Josh Barker Real Estate Podcast #13

Joey: Okay, welcome back, Josh.

Josh: Thank you. Glad to be here.

Joey: It's November. This blows my mind saying this out loud, November of 2022.

Josh: Time flies when you're having fun, my friend.

Joey: Yeah. And even when you're not.

Joey: It's like 2022 is almost over. And it's been quite the year for real estate.

Josh: Yeah, we had a little bit of a transformation, haven't we?

Joey: Yes, we have.

Josh: Yep.

Joey: And we were talking before the camera started. We were talking about the big news in real estate has been: interest rates. This time last year, we're talking a huge difference and a major... What you'd call a headwind, a major headwind. But there's a little bit of good news: hey, there's a rainbow behind this monsoon thunderstorm, that interest rates went down.

Josh: It went down a little bit. Yeah. So for our listeners, our lowest point was about 3 1/4%, roughly of interest rates. It was in the mid-sevens, not even a month ago. And right now, we're about 6 3/4 over the last week. So that report from the Feds basically said, hey, we got some good news on the... That looks like inflation is cooling a bit, even though they're not reporting that until next month. Some of the other lead indicators are telling them that. And so, as a response, the interest rates came down just a bit. And for everybody, too, it says for every 1%, the interest rate goes up. So it has an impact of about 10% on purchasing power. So when the rates dropped to half a percent, that increased purchasing power by 5%. And last week we saw some sales go up because of it.

Joey: And if you're talking about a $400,000 house, that's $20,000.

Josh: It is. It's significant.

Joey: Yeah, absolutely. We were also talking about... because one of the themes that have been going through this year is we've been comparing the inventory, the thing that you call the absorption rate, meaning if nobody brought a house to market, how long would it take for the current inventory...

Josh: To sell-off.

Joey: To sell-off. Because that's a big sign of whether we are in a seller's market, a neutral market, or a buyer's market, we've obviously, over the last few years, been in this like insane seller's market. At one point, it was like one point something, right?

Josh: Yeah, exactly.

Joey: And three is the magic number. Where are we? Like three months is...

Josh: Yeah. One to three months' supply is considered to be a seller's market. And then, from three to four months, supply is normally considered a neutral market. And then five months or more is considered to be more of a buyer's market. And that tends to be... At least for our marketplace, that's what it kind of tends to be. Right now, we're at the 15th of the month for this podcast. That's what the date is today for this filming of this. And we were at 98 pending for the month, and we had 715 residential properties for sale. So if you do the math on that, we'll report in our market update this next month. We'll be reporting that we're in at three months of supply, which means that we're on the tail front end of a neutral market in terms of demand relative to supply.

Joey: So, which means that you got two things going on? Number one, interest rates are heavily affecting sellers and buyers, obviously buyers. But if you don't have buyers, then sellers... Yeah. And sellers aren't bringing inventory. So it's starting to slow off a little bit, it's starting to... Because the number was creeping. It was. I remember it was in the low ones jumped up. The last time we spoke, it was like 2.9. So it's not just racing up but starting to level off a little bit.

Josh: It is. You know, and in our inventories right now, are right around 715 or so homes for sale. We saw a peak in the last few months in the 740-750 range. And part of this is seasonality, too. Fewer people want to come to the market in November or December than spring. So it's common to see our inventory decline at this time of year. And that's having an impact, obviously, on the absorption rate. But really, the quick question everybody's asking is, what's going to happen next year? Are a lot of folks going to come to market? And if they do, at what volume? What is the demand going to look like, cause that's going to tell us a lot about what to expect next year?

Joey: Yeah. And you'd have to have a crystal ball because trying to think about, well, are we going to have a big demand, are we going to have a big push of people moving to rent again next year? Or has the whole telework... Has that kind of settled out? Because during COVID, we had a massive push. And I've been like I said, I go on a radio show with a local lender a few times a year. And for the last several years, I've been bullish on people moving here. But it's leveled off. I think we need to get that.

Josh: Yeah, well, at the peak of COVID, obviously, during the pandemic, you had people that were migrating significantly for multiple reasons. And I think now obviously that big, robust migration pattern shift is obviously over. So whether or not people are going to continue to be able to work from home and have those types of jobs, people are moving up here. So I think that's still going to happen. It's just not going to have the same volume that it was before. But, you know, the median sales price in the market right now is 350,000. And if you go back one year ago, in the same month, it was 350,000. So our prices actually went up last year after October.

Josh: But at this point, we've given back a lot of the market gains from last year up to this point in terms of prices coming down a little bit softening. But if you take the median buyer and what they qualify for and compare that to the median selling price right now, it's still a delta of 40-50,000 bucks. And so, the headwinds are still there, and the only thing they can change is interest rates going down, inventory continuing to decline, or wages going up. So it's going to take something along those lines to get it done.

Joey: Do you know much about inventory besides sellers bringing it into the market? Are there a lot of projects for construction? I remembered a few months ago. We talked about how DR Horton was one of the first indicators because they're a big corporate builder. So they just came right out and said, hey, we're dropping our price. Was it 10% or 5%?

Josh: Yeah, they were like at the 470-480 range, and those same products were down, down in the 440-450 range in a short amount of time. To answer your question, we are definitely seeing builders tapping the brakes a little bit in terms of new construction. It's certainly not as robust as it was a year ago, for example. It's beginning to feel like they're being cautiously optimistic right now. I mean, it's hard. The part that's getting better for them is their access to labor is getting better. The cost of materials and supplies is going down. And so that gives some flexibility to their pricing strategy if they're trying to be more price competitive against the resale market. But there are some headwinds there right now. While we're in a higher interest rate environment, where you had the rates double in less than a year, that's what you will be up against.

Joey: And so, when I think about this stuff, we bring the data in these podcasts. There are certain things that it's like it's just information. It's like, well, what can I do with that? It's like you can't do anything. Can't you lower the interest rate?

Josh: Right.

Joey: If you're thinking of selling and you're selling because you're moving, it almost doesn't matter what's going on. If you have to move, you have to move. If you were thinking, hey, I'm going to sell my house at retail, and then Imma go pick up a house at wholesale, that's you're watching too much AE TV. I'm just going to house flip real quick. But it's like some of this data, it's like, what can you really do about it? Be calm.

Josh: When you're saying all that, I literally I'm thinking of myself. We're like trying to be a calming force, right? People always want to jump to one extreme or the other. It's either, "Oh, my gosh, we're going to the moon." Or, "oh, no, we're gonna be the worst thing since the last recession." And it's like it doesn't have to be like that. This time around, the market cycle is a bit different than the fact pattern it was last time. And we've talked about that on previous podcasts. But I think if anything, it's to be calm about it. Say, look, here's what's going on. Yeah, we have some pressure on the housing market right now. Interest rates are high. It's having a corresponding effect on demand. You have a lot of people, though, that don't wanna sell their homes. They're happy to be in their houses at a three-and-a-quarter percent interest rate. So we don't have inventory that's shooting through the roof. That's large because we didn't have a massive amount of speculation over the last 24 months. For most of those purchases, the vast majority were owner-occupied, which means that those folks, if they were to sell, must find something.

Josh: They have to go to the rental market or whatever, which that's interesting. The rental market has been changing.

Joey: How so?

Josh: Well, I was talking to a friend of mine that has a pretty good-sized property management company, and I asked him, I said, how are things going on the property management side? So what's the vacancy rate like? And he was like, "Well, COVID was like one percent." And he's saying now that it's probably anywhere between five and seven percent.

Joey: Oh, wow.

Josh: Yeah, it's jumped a lot. He gave me an example of putting a property on the market for rent at one point and getting 15 offers on it or 15 applications for it. And now he can come into the office on a Monday and realize that there are only applications for that same product. And so the rental market is beginning to show signs it's probably reached its peak. And for some of us that have been around, we saw some of the rent prices people were asking were like, ah, this doesn't even look right.

Joey: Yeah, some of it was crazy.

Josh: It's crazy. And so I think that those folks, not the ones that are priced with the market, people that have rental properties and are pricing them fairly in the market based on comparable rents over the historical trend line, or all those are still those that are rented out. But those people that were going out there and trying to cut a fat hog, if I'm allowed to say that.

Joey: Mm-hmm. I think you're allowed.

Josh: Okay, I don't know what the rules are on that one. But that type of product is no longer really easy to rent out anymore. So it will also show up in the vacation rental market. In the vacation rental market, the vacancy is beginning to go up. But they were getting for those rentals, vacation rentals at one point, is beginning to decline a little bit. We see that, too, for different reasons, though. Some of it's associated with what I just said, but some of it's because, A lot of those vacation rentals, a lot of traveling nurses and doctors were utilizing some of those facilities instead of hotels. And that was because of some of the... I don't want to get into the politics of it, but some of the hospitals, with some of their programs and some of their rules, made it more difficult for people to work in the medical field. And so, for them to be able to facilitate the services they have to offer, they were bringing in traveling nurses and doctors. And now I think they're backing off on that a little bit, which is taking off some of the pressure on the vacation rental market.

Joey: As we sit here and talk about this, this is like just an incredible dance of variables. Just so many, the more data you take in, and it's for the people that are trying to time the market, as you said, it's a calming voice because, hey, look, if you're in a home, if you're renting, you probably want to buy if you can. If the interest rates don't make sense with the current inventory, it feels like based on... You didn't say this, but I'll go out on a limb. Here, the median price is down from its peak. Interest rates are still high. The delta is about 40 grand. So what does that tell you? Housing prices are probably going to come... That delta has to be fixed somehow. So either Feds have to lower interest rates dramatically so buyers can get that 40 grand, or sellers have to come down. That's how that delta has to be dealt with.

Josh: It does. And where people overestimate what's necessary, like based on that description, which sounds right, prices would have to come down that much. But this is what happens when the prices start to come down. The buyer demand starts to pick up.

Joey: Yeah.

Josh: And we have to compensate for that adjustment, too. If we move into a recession, which obviously it looks like that's what we're going to be in if we're not already there and everybody can...

Joey: We don't use the R-word, Josh.

Josh: Okay, fair enough.

Joey: You can say fat hog, but you can't say the R-word.

Josh: Fair enough. Okay, so since we have multiple quarters of a less gross domestic product being sold.

Joey: Okay.

Josh: We won't call it anything else but within that. During that season, normally, the Fed's, once they feel like that's the case and they see unemployment going up, they're going to start to cut the rates. And so that's what I'm saying: when things start to change, the Fed will take some action, too. So if interest rates go down, the corresponding effect is that purchasing power increases, and you see buyer demand pick up. That's just part of what happens in economics, right?

Joey: Yep.

Josh: So I'm looking at that, and I'm thinking, well, next year will be interesting. We'll probably have some tougher days ahead over the next quarter. Maybe two quarters. And then, at that point, we will have a good feel for where the bottom is. And in terms of adjusting, and letting the Fed do what they're doing right now to try to get this inflation thing under control, and then we can resume whatever that new normal is going to be. But inflation is going to be an interesting thing next year.

Joey: Yeah.

Josh: Because I think that as those numbers start to improve, the optimism of the average consumer is likely to improve, too.

Joey: And so interest rates, I mean, they've got if they come down enough to where they were last year.

Josh: I don't see that happening.

Joey: Yeah. That's going to fire it. Right, that's going to fire the kiln right back up. Do you know what I mean? Everything's going to start going crazy. But if interest rates can get down to, as you said, they're in the mid to high sixes right now.

Josh: Right now, they are.

Joey: So if they get down in the mid to high fives. You've got that delta.

Josh: Yeah.

Joey: So if they come even down a half point and then sellers reduced, maybe make a couple of reductions, you're going to meet in the middle.

Josh: You're going to meet in the middle, which might be our new normal.

Joey: And it's going to shoot. That's how it works. It always overshoots this way. Then it overshoots that way.

Josh: Sure.

Joey: So it's just going to steady out. But it was up until this year. I mean, it was just straight. It was a bull market.

Josh: Yeah. Well, COVID just, I mean, it's like riding a bike down the street. Somebody took a baseball bat and shoved it right through the spokes on your front and back tires.

Joey: You shouldn't hang out with that dude.

Josh: Yeah, I shouldn't...

Joey: And maybe there's something like that...

Josh: And we're still dealing with the aftermath because when the bike flipped, it broke the handlebar and the seat post off. Do you know what I mean?

Joey: Yeah.

Josh: You got a pedal that's off in the cutter somewhere. And now we're trying to piece this whole thing back together after you've picked it up off the ground. I mean, and so there are all kinds of leftover carnage from this massive economic catastrophe if you will. Not to mention the fact that we just threw tons of money trying to solve the problem, which created its own issues. So there's a lot of work ahead of us to get this thing back to normal. It isn't going to happen in six months.

Joey: No. And so our headwinds are interest rates. Our tailwinds are low inventory, although that's going away. The other big one is we were talking about people coming into the area that's slowed down. So all points seem to say the market will continue to come down a little bit.

Josh: A little bit. Little bit. It's going to continue to soften a little bit. It's funny because I hear this. I have lenders that will run into me like, "Oh, my gosh, we're going to see rates at 10% in the next 90 days". I'm like, calm down, calm down. It's probably not going to be like that. And then the same people, two months later or two weeks later, come to me and go, "Oh, I just read this awesome report, and rates are gonna be at 5% in the next 30 days". And I'm like, calm down. It's not going to be that good, either. It's like, just calm down. The rates are likely in the high fives, mid-sixes, and long term. That's historically been the trend, anyway. When it gets a lot higher than that, it's unusual. If it gets a lot lower than that, that's unusual. So if we were to figure that it's going to be mid-fives, mid-sixes, that's a pretty decent market.

Josh: And if we can get it done, market to stabilize where buyers and sellers in the marketplace go, "Okay, here's our fact patterns. Here's what the information is on the ground. Here's what we can expect." So now people can properly start planning, and planning is really what people need to make moves. I mean, if you're going to stay locally, move up or move down or move sideways, or if you're going to leave the state or people are going to move from out of the area, all of that takes planning, and they want a fact pattern that's a bit more consistent so that they can make plans that they can rely on. And that takes time, and that's kind of...

Joey: C'mon, good luck with that.

Josh: I know.

Joey: Good luck with stability. When was the last time we had stability being serious? When was the last time you were like, oh, it's a totally stable market? We're at equilibrium.

Josh: I'd say probably 2015 to '19 was pretty cool.

Joey: Yeah?

Josh: Yeah. Pretty stable. I mean, we were climbing. I mean, it was great because homeowners would buy and we weren't, hitting the cover off the ball. But have a home and value of five to seven percent in a year. That was pretty exciting news. They could decide to sell the home a year from then. They'd have enough equity to make some money if they wanted to and get onto the next home. And that might even be aggressive in terms of appreciation over the long haul, but it's still nice. And that's... We've had it where that's been the case. But the challenge we had back in '14 and '15 was that prices needed to be higher for builders to build at a meaningful level and compete against the existing resale market. And that was the challenge. We were watching them, waiting for home prices. We're like, okay, when the home prices get to X number. Home builders can start building again. Do you know what I mean?

Joey: Yeah.

Josh: And we were watching that pretty closely, waiting for that number to hit. And it started to hit probably at a meaningful number. And, '17, '18.

Joey: I wonder if that number is now to flip, that is, is it worth people to build now? It has to be. It has to be somebody that has a major infrastructure already taken care of. It can't be probably the individual unless they bought the lot years ago. Maybe they got that at post-car fire a lot or something. The cost to build a home right now is with that property coming back down. So they're probably back to that number again.

Josh: Yeah, they are. Again, we talked about this in our previous podcasts. The construction field is going to have some disruption coming up because you've got at least here locally what we had was, and for some of your listeners, we've had multiple fires that created this huge demand for new construction to rebuild a lot of those homes.

Josh: We've had some pretty big hailstorms, which are fairly unusual for our market, and created a huge amount of re-roofs in the county. And then if you combine those two things, and then you have the pandemic, I mean, we had just a massive amount of labor in a very short amount of time in the area. And we're beginning to see the housing market slowing down. And so you've got these crews now that are a bit more swollen compared to what they have been in the past, with all the different employees working for them. And so it'll be interesting to see what happens in the future with bid pricing and stuff like that. I could see the price per square foot going down, not just because supply and material costs go down, but also because labor potentially, or at least profit, the amount of acceptable profit will start to decrease.

Joey: When taking a kind of a step back. When we talk about year-over-year interest increase, so an appreciation of homes.

Josh: Sure.

Joey: I'm thinking, do you want it to just be a little bit higher than inflation? What is an ideal, sustainable growth number?

Josh: Well, don't go year over year. I go five years over five years kind of thing, right?

Joey: Okay, fair enough. Fair enough.

Josh: Because everything modifies.

Joey: What about weekly?

Josh: Well, what people don't probably realize is that the Federal Reserve actually has a stated... They want inflation. They absolutely want inflation.

Joey: Was it like one to three percent or something like that?

Josh: Yeah, I think it's like two-something, right? I have to double-check what the number is. So, everybody, I'm sure listening, can fact-check this. But if you were to go to the Federal Reserve.

Joey: They will.

Josh: Yeah, go to the Federal Reserve's site and look at their mandate. Their mandate will target a certain amount of inflation, which means they want inflation.

Joey: Yeah, growth.

Josh: And that's how you get that growth, right? And then the second part of that, that you're going to be looking at, is they also have a targeted number of unemployment, which means they actually want to cause some unemployment, which might sound counterproductive, but in a healthy work environment, we need people to have equal leverage. I mean, employers and employees, to have a more harmonious relationship, we need to have some unemployment in the marketplace so that you have more value as an employer to offer a job to somebody. Do you know what I mean? It allows the work and the effort of an employer. You receive from your employee to be a bit more meaningful and profitable because the person wants to keep their job. Whereas if the jobs are just too robust, it's like, "well, you have to accept my 50% effort because if I don't, I'm gonna go work for somebody else." And this is some of that disruption we're going to see, and we're hearing some pretty good-sized layoffs right now.

Joey: Amazon just reported 10,000 this week.

Josh: Yeah, these are big numbers. And they start to trickle into the economy because those people, obviously, while they're in a disruption of labor, will not be out there making some of those higher dollar purchases, and they'll probably be cutting some expenses here and there. And that starts to have a corresponding effect on those markets in which they would have been participating. So three to six months from now is when we will finally start to see where we really stand economically.

Joey: So back to that five years over five years, what kind of appreciation would you want to see on a home? In a stable...

Josh: Stable market.

Joey: Robust, but not crazy, because what goes up comes back down. So when you get these white hot... There's the other side of the mountain.

Josh: Yeah, I would say four to five percent is probably something. And, you know, Redding tends to be...

Joey: Over five years? Five percent?

Josh: Per year.

Joey: Per year. Okay.

Josh: Compound effect, yeah.

Joey: So 20 to 25%.

Josh: Yeah.

Joey: Probable it will be more than that because it compounds.

Josh: Yeah, it compounds, right? But that helps you to stay ahead of inflation. It gives you the ability to repurchase another home. But you must also realize that Redding is a lot like those flyover states. In the sense that we don't have these massive, robust swings in our home valuations, whereas you could get on the coast, you know, people think... Whenever they hear I'm from California, people say, "oh, you're from California." I'm like, yeah, but I'm not from California. You think I'm from. But we can buy a home where we live. And I'm proud to say that. Whereas if you look at the Bay Area and Southern California, it's extremely expensive.

Joey: Insane.

Josh: Yeah. And what they do in terms of appreciation has a lot to do with the economic factors on the ground at that time. When the economy is doing well, those prices down there are doing really well. When the economy goes down, they get back some value quickly. In our market, we go up and down more slowly than the Bay Area, and Southern California does. So for anybody that's thinking about moving up here, just enjoy the fact you get to buy a great home. We can't wait to welcome you here. But realize that the valuation is going to be different from what it was for you if you lived in LA. It's going to go up slower.

Joey: Well, at four to five percent, you're looking at the value of your home doubling about every what? 15 to 20 years, 15 to like 18 years.

Josh: Yeah.

Joey: So you think about you buy a home for $400,000 now, 20 years from now, it could be, on average, valued worth $800,000 at that growth rate.

Josh: Yeah. You used the rule of 72, I think, on that?

Joey: Yeah, that's what I was doing. Yeah. Kind of cheat math, cheat math. I was using poker math.

Josh: Poker math. Like, wait for a second. He's got seven outs. We'll give a training tip right now. If you guys want to know what the rule of 72 is, if you want to know how to double an investment, you'll take the rate of return. Let's say it's five percent, and you multiply it by whatever number to equal 72. And by doing that, that's how you'll get that corresponding. How many years would it take for you to double in value? So if you took five times, what, twenty-five?

Joey: No, five times 14.4.

Josh: Is that what it is?

Joey: 14.4.

Josh: Yeah, that sounds right. Yeah. Yeah. And then it puts you there.

Joey: So it sounds like 14 and a half to about 17, 18 years at that interest rate which...

Josh: Well, there you go.

Joey: There you go. Yeah. So that sounds reasonable. It sounds kind of crazy, too, at the same time, because you think like 4 years later, you know, a 400,000 house is 1.6 million.

Josh: I know.

Joey: And then, I think I just described the East Bay, you know? Maybe they were getting a bit better than that because I remember being a kid, a teenager, and going down and visiting my aunt and uncle and then buying a brand new house in Dublin at the time. And it was, I think, just these numbers, you think of something, and a number pops in your head, and you say, "I think that's the number because it popped in my head." But I remember them buying it for like $100000. It was a total track home, cul de sac, four-floor plans, and hundreds of homes. But there were fields everywhere.

Josh: Oh, yeah.

Joey: You know? I remember walking down, and now you look at it, and I'm sure that house has to be... I don't know. It's way over a million dollars.

Josh: Oh, yeah.

Joey: Way over a million dollars. And that was about... Oh, wow. I'm much older than I anticipated. Thirty-five years ago. But that sounds about right.

Josh: Yeah. I mean, if you were to look at... Same thing. I have a family in Santa Clara who purchased a property for like four hundred thousand bucks. The last time I saw it sell, they didn't own it anymore. They'd moved on to another property, but it was like 2 million. It's probably over the same period, like over 30 years, that it did that. And it's interesting to see what real estate does over time. I'm obviously a huge advocate, and full disclosure, I'm heavily invested in the real estate market. And so, for me, I like and enjoy the benefits of appreciation, but I equally enjoy the benefits of cash flow. And if you want to find an investment that has proven itself over an extremely long period of time to perform well, it's not the magic answer. I invest in stuff like the stock market as well. I try to be somewhat diversified, but I... More heavy in real estate because that's what I do. It's what I know.

Joey: It's what you know.

Josh: Yeah. And I've got friends that are stockbrokers, and obviously, they do some real estate, but they're way more invested in the stock market because that's what they know. But it's wise to invest in something because dollars, no matter what, return to zero if they don't get invested into some asset.

Joey: Especially with the inflation. We've seen this year that if you've got cash sitting in the bank, you're losing money.

Josh: You're losing money.

Joey: You're losing money at eight to 10%, depending on...

Josh: You are.

Joey: Yeah. So you want to purchase assets that you will appreciate. And yeah, that's a whole...

Josh: Well, even purchasing something that holds its value is going to be, you know, protecting you, right?

Joey: You're going to beat cash.

Josh: Yeah, exactly. I mean, investments are not a liquid position, or at least not very often. So you'll have to commit to being in that investment for a time. Real estate is a challenging investment to diversify out of quickly. It takes a period of time to market a property and sell a property.

Joey: One of the least liquid, if not the least liquid.

Josh: Yeah. Well, you could get a refinance or pull cash out. So, if you are in a position where you could do that...

Joey: But you can't just run down to Goldmark and sell your necklace.

Josh: No, you sure cannot.

Joey: And you can't get on E-Trade and sell, sell, wait, everyone's selling? Buy buy.

Josh: That's right. Yeah. No, with real estate, you will want to be a bit more strategic in how you approach things. But I can access cash out of all of our properties at any given time if I want to. I don't choose to because if I don't need it, why would you pay interest on stuff you don't need? But setting yourself up for that, investment in real estate still as a long-term prospect is a great investment.

Joey: I've got a question for you that's going to be... You're not going to be prep for this.

Josh: We've got two minutes, by the way.

Joey: Oh, okay. Are you familiar with what commercial rates are doing? Because normally, when residential rates were at three and a quarter, the commercial was at like five and a half, it's always a little bit higher. It just is. But I'm wondering now, where are commercial rates? So I put you on the spot if you don't know it's cool, 'cause I'm wondering, "Hey, I want to buy a templex," you know...

Josh: Yeah. Well, I've got some commercial lines right now. I mean, most of my building stuff is obviously fixed-rate stuff. But we have our instant offer program. And what we use that for is we have a huge line with the commercial line. And I just got my notification of what the rates are right now. And they just sent me the rates at eight and a half percent.

Joey: So the same thing, they're a couple of points higher than residential.

Josh: They are.

Joey: So they just track. I think there was a time there, a few months ago, when you could have snuck in. And so we'll see the commercial because the last few commercial buildings, apartment complexes, I keep my eyes open for that stuff. The prices had yet to come down.

Josh: Well, we don't have time... Well, they can't because they have a cap compression issue. And that's going to be an interesting story going forward. A lot of folks had some very short maturity on some of the notes they had on their investments on the multifamily side. Many people were really getting aggressive into the multifamily space, with cap rates that were already compressed, and now rents are likely going to compress. And now they're going to be paying more for that mortgage than last year. We don't even have time to talk about the rental market today because we need more time. But I would say if you were to look at what's the next thing we're going to see, we have some serious challenges. I mean, we already have the stock market and the real estate class. Where would we get hit first? I would say it's going to be in the multifamily space.

Joey: So we have topics for next month. But just to leave everybody on a good note, we're talking about total pandemonium, cats and dogs sleeping together. I mean, real wrath of God-type stuff.

Josh: Real end-of-the-world stuff.

Joey: Oh, yeah, total. Wrath of God.

Josh: Send the nukes. We're done.

Joey: Yeah. Clickbait. So well, awesome. Thank you, Josh, for this month's report. And next month, I'll make a point of us definitely doing some homework to talk about commercials and rentals and stuff.

Josh: That's a great idea. Let's do that.

Joey: Okay, thank you, Josh, have a good one.

Josh: Thank you. Appreciate it.