside you can actually see, hair in my eye here, sorry. You can actually see downtown. I can see all the way. You can see a big old shower coming down the way and some sun rays coming through them.
Jesse: It is nice.
Jeremy: It is incredible. The famed, famed Larkin Group Fall and Dixie photo that has just been going around for forever and ever and ever, we actually have a client. Remember Quuntin and Mori Jensen? Did you, you did not know them.
Jesse: I did not know them.
Jeremy: So they are moving back from Virginia and how I noticed that on Facebook the other day is that they had posted this photo, and if our listeners do not know what this photo is I guess I can throw this into the feed this morning. But it is a picture we had taken in 2009 by Danny Lee. Danny is a really great professional photographer here in town and did just a ton of work for us for a lot of years. Larry Gardner, a little back story. So this is going to be fun this morning, excuse me, but I am. So Larry is a friend. I grew up in the neighborhood that he was one of the dads. Right? So his kids are my friends.
Jeremy: And then he was my boss. One of my bosses. He is a City councilman and a really well-known guy, and so he took a photo of this shot. And the shot is you drive up Airport Hill. Okay? What they call it. Right? Just to the top, almost to the old airport, which is now where the Cliffside Restaurant is, and he took this photo. And it was probably 2004 of downtown and it was just in this epic color, and it was right after a rainstorm and everything was clear, and the color was really vibrant. Well, it was not a professional photo. It was a good photo, and years later, it was November. It was good, and we used it in our marketing, but it had some power lines running through it.
Jeremy: And then years later on a November day, I called Danny and I said what are you doing? Well, I am in St. George. I just shot a home, photographed a home. Well, could you go up to Airport Hill in like 10 minutes? He said yeah. He went up to the hill and 15 minutes later we had this photo, and it has been featured on more Facebook pages and yard sale pages. When I saw the Jensens, now segueing back, I knew they were moving back from Virginia because what photo did they post to say guess what everyone, we are moving back to St. George.
Jesse: I am going to tell on myself for a second here. I do not even know if you know this, but did you know that I stole that idea before we met? For my sign.
Jesse: I went up to my friend’s house –
Jeremy: I remember. I remember.
Jesse: But it was my photo.
Jeremy: We disapproved. We saw.
Jesse: I did not even know it was you.
Jeremy: Oh, it was us.
Jesse: I saw this sign and I am like wow, that is gorgeous. How could I get one like that? So I went up to my friend’s house with my phone and took it.
Jeremy: Oh, I remember. I remember, Jesse. We knew you before you knew us.
Jesse: And do you know where those signs are now?
Jeremy: In the garbage?
Jesse: No, my sister-in-law painted them. We have this, the next time you come to my house you will see it. It says the cottage. This beautiful sign.
Jeremy: I did not know this.
Jesse: I have not hung it yet because we were still working on it.
Jeremy: Oh, that is classic.
Jesse: But she painted them all. For each, she did one for everybody’s house.
Jeremy: I am glad you came to work for us instead of –
Jeremy: — instead of competing.
Jesse: Right. Competing with the sign. Mine still was not as pretty though because it was reflective, and it is in the details. Right?
Jeremy: The devil is in the details. Hope we have got some friends watching. Comment and say hello if you are watching this morning and let us know that you are out, and you are listening. So I want to share with you guys something that is going on. That is the background. And we will share that. We will actually throw that photo on the Larkin Group Facebook page this morning.
Jesse: It is a nice photo. It is so nice people try to steal it.
Jeremy: Yeah, it has been on postcards. There are some jerks around town that thought they could take our photo. That is the situation, guys. It could be worse. By the way, if you are lamenting that it is cool or not, it is just not early Fall anymore, you could have snow. And it is snowing all over the place.
Jesse: And they do have snow in Cedar City. My wife called me last night on her way back from work and said it is snowing.
Jeremy: Woo, buddy. We do not want that. We do not want that. Today, we are going to share with you, just so you know, as we get the show rolling, we are going to share with you what I believe is really the most important, single most important message that you can receive in real estate. And when I say most important message, I mean in any market. And when I say any market, Jesse, what I mean is any city. Okay?
Jeremy: And in any market condition. Right? Whether the market is going, generally the public understands real estate as the market is either going up or it is going down.
Jeremy: That is kind of how that works. Well, is the market going up or is the market going down? We are going to share with you the single most important message that you could possibly have in real estate. There is nothing more important to you as a buyer or a seller than this message that we are going to share today. Okay? Which is something more than Happy Holidays. Is that fair enough for you?
Jesse: Oh, happy days.
Jeremy: This truly is something that is important. So I wanted to share something that is kind of fascinating.
Jesse: That was for Jessica Marron, by the way. Her and I –
Jeremy: Good morning, Jessica.
Jesse: You never know when either of us is going to start singing —
Jesse: — or dancing.
Jeremy: That is exactly right.
Jesse: She is my kindred spirit.
Jeremy: I think she is a lot of people’s kindred spirit. Good morning to her. Gang, if you are a skier or a snowboarder, Bryant Head Resort, I was just mentioning when the live feed started, and we were just kind of in here getting mic’ed up, Bryant Head is getting some snow. Finally, getting some snow. They opened last weekend. I never miss opening day ever.
Jesse: And you did.
Jeremy: Two weekends ago. I absolutely missed opening day. They opened actually the weekend before Thanksgiving, and then I missed the weekend after. It is looking like I will miss this weekend as well. So this is pretty rarified stuff for me, but it is what it is. If you go to Bryant Head dot com, it is fun. They have three live webcams and I watching it right now in studio, panning left and right, and it is dark, and it is overcast still a little bit up there. Lights are on. It is really cool because the storm has set in up there. So check that out. Skiers and snowboarders, we are really only an hour, it is an hour and a half if it were a snowy day and you were taking it easy. I do not tend to take it very easy when I travel to Bryant Head. I am usually in a hurry. I call it 75 minutes for sure coming back and usually about 80 going up. So Bryant Head dot com. I hope that everyone has got their skis shined up, grab a stick of Juicy Fruit. Remember those ads? I do. I remember those ads very, very —
Jesse: Juice Fruit.
Jeremy: — yep, very distinctly, and these people were skiing over in Colorado. That was a good time. All right, let’s talk about real estate, shall we?
Jesse: Let’s do it.
Jeremy: Jesse, I had this crazy, last night I was playing around, and I am absolutely not going to mention the homeowner’s name. But I saw a property that was in Stonecliff that was on the market. And when I looked at the property, this is kind of interesting. So, this home has been listed one, two, three –
Jesse: Two, three, four, five, six —
Jeremy: — four, five, six, seven, eight, nine, ten, eleven, twelve times.
Jeremy: So there is a property that has been on the market twelve times, and that is with a variety of real estate agents, starting in 2008, it is now 2018. So for a decade, literally for a decade, and if I count up the days, two, three, four, the home has legitimately been on the market probably 1500 days over the last decade in Stonecliff. For our listeners out there, if you have not sold a home, this is so mind-boggling if you are the homeowner. Right? Because you start to say what is possible, and I see the price started at one point, I am just going to say six. The price started at $1.6 million, and it has come down a third of that, and down below that, and then it has come back up. Here is the challenge. When we have a market that has appreciated for the last six years but your price has come down a third over the last ten years, this does not make sense. Right? So all of the home values in Washington County have gone up an average, an average of about $125,000, 130 since April 2013. Or just 2013. Maybe it was April. Home values are up $125,000, 130 maybe in Washington County since 2013. That is the average home. Home values as a percentage are up 25-30%, maybe even more, maybe even 35% in certain neighborhoods. But here is a home that a really good human being has tried to sell. A homeowner, and they have actually reduced their price by 30% over the same time period. Jesse, what does that mean? Because that does not make sense with the market. It means something very simple for us.
Jesse: Well, it just means that they are not, they are trying to get what they want instead of what the market will bring.
Jesse: Because even, I am going to go somewhere you are not even expecting. But even in those price ranges –
Jeremy: Oh, I do not know. You are pretty unexpected.
Jesse: — even over a million dollars, the homes that are selling are selling within, at the highest, 154 days, oh no, 207 days –
Jesse: — is the highest days on market. So they are still selling when they sell.
Jeremy: It is just taking longer.
Jesse: It takes a little bit longer. Not significantly. Not 1500.
Jeremy: Yeah, so 1500 days, as we get into this and we are going to share this message. What we believe is the single most important message about any real estate market for buyers and sellers and would-be buyers and sellers. But I think this is a great segue for us. You have someone, as Jesse said, has been trying to ask significantly more than the market will bear.
Jeremy: So here is what is going on in the real estate market today before we set this up. Well, let’s just share it. You guys ready? Three, two, one. Real estate markets in every city in the United States of America and probably on the planet are cyclical, and this is the single most important message that you can possibly understand about real estate. It is not is it a good time to buy. It is not is it a good time to sell. Should I rent or buy? Right? Should I purchase an investment property? The single most important message is that real estate markets are cyclical, which means what?
Jesse: That what goes up must come down.
Jesse: And what goes down must come up or will come up.
Jesse: It is an equilibrium, and in any equilibrium, it has to go up and down to equalize.
Jeremy: I have a very close friend who two days ago, 48 hours ago, we are not even at 48 right now. I think we are at 35 hours ago. He was like I guess things are just not going to work out in my life, and two hours later, everything changed. In a very positive way, and the way I described it is the clouds parted and the sun broke through. Go figure, and I said this morning, do you realize that was two days ago? Two days ago, you were everything is going to pieces.
Jesse: That is why we need to keep reminding ourselves that this will pass. This too shall pass.
Jeremy: Which makes it sounds like we are talking about a bad real estate market. We are not at all. This is an amazing real estate market, but we are going to help you understand what is going on in the real estate market. So if we go back ten years, it was 2008. Literally, people thought, people meaning just generally everyone, it seemed like the clouds could never part, and that the real estate market would forever be in freefall and gang, understand that almost all of the major developers in the western United States lost everything.
Jeremy: This was not like –
Jesse: I was just talking to a roofer last night. Actually, Stout Roofing is going to do my roof, and we were talking about the crash. What they went through and what they have pulled through, it is just amazing. We are talking about $600,000 of accounts receivable that they could not collect on.
Jeremy: Are you serious?
Jesse: And they pulled through that. It gave me goosebumps for a guy to stand in front of me that came through that and now they are getting ready to do my roof and they are going strong.
Jeremy: Isn’t that amazing?
Jesse: Yeah, it was really cool because how many did not come back.
Jeremy: Right. The amazing part is we have projects in Washington County that were 30 to 40 to $50 million value projects that just went belly up. They went upside down. Anyone who can remember ten years ago, if you went up to the Ledges, so the Ledges actually came, well it was a little later. The Ledges came out of the ground. It was 2007, Parade of Homes 2007 is when the Ledges came online. This is fun. The average person does not know this because why would you know this? You do not do this for a living. But it is 2007, and they have opened at the Parade of Homes, and they had this big, incredible Spanish-style property that many folks do know of. It was the first big home in the Ledges. It has a lazy river and an island green in the backyard where you can chip balls onto the green. It overlooks Snow Canyon, and that thing came on the market. It was $5 million, by the way. They had all these tents set up, and the sky was the limit, and they sold all the lots up there to a variety of builders. They came in and these guys thought they could do no wrong, and gals, to be fair. By 2010, you would drive down past the clubhouse, and there was a row of unfinished homes right there. Probably a dozen homes, framed, some of them had, what do you want to call it? Paper, what do we call it the paper? My brain is fried for a minute. On the outside, getting ready to stucco and they sat for years.
Jesse: The vapor barriers.
Jeremy: The vapor barrier. Years, and years and years. My uncle came into town from Southern California. He is a developer and he said oh my gosh. This is bad. That was, guys, that was eight years ago. That part. So now go to the Ledges. Now look around St. George. I am looking behind me at the Bluff Street redevelopment project. So what we need to understand is that every real estate market is cyclical. And so, Jesse, what are we starting to see in the market. We are having a lot of real estate agents reach out to us and say what is happening with their listing that they are trying to sell for a client.
Jesse: Well, what is happening is there are a couple of things. We are seeing a lot of pressure like sellers are having to reduce their prices finally.
Jeremy: There you go.
Jesse: Buyers are stopping. They are like no, we are not going to do this anymore.
Jesse: You are having to have a strategy to actually sell a home. What are we going to do? How are we going to be the best value?
Jeremy: So very specifically, sellers are having to reduce their price.
Jesse: They are.
Jeremy: Does that mean the home values are going down?
Jesse: Not necessarily.
Jeremy: Not necessarily.
Jesse: They do not go down like that. It is kind of like a train does not stop in 100 feet. It takes a minute.
Jeremy: It takes a while.
Jesse: But there is starting to be some pressure.
Jeremy: There is.
Jesse: And it is visible pressure like homes that 30 days ago or 60 days ago would have sold in two days are taking maybe three or four weeks.
Jeremy: This is absolutely right. We are seeing a ton of pressure in the $4-500,000 range, and what starts to happen is because real estate markets are cyclical, and the reason this is the most important message is that people will start to panic and the market is so driven by the emotional conditions that people live in that what will happen is you will have a whole bunch of buyers who are frustrated and they are fed up, sick and tired of writing offers on homes and competing with five people. So they start saying well, maybe I will not write anymore offers. They are fed up with paying 10% more than the last person paid in the neighborhood. So they say well, maybe we will not pay 10% more than the last person. They are frustrated because interest rates are amazing at five-and-a-quarter percent, but they remember when they were four-and-a-quarter percent. So they say maybe I just will not borrow money, and I will not buy a home. And what starts to happen is very subtly, slowly, then suddenly, the entire market can change. And it is changing.
Jesse: What is interesting is that, Guild Mortgage put out an interest rates over the last, I do not know, 40 years, yesterday, it is a picture. But for the last, gosh, 15 years, interest rates have just kept going down. And we lose track of our memory. Right? We do not think well, this is cyclical. And we do not stop long enough and –
Jeremy: Excuse me, what were you saying?
Jesse: It is cyclical.
Jeremy: You said we lose track of our memory. I was going to see if you were paying attention. Okay.
Jesse: But we do not realize that what goes down is going to come back up. And what is that going to do to us if we do not act now or if we do act now.
Jeremy: We do forget, and here is what we start to do. We make decisions on buying and selling a home that are based on well, rates went up, maybe I should not buy. Here is the issue gang. Historically, rates were significantly higher than this. I remember when I was at 7% on a townhome, and I thought it was the greatest thing ever.
Jeremy: When it went to 5.8, 6%, I really thought that my wildest dreams had come true. And then they went to 3%. Well now they are back to five-and-a-quarter percent, and they will go higher. So there will be people who will look back at this market and go oh my gosh –
Jesse: I wish I would have.
Jeremy: — I cannot believe I did not buy a home. Okay? We are going to have sellers –
Jesse: Or make that move.
Jeremy: Correct. Right? We are going to have sellers who are going to find out that people are reducing prices in their neighborhood, which is going to imply to them and cause this idea that maybe values are going down. Maybe this is not a good time to sell.
Jeremy: Historically, ladies and gentlemen, do you realize that values are literally back where they were at the ’06 peak. We are actually back there. We are right back where we were. Let me share something with you. Southern Utah Title produces a really great report that we were looking at this morning, Jess, right?
Jeremy: And by the way, you can visit SUTC, S as in Sam not F as in Frank. S as in Sam. SUTC dot com, Southern Utah Title Company. Thank you, Mitch, for your help this morning. Southern Utah Title Company, they produce this incredible report called the Good News Report. Let me share something with folks. In 2009, there were 474 building permits pulled.
Jeremy: In 2009, 474 building permits. Do we know how many building permits were pulled so far this year, Jesse?
Jeremy: Projected at how many more?
Jeremy: So we are projected to have 2400 building permits pulled. That is five times as many building permits as were pulled in 2009. Okay? And it looked like this. 2005, four years prior, now brace yourselves, folks, and we have talked about this in the show, but I would not expect someone to remember this. 3500.
Jeremy: We went from 3,500 building permits pulled in 2005. The low was 474. Nine times, a nine-time crash. Nine times fewer.
Jeremy: Right? We went from 3,500 building permits in Washington County to 474. Last year, we pulled 1800, and this year we are at 1800 and the year is not out.
Jesse: And end at 2400.
Jeremy: Let me be really clear. This is September. But we are headed to 2400 permits. Is real estate cyclical? Real estate is cyclical. Is the market crashing because people need to reduce the price? No what it means is, and what we have talked about on the show is pretty much everyone is asking probably 5-10% more than what the market is really going to bare.
Jeremy: (Indiscernible) the sellers.
Jesse: The pricing conversation is a lot different when you are in a really strong sellers’ market than when you are in a buyers’ market or just a balanced market.
Jesse: And really, we are just going back towards a balanced market.
Jeremy: Yeah, correct. This is so true. We are headed back to a healthy, balanced market.
Jesse: Because there is a day when three months was normal to sell a house.
Jesse: Sixty, ninety days. That is normal. This sell your house in a week is not normal or sustainable.
Jeremy: It is not. Right? We have used this so many times, but it is like when In-and-Out Burger opened over there by Best Buy, it has been a long time now. There was a line around the building for four days.
Jesse: That is crazy.
Jeremy: Well, it is an unsustainable pace. No restaurant has a line around the building for 365 days a year and it lasted about four days and it was done. And there is a nice line out there now on a busy lunch, but they push them through.
Jeremy: Here is another thought. Okay? That was building permits. How about total sales? In 2009, 3,900 properties sold in Washington County. 3,900 properties. We are projected this year to have almost 10,000 properties sell in Washington County. Now this is all sales, and so when we say all sales, and again you can visit S as in Sam, UTC dot com and look at the Good News Report. All sales means building lots, homes, condos, townhomes, that kind of thing. Right? So folks, look, the market is absolutely incredible. The market is cyclical. Let me share one last thought with you. We virtually have no foreclosures in Washington County right now.
Jeremy: We are talking about, folks, let me give you some perspective. We are talking about almost zero, virtually none in Washington County.
Jesse: Out of how many active listings? 1400?
Jeremy: 1500 homes on the market. Well, how many homes are in the county? 10,000?
Jeremy: More. I do not know how many. That is a number we need to get.
Jesse: How many homes are actually built?
Jeremy: Yeah, yeah, properties.
Jesse: I will work on that.
Jeremy: Thank you. There are virtually no foreclosures. Real estate is cyclical. A decade ago, we know for a fact, I know because I was selling homes that I was handling at one point, the Larkin Group, we were handling over 70 foreclosed or soon-to-be foreclosed properties.
Jeremy: Just us. Guys, the most important message that you can ever receive about real estate is that it is cyclical. Markets go up and they go down. This will be a time that people regret not selling because values are high, and they will have been high, and it is a time that people, this is ironic because it does not always work this way, will have regretted not buying because rates will go up another point.
Jesse: I think that is a big piece.
Jeremy: And they will be ticked. It is a strange and actually amazing time in real estate. Headed back to a balanced market.
Mike: You are listening to the St. George Real Estate Morning Drive with the voice of St. George Real Estate Jeremy Larkin. For more detail and information, call 275-1690 or find them online at Sold in St. George dot com.