Filename: April 8th, 2020 Twin Cities Real Estate market update, COVID19, mortgages, with Peter Lindquist
Duration: 13:25
Travis Anderson: Hey, it's Travis Anderson here with Keller Williams. Hey, it's Travis Anderson here with Keller Williams Realty and I have one of my good friends, Peter Lindquist with me. He is going to help us understand a little bit about what's going on with the mortgage industry. We've spent the last few weeks looking at real estate metrics, specifically things like actives, pendings and showings. And Peter is going to lean in a little bit on the mortgage industry. So Peter, thanks for being here today.
Peter Lindquist: Absolutely. Thanks for having me, Travis.
Travis Anderson: I'm going to start here, Peter, and then I'm going to kind of leave it up to you. I want to give my weekly market update. As far as buyers buying real estate, it's the same. We had 1638 transactions in the Twin Cities over the last seven days. The previous week was in that 1600 range as well. So we still have had 1600 plus people buy a home over the last seven days, which I find completely fascinating. In addition to that, we had 2197 new listings hit the market. So I kind of was worried a little bit as we were entering the Shelter-In-Place.
I didn't know what last week would look like because it would have been the first full week where we are sheltering in place. Somehow the market still is responding and still active. At least, the data that I'm looking at directly from the MLS, people are still buying. People are still listing their home. I think there is some optimism there. Again, the biggest thing that we don't know about of course, and Peter is going to help us understand a little bit of how this is affecting the mortgage industry, but it's the job market, right? If the job market gets affected directly, it's going to indirectly affect us and it just a matter of time.
The other thing I wanted to say is I watched a video the other day from one of the number one realtors in our market and as I was watching the video, nearly 70000 people had watched the video and one of the things that this agent had said is that people are not looking at houses anymore. They are doing everything online. I'm just going to share with you. There were 18000 showings over the last seven days, 18000 showings. So to say that people aren't going into homes anymore, it's just not true. I do think that people are being more proactive. They are doing a little more due diligence upfront there. They are watching videos; they are making sure they read the description and everything. Maybe they are looking at six to eight homes. 18000 people walking through homes is evidence to show me that people are not just buying real estate in front of their computer.
To give you some perspective, that's actually up from the previous week. We are up about 8%. So 8% more people looked at homes when we are supposed to be sheltering in place than did the week before. I do believe that things are changing and the reason I'm doing a weekly video, and Peter, I know that you've watched a couple of the videos, but the reason I'm doing a weekly video is because I can't predict the future. My best understanding of the market is kind of a weekly snapshot of what people are actually doing. So that's all I have, Peter. People are still buying; people are still selling their homes. And then of course 18000, nearly 18000 people had showings last week. That's my market update from the realtor side. Peter, why don't you give us an update on what's going on in the mortgage world?
Peter Lindquist: It has been a rocky and rollie a couple of weeks in the mortgage world, particularly as it relates to mortgage programs. I want to talk to you a little bit about programs, rates and kind of what you might expect. Mortgage programs are under a lot of pressure, mortgage originators are, and so we are seeing guideline changes happening at a very fast pace. What I would like to encourage people is that if they've been pre-approved any time before, let's say last Thursday, they should be checking in with their lender to see if they are still pre-approved. The good news is that for borrowers who have saved their own down payment and have credit scores above 700, probably they are going to find that there was no change. But for borrowers that were looking at minimum down payment programs, down payment assistance programs, or have credit scores under 680 in particular, the programs are either modified dramatically or they are gone.
It's happening like that, so it would be a good idea if you were pre-approved under those kind of circumstances. Check in with your lender to see if you are still pre-approved. I've been reaching out to a couple of my past clients or my pre-approved buyers and telling them, here is what just happened and here is what just happened to your program. If you are in that group of people that have saved their own non-payment, better credit score, the great news is interest rates are incredibly low. So right now is a great time to buy because you are going to be able to get some kind of crazy rates. Now that being said, rates are extremely volatile, so it's not even worth talking about rates. Even if I could mention rates, it's not even worth talking about it, because I'll send quotes to a customer and now my new tagline is, "By the time you are reading this, these interest rates are no longer valid." And I'll just say, we need to talk about this and if you want to take action, we've got to take action right now because they've really changed a lot.
A couple of weeks ago, we saw our rates swing by one and a half percent in the same day and then come down like three quarters of a percent the next day. Right now there has been comparative stability, but it still is changing very rapidly. If you are in a position where you are buying a home or refinancing a home, get your rate locked and don't worry about thinking that rates will fall to 0% at some point, because that isn’t going to happen. Just get it taken care of because things could change on you real quickly.
Travis Anderson: I've got a couple of questions for you. How long have you been in the industry?
Peter Lindquist: 29 years.
Travis Anderson: 29 years, that's a long time in the industry. When was the last time you saw, you mentioned the programs changing dramatically and they are changing all the time, that’s not the right word you used, but they are changing often, when was the last time you saw programs change this rapidly?
Peter Lindquist: 2008. So mortgage crisis, I remember that very distinctly as emails coming out that were just, this program is gone, this company is out of business and we are seeing, those same kind of emails. The interesting thing on my end of things is that because I worked through that, lived through it, it's not as shocking. It's like, okay, well, this is what happens in this kind of environment and so let's just deal with it.
Travis Anderson: Essentially, what happened since 2008, and I'm going to speak very much like I have no clue what's going on and that's why you are here, because I don't know what's going on in your world nearly as much. So in lay terms, after the crisis, lenders started to loosen their requirements to allow for more home buyers to qualify for mortgages. That happened over the course of it decade and then now we hit another crisis of some sort and then the lenders are now pulling back in those requirements and tightening back up. Is that what I'm hearing?
Peter Lindquist: Yeah, absolutely. People lose their jobs due to COVID 19 related kinds of issues. They can't make their payments. So that's a big deal. There is a lot of pressure right now that wasn't so much the case back in the mortgage crisis days. It's a lot about, is your borrower employed at the moment the loan closes? So we have to be even more diligent about those verifications and those verifications come a little tougher because a lot of HR departments are working at home. So we need to try to find, who can we contact? Some different challenges that way.
Travis Anderson: Yeah, very interesting. Every borrower has their own set of challenges. My assumption is that when they do their application with you, you are going to have a pretty good idea of what it looks like at that moment in time. And then you are going to be their pulse as time moves on. Is that the best way to put it?
Peter Lindquist: That's very true. We want to make sure that the program is still in existence. If we go back to the mortgage crisis, there were loans that were in process that the investor went out of business in the middle of the process. So we couldn't actually close that. It's less likely to be the same problem that we will run into today, but without a question before you are writing that offer, check back in with us before writing the offer just to see how different things are.
Travis Anderson: That's another reason why you have a really good mortgage broker too, so you can help prepare for some of these things. I have one other question. It's about interest rates, it sounds like... Before we dive into that, it sounds like you probably can't talk a lot about interest rates. Is that correct?
Peter Lindquist: Yeah, there are just so many regulatory guidelines, but even if I could, whatever I tell you now, five minutes from now, it's going to be different, so what's the point?
Travis Anderson: Yeah, I think so. Let's see. I'm going to ask you the question and see if it works. And if not, we can, you know... We may not use it. We will edit it out. When you were talking about big swing, so interest rates adjust on an everyday basis, so in a normal scenario, like last year, middle of the year, let's say, interest rates during the day were different prices at 8:00 AM as they were at noon as they were at 5 o'clock. That's typical of a day, correct? Interest rates can go up and down. Okay. And so then when you are saying interest rates are volatile today, in other words, that fluctuation during the day can be a bigger swing than normal. That's what I'm understanding, correct?
Peter Lindquist: Most commonly in a stable market rates come out at around 10 o'clock and they are the same throughout the day. Occasionally, you would have a price change in the middle of the day, but it was modest. Now we are seeing three to four price changes during the day and they can be very significant. They can be half of a discount point, which might relate to an eighth of a percent in rate, for example. That might sound small, but in the mortgage world that's really big. It might be the difference between, oh I should lock or I shouldn't lock based on what just happened.
Travis Anderson: Right. Yeah, that makes sense, because it is interesting when we talk about interest rates. If I were to lock in today and things were to change, you as a lender is basically taking the risk on that if it changes in the wrong direction, that's correct?
Peter Lindquist: That is correct.
Travis Anderson: Your phone is blowing up. We will have to wrap this up, Peter. I think that's about...
Peter Lindquist: Let's do it at 7:00 AM next time.
Travis Anderson: It's about all that I have. I think that it's really helpful to have somebody with your expertise provide a little bit of perspective on the mortgage market. Is there anything else that you think would be beneficial for my customers, your customers, prospects to know?
Peter Lindquist: I'll just tell you one thing only because it's kind of funny. You asked how long I've been around, 29 years. So the last time rates changed by one and a half percent was 40 years ago.
Travis Anderson: Oh wow. There you go.
Peter Lindquist: Before me.
Travis Anderson: In a 24 hour period, you mean, right?
Peter Lindquist: In a 24 hour period.
Travis Anderson: That is fascinating. I'm a 39 years young, so about when I was born.
Peter Lindquist: About that.
Travis Anderson: That's awesome. Well, Peter, I really appreciate it. We can do this anytime you want. We will set it up and maybe next month or something we will do another version of this so we can update clients as we navigate the market.
Peter Lindquist: That sounds great, Travis. Thanks for having me.
Travis Anderson: Yeah, thanks for being here. We will talk soon.
Peter Lindquist: Bye.