251 dan habib
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So my guest today, Dan Habib, has been an educator in the mortgage industry for over 15 years. He was [00:00:10] recently honored by National Mortgage Professional Magazine, being named one of the top 40 under 40 mortgage [00:00:15] professionals in the country. He was also presented the housing Wires Award for The Rising Star, which [00:00:20] acknowledges young leaders in the housing industry.
Dan is currently one of the head market analysts [00:00:25] for Chief Revenue Officer of Highway, the parent company of MBS Highway and List Reports. Highway is [00:00:30] anonymous with mortgage and real estate for providing the most trusted insight and market software [00:00:35] solutions. Dan is also a co-founder of Crypto Charge, which you're gonna hear about today.
A platform [00:00:40] designed to educate investors on the crypto markets to help them make better informed decisions and investment [00:00:45] opportunities due to his expertise in the mortgage, real estate and crypto markets. Dan is sought after speaker and [00:00:50] thought leader in the industry, and I'm honored to have him on the show today.
So Dan, without any further ado, [00:00:55] welcome to the show, my friend. Well, thanks man. And there's, certainly a lot to talk about, but it seems like we might [00:01:00] have to edit that, bio because,it, it now the Parent Company [00:01:05] Highway now also encompasses home report, which maybe we will get into a little bit towards the end of the [00:01:10] show.
But listen, there's no shortage of things to talk about with volatility and things happening in [00:01:15] the market. Boy, it seems just as if we're on the precipice to having some lower [00:01:20] rates, maybe on a sustained basis, we get a blockbuster jobs report figure. But [00:01:25] there's a lot of good things I do see on the horizon, and I do think rates are going to [00:01:30] come down this year, and I don't think they have to come down as much as most people think for it [00:01:35] to have a really meaningful impact.
So, you know, we can kind of get started wherever you want, [00:01:40] but I think. Down, you know, the next few months, and then over the next few years as it relates [00:01:45] to surprisingly crypto, I think that there's gonna be a lot of things that can help [00:01:50] mortgage rates to come down. So let me know where you want to begin.
Yeah, let's kind of jump [00:01:55] right into it here. So, for our audience, you know, they've been listening to me talk about a lot of the fed's [00:02:00] mindset, position, things that have to happen. the combination of the 10 year treasury, the spread. And, you [00:02:05] know, I love the insight you bring to the conversation here.
So let's just kind of kick it off. For those who don't know, [00:02:10] Dan, Dan and Barry host NBS Highway, they give updates every single day. They provide significant charts, some of which [00:02:15] you've seen on this show, and, you know, in recent forecasts and recent, theology from the [00:02:20] two of you, it was, Hey, listen.
The momentum is building, right? We've got some jobs reasons right [00:02:25] now. It's really labor over inflation. You know, we hear a lot of people say that, but the job market is deteriorating. It's [00:02:30] kind of setting the tone and the Fed's hand may be forced and you kind of have a split federal reserve [00:02:35] right now, as you've mentioned.
Talk a little bit about, you know, you just mentioned there, maybe we don't have to have the full [00:02:40] cooperation of the Fed to get lower rates, but what do lower rates really look like? Because I feel like two years ago we were saying lower rates, we were [00:02:45] thinking 5 8, 7, 5. Right. What do lower rates look like in the future for the remainder of 25 [00:02:50] and maybe into 26?
If you can go that far. Yeah. So first we'll start with that, right? So [00:02:55] I think if we see rates come down below 6.5%, [00:03:00] you know, we've. Done the research, run the numbers, you actually have a few million refi [00:03:05] opportunities, but that also does unlock a lot of purchase business. But if we reach our [00:03:10] target, which is somewhere between six and an eighth and six and three eighths, I truly, and on a [00:03:15] sustained basis, not for a one week blip, I truly do believe that it is a [00:03:20] different environment.
You have to remember there's been a lot of activity over the last few years with much higher rates. [00:03:25] So rates don't have to get as low as many people think, 5%, 4% for it to [00:03:30] really change our business and our industry, it just has to go there and then [00:03:35] stay there for a sustained basis. So mortgage professionals can, you know, pay off debts, refill their [00:03:40] CERs, so to speak.
And I do think there's a possibility that we see that. [00:03:45] So first off, my target somewhere between six and eight and six and three eights, maybe that's [00:03:50] somewhat hopeful, but. I do think there is a pathway to get there. [00:03:55] Now, as it relates to the Fed, they're always important. The Fed right now is extremely divided, [00:04:00] so the Fed looks at two main things.
Maximum [00:04:05] employment and stable prices. So what does that mean? Well, maximum employment means they don't wanna see the [00:04:10] unemployment rate rise too high. So they care about that. And then the other portion of their [00:04:15] mandate is stable prices. That means they want to see 2%. Core [00:04:20] inflation, which strips out food and energy prices on a year over year basis.
And there's two main [00:04:25] inflation readings out there. The Consumer Price Index or CPI and Personal [00:04:30] Consumption Expenditures or PCE, they favor the latter. That is their favorite measure that they [00:04:35] really want to see hit 2%. Now it is running above that and [00:04:40] it's not dramatically above it. I mean, listen, it's made a lot of progress, but [00:04:45] the thing is the last few inflation readings we've received, they've been tamed [00:04:50] and it seems like for the last six months the Fed has been waiting and waiting for the [00:04:55] impact of the tariffs to show up and the numbers, but they actually haven't.
And oh, just looking at some data [00:05:00] recently, it's interesting when you look at goods prices and you look [00:05:05] since December, 'cause some of the tariffs went into effect in January and such goods, prices [00:05:10] overall. Looking at the PCE, they're up four tenths of a percent, but [00:05:15] imported good prices are actually down one 10th of a percent.
So we're certainly [00:05:20] not seeing, at least, you know, a, as a whole, the tariff [00:05:25] prices or the tariff increases impacting inflation yet. But Fred Chair, Jerome [00:05:30] Powell's been very clear that he's fearful that in the coming months and later this year, it is [00:05:35] going to show up, and that really has him handcuffed and has him wanting to hold [00:05:40] off on cutting rates.
Now, mind you, the other side of their mandate, which I would argue they're more [00:05:45] focused on inflation now than labor, but the other side of their mandate, which is the labor market and maximum [00:05:50] employment, there's a lot of signs that there's weakness there, but there's several different [00:05:55] reports. I mean, I could just rattle off a few, right?
A DP. Which is like the largest payroll company [00:06:00] out there. They show you private payrolls. They just showed 33,000 job losses in the month of June, [00:06:05] and over the last three months, the total is like 56 or [00:06:10] so thousand. So on average over the last three months, you've only seen 18,000 jobs created per month.
I mean, [00:06:15] that's pretty soft. All the initial was claims numbers, right? People filing for [00:06:20] unemployment benefits for the first time. Those have been more elevated than recent history. But the [00:06:25] big one for me is the continuing claims. That's people after the initial claim, they continue to [00:06:30] receive benefits.
Well, that is just about to scare 2 million. It's [00:06:35] definitely the highest in this cycle and the highest since November of 2021. But what that tells you is [00:06:40] that once you're let go, you're staying on benefits for longer because it's harder to find a job. [00:06:45] Why? Because there's less hiring going on out there.
And that was also evidenced this morning. [00:06:50] We got the Atlanta Fed's wage tracker info where for the first time in a while you [00:06:55] have job stayers or those staying at their job. That derated from like [00:07:00] 4.3% to 4.2%, meaning how much their income increased over the last year. But still decent numbers. [00:07:05] But job switchers actually fell beneath it and it went from 4.1% to [00:07:10] 4%.
So that's if I am getting poached from another company. What do [00:07:15] they usually do to entice you? They pay you more. So normally the job switchers, their [00:07:20] pay is higher. We're actually seeing that contract at a level, at least according to the Atlanta [00:07:25] Fed below job stayers. So that means there's less hiring, less poaching going on.
It [00:07:30] sounds like a cooler market Job openings from the jolt survey, I mean that [00:07:35] went from like over TW 12 million at the peak. Now we're around 7.7 [00:07:40] million or so. But all of those numbers are showing softness and weakness [00:07:45] and the soft data is also extremely soft, or I should say extremely weak. [00:07:50] So any of the survey data out there, that's what I mean by soft data.
It's all showing [00:07:55] weakness except the most important one. And the one that the Fed goes off [00:08:00] most, which is the BLS Bureau of Labor Statistics Jobs report. Now, [00:08:05] if you ask me, I think they should drop the L because they have just been so [00:08:10] inaccurate and what they've been doing and just look at. Every report last year, [00:08:15] they've been reporting these blockbuster numbers, and it's held true this year too, [00:08:20] only to revise them lower in the subsequent two months.
And then many months [00:08:25] later, still from the BLS, they released this QCEW or quarterly census [00:08:30] of Employment and Wages, and it shows that 50% of the jobs that [00:08:35] the BLS initially said happened last year never occurred. Right? So if you look at the [00:08:40] Fed last year, they started cutting rates in September 18th, they cut 50 basis [00:08:45] points and they said that was because the labor market especially was showing sense of weakness.
[00:08:50] And then they cut another 25 in November and then another 25 on December 18th. [00:08:55] Well, if you look now versus then. Employment's weaker, and [00:09:00] inflation is actually slightly below that. So you would argue, you could argue they have more impetus to cut now than they did [00:09:05] back then. But here's the thing, a lot of people think when the Fed cuts, they're cutting [00:09:10] long-term rates or like mortgage rates.
They're not. They are cutting short-term rates. They're cutting [00:09:15] actually an overnight rate that banks use to lend to one another. But if you were to look at a chart. [00:09:20] Of the Fed funds rate, which is what they're cutting or hiking, and then [00:09:25] long-term rates like the 10 year, 30 year mortgage rates. There is a pretty close correlation over [00:09:30] time, but we didn't see that happen.
Last year. The fed cut 1%, but mortgage rates actually went [00:09:35] up. Why? Well, I think. A big reason for it was those blockbuster [00:09:40] jobs numbers we were getting. If you look at a chart, it's like bonds are doing okay and then boom, [00:09:45] 300,000 job creations that we find out later was bs. But the market reacts and it doesn't react [00:09:50] as much to the revisions.
And then so there was some hot monthly inflation readings in there too. [00:09:55] But over time they're usually pretty well correlated. And I think this time around [00:10:00] when the Fed does begin to cut, I do think it's something if you want to see lower rates in the mortgage [00:10:05] industry that you should root for. And I actually think the Fed should be cutting now.
You know, [00:10:10] the Fed always is. Driving in their car, but looking in the rear view mirror, they're [00:10:15] looking in the past, they're looking at old data. Jerome Powell, I am sure, is very afraid of [00:10:20] making the same mistake twice, where going back a couple years ago, there was [00:10:25] clear signs inflation was going up, but they kept rates at zero.
They kept [00:10:30] quantitative easing alive, which was buying a ton of mortgage bonds and treasuries to keep rates [00:10:35] low. And they did this after COVID to try to make borrowing costs cheap and stimulate [00:10:40] the economy. But they were looking at old lagging data, especially when you look at [00:10:45] shelter data, which is terribly lagging and makes up the biggest portion of these inflation reports.
So [00:10:50] they said, oh, inflation's, transitory. It's gonna pass. We're not worried. They [00:10:55] waited way too long and we got 40 plus year high inflation. So inflation's made a lot of progress. It's not [00:11:00] at their goal, but here they are again, they're deathly afraid of making that mistake twice. [00:11:05] And I think they're holding off because they're very fearful that tariffs are going to cause [00:11:10] some inflation, even though it hasn't showed up yet.
And I would say that it's possible that they [00:11:15] could show up. And there's also a possibility that many people, or many businesses, they [00:11:20] front ran the tariffs. So they have a bunch of inventory at those lower prices that hasn't been passed down yet. [00:11:25] But you know, imports make up about 10% of GDP. I don't think that full cost would [00:11:30] ever be passed to the consumer.
I think it's gonna be eaten up and shared along the supply [00:11:35] chain. But then on top of that, tariffs, and we've had Fed members speak about this, [00:11:40] they're different than inflation. Inflation by definition is persistent and [00:11:45] ongoing. I mean, remember the Fed's goal is to have prices rise by 2% a year, [00:11:50] but.
Tariffs, at least theoretically, they are a one-time price increase. And then that's it. [00:11:55] And we've had some Fed members vocally speak about this. One of the favorites for the next Fed chair, because [00:12:00] Powell's term ends May of next year, is fed Governor Waller. And he really took [00:12:05] some shots at the Fed after the last meeting in his interview on CNBC.
And he said, we need to be [00:12:10] looking past these tariffs. They're a one-time price increase. Everything [00:12:15] else is showing pretty tame inflation readings, the labor market's weakening. We need to stop looking backwards [00:12:20] and we need to start looking forwards. Because even if the Fed were to cut the impact that the cut would [00:12:25] have on the economy to let's say, try to stave off a recession or something, it takes a long time in the [00:12:30] fed's own worlds.
There's long words, there's long and variable lags, and there's certainly some [00:12:35] signs that you need to be concerned. And we don't know where the tariff situation's gonna end up with [00:12:40] this latest round of letters that was sent out by President Trump with the deadline being August 1st. But [00:12:45] you know, you could certainly see.
A slowdown because of that. And I [00:12:50] think one part of the equation that a lot of people aren't considering is yes, on one side you could have one time price [00:12:55] increases on stuff, but on the other side, you could have demand destruction that historically has led to [00:13:00] recessions and that could actually cause deflation.
So I thought, I actually think he'd be a pretty good [00:13:05] option as the next Fed chair. But you know, I also think the last point on this, [00:13:10] the fed can cut rates because they are still restrictive. [00:13:15] So the Fed has their Fed funds rate, and then you have something, you have inflation, and then you [00:13:20] have something called the neutral rate or R star, right?
So, so what you try to do is say, Hey, [00:13:25] how far above neutral is the Fed? And the definition of neutral is where [00:13:30] is the fed funds rate supposed to be? Where they're not accommodative to the economy or [00:13:35] restrictive. It's a moving target. I don't think anybody knows the exact number for sure, but based on our [00:13:40] calculations and many others, they're about 1% restrictive still.
So what's [00:13:45] the big deal? To be proactive here? You see signs of weakness. If you go ahead [00:13:50] and cut a quarter of a percent, you're still restricted by three quarters of a percent. A hundred [00:13:55] percent. a lot to unpack. There are great answers. When I look at this, you know, we've talked well before this podcast.
We [00:14:00] both agree Waller's the favorite in there. And, I'm gonna ask you question. There's a couple other question. Now. you got Hasset, you got war and, [00:14:05] you know, Warsh was,I believe, no, I think it was Hasset. No, it was Wars that used to [00:14:10] be a Fed governor many years ago, so he could be the next Fed chair.
But warsh, [00:14:15] you know, there's rules to being the next Fed chair. You can't just put anybody, they have to [00:14:20] have served on the Fed, right? So there is a vacancy coming up in January in one of the [00:14:25] Fed Governor's seats. So that would be a telltale sign if they put Hassett in there, well [00:14:30] then you know that he's probably gonna be the next Fed chair choice.
Yeah, no, it'll be [00:14:35] interesting to see, you know, listening to that answer there, the fed's not ahead of the curve, right? They're like, you use the [00:14:40] analogy driving in the rear view mirror. They're not playing ahead of the curve to anticipate. And when you look at the job history [00:14:45] reports and the things that have come out, especially on the B Ls side of things, you know, I love the fact you referred to as the BS report.
the [00:14:50] reality is, by the way, I stole that one from Barry. Yeah. I gotta give credit. the reality on that is [00:14:55] that, imagine like, I look at this and I'm like, could you imagine, like, you know, you recently congratulations had a [00:15:00] child, and you know, imagine when your son goes to school, he comes home and he's like, dad, hey, [00:15:05] crush it.
I got an A on that paper. And you're like, hell yeah man. Congratulations. A month [00:15:10] later, he comes back and goes, Hey, there was a revision downgraded to a ded. And you're like, dude, what the [00:15:15] heck? That would never fly. And just to put in perspective for our audience, that's what it's actually an F. That's what's [00:15:20] been happening on the BLS side of things.
And they've admitted openly that there's a higher [00:15:25] degree of error because they're understaffed. Yeah. And in this most [00:15:30] recent report that came out, it was a lot of state and local jobs that were provided. Not necessarily [00:15:35] federal. It was. it was. there's always some oddities within the report, right?
By no means was this like a blockbuster [00:15:40] report. They were expecting 110,000 jobs to be created in June. There was 147, [00:15:45] but it did beat estimates. And that's really what the market focus is on. But the [00:15:50] composition of the jobs, I mean, first off there was [00:15:55] 73,000 in government jobs and the bulk of it, [00:16:00] 63,000 was like state and local government.
From [00:16:05] education. Now it's for the month of June. I mean, I mean, I'm sure some states are different, but a [00:16:10] lot of states, I mean, I know in Jersey, June you have teachers that are taking break for summer. Yep. [00:16:15] So the way that they count if you're employed is if you're still receiving pay. So [00:16:20] theoretically you would think they wouldn't.
Now, of course, there's always the raw data. And then they seasonally [00:16:25] adjust it. The raw numbers are what you would've thought, 542,000 job [00:16:30] losses, but they seasonally adjusted it up by [00:16:35] 605,000, which it doesn't make sense and it's an abnormal seasonal adjustment if you follow these [00:16:40] things. But it's always wonky stuff.
I will say the other thing that really hurt us is the unemployment [00:16:45] rate. It was 4.2%. It was expected to go to 4.3, it went down to [00:16:50] 4.1. Right. But that it has its own set of problems there. That's from the [00:16:55] household survey, their phone calling households, and the participation rate has been [00:17:00] falling off a cliff, which means that they.
The [00:17:05] unemployment rate is a ratio, right? It's the unemployed persons divided by the people in the labor [00:17:10] force, but the people that they count in the labor force. It's interesting, you wouldn't think [00:17:15] it's this way, but let's look at May. For example. There was [00:17:20] 626,000 or so, or 696,000 job losses. So you [00:17:25] would've thought, well, the unemployment rate's gotta go up, right?
It didn't because, almost [00:17:30] similar number of people left the labor force. Now listen, God forbid these people didn't [00:17:35] pass away. They're still breathing. They still have a pulse, but they're just no longer being counted. Why? [00:17:40] Well, the reason why they're no longer being counted is they either didn't [00:17:45] respond or so they.
Answer a series of questions. It's not like if they say, Hey, are you [00:17:50] unemployed? And you say No. They say, okay, you're unemployed. No. Have you looked for a job in the [00:17:55] last four weeks? If the answer is no, they don't count you as unemployed or in the labor [00:18:00] force because you're like a disgruntled worker.
You're not actively searching. Even if you say yes, [00:18:05] but you haven't filled out an application or done an interview, they still don't count you. So [00:18:10] the U three. Is the technical term for the unemployment rate that just went down to [00:18:15] 4.1. That's the one that everybody looks at. But if you add back everybody and you want [00:18:20] a more indicative unemployment rate of like what's really happening in the economy, it's called the U six [00:18:25] and it's like 7.7%.
That's more like the true unemployment rate, but the [00:18:30] markets aren't focused on that. But there's a lot of oddities, a huge [00:18:35] margin for error in this report. And all the other reports out there are showing softness [00:18:40] except for this one. And we know the numbers are gonna get revised lower and it's not gonna be real.
[00:18:45] But it's frustrating for us in the mortgage business because just recently the bond [00:18:50] market was primed up to continue higher. It was on a nice rally. Yields were moving down, [00:18:55] the charts were looking good, there was room for things to improve. And then you got the jobs report that spoiled the [00:19:00] party as it's done almost every month for the last like year and a half.
Yeah, a [00:19:05] very battered fan base about that right now, you know, we're all set and ready and it's just like an epic collapse there [00:19:10] as the rally starts to happen and the momentum goes, and then all of a sudden you got this blockbuster report that comes [00:19:15] outta nowhere. But getting back to the rate side of things.
So I heard you say six and 8, 6 3 [00:19:20] eights I kind of forecast through 20, 25, but below six and a half I think makes a big difference [00:19:25] too. Huge difference. Now, what do you think about heading into 26? What does that look like? Yeah, so, and I know I'm putting you on the [00:19:30] spot here, but No, it's fine. so listen, there's a couple of really big things that I [00:19:35] think can help rates.
So we're talking about inflation, labor and the Fed, and of course all of those [00:19:40] things can have an impact. But one of the main reasons why rates have remained elevated and one of [00:19:45] the biggest headwinds is simply our debt. So a lot of people don't really [00:19:50] understand or realize how this works. They think that like Jerome Powell's got like a [00:19:55] printing press, like, like a money press out there.
It's not how it works. What happens is [00:20:00] we are currently deficit spending by a little over $2 trillion, [00:20:05] and what that means is that we are spending more than we are taking in through tax receipts. [00:20:10] That's how a country makes its money, and that's a deficit. And then that adds to our [00:20:15] $37 trillion debt load that we have, which has just been freaking exploding.[00:20:20]
So how do we come up with the money? We issue debt. What [00:20:25] we do is we issue treasuries, and they could be short term, long-term treasuries. The ones that hurt us [00:20:30] the most are the longer term treasuries, like 10 year and 30 year treasuries. But none of [00:20:35] it's good. And if you go back quite, and I don't know if you had like a macro economics class [00:20:40] back in the day, but maybe you'll remember this term, right?
So you have a bunch of supply that's [00:20:45] coming to market. There's going to be demand at some equilibrium price. But [00:20:50] just like in housing, if all of a sudden there was an explosion of inventory, you'd have demand for that housing [00:20:55] at some price. But with all that supply, the demand would be at a lower price.
And in the bond market, when [00:21:00] you're flooding supply, because of the debt we continue to go into, there's gonna be [00:21:05] demand. And if the price is lower. That means the yield, 'cause it's always inversely correlated, is [00:21:10] higher. So that additional supply, which it's probably not gonna be helped by the one big [00:21:15] beautiful bill act either, which, listen, there's estimates that's gonna add a couple trillion to [00:21:20] our debt over the next 10 years.
That's more supply that has to be added. Now listen, [00:21:25] I don't want to get political at all here, but. Here's the facts. Obviously some [00:21:30] people are looking at it like this is bad and that you would have, you're gonna be adding to our already [00:21:35] insane and irresponsible debt. And then the other side says, listen, we [00:21:40] had to do this because if we didn't extend the tax cuts and things like that, you'd have the [00:21:45] largest tax hike in history.
And then what they really focus on, like the most important thing isn't [00:21:50] necessarily the absolute level of debt, but it is the debt to [00:21:55] GDP ratio, meaning how much is our debt to how much the country's growing. Yeah, I'm glad to get into this. [00:22:00] And there's arguments that, there's arguments that, listen, if we didn't, if there extend these tech tax cuts and other [00:22:05] things, you would've had surely a recession, in which case that debt to GDP [00:22:10] ratio would've gotten a lot worse.
Now the CBO, I don't think they do a very good job with their [00:22:15] estimates. They don't really factor in that growth component too much, but. If [00:22:20] this does create additional growth, instead of maybe the forecast of 1.8% GDP, it's [00:22:25] 2.8%. Even though we're adding to the debt level, you actually see that debt to GDP ratio [00:22:30] go down.
Do I know what's gonna happen? Absolutely not. But I do think that's a [00:22:35] important component, at least to weigh. But the bottom line is that overall is probably not a great thing for [00:22:40] mortgage rates. But as I was alluding to, there's two big things that I think are [00:22:45] gonna happen that can help absorb that supply.
And if you have people absorbing [00:22:50] that supply, that can help mortgage rates to come down. And there's actually three [00:22:55] things. So first off is this, I mentioned longer term debt hurts us more if it's issued on the long end. [00:23:00] Barry, my father, Barry Habib, had a conversation, personal one at Mar-a-Lago [00:23:05] with Treasury Secretary Scott Besson, and he said this publicly too, but he wants [00:23:10] to see rates come down.
His target for the 10 year is around three 90. He also [00:23:15] wants to unfreeze the housing market and he said what he wants to do is. Term our debt [00:23:20] shorter. So if we're gonna be issuing new debt instead of issuing 10 year treasuries, 30 year [00:23:25] bonds, let's issue more of it on the shorter end because that will have less of an impact [00:23:30] on long-term rates.
But the other thing is he also mentioned the Fed who's [00:23:35] doing reinvestments from their balance sheet runoff, which they've lowered, meaning they're allowing less [00:23:40] to run off and they're reinvesting more into treasuries. He [00:23:45] wants them to focus on investing that more on the longer end, which could help absorb some of the supply on the [00:23:50] long end.
But the big thing, and you might have heard of this, is [00:23:55] they're putting framework together that I'm hoping we hear about, you know, at least an update [00:24:00] on in the next couple weeks on the bank deregulation deal. So what does [00:24:05] that mean? First you have to understand how a bank makes money. A bank, [00:24:10] we give a bank.
Our deposits, they pay us very little if you look at your accounts, right? [00:24:15] And then they take that money and then they lend it out a much higher rate, and they make the [00:24:20] spread. But a bank can't just lend out all the money that it [00:24:25] comes, that it gets the deposits. There's certain capital ratios.
It's actually called the [00:24:30] supplementary leverage ratio for risk and needing to have a certain amount on hand. [00:24:35] So right now, as it stands, [00:24:40] treasuries go against their capital ratio. That means if a bank, especially the big banks, if they [00:24:45] were to buy treasuries, that would limit the amount that they could lend out, and they can make more money [00:24:50] on the amount that they could lend out than they could in a risk-free return from a treasury.
But the [00:24:55] bank deregulation deal says this, whether you agree with it or not, it says. [00:25:00] Treasuries are a risk-free asset backed by the full faith and credit of the government. So they [00:25:05] should not count against your capital ratios, meaning big banks could buy as [00:25:10] many treasuries as they want, and it won't impact how much they could lend out, and hence how much they could make.[00:25:15]
So if this gets passed, which it certainly looks like it's going to, that [00:25:20] will be a big opening of the doors for more demand for our [00:25:25] treasuries. The other big one, and you know, I have a little bit of a unique view on this because not [00:25:30] only am I heavily involved in the mortgage and real estate space, but I also have a company in the crypto space and I am a [00:25:35] big student of that market.
I also love to educate people on the crypto space. And by the way, as we're [00:25:40] recording this, not upset to see Bitcoin setting a new time, new all time high, just, under [00:25:45] 114,000. Yep. I was wondering when you were gonna work that in. Yeah, I had to throw it in there, but. [00:25:50] Everybody hears crypto and what do they think?
They think Bitcoin, Ethereum [00:25:55] XRP, and they think volatile crazy assets. But there's other [00:26:00] cryptocurrencies out there called stable coins, and just like the name suggests, a stable [00:26:05] coin is stable. It doesn't have really much, if any, [00:26:10] fluctuation in its value. And most of the time it is pegged to something like the [00:26:15] US dollar.
So one USDC or USDT stable [00:26:20] coin is equivalent to one US dollar. Okay? So [00:26:25] everybody is trying to get into this game. I mean, Walmart, you name the big company, they're trying to create their own [00:26:30] stable coin governments, countries. And the reason why it's so [00:26:35] attractive is because it really bridges the gap.
Between crypto and the [00:26:40] blockchain and between traditional finance and US dollars. And you might be wondering, where [00:26:45] the fuck are you going with this, Dan? Or where the heck are you going with this? Right? So I'm gonna get there as far as how would it, how it [00:26:50] could help us in the mortgage and real estate space.
So if it's pegged to the dollar, [00:26:55] how do they back it? Right? So what's owned by these stable coins? [00:27:00] 80% of it. Is treasuries. So right now the [00:27:05] stablecoin market is around 240 billion, which means [00:27:10] 192 billion or so is held in treasuries. Now, most [00:27:15] of it has to be short term treasuries because it's gotta be highly liquid.
But if we term the debt shorter, that can [00:27:20] really help. but it will help nonetheless absorb supply. But it's [00:27:25] projected as this market is. I mean, I'm very confident it's gonna explode, but the projections [00:27:30] out there are like, it's gonna go from 240 billion to like 2 trillion just over the [00:27:35] next three years.
Well, what does that mean? You do some simple math. 2 trillion, 80% has to be owned in [00:27:40] treasuries. It's like 1.6 trillion that it would own. In [00:27:45] treasury. So between the stable coins absorbing a lot of supply and the bank [00:27:50] deregulation, which opens the doors for banks to buy as much treasuries as they want.
'cause it won't go against their capital [00:27:55] ratios and how much they can lend out. That could be a big source of demand for our treasuries. [00:28:00] And you know, the other thing is like there was this whole narrative out there with the tariffs and [00:28:05] everything that other countries are shunning our debt. Nobody's gonna wanna [00:28:10] buy our treasuries, the dollar's not gonna be the reserve currency of the world anymore.
I think [00:28:15] all of that is way overblown. And if we just look at the facts, I mean, just [00:28:20] this week we got a 10 treasury note auction that was really strong that actually helped yields come down [00:28:25] after the jobs report stuff. And there was a. more than, we've seen [00:28:30] historically over the last 12 months foreign demand, and we've been seeing that theme over the last [00:28:35] several auctions.
So in my eyes, there's no sign that foreign countries are shunning our debt. And by the way, why would they that, [00:28:40] I mean, I've heard of the story that they, you know, might wanna spite us, but it would be foolish [00:28:45] money-wise because there's no better quality paper paying as high of [00:28:50] rates that could also handle the size, right?
Some of these smaller markets, you can't even, you don't even have [00:28:55] enough debt to buy and it's much lower quality and lower rates. So I think [00:29:00] that's not really a true story. I think the dollar is certainly, is not gonna not become the, or not [00:29:05] be the world reserve currency either. I think that's all just click bait stuff as well.
[00:29:10] But I do think that a lot of the things we just talked about. [00:29:15] Coupled with boy, maybe we start getting some more jobs. Data that's aligned with [00:29:20] everything else we're seeing out there showing some weakness. You get some weak BLS jobs, reports, [00:29:25] inflation data remains tame. I mean that is a recipe for some lower rates.
And by the way, [00:29:30] if we see another tame inflation report and you start to see some weak jobs data, that's gonna [00:29:35] really pressure the fed to cut rates. I think the July cut, which was somewhat on the [00:29:40] table until this jobs report that's off. Yeah, but I think the September [00:29:45] meeting, we could certainly see a 25 basis point cut and I'm quite confident that we will, and even though you [00:29:50] have some Fed members now talking, saying, oh, I don't want any rate cuts this year, they are a very fickle [00:29:55] group.
They changed their minds and we've seen this time and time again very quickly. So you start to continue to [00:30:00] see tame inflation data showing the tariff stuffs not showing up, and the labor market starts to weaken. [00:30:05] They're gonna, they're gonna flip flop faster than you could blink. Yeah. And I mean, I feel like we're [00:30:10] dealing with, Dr.
Jekyll and Mr. Hyde when it comes to the Fed, when they're taken to the podium and other members [00:30:15] speak. You know, one of the things I took away from that commentary there, that for me was obviously there's a [00:30:20] lot of outside factors that can bring demand to the 10 Treasury and for our audience, you know, if you didn't get [00:30:25] anything out of what Dan just rattled off there, which was amazing, I'm something out of it.
Oh. I mean, I know they did. But if you're gonna take away one thing, [00:30:30] earnings, it, like demand drives the yield on the 10 year treasury and mortgage [00:30:35] rates are attached to that treasury. Whether we wanna sit here and like it or not. So we need more demand in that market [00:30:40] 'cause we have too much debt that's flooded the market with too much treasuries.
And so by that demand [00:30:45] being increased, it's gotta come from multiple places. It just can't come from foreign participation or from the Fed. You [00:30:50] know, when Dan mentioned stablecoin and the growth of that, that's newfound demand. You know, we count on the [00:30:55] fed, we count on, you know, the taxpayers of the United States.
We count on the foreign reserve, you know, and [00:31:00] investors. But this is newfound opportunity that could absorb some of that debt in [00:31:05] treasuries. And that's big because that's something we haven't seen before. And that can add, yeah, to be clear, I think there's a few venues, [00:31:10] right?
So like if we started to see the labor market really fall apart, right? Like, [00:31:15] I'm not gonna say despite, but like. You would still have seen rates come [00:31:20] down, like if we just got a weak jobs report, rates would be, weights would be like probably, in my opinion, like six point a [00:31:25] half percent and we be staying there for quite some time or for at least a bit of time.
but we didn't get [00:31:30] that. So there's a couple different levers here, but one is certainly if we can, [00:31:35] like you're saying, absorb some of this supply or I should, a lot of this supply that's out there, [00:31:40] right? that could certainly be one lever that can help. But I think, you know, we'll take any of these things if we [00:31:45] get a weaker labor market continued stable, continued, you know, mild inflation [00:31:50] readings and I think this bank deregulation deal on the stable coins thing is coming regardless.
So [00:31:55] that's just, yeah, that's a big win.
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I was gonna ask about the [00:32:55] prediction of the Fed July.
Hit it with probably zero chance. Anything's happening. We're gonna hit the pause button again. we might [00:33:00] get some commentary that's favorable and maybe that moves the market. September looks like the rate cut is on [00:33:05] for, you know, a quarter and market's always pricing in this year. Two rate cuts, [00:33:10] two rate cuts.
So, and maybe, you know, that could be one in September, one in December, who knows? but September [00:33:15] is like, I think it's less, less. Look, if you look at the Fed futures, which is almost like the [00:33:20] betting line, you know, in the markets for the odds of a rate cut, it's like probably around [00:33:25] 65% or something.
67% last time I looked. but I think [00:33:30] that has a good chance of being the first chance we get at a rate cut [00:33:35] weaker data on the, job side of things, inflation maintains or gets worse is or gets, you know, [00:33:40] starts to retreat. Do we have an outside shot at 50? I don't think so, no. Okay, [00:33:45] fair enough.
Fair enough. I always like to push the envelope there, find out, you know. Yeah. No, I don't think that's on the [00:33:50] table, but 25 certainly is being priced in at September, and I think there's [00:33:55] a good chance that we see that unless all of a sudden we start getting crazy [00:34:00] inflation readings that are much hotter due to the tariffs maybe, or, you know, the labor market [00:34:05] continues, at least in the BLS report to show much greater than expected strength.[00:34:10]
I think 25 basis points is a high likelihood of that in September. [00:34:15] Barring the, some of those things I just said happening. Yeah. And I'm gonna ask you a question here and then I'm gonna dive into a [00:34:20] couple of the things that, product-wise, I want our audience to hear. Shadow Fed. Do we have one working right now?[00:34:25]
A shadow fed. Yeah. Do shadow fed, you know, has Trump kind of [00:34:30] already tapped someone and they're running their agenda in the background? No. at least to undermine the current mean [00:34:35] if we did, then we would've had a rate cut already. Trump thinks that we are [00:34:40] 3% too restrictive. Okay. So, listen, he's clearly [00:34:45] applying pressure.
Yeah. I think it is like all kinds of different, Things [00:34:50] you could get into and you know, people say that Powell says he is not [00:34:55] political, but he cut by 1% or so before the election, but now [00:35:00] we have inflation in the labor market weaker than then. So you could argue now's a better time to cut than back [00:35:05] then, but now you're against it.
Listen, I don't really buy any of this stuff. The way that the [00:35:10] Fed and the administration was kind of created in the relationship is that the Fed is supposed to [00:35:15] be completely autonomous. Right. And they're not supposed to be influenced. But I mean, I've, I [00:35:20] like reading on history on some of this stuff where there's been example after example [00:35:25] of presidents.
Like pressuring fed chairs to, to cut rates to [00:35:30] make the economy better. I mean, there was actually a story, I forgot who it was. My father told me it. [00:35:35] And then, a guy by the name of Jimmy Chan, who's a brilliant writer, wrote about how the [00:35:40] president actually like, like pushed chair balloons over. yeah, exactly.
You're talking about pushed fed chair, right? So [00:35:45] listen, there's always pressure there. I don't think that there's any signs that, [00:35:50] you know, Trump's having an influence, although publicly, I'm sure it's not pleasant for those at the [00:35:55] Fed where he told calls him, you know, too late Powell and things of that nature.
[00:36:00] However, there are some concerns out there that when Trump assigns the [00:36:05] next Fed chair that he's gonna do whatever maybe Trump wants or something, right? Sure. Where [00:36:10] like, but listen, I hope that they remain somewhat. separated at [00:36:15] least. But I think you need a smart person for the job. I actually really think Waller would [00:36:20] be a good candidate 'cause he seems to get it.
And we're very aligned in the way that we're looking at [00:36:25] things, at least in my opinion, where the tariffs can be a concern. But it's a one time price [00:36:30] increase. You have to kind of look past and history shows us that as well. But there's also the demand side [00:36:35] destruction end of it. But you have to look at past the BBLs numbers, which are not reliable and all the [00:36:40] other data points and see that the labor market is showing signs of cooling.[00:36:45]
And you know, I think I. He gets it and you know, some of the other [00:36:50] ones warsh and has it, they might be good fed share options as well. but it's gonna be [00:36:55] interesting to see if like the market feels that credibility is lost or if the market [00:37:00] feels that like the person that he ends up appointing is going to just do whatever he [00:37:05] says.
I don't think that would personally be healthy. but I don't know that's gonna be what we get, [00:37:10] but it's gonna be very interesting to see. Yeah, no, it'll be, headlines for sure. [00:37:15] So, hey, if I'm a real estate agent right now, or I'm a loan officer, right? I've been in the business for quite some time.
It's been [00:37:20] tough for the last three years, you know, regardless whether you're on the top of your game or not, you've worked harder to get there. [00:37:25] whether you're, you know, you're down and a lot of people are, select few are up, you know, what advice do you [00:37:30] have out there for people right now?
Yeah. As far as what to look for, you know, you've been doing this for long enough. What advice do you [00:37:35] lend to our audience here? Yeah, I have some advice, so people always ask me, and I [00:37:40] do a lot of presentations to you. People from every mortgage company in the country, [00:37:45] and realtors, what's the fastest way to increase my business, Dan?
And you know, a lot of times [00:37:50] people are looking for like a silver bullet. I would say we [00:37:55] have obviously a lot less opportunities today than we did several years ago. [00:38:00] So increasing your conversion is critical because there's a lot of things you can do to try to [00:38:05] get more business, but without having to change too much.
Imagine if every 10 [00:38:10] people you spoke to instead of closing, I don't know, four, you closed eight, you literally [00:38:15] doubled your business by just being more effective. It sounds great, but like how do you do [00:38:20] it? And I think one of the best ways to do it is by really building [00:38:25] trust. Your relationships and trust is paramount in a personal [00:38:30] relationship.
I mean, if you've ever been in one that trust isn't present. Think about how difficult things are. But when trust is [00:38:35] present, everything's quick, easy, it flows. And the best ways to build trust, [00:38:40] in my opinion, is vulnerability, which means don't always just try to, you know, be like a [00:38:45] yes man and tell 'em everything they want, but actually point out the things that [00:38:50] they should look out for.
And actually, I went to dinner with my wife last night. Here's a good example. We went to this restaurant [00:38:55] we've been dying to try, it's called Rod's Tavern in Seager, New Jersey. And I asked the [00:39:00] waiter, I'm like, Hey. What do you recommend? And he riled off a few options, but my wife was like, [00:39:05] really hot on, boy, what was it?
I think it was like the halibut or something. [00:39:10] And he's like, nah. Oh, the, it was the French dip. And she, and he is like, no, I wouldn't [00:39:15] get that. You can get much better French dips and you're, he's telling me something bad. But now I trust [00:39:20] him so much more. The next time he tells me something, when he does suggest something, I'm like, I'm [00:39:25] with you, bro, because you, I could trust you, right?
But you know, it's analogous to our [00:39:30] business where maybe it's not the right time for them to refire. Maybe it's not the right purchase decision or [00:39:35] maybe, you know, it's not the right neighborhood or property because it doesn't look good from a forecasted [00:39:40] appreciation standpoint. But I can promise you that if you handle the situation where instead of sitting across [00:39:45] from them, metaphorically speaking, you are sitting next to them and advising them like your friend or family member, [00:39:50] it's gonna be a much better relationship where trust is intact.
The other one is obviously just building trust through [00:39:55] knowledge. And I think. No matter what during the transaction, somebody's [00:40:00] going to ask you, Hey, is now a good time to buy? And where are rates headed? What is your [00:40:05] answer to that? And you know, our, like in, in different professions, you have your [00:40:10] tools, right?
If I'm doing construction, I got my hammer, my drill. In our profession, our tools are our words [00:40:15] and the words that we say are important. So you need to practice and you need to have a good [00:40:20] answer here. A lot of people, they give a safe, cute answer and they say, you know, boy, [00:40:25] it's a good time to buy, I think.
And if I knew where rates were headed. I'd be on a beach somewhere [00:40:30] drinking a pina colada. Now, that might get a chuckle, but you just blew an opportunity to [00:40:35] differentiate yourself from a hundred percent petition and build trust. So listen, it doesn't have to be [00:40:40] some crazy thing, but you need to have an answer there, right?
And you [00:40:45] need to explain to them the opportunity. And obviously I'm partial, but at MBS [00:40:50] Highway, you know, we give you scripting as well as breaking down the market in ways that [00:40:55] you can understand and regurgitate and explain to your customers referral sources to show 'em that you are the expert. [00:41:00] But I promise you, it makes a big difference and increases your conversion because like [00:41:05] 95% of mortgage professionals out there have zero clue and [00:41:10] can't speak intelligently to what's actually driving the market, where real estate's headed, where [00:41:15] rate's headed, and it doesn't, you don't even always have to be right.
You just have to have some good [00:41:20] reasoning there. And. People are drawn to those that they feel have put in the work that are masters of [00:41:25] their craft. In today's day and age, information is everywhere more than it [00:41:30] ever has. I mean, especially with ai, artificial intelligence. But people are [00:41:35] still willing to pay for knowledge and wisdom and that is still a valuable commodity.
So my [00:41:40] first tip would be make sure you practice that you have good answers to those [00:41:45] questions and that you understand what's happening in the market and you're plugged in because it will give you a big competitive advantage. [00:41:50] Other tips I would have, I think there's an [00:41:55] opportunity on the horizon that is not as far out as many people think.
And as I talked [00:42:00] about, I think rates don't have to come down as much as many people think. For there be an opportunity. If you look at your [00:42:05] database of customers. A lot of them were done with rates at seven, maybe [00:42:10] higher, right? And you don't wanna do what many people did [00:42:15] last August and September. Rates came down to around 6%.
They were not [00:42:20] proactive, they reacted, and a lot of them didn't even come [00:42:25] close to maximizing the opportunity because by the time you reach out to the customer, you explain the [00:42:30] situation rates moved higher right? Now, those that proactively kept in touch with their [00:42:35] database established a strike rate.
Which, to give you an example of that, let's say I have a [00:42:40] database, a customer's got 7% rate. I have the conversation with him today [00:42:45] and I'd say, listen. If rates come down to six and a quarter, I want your commitment that I could just go ahead and refi [00:42:50] you because the opportunity can be fleeting and I want to make sure you can save the $300 a month and sell the bigger [00:42:55] numbers.
That's, you know, that is $3,600 over the course of the year. that's, you [00:43:00] know, 20 something thousand dollars over the next five years. You wanna sell [00:43:05] the big numbers, but you wanna start doing that work. Now, first of all, it's a good touch [00:43:10] point with the customer. You care about 'em, you get their commitment, and then when rates [00:43:15] fall, you can jump on that opportunity so they don't miss it.
And we created a strike [00:43:20] rate tool in MBSI way to help you with just that, where we send you notifications and have your whole [00:43:25] database in there of customers. So something to check out. But regardless of if you use MBS Highway, you need to be [00:43:30] doing that and having those conversations now. Yeah, so trust, vulnerability tools, these are the [00:43:35] things you need to have.
Another one is a lot of people are afraid of de consolidation and making that call, like [00:43:40] people aren't afraid to talk about raid and this, but they're afraid to talk about their customer's debts. They look at their [00:43:45] database and they're like, oh man, all these customers, they got like a three and a quarter rate.
I'm not going near that. [00:43:50] You should listen. I promise you it's not gonna work for everybody, but I also [00:43:55] promise you that you will find deals. I have. A lot of customers [00:44:00] doing 1, 2, 3 deals a month doing cash out refis with debt [00:44:05] consolidation. Why? Because even though their mortgage rate is low, when you do a blended rate analysis, [00:44:10] you can see that all the credit card debt, the car loan debt, I mean their blended [00:44:15] rates are much, much higher.
And a lot of it's about the cash flow. Maybe they're paying 33,000 in [00:44:20] change in, you know, monthly payments for their credit cards, their revolving and installment [00:44:25] debts. You can take 'em even to a higher rate and free up 17, $1,800 [00:44:30] a month. And it's something a lot of people aren't doing. But if you look at the numbers, if you look [00:44:35] at the amount of share of transactions, mortgage applications that are refis, [00:44:40] and then you look at the subset of that, what percent.
Our cash out refis. [00:44:45] If you're not doing cash out refis, you're missing like 30% of the business happening [00:44:50] today. Maybe around 28% to be exact. But that's a lot. Right? So [00:44:55] I would be doing that and I would also just more than ever make sure that you are, and [00:45:00] there's a lot more I could give here, but I'd make sure that you're providing value for your agent [00:45:05] partners, right?
And I think there's a lot of good tools out there to make sure that you can [00:45:10] research and find the agents you wanna work with. But then I still see people today, they're, [00:45:15] you know, going to an agent's office, here's some coffee, here's it. They don't give a [00:45:20] crap about that. You gotta make sure that you are helping them to make more money right now.[00:45:25]
And how do you do it? Well, the biggest concerns that they have is people waiting for rates [00:45:30] to come down before buying. Yep. Do a cost waiting analysis for every one of your agents. Open houses and [00:45:35] listings. The lock in effect, that debt consolidation example I just gave you. What happens [00:45:40] people, they look at their scenario.
Okay, I could sell my current house and then I'm [00:45:45] gonna take all the proceeds, $300,000 and put it down towards a new house because I have needs, I [00:45:50] had a baby, I want an extra bedroom, but I'm gonna have to pay more. But based on the more expensive home [00:45:55] with the higher rate compared to what I was paying, it's like $3,000 a month more.
That's the lock-in [00:46:00] effect. It's too much of a jump. But they have debts. Most customers will have a lot [00:46:05] of debt. So in that example I just gave you, they had a hundred thousand dollars in non-mortgage [00:46:10] debt. You know what? Put 200,000 down from the proceeds. Take the a hundred thousand and pay [00:46:15] off the debts.
I can now get you into the new home for like $500 a month more. That's on their overall [00:46:20] obligations. But boy, talk about being a resource and creating [00:46:25] solutions for your realtor partners. That's something else I would be doing. Yeah, so what I heard there was bring value, [00:46:30] you know, and what I think about that when I think of value is.
You know, we talked a little bit about this before the show here. You know, our [00:46:35] sponsor, tech and bank has an extreme value. They bring together, talk about helping agents make more money. [00:46:40] I mean, you'll hear the commercial on the show here, but they pair agents in with the loan officers bring 'em into the bank [00:46:45] under a product that they have exclusively titled and copyrighted called Rim Low, which stands for Real Estate Mortgage Loan Officer.
And [00:46:50] they bring 'em all under one umbrella and they say, Hey, we don't have to go to a real estate office and do those things. [00:46:55] We have tools like MBS Highway, we have tools like Homeport where you can come in here and we can identify [00:47:00] exactly what Dan's talking about inside your database and we can help you go get that and we can [00:47:05] assign you a team that will give you all the backing support you need to be essentially the [00:47:10] CEO of your own business, which is completely different.
Yeah, I mean you talk about that Quinton and we've kind of chatted offline [00:47:15] about this and while I've seen like some other examples of some companies doing [00:47:20] something somewhat similar, I haven't seen any company doing it like you guys are doing. I gotta say I think it's brilliant [00:47:25] and I think you guys are gonna have a lot of success with it.
Yeah, brother, I appreciate that we're [00:47:30] fired up about it. It's starting to make its way across the nation here. We're getting more and more calls about it and I think one of the [00:47:35] things that I'm excited about is the new product you guys have rolled out with Home Report. It's really allowing us to sit [00:47:40] down with the agents and go, Hey listen, don't worry about how you're gonna identify a refinance who you're gonna call.
We've [00:47:45] got the product, put the database in there and it will bring it to you. Well, you wanna talk briefly about this new venture you got going? [00:47:50] I mean, appreciate you teeing that up. You mind if I share it real quick? Yeah, let's show it. So lemme just show this so [00:47:55] clearly. There's a lot of companies out there that have done a great job of proving the model, like [00:48:00] Home Bought for instance, with, hey, you gotta keep in touch with your past database.
How do you get [00:48:05] the engagement? You send 'em something they care about, like the value of their home each month, right? It's likely one of the largest [00:48:10] transactions of their life and our engagement's like north of 80%. And this is [00:48:15] what it looks like. So you as the loan officer, you can upload your whole [00:48:20] database, you also can invite your realtor partners and they can upload their database.
And on [00:48:25] those clients. You'll market to them in a co-branded fashion, but unlike a lot of our competitors, [00:48:30] one of the biggest benefits at Highway with our home report is it's free for agents. [00:48:35] So there's no barrier to entry there. And when you see the stuff at shares, I don't [00:48:40] know why any agent wouldn't want to be on there because it unlocks all kinds of [00:48:45] opportunities for both them and you.
So it shows you the home. The current [00:48:50] value when you bought it. So how did I do on my investment so far? In this case I gained [00:48:55] 134,000, but then something we have that nobody has, we have a lot of data for every zip [00:49:00] code, what's the forecasted appreciation over the next five years? And you could see what the future [00:49:05] opportunity is and that can also, you know, start getting some of the gears, moving as far as [00:49:10] what opportunities are there in the future to me, buy a new home or, hey, if I have mortgage [00:49:15] insurance right now, not just waiting for it to fall off naturally, but based on [00:49:20] forecasted appreciation and amortization, when I could refi based on my LTV.
To [00:49:25] remove that or at least have a reduced mi and you could see here [00:49:30] what the equity is in the home. There's some cool tips here, but this is one of my favorite parts. [00:49:35] There's, I think, benefits to having a predictive in nature readiness [00:49:40] to move score based on activities that the customer may be taking, but [00:49:45] a lot of that could be just wonky.
This is something the [00:49:50] customer. Edits. So the customer engaging with our home report says how ready [00:49:55] to move they are. So are you a one or are you a five? Well, this customer's [00:50:00] telling you, I am ready to move. Well, that's huge. That's good to know, right? But then here's [00:50:05] the equity you have, and I'm gonna show you more on that.
Ready to move in a second. But here's the equity that you [00:50:10] have, and then we give 'em ideas on how they could utilize that equity. Maybe it's paying off debts [00:50:15] and everything leads back to the loan officer. But then if you go to the market tab. This is really [00:50:20] gonna tease, move up, buying opportunities. It's gonna show you all the different areas around [00:50:25] where your current home is, and you could add areas, show you the health of the market, but then it [00:50:30] shows you all the listings and it keeps you in this ecosystem.
So they're not going to Zillow and [00:50:35] they can go through all this stuff. And the best part is there's robust reporting for all this. So [00:50:40] imagine on one of your customers, you have a customer that says, I'm ready to move. [00:50:45] And you can share with an agent that maybe you want to get their business, Hey, I have a customer that's ready to move [00:50:50] now, and they looked at these 10 listings in your zip code at this price point.
And by the way, here are the [00:50:55] listings that they're looking at. You're welcome. That's a very nice handoff, right? But. [00:51:00] Also, it's a good selling proposition to your realtor to say, listen, how about I set you up with home report? [00:51:05] We'll work more closely together. It's free for you. And this is the kind of insights you're gonna [00:51:10] get from your database of customers.
I mean, I think it's invaluable and I think it's a no-brainer. We [00:51:15] also give some market insights here, whether it's, you know, economic data, on home price [00:51:20] appreciation, inflation, mortgage rates, and then there's a tool section that's highly [00:51:25] engaging. So we know your current rate. And we know where market rates are.
[00:51:30] In this case, the customer's got a rate of 7.5%. Current rates are, let's call it [00:51:35] six and three quarters. Well guess what? They could potentially refinance right now [00:51:40] and save around $500 a month. And this is teasing that opportunity. And of course everything [00:51:45] is leading back to contact the loan officer and they can edit some of this stuff too to say, Hey, [00:51:50] maybe rates aren't there now, but what if they go down to this?
What can I do? So it really, I think, uncovers [00:51:55] some opportunities or shows them what they could be saving. And then there's a savings calculator here where they could see if they [00:52:00] paid additional principle, what that would mean. All of this stuff. It could go viral. [00:52:05] Your customers could share it with their friends and family.
They could sign up for your home report. And then there's like the [00:52:10] admin section for you, the loan officer. And I'm not an originating lo, [00:52:15] but I have a couple examples in here where you can see the people you're [00:52:20] sending it to, who's receiving it, engaged with it. You could see how many agents are getting it.
But [00:52:25] then also you can come in here and see the activity so you can get this stuff emailed [00:52:30] to you. So if a customer's looking at listings and stuff like that, or whatever their actions are, we can email [00:52:35] you with those notifications. Might be a good time to reach out, but you have a whole activity feed. I can go and [00:52:40] dive deep into this and see, hey, a customer's spending time on this, on the home report, they're looking at these [00:52:45] listings.
Let me share this with an agent and give 'em a real nice teed up lead. And [00:52:50] also. You have a lot of different ways you can share your home report link for people to sign up, [00:52:55] whether it's copying the link, a QR code, you could put it on all your marketing text, share it on social. [00:53:00] So I wanted to just give a brief look at something I'm very proud of, which is the [00:53:05] home report.
And like everything we do, Quinton, we're very happy with what we've done so [00:53:10] far. But there's some really cool plans on some of the stuff that we're gonna be adding to this to make it. Even [00:53:15] better. Yeah, I know it's coming and I mean, that's fantastic. I love it. I know who the competitors are in that space.
[00:53:20] I love what you just put together. It's a huge win. You know, if I'm a real estate agent, you know, everybody has a [00:53:25] database, how to actually identify that database besides just making calls A to [00:53:30] Z. Right? And you're doing the telephone calls and you're doing the touchpoint. Having something identify this for [00:53:35] you at no charge.
That's what I heard. No charge is the only one in the industry that's doing it like that. And to [00:53:40] have the customer tell you I'm ready to move versus a predictive score is something drastically different as well. [00:53:45] Because now they have the need and the want. They want to do it. One thing, I know we only got a couple [00:53:50] minutes left here, but I appreciate you having me on.
I just wanted to make one [00:53:55] comment 'cause we didn't talk that much about the housing market and. [00:54:00] I'm sure a lot of people are. I have some questions. Maybe The housing market is certainly cooling a [00:54:05] bit, right? We have more inventory. Demand is still not great 'cause rates are high. [00:54:10] We're still seeing more modest levels of appreciation.
There's a lot of people I read out [00:54:15] there, even, you know, people in the economy that are analysts that I respect saying they're [00:54:20] looking for 20, 30% declines in home values. I mean, the same [00:54:25] individual's been calling for that for like the last like seven years. And obviously all we've seen is appreciation.
[00:54:30] I do think appreciation's slowing, we'd certainly be helped by lower [00:54:35] rates, but by no means do I think we are on the verge of like a housing bubble or [00:54:40] anything like that. Thank you. And, and I think also something that got a lot of [00:54:45] attention was the Redfin chart. An article that went viral got picked up by the Wall [00:54:50] Street Journal where Redfin said there's 500,000 more sellers and buyers and in like two minutes I [00:54:55] just wanted to address that because.
I really dove deep into this. I did a social [00:55:00] media post. They said there was like 1.943 million sellers and [00:55:05] 1.4 something million buyers, right? So first on the sellers, the [00:55:10] problem I have with that is it doesn't match up with anything else out there. [00:55:15] Where the heck did you pull 1.95 million sellers out of a hat?
Because. [00:55:20] The total existing inventory out there is like [00:55:25] 1.45 million, and then of that, there's like 400,000 under [00:55:30] contract, which isn't really available. Active listings is a little over a million, so how are you [00:55:35] getting like double that number even if you included the new homes for sale, right? [00:55:40] Which, you know, it still doesn't even come close.
Okay, the other side, [00:55:45] the buyer side, I looked at this and I was like, how the heck are they calculating how many buyers there are on the market at [00:55:50] any given time? If you look past their like headline and their chart and you go to their [00:55:55] methodology, it very clearly says there's no metric to determine how many [00:56:00] buyers there are on the market at any given time.
So we created one and they used some BS [00:56:05] bogus ratio, but listen. They were successful because it [00:56:10] got a lot of attention and it was a lot of click bait, and it certainly scared people. But if you have [00:56:15] to look past the headlines on a lot of this garbage out there, no question. The housing market's not as strong [00:56:20] as it was.
There's more inventory. It's about 30% more inventory than last year. [00:56:25] But on a relative basis, you have to always look for perspective. We're still like 12% lower than pre [00:56:30] pandemic levels, and we got like. 12 million more people in the United States too. Okay. [00:56:35] But, I don't see us in a situation where we're gonna have like a housing [00:56:40] bubble or anything like that, but I think we're gonna see softer levels of appreciation [00:56:45] and boy, if rates come down, I think things accelerate.
Yeah. I was purposely holding off on the housing market. I was trying to [00:56:50] reel you back into another episode because my Oh, . I'll come back. yeah. Because my, my, my thing is this man, [00:56:55] the doomers that are out there, the click baiters that are out there, we're constantly battling that. Like we talk good positive stuff on here.
That's [00:57:00] real. that doesn't get all the attention. It's the click based stuff. So I love the fact you addressed it. There's always been that, man, I can't tell you how many [00:57:05] times I've fought people over the last several years. I mean, just, let's just go back like the last [00:57:10] like four years. This is after the really crazy appreciation we saw.
Right. You're talking [00:57:15] about like 6% appreciation, 6% appreciation, 5% [00:57:20] appreciation, and four and a half percent appreciation. Those are the last four years. Yeah. Gotcha. Every single one of those [00:57:25] years. I could show you 20 people that said there's gonna be a housing bubble and 20, 30% [00:57:30] declines. And you know, I mean that sounds clickbaity.
I mean that sounds like something, [00:57:35] you know, whatever. But it comes down to supply and demand. At the end of the day, there's [00:57:40] certainly less demand, but the, you know, existing inventories increase. But like [00:57:45] look at housing starts. I mean they are at levels that's like [00:57:50] 1.3 million. I mean, that's been really falling.
That's the future supply coming to [00:57:55] market. And I like to look at that versus permits, because while permits is the most forward looking [00:58:00] indicator, a lot of the permits don't get done, especially with the increased cost from tariffs potentially on [00:58:05] new builds. So the starts ground has been broken. There's a much higher chance that supply gets finished.
So [00:58:10] 1.3 million future supply coming to market. Even if you looked at completions today, it's like [00:58:15] 1.5 million. But then on the other side of things, the demand component, future demand is H [00:58:20] household formations. So how many households are being formed, right? An example is you have mom, dad, and [00:58:25] child.
They're all living home in together. In one household, the kid grows [00:58:30] up. They move out, it's still the same family, but now you have two households instead of [00:58:35] one. Or you have a married couple living together in one household. And then let's say for whatever [00:58:40] reason, they get separated and you know, then you have an additional household, right?
So [00:58:45] that's a household formation. It's a demand component versus supply. Like using housing starts, household [00:58:50] formations. It's an annualized number. So throughout the year it can be volatile. So I like to look at [00:58:55] like the average over the last five years. It's 1.8 million, so you have 1.8 million. [00:59:00] Demand 1.3 million supply.
I think we're still undersupplied and I think the [00:59:05] trend, because of what's going on with builders is actually going to be getting a little bit worse. And I [00:59:10] think that's, from that part of the equation, gonna be supportive of home values. it's [00:59:15] definitely true that we're not gonna see the same levels of appreciation we saw probably, you know, [00:59:20] last year or the year before this year, or maybe even next year.
But the one big wild [00:59:25] card would be if we see rates fall, because you have so many people on the sidelines, that would drive a lot of [00:59:30] demand and drive pricing pressure higher. And I do think we can see that. So yeah, I wouldn't be [00:59:35] surprised to see, I don't know, 4% appreciation or so, and that's, that's still [00:59:40] meaningful.
I mean, you buy a $600,000 home, that's $24,000. and it's always hard to [00:59:45] bet against the champ, which is housing because That's right. Over the last 83 years, it's gone up [00:59:50] 77 of those years. And the bulk of years that was [00:59:55] down was the housing bubble. But that was a different environment, you know, very lax underwriting guidelines, fog up [01:00:00] AM mirror, get approved.
You had the go-go dancer with four homes in the condo in [01:00:05] the big short, and you had 4 million existing homes. We have like, you know, like [01:00:10] 25% of that now, right? And then you had builders putting up 2 million homes a year, [01:00:15] which is the most in history. So I definitely think it's different. I actually think right [01:00:20] now is a good opportunity to buy a home because there is more, inventory rates are [01:00:25] still high and you have now more than you've had in the last several years.
More negotiating [01:00:30] power, some price drops in some scenarios for sure. And if you can [01:00:35] buy the home today. I think you'll be pretty happy because we'll continue to see appreciation and then [01:00:40] when rates come down, you can refi. Yeah, I mean, you said it yourself. Economic foundation formula supply demand.
it [01:00:45] continues to be ignored and it continues to be discounted when it holds true to the tell of time. So, [01:00:50] hey, I know you gotta get outta here. Thanks for being on the show, Dan. Guys, if you like what you're hearing, please five Star View this podcast. Check us [01:00:55] out on our YouTube channel. we'll have graphs, you'll get to see all the information about Home Report on there as well.
guys, I [01:01:00] highly encourage you, if you're not a part of the MBS Highway, go to mbs highway.com, check it out. They have all [01:01:05] the tools, all the resources. They even give you a free seven day trial on there. You can't go wrong with that. So two weeks, it's amazing. [01:01:10] Two weeks now they're giving two weeks. When I started it was seven days.
But hey, you know, these guys are amazing, and I can't [01:01:15] say enough things. Dan, thanks for being on the show today, brother. I appreciate it guys. All the details for Dan will be [01:01:20] on the bio channel there at, uh, YouTube. Check it out. And Dan, thanks again for being on the show. Hey, thanks for having me, brother.
[01:01:25] Always great brother to see you, my friend. Thanks, man.
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