The Housing Market – Transcript

The Housing Market

Big Picture – Is Your Country on the Right Track?

Probably the easiest to read and most informative big picture of what is happening in the housing market across the globe is an ING International Survey entitled “Homes and Mortgages − Home Costs and Prices” that included 14,725 people in 15 countries. Download the survey results and see if you agree whether your country is on the right track.

Other areas you will find interesting are multi-generational living, how much of monthly take-home pay is spent on a mortgage, will your family help in the home purchase, and what percentage of buyers expect to buy before they turn thirty?

Brexit and The Housing Market


Real Estate is a financial decision, but it is a decision sitting in an ocean of emotion.

Based on comments by Howard Archer, chief economic advisor to the EY ITEM Club,  London home prices fell year over year for the sixth consecutive year. On the positive side, the UK as a whole had a year on year increase of 2.5%, even if it was the lowest increase since July 2013.

Uncertainty seems to be the word of the day as 2018 ended with five months of declining sale agreements.

But what about 2019 and Brexit? It appears a 2% gain or a 5% loss in home values are projected depending on an approved Brexit deal.

The Telegraph has an article entitled “Five ways you can protect yourself from the Brexit house price slump“. You might find it helpful.

European Housing Markets Poised for Growth

House prices going up?

Forbes recently had an article entitled “The Best Emerging Real Estate Markets In Europe For 2019“. Can you guess which Countries or Cities are on that list?  What City had condos increase 20% in value compared to the 8% for the rest of the country? Where did housing prices increase by 20% over the last year due to the Golden Visa System?  What city was named the European Capital of Culture? Do you know where prices increased by 39.4% last year? What? Was that a typo? No, 39.4% is correct. Lastly, what City has 70% rentals compared to its neighboring city where values increased by 17%, compared to their national average of 10%. I hope you read the article.

Housing Market Down Under

In Episode 10 I referred to the 60 Minutes segment on the Australian Real Estate Market entitled “Bricks and Slaughter“. Then there was Greg Clough’s response to the interview which he participated in. Now, what has been happening in the Australian real estate market since those September videos came out?

In November had an article entitled “‘Deep recession’: House prices could fall more than 30 percent in UBS doomsday scenario” They reviewed various scenarios where Peak to Trough price declines ranged between five and thirty percent.

One of the better quotes was by UBS analyst Jonathan Mott who said “Sentiment in the housing market turns from FOMO (fear-of-missing-out) to FONGO (fear-of-not-getting-out). ”

There are sad realities to a declining market with reduced home equity and little to no borrowing power, ruined credit, the emotional drain of missing payments and for many, the feeling of shame because they lost a job and for the first time in their lives find themselves, even if briefly, homeless.

For some of those who are still in the market, the fear of getting out, or of not being able to get out, is akin to a slow death by torture.

This emotional wave of sentiment often becomes a driving economic force that morphs into a Sunami, which accelerates the destruction in its path.

In a more recent article out in January, it was noted that Australia is going to have one of the worst housing price declines in the world for 2019.

Amidst struggle there is hope.

The Housing Market and its prices are expected to stabilize in 2020.

Housing in Canada

Although unemployment, at 5.6%, is the lowest since StatsCan started keeping records in 1976, Canada’s housing market is struggling.  With 80% more consumer debt than in 2008 and increasing interest rates and federal standards that reduce borrowing power by 20%, Canadians are feeling the budget crunch.

Practically speaking, Toronto and Vancouver mortgage holders had an average monthly increase of $112.50 between 2017 & 2018.  Counting consumer debt and rate hikes, the total increase in cash outlay affecting the average budget was $212.50 per month.  See charts and graphs at

The math of finances doesn’t begin to tell how lives are affected. Where do most families cut out over $200. of “discretionary income” to compensate for this change?  How will these changes affect family members and how they feel about themselves and each other?

Thankfully, what is true in Toronto and Vancouver, isn’t necessarily true throughout Canada where the debt to income ratio has remained pretty steady over the last nine quarters according to Canada Housing and Mortgage Corp (CMHC).
In fact, it has gone down in areas like Edmonton (-8.3%) and Calgary (-7.9%).

This is of no help to those with variable rate mortgages but the CMHC also said three-quarters of all loans have fixed rate terms

The U.S. Housing Market

Is the U.S. Market headed for a big-time crash, 2007 style, considered by some to be the worst in U.S. history. Or will it be more of the real estate market slowing with moderate appreciation of between 2.2% according to and 3.8% as projected?

Zillow took 35 of the largest markets in the U.S. and determined that in December, year over year appreciation for 19 out of 35 had slowed down over the previous year over year period.  Of course, that also means 16 of 35 had not slowed down.  Go to the Zillow, then the Home Value Index Graph and choose your region on the left side and on the right side choose ZHVI yoy.  These graphs give an easy to understand visual of which direction and how dramatically values have changed.

Speaking of home appreciation and home values, have you ever wondered how many people have lots of equity in their homes? Say 50% or more?  There is a map by Attom Data Solutions that is searchable by zip code to find out how equity rich your zip code is. The map is embedded below in our Transcript version of this podcast.  You can search by your zip code using the magnifying glass icon and see what the number and percentage of homes have loans of less than 50% of their value.

What percentage of homeowners do not have a mortgage? has a great article ranking the percentage of No Mortgage Home Owners by state.  Do you know what percentage your state has?  The highest is West Virginia at 54.06%. So more than half of all West Virginians have no mortgage. In California, in 2017, there were 2 million homeowners without a mortgage.

Is this just a U.S. thing?   No, because in the UK. about one out of every three homeowners is mortgage free.

What is the housing market going to be doing and what should our response be?

The Interview – “Housing Market Under Attack – Values Disappearing”

As a real estate Broker, I was watching a video with coach Tom Ferry who was interviewing Steve Harney of Keeping Current Matters. The topic had to do with the U.S. Housing Market and the narrative, what is said and how we say it. There is a point where Steve is talking about how people are looking for the doomsday scenarios and what they find are headlines followed by “fluff”.  If that was what he wanted to do, which is opposite to all he stands for, he said his headline would read:  “Housing Market Under Attack – Values Disappearing”  It is worth listening to his entertaining explanation of how this headline would play out explaining the possibility of  life on Mars and how that would crash the housing market.

Articles and Advertising – The Digital Equivalent of Grocery Store Product Placement

The next time you hear or read something online, on TV, or on your phone, imagine yourself walking through a grocery store, every idea, concept, or line of thinking is really a grocery item designed to get your attention. There is a video entitled “Top 10 Grocery Store Tricks to Get You to Buy More“. Let’s go over a few of those areas.

When you first come into a grocery store does the smell of baked goods cause you to smile or emotionally grab you through the sense of smell?  Headlines will often do that using the opposite side of the coin through your sense of fear. If you have kids in College the pending College Loan debt structure may be your tipping point. Or the increasing rate of auto loan defaults.

Did you ever notice lots of sweets and other “kid-friendly” consumer goods are right at the top of the grocery basket level?  Once your mind starts thinking of the problems and stresses you feel, read about, see or listen to, you will probably see instance after instance of that following you around the internet.

Ever go to the grocery store to get an item or two but end up with a basket full? If you started off with a smaller cart or used a basket you have to carry through the store, you probably wouldn’t be as likely to overbuy.

It is not easy, but if you find yourself fearful as you read the real estate news, just maybe the headline isn’t the full story and you might choose to focus on ways to minimize the risk of what you fear.  If the mind gravitates toward what we think about, then focusing on solutions might put us in a better place. For those who have concern but not fear, maybe you should choose to use a smaller grocery cart.  Just because a lender says you can afford it, doesn’t mean you have to fill that proverbial cart up with high monthly payments.

For those who own their house and have no mortgage, congratulations, but be sensitive to those who may not be as fortunate as you.  They may not say something, but chances are you have a friend who is under some, or a lot of financial stress. Whether taking them to lunch, sharing some cash, or sending a letter of encouragement,  it will all be appreciated!

Thank you for listening to and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell is when you don’t have to.”

The Housing Market

Big Picture – Is your Country on the Right Track?

Brexit and the Housing Market

European Housing Markets Poised for Growth

Housing Market Down Under

Housing in Canada

The U.S. Housing Market

The Interview – “Housing Market Under Attack – Values Disappearing”

Articles and Advertising – The Digital Equivalent of Grocery Store Product Placement

Home Buying and Rabid Raccoons – Transcript


Tom, here.

This is where we talk a lot about real estate and a little about life.

Read the transcript version of this podcast if you want to learn more about the topics discussed.

Thinking of buying a home in Europe? How about Spain? This New York Times article is a great place to start. Why not? As there has only been an 8% increase in values since the post 2008 thirty plus percent drop. Learn what the “Golden Visa” program is and why, if you are a foreign buyer, it is important to you.

There is a housing shortage in many areas around the world but do you know in what Country the Public Housing shortage is expected to last decades? According to an AHURI Report, it is Australia. Of course, if you knew AHURI stands for Australian Housing and Urban Research Institute, you knew the answer was Australia.

Where in the world might the next real estate gold rush be? Although inflation is at 19.9%, Argentina is the correct answer,

What percentage of homes in your city are worth a million or more? In Honolulu it is 19.8%. What City has four times that percentage? Seattle and San Diego are in the 13% range. If you guessed San Jose, you are close as it is at 70%. It is also close to its’ neighbor, San Francisco who sits at 81%. Even in Portland Oregon, 1 in every 40 homes is worth a million dollars or more.

The World’s Most Expensive Homes. We are not talking about millions, or even tens of millions, but rather multiples of hundreds of millions. How about half a billion dollars? If you want to spend between $400 & $500 million dollars you can choose from one of three homes located in France, Hong Kong, or the U.S.

In the U.S. foreign investors account for about 5% of purchases however in one particular state it was 15% last year and slipped to 13% this year. Can you guess the state? Florida it is!

In the last quarter of 2017 almost 1 in 4 people surveyed by the National Association of Home Builders expected to buy a home in the next twelve months. Of those responding in the 3rd quarter of 2018, it dropped from 24% to just 13%. Just half as many people are planning on buying a home in the next twelve months. Of those looking in the third quarter of 2018, 54%, over half have already been looking for 3 months or more.

So, if price reduced is becoming more common, but interest rates are climbing, how does that affect the number of loan applications? Purchase applications are the lowest since February of 2017. Maybe not so bad, right? Less than 2 years ago. What about this statistic: The number of refinance applications is at its lowest level is about 18 years.

If you are thinking of retiring and want to know where to move to, US News took the 100 largest metropolitan areas and ranked them in order. Six of the top ten were located in either Florida or Texas with number one being Pittsburgh, Pennsylvania.

The Real Estate Market is heating up in these U.S. cities according to Redfin. Speaking of retiring to Pennsylvania, Philadelphia was the second hottest market with inventory declining by 22.9% and prices increasing by 8.3% for the four weeks ending October 14th compared to the same period last year. Maybe the affordability of the $195,000. median sales price is a small part of the why.

Creative Way to make Housing More Affordable. With all the talk about rising housing prices and increasing interest rates, can anything be done to make housing more affordable? According to an article in the Sierra Sun, 1,300. Truckee and North Tahoe families would be able to afford housing that is currently beyond their reach if they would only do what? Shop at their local Grocery Outlet store. Sometimes the question of affordability is not so obvious. I wonder what other local businesses could help do the same?

Let’s look at another segment of the population who are thinking about moving. Or maybe not. 85% of the baby boomers (age 58-72) in this survey said they do not plan to move in the next year. It is interesting to see the cities where the percentage of baby boomer home ownership is increasing and where it is decreasing. Seattle Washington has the biggest increase between 2010 and 2017 whereas between 2016 & 2017 it is Atlanta Georgia. What cities are baby boomers leaving?  Salt Lake City Utah and Buffalo New York.

Modular Housing variations may be the Disrupter in the housing industry. It comes in many forms: prefab off site building components, cargo container housing, and 3D house printers. Cross Laminated Timber or CLT, is becoming the building product of choice.

What new technology may be the answer to wire fraud and other aspects of a real estate transaction? Learn why the biggest impact of this technology may be on the escrow and title portion of the real estate transaction. Forbes has a great article on expected changes to be brought about by “Blockchains” and if you want to get a basic overview of what Blockchain Technology is, BlockGeek has it for you. They also have a great 2 plus minute video that that does a good job of explaining Blockchain Technology.

What other areas of the real estate industry might be impacted? Imagine that thirty to forty five day loan process shrinking down to 10 minutes. Impossible! Not according to this article.

How far into the future is it until we are using Blockchain Technology? Already being used by China and Russia for Digitally issued mortgages and Japan and Saudi Arabia are heading that direction.

Residential Real Estate won’t be the only segment to be impacted. Blockchain may allow investors to buy and sell small pieces of Commercial Real Estate thus upending an entire segment of the real estate industry.

As you filter through information always remember that what at first appears to be the case, may, in fact, not be so. The perfect example? Those raccoons in West Virginia first thought to pose a big threat because they had rabies turned out to be curious critters drunk on crabapples.

So, when you hear something like this “Did you know that our neighbor John told me he sold his house for half a million dollars?”  Or “Jill said I should ask three hundred thousand dollars for my home because it is much nicer than the house down the street that just sold for $250,000.” and “I wouldn’t offer a penny over $400,000. because my friend just bought a house like this one and that’s all they paid”. You might consider the following….

That half million dollar house might have sold at that price because the seller carried the financing for a higher risk buyer who was willing to pay more than market value because they couldn’t qualify for their loan. Or maybe they sold six months ago and home values have declined five percent since. The house down the street may not be as nice as yours, but it could be bigger, have a three car garage instead of two or a larger lot. That house your friend just bought was the same floor plan but in a different neighborhood backing up to the freeway where prices are less. Don’t get drunk on crabapples.


I have always been intrigued by what happens to people who “win big”.

In an article on, you can read the story of seven lottery winners. Jack Whittaker was worth 17 million dollars before he won but said “I wish I’d torn that ticket up”. His granddaughter and her boyfriend died as well as his daughter. Some of them under suspicious circumstances. William Post III had three dollars to his name when he won 16.2 million dollars. He ended up having to declare bankruptcy and thirteen years after hitting the jackpot, he died penniless. Others committed suicide or were murdered.

Like much of the news today, little is said of those who win the lottery and are thankful and responsible with their winnings. Not a lot of sensationalism in being a responsible adult who quietly goes about their life.

But to be fair, the same website and author did publish an article entitled “7 Lottery Success Stories That Will Inspire You to Buy a Ticket.

So, what is the difference between “The Lotto Curse” and “The Lotto Gift”?

There is a book by Don McNay entitled “Life Lessons From the Lottery”. You can also read an article he wrote or listen to him speak on a youtube video.

I think there are several parallels between the lotto, real estate, and life. Whether it is your time, your money, or your real estate transaction, it should have a purpose. Purpose narrows your focus and keeps you moving in the right direction. Purpose give you perspective so you don’t get lost amidst the little stuff. You will also avoid that thing called “greed”, which blinds you by limiting your purpose and perspective to self.

May you look out at the opportunities this week holds and win the attitude lottery, where your purpose and direction encourages all whom you come in contact with.

Thank you for listening to and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.”

Real Estates Biggest Game Changer – Transcript


Tom, here.

This is where we talk a lot about real estate and a little about life.

Want to dig deeper? Find helpful and interesting links by reading the transcript version of this podcast.

What technology might be the biggest disrupter for change in the real estate industry? The internet along with cell phones show you 3D tours, photos, and aerial videos of homes. What could impact real estate more than that? Probably self driving cars! There are several articles that give an interesting perspective on this. What if you had to sell your home due to a disability that limited your freedom to drive to the store, hospital, or even work? You might not have that same challenge in the near future. You could even live out in the country knowing you can sleep or work on your way to the office. Imagine all of the parking spaces that can be turned into building lots if there was a public self driving transportation that kept moving people around without having to stay parked all day.

If you think self driving cars and the benefits they offer are still out into the future, Forbes put a panel of experts together about their “Near-Future Real Estate Predictions.” If you live in Dallas Texas, be prepared to face off with cars marked as a “Driverless Vehicle”.

You will also enjoy watching this video about a Tesla owner who remotely moves his car every two hours to avoid a parking ticket!

Want an interactive graph comparing real estate values between your choice of two of forty four comparable cities across the globe?  Pick any quarter back as far as 1990 and compare it to one as recent as the first quarter of 2018.  You can compare housing prices to disposable income for those time periods. You can choose from twenty of the largest U.S. cities plus see house prices against rents as well.  Who ever knew that learning could be so much fun!

The New York times has a great article on real estate in France and particularly Normandy. Imagine a two bedroom cottage for $125,000. or how about a 17th Century Estate on 10 acres for $1.58 million. With a dip in values the number of interested buyers is increasing as reflected by a 15% increase in number of sale in 2017 over 2016.

In what City have prices reduced by 2.9% through September yet had a 12.5% increase in prospective buyers enter the market in the third quarter of this year compared to last? Can you guess?  London it is! Although Brexit might have something to do with what is happening in real estate, would this pattern still apply to other cities around the world as prices settle downward?

When it comes to Luxury Real Estate, do you know what city in the world had the biggest percentage drop? It was Vancouver B.C. where values dropped 11% and the number of sales down by 36%. Contrast that with Singapore where values increased by 13% end of September compared to the same time one year earlier.

As you or your friends consider buying or selling a home what should your timing be? Now? Or six months from now. If the agent you are talking to says you should buy now before rates go up, is that a “Pressure Tactic” or “Fiscal Responsibility”.

Interest rates are a funny thing. We call a lender and ask what the rate is today, as if one rate fits all. What could possibly affect the response we hear? Type of loan or financing, amount we have for a down payment, credit score, assets, length of the loan and even the financial institution itself.

With the recent interest rate increases you might feel like you missed the boat and rates are pricing you out of the market. If you feel that way, only because you don’t want to pay more for your loan, you may find that historically speaking, borrowing money at today’s rates is still a good thing. View this chart and move your cursor along various data points to see what U.S. mortgage rates have done over the last forty seven years. It is really only the last ten years we saw rates around 5% and below.

Let’s take more of a world picture and see if we are among the more fortunate of home buyers. Numbeo has a chart reflecting 20 year fixed rate mortgage interest rates in countries around the world. The top rate is in Argentina at 27.68%. That probably takes any thought of borrowing money for a home out of your mind. China is in the 5% range, New Zealand, Australia and the US in the fours, Romania, the United Kingdom and Canada in the threes, Hong Kong and Italy in the twos, and  Germany, France, Switzerland and Japan in the ones. Over ninety cities are included.

If you borrowed $300,000. your principal and interest payment with the 20 year example would be $1,380. at 1.0%, $1,980. at 5%, $2,895. at 10%, and $5,096. at 20%.

What happens when California has prices so high, that the median price of $600,000. is affordable to only 25% of the population? They move to places like Boise Idaho where 29% of those viewing a home there on are from California.

Are you a numbers cruncher? Do you want to know the difference between a seasonal slump and a more pronounced downturn? Real Estate agents may sense a market change before it is confirmed by the numbers, but if you want to know what the numbers mean, and what they don’t mean, it is always fun talk to an appraiser. They are the number crunchers in the real estate industry and one appraiser whose insights and data presentations I find fascinating is Ryan Lundquist in Sacramento. Here are two articles worth reading. One is entitled “How would you know if the market was starting to tank?” and the second more recent one “Slumping volume & rising inventory.

If you prefer watching or listening to a video rather than read an article, Ryan has a recent video entitled “What’s The Market Doing.” Even though he is talking about the Sacramento real estate market, if you listen to what he says and how he interprets the data, you will be able to apply what you learn to your local market.


Buying or selling a home involves a large number of calls, meetings, and pages of paperwork.

The question is, how accurate is your memory?

Let’s look at your memory from another perspective for a moment.

You are in a park enjoying yourself and decide to watch a street performer doing card tricks. You watch the cards move around and are asked to choose a specific card. While you are engaged with the card trick, you look up and see there is some arguing going on and one of those people gets robbed.

How good is your memory? As an eye witness, someone who was there, can you accurately recall what happened? If you have the time, watch this video produced by “Brain Games” and as you interact, you will find out just how accurate your memory is.

In an article entitled “The science of why eyewitness testimony is often wrong” you will learn a few reasons why, when DNA evidence helped overturn a conviction, eye witness testimony was wrong 70% of the time. Does just recalling an event alter what you recall? Learn about how we fill in blank spots so that what we saw makes sense.

Was that book shelf in the house you just saw free standing or bolted to the wall? The answer may make a difference between it being included in your home purchase and having to go out and find another one just like it because it was exactly what you wanted.

How about that beautiful exquisite mirror in the bathroom? Staying or disappearing?

That is why the real estate process and agreed to terms need to be in writing. Less room for misunderstanding. When you go through the house or discuss terms, it is kind of like a doctors appointment, it always makes sense to have someone besides yourself there. Bring a friend or relative along so you have a more in depth understanding of what you saw, or what was said and then reduce that to writing.

In real estate, as in life, if you are the only eye witness, how accurate is your memory going to be?

Thank you for listening to and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.”


Interest rates vs Declining Values – Transcript


Tom, here.

This is where we talk a lot about real estate and a little about life.

Want to dig deeper? Read the transcript version of this podcast for helpful and interesting links.

Are you a bird watcher? Do you like Cranes? Did you know they live on all continents except South America and Antarctica? Crane watching can tell us a lot about what is happening in the world today.

Are you familiar with the RLB CRANE INDEX ®? Of course when it comes to this index,  we are talking about construction cranes and not the bird.

Like a big storm sweeping across the U.S. we have gone from storm watching to crane watching, where commercial construction is booming and unemployment low. Wages are rising and it seems like it is full steam ahead.

If you want the world view, there is the RIB International Crane Index®. What cities have moved in up or down in relative construction cost? Dublin up 3 spots, Sydney up 1, and Auckland up 6 spots. Perth and Christchurch each dropped 4 spots, and Madrid dropping 9.

What is happening in North America? Toronto leads with 97 cranes, Seattle jumped back up from 45 to 65 during a six month period. Portland dipped slightly from 32 to 30.

Where was the real estate market so hot that the number of homes for sale went from 87 down to less than 10 in just forty hours? Why, the same place where the vacancy rate for rental houses is 42%, which is the highest in all of British Columbia. How can this be happening in the town of Kitimat? This is a great example of how development can dramatically affect the local economy of any one city or town. In this case it is the approval of Canada’s LNG (liquified natural gas) project.

The U.S. unemployment rate, at 3.7%, is the lowest since 1969. With all of those potential home buyers working, the real estate boom has to continue, correct?

Won’t increasing interest rates put the brakes on the housing market as homes become more unaffordable?

Probably not in the short run. If you have been thinking of buying but felt no urgency, what might be the tipping point to cause you to move into action and buy that home you have been considering? For many home buyers increasing interest rates would cause them to lock in interest rates before they continue to increase and put home ownership out of reach.

Consider this. A $300,000. Loan amortized over 30 years at 5% interest would cost $1,610.46 per month for thirty years for a total cost of $579,765.60  Rates jumping to 6% would cause your loan payment to go up to $1,798.65 for a total loan cost of $647,514.  That is a monthly increase of $188.19 for a total loan cost difference of $67,748.40

So, which side of the coin flip are you calling?  Heads, interest rates are rising and better buy now, or tails, prices are going to level off or even decline to offset the higher interest rates?

If you are in an area where “Price Reduced” is a common real estate ad heading, that doesn’t necessarily mean foreclosures are on the rise. View this chart of historical foreclosure rates as well as a U.S. map of color coded foreclosure rates by city which show foreclosure rates are down 75% in the first half of 2018 compared to the peak during the first six months of 2010.

The New York Times recently did a study of the Denver real estate market. There is a slowdown in the acceleration of prices, but they have to this point continued upward. What is happening in Denver as housing becomes unaffordable? Some leave to more affordable housing in other cities. This trend can be seen in other part of the U.S.

Rising interest rates not only affect those buying a home, but also those thinking of selling and buying.

If you bought a home between 2011 and even as recently as part of 2017, you could have borrowed money somewhere in the 3% – 4% range. If you were not getting a job transfer or had a major life change, would you be willing to almost double the cost of the money you borrowed? Another way to look at that is would you be willing to move and replace your current home with one half the size of what you currently have?

In 2016 the number of people in the U.S. who were moving was at an all time low. From 1985 to 2008 the average time spent owning a home in the U.S. was six years. Can you guess what it was in the latest 2018 report? Eight years? Ten years?  The average is 13.3 years. Check out this map to see what it is in twenty major U.S. cities.

If you are thinking about buying a home, what month do you think would be one of the best to buy in? Realty Trac tracked 32 million homes over 15 years and on average, those who bought in October paid 2.6% less than market value. That is $2,600 for every hundred thousand dollars of house that you buy.

Do you know which neighborhoods in the Portland Oregon Vancouver Washington Metro area where prices are increasing the fastest? Oregonlive has neighborhood maps and statistics that keep you in the know!

If you wanted to compare the headlines and news reports between 2018 and 2007, what might be one way to do that?

Where to find it? Do you know you can go to, also known as The Archive Machine, to find news clips of what was happening in 2007? It describes itself as “a non-profit library of millions of free books, movies, software, music, websites, and more.” You not only have the text version of many books, but also the audio version. A recent article goes into more detail about what is offered on including a vast classic video game collection you can enjoy.

The amount of information it has on real estate investing, training and news from many sources around the world is worth taking a look at.

The Communication Conundrum

The real estate sale and purchase process is in some ways very simple. Find the house you want. Put in writing some basics such as how much you will pay, what conditions your offer is subject to and when you want to close and make it yours.

How hard can it be to communicate during this seemingly simple process?

Probably no harder than the daily communication we have with each other in our homes or at work.

In 1990, Elizabeth Newton, a graduate student at Stanford University did an experiment which The Harvard Business Review says illustrates “The Curse of Knowledge.” She created a game where you were either a “Tapper” or a “Listener”. The tappers would choose a song that was well known and tap it out. The Listeners would name the song. There were 120 songs tapped out.

If you were a tapper, what percentage of listeners do you think would correctly name the song you tapped out? In this experiment, the tappers expected 50% of their listeners would be able to do that.

When we are talking, sharing, or explaining something about real estate, or any topic for that matter, what are our expectations that those listening will have a solid understanding on what we are saying? Whether are home or work, don’t we really expect everyone we talk to, to understand what we are saying? After all, it is so clear in our minds.

The experiment showed the tappers had an expectation of 50% correct responses. That expectation was met with the reality of only 3 of 120 songs correctly named.

At 2.5%, that means their expectations were met just one out of every twenty times.

You can listen and try it yourself.

Why such a low rate of understanding? One often stated reason is that the idea, task, or concept in our mind is very clear to us because we are familiar with and have studied it.  The question is how to make what we want to convey, as clear to the person we are talking to, as it is to us.

Simple as it sounds, becoming aware of the challenge before you is the first major step you can take. You can also do some more research and learn other ways to overcome this challenge.

The next time you are sharing something that is important to you, remember the experiment of “The Tappers” and the “Listeners”.

Thank you for listening to and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.”

What was – What Is – What is to Come – Transcript


Tom, here.

This is where we talk a lot about real estate and a little about life.

Just a reminder that you can access the links and references when you go to the transcription version of this podcast.


Information without context is much like the tree falling in the forest. Who will hear it fall? If you are a long ways from that falling tree, or around the bend, you might not see what is happening, but you could hear the barely perceptible muffled sounds of cracking branches as it forces itself against others trees on its journey to ground level. You could be close enough that the loud sound of tearing wood fibers stops you from what you are doing. You might see the tree coming down and be able to take in the whole scene and notice if anyone is within its path of destruction. The worst possible scenario is when that tree is so big and moving so fast, that you see it headed toward you and you don’t have time to react or get out of its way.

What happened to you in the 2007-2008 economy could range from business as usual to life altering devastation, economic slowdown, recession, or depression. Any one of them could describe what you experienced. Even that range of responses could vary from country to country, city to city, and even neighbor to neighbor.

Real estate and the economy can also be like the sky above us. It is just there. In the background as we go about our daily lives. It affects us but is not usually our focus. We enjoy the sunshine and blue sky but sometimes we get rain or snow. It is when the weather becomes extreme, massive amounts of rain or snow, or no rain at all for long periods of time that we take notice. It is when a hurricane comes or a tornado touches down that the weather is no longer in the background.

When you read about economic destruction remember that there are people behind the headlines. The headlines come and go, but those who struggle may continue to do so. There is an article about an Omaha debt collector that helps us get a glimpse into what it is like in America to owe money we don’t have and what happens in the process to both the person owing the debt and the one trying to collect it.

Does the city name of Omaha Nebraska sound familiar to you? It should. This is the hometown of Warren Buffett estimated to be worth over ninety billion dollars. Same city, same economy. But experiencing life in a far different way.

Listen to these quotes:

A real estate crash might not be the most likely outcome, but it certainly seems legitimate to think about what one would look like.”

Take a deep breath. We’re not forecasting a nationwide housing collapse… The problem is as basic as beams and trusses: The triple threat of soaring prices, higher mortgage rates and relentlessly rising property taxes has drastically increased the cost of ownership.”

“Many sellers have stubbornly stuck to listing prices suggested by the sales of comparable homes a year or more ago, despite price drops since.”

Sound familiar? I will tell you when those quotes were made. The first about a real estate crash not being likely was in August of 2006. The second not forecasting a nationwide collapse was May of 2006. The lasts about stubbornly sticking to list prices was about a year later than the first two, August of 2007

How bad was the housing crisis in the United States?

Housing prices peaked in 2006 and in 2007 the median price was $219,000. Contrast that to the 2012 median price of $154,700. which is almost a 30% drop in value. In January of that same year 35% of all homes sold went for less than their original mortgage amount.

In December 2008 60 Minutes produced a segment called “Mortgage Meltdown”. Take the twelve and a half minutes to better understand what was happening with various mortgage loan products and how they affected the consumer.

This meltdown may have started as a U.S. problem but when Lehman Brothers collapsed, the dominos began to fall. The U.S. bond rating was downgraded and the world financial markets felt what was no longer just a corporate problem of failing businesses, but a Sovereign or governmental problem pushing countries to the brink of financial ruin.

Even though it was a global crisis, countries such as Canada refused to join the party and escaped with but mild consequences.

What other Country had their stock market affected but technically missed a recession in 2007? What country had higher home prices in 2009 than 2007? And why?

CBSnews had an article entitled “How Australia Ducked the Crisis”. One of the conclusions of the article was that their choice of trading partners, China, practically negated what was for most, a world crisis. The average Australian might have said “what recession”.


According to Brookings we have reached a tipping point where half of the world’s populations is considered middle class, and as having some discretionary income. Will we now tip forward? Or backward?

Homes Sales are down and prices reduced across the U.S., right? Wrong! Homes sales numbers in New Mexico continue to set new records with a 45% increase in number of sales for July 2018 as compared to July of 2017.

Let’s come back to Australia, whose fate may be far different now than in 2007 and 2008.

60 Minutes Australia has a two part series entitled “Bricks and Slaughter”. In Part 1 60 Minutes Starts off quoting the prediction that “Housing Values in Australia Could Fall by as much as 40% in the next year.” It interviews homes owners, investors, real estate agents, and data experts. Listen to the parallels of Australia today to the U.S. of 2007 & 2008. In some areas foreclosures rates have gone up over 600%. The big mistake during this crisis, “Believing that house prices would keep going up and up forever.

In Part 2 you hear about the banks who are denying 50% of refinance applications compared to 5% a year ago. Learn about how banks who are raising interest rates or are now requiring principal and interest payments on what once were interest only loans, affects consumers.

Sounds like all of Australia is on the auction block getting ready to be sold for pennies on the dollar.

Real Estate values and trends are local and what was portrayed appears to be accurate. Accurate that is for the City of Paramatta. Maybe not for Australia as a whole.

Is that the true picture? Is that the whole picture? Greg Clough, who was interviewed by 60 Minutes, posted a video clarifying his perspective of what is really happening. Here are a few new quotes:  “70% of Australia’s market is owner occupied and 50% of those do not have a mortgage. 30% of the remaining 50% are in advance of their payments.” He also talks about some of the differences between the loan default process in Australia and what in America he calls “jingle bells”.


Some predict a recession is coming to the U.S. Is there one indicator that seems to correlate more than another? It just might be the gap between household income and home prices. And how do they relate to each other? According to a Federal Reserve Study, for every decrease in a home values of $100., consumer spending decreases between $2.50 and $5.00

Did you know there is a Global Real Estate Bubble Index put out by UBS. The highest Bubble risk city?  Hong Kong. The lowest which is considered undervalued? Chicago.

Let’s look at some current headlines or quotes that may sound similar to that of ten years ago:

So, while a crash in the near future is probably not likely, it is important to keep tabs on these fundamentals going forward.

“How to Spot a Real Estate Bubble”

“Opinion: These 4 called the last financial crisis. Here’s what they see causing the next one”

I recently read an article entitled “Stop Extrapolating Your Perceptions”. I perceive something and then I come up with my list of “also must be trues”. The last several years prices have been going up and inventory declining. That would continue forever, right? That was my reality of the moment. However, our local real estate market slowed down the later part of August. It’s the coming recession of course. The next big down turn. Or, it could be the end of summer when families with kids finish their vacations or spend all of their focus on shopping and preparation for school.

Buying or selling a home is most often an event or circumstance driven process. You buy a home to lessen the impact of increasing rent, you sell and move up when your family grows. You may also sell when it is too big, when a job change or divorce occurs.

Just as the world real estate market has common trends and yet variations down to the neighborhood level, so as buyers and sellers we have common motivations with other buyers and sellers, but yet our circumstances are unique.

Most of us in the U.S. have an average of a ten year gap between buying or selling, so for most of us, this is a process that we don’t concern ourselves with.

What we hear about the real estate market in our area may be true, but it may only be partially true. Take the time to do your homework.

When it is time to make some decisions, it is always best to not be driven by fear.

Thank you for listening to and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.