Josh Barker Real Estate Podcast Episode #1

Frequently Asked Questions

Can a bank foreclose if you make partial payments?

The short answer is yes. A partial payment is considered a breach of contract and could lead to negative impacts on credit, a formal notice of defaults and eventually foreclosure. However, many banks may choose to work with a borrower who is experiencing a short term hardship through the use of a forbearance or loan modification program. Proactive communication with the lender is a positive first step.

Will house prices go up in 2022?

According to the majority of economists, the housing market is projected to appreciate an average of 5% next year. Major disruptions due to inflation, employment, and interest rates are the largest factors to be considered.

What will house prices do in 2022?

According to the majority of economists, the housing market is projected to appreciate an average of 5% next year. Major disruptions due to inflation, employment, and interest rates are the largest factors to be considered.

What are the steps in foreclosure processing?

Typically the lender will first issue a 30 day late notice followed by a 60 day notice of default being filed on the property. Next the lender will issue a notice of intent to foreclose followed by a notice of trustee sale. Finally the home will be offered for sale at an auction and if not sold will be repossessed by the bank. There are variables that could impact the length of time to foreclosure but the process typically averages 6 months.

Do banks really want to foreclose?

The short answer is No. Banks are in the business of loaning money. However, banks have a fiduciary responsibility to shareholders, and must answer to government agencies in regards to monetary policy and compliance.

Do banks lose money on a foreclosure?

In many cases banks due in fact lose money foreclosing on a property. The financial impact on a bank can be costly due to the lack of loan performance, the condition of the property deteriorating, the cost of maintaining or repairing the property and of course the cost of legal fees. For these reasons among others, typically a bank would prefer to work out a reinstatement of the loan, a loan modification or a short sale option to avoid foreclosing.

How much are banks willing to lose on a foreclosure?

Typically, there is no set amount that a bank is willing to lose on a foreclosure. Banks utilize a variety of factors to determine an acceptable loss. These factors include but are not limited to the current market value of the property, the length of time necessary to liquidate the asset and any other legal considerations.

Transcription of the Podcast Episode #1*

The transcription is auto-generated by a program and may not be accurate to the conversation. In order to ensure you get all the information from the video properly, you must watch the video.

Joey: Okay, so the local market has slowed down a little bit...

Josh: Yeah.

Joey: I mean that's... But it's also going in the holidays, I would say every year. It kinda slows down a little bit.

Josh: Yeah, there's a season to it.

Joey: It hit a peak in the summertime, around August. One of the things that we're seeing, and I don't know if that's related to the local market, but we saw Zillow who was gobbling up real estate, not only did they stop that, but they laid off... I think it was like 2000 employees. It was a very large number. Yeah, it was a huge number. It could have been 20,000 but it was significant enough that it hit headlines pretty hard, but what does that? Did that have any effect on the local market here?

Josh: No. The short answer to that, no, that didn't. In fact, I was watching some realtors running and posting on Facebook and everything else, "Oh my God, Zillow is not buying... IBuying anymore." And I'm like, "You know what? In Shasta County, there's no reason to freak out about it, 'cause Zillow wasn't buying homes in Shasta County." So it was not a big event when they stopped buying, but essentially what it was, is that Zillow was participating in the iBuyer market, which is where they're buying them with... Institutions are buying in these properties with the intent of just to resell them... Flip properties essentially. In some cases, they would fix them up a little bit and do a small little face left to him and re-market them to the market, but as a whole, they were trying to offer a value, which I think was well-intended, but the second you start buying an investment property or buy a property in general in any market center, you are an investor at that point. And Zillow wasn't really an investor to start with, they were in an advertising company, specialized in advertising products online for buyers and sellers to communicate with.

Josh: So what happened was, is that essentially they realized their Zestimate was inaccurate, that they were buying them for too much money. And that when they went to try to resell them for what they thought the Zestimate was reflecting, they couldn't get them sold, so then you had a lot of inventory sitting and in some cases being price reduced below what they even bought them for in order to get them off the books, and so I think they... They're publicly traded, they have to answer to their board, but they also have to answer to their investors, and they said, "We need to stop the bleeding," and made a smart decision of, "You know what, maybe we need to re-look at this." And so they made a decision to stop iBuying, which I'm sure they probably still have some commitments, I'm sure they're probably still closing on some of those transactions that they had already committed to. But they're winding it down. And it's probably a smart thing to do. I mean, an institutional investor buying to flip will never outmaneuver, outperform a local investor who really understands the lay of the land. That know... Real estate's local, people have always heard that. And it's true if you don't know all the little intricacies of a property or an area or a subdivision or what that type of buyer is searching for, you could get slaughtered out there and they did... They got, what, 500 million or more?

Joey: When you said that, what I immediately thought of was back in 2007, 2008, when they had the mortgage back securities and they were gobbling them up, but yet credit unions didn't have any problem because there were individual little credit unions that analyzed each loan and they wouldn't give out the bad loan.

Josh: That's right. Or...

Joey: Whereas the institutions were just gobbling up mortgages.

Josh: Yes, yeah, when you took comparisons of different assets... The credit union, to your point, did get hit a little bit, but it wasn't initially, it wasn't because of bad loans, it was because these bad lenders drug the market down so far that even the good loans that they provided were underwater, that's why that market was so exasperated. This market this time isn't like that... I've had a lot of people asking like, "Hey, are we in a bubble?" Those kinds of things. And it's like, "Well, I'm not saying that we won't see the market correct a little bit," because any time you have a period of a major increase over a period of time, and any time there's a breakthrough in pricing, which we've clearly had... We've had 10 years of major growth...

Joey: Yeah.

Josh: Well, after long periods of growth, there's always some sort of a pullback, some sort of a recession, so it'd be kind of irresponsible to say, "Oh no, not this time." But the good news is, is that the buyers that we see coming, they're purchasing on 30 year fixed mortgages, which means there are no balloon payments, their interest rates are extremely low, which makes them wanna stay in those properties and hold those properties, there's hardly any negative amortization or interest-only products in the market, so we don't have a lot of those issues to deal with. And the investor participation is really low. We're probably talking maybe 10% of the markets investment-related in Shasta County.

Joey: Really?

Josh: Oh yeah, yeah. And before it was almost 50% in that 2007, 2008 that everybody knows where that market just got hammered, it was because in those periods, major investor participation where today it's 10%.

Joey: So you think maybe the... When you say it like a market correction, are there any numbers that come to mind percentage-wise, or any length of time or... I know it's like, Hey. Do you have a crystal ball? Can you tell the future?

Josh: Yeah. I'd be retired. Completely if that were the case. But I think what it is is after periods of market expansion for a period of time like I said, I think you could expect to see some retraction. You have another way of investors look as we have tailwinds and we have headwinds. So tailwinds, what are the things that'll push the market up? Well, you have family formation, you have migration, you have wage growth, you have a lack of inventory, you have monetary policy that's easing and that's pushing the amount of pay up where people can afford more. You've got the cost of construction, if it's really high, then that pushes the existing inventory up in value too, if you have a lack of labor, that again can cause prices to get pushed out because you can't really replenish the needed supply. So right now our... Let's say our tailwinds right now are hovering at 7-8%, which are all positives, right, and then you have to... That's your tailwind. And then you look at the headwind, it's like, "Okay, well, what could push pricing down?" And one of them would be as if people were to lose their jobs, if we went into a major recession when people weren't getting jobs, well, then that would reduce the buyer participation and that could have an impact on value.

Josh: Do we see that today? Not really, they're even paying people to stay home, right?

Joey: Yeah. Not locally anyway.

Josh: Yeah, locally. And then you have interest rates, so interest rates are sitting in right around low threes, and the fad is said that they probably would see maybe two rate increases in 2022, and every time they increase, it's only about a quarter basis points, so next year they said, "Hey, rates might go up a half a percent." A lot of people don't know this, but for every 1% that the interest rate goes up, it has up to a 10% impact on your purchasing power. So if we know that the interest rates will likely go up 10% next year, which with inflation where it is, I'm sure they're going to go up, that could have an impact of about 5% on the value. So if you have a tailwind of 7%, you got a headwind of 5%, that means you have positive growth and value of maybe 2%, and that's how those things interact with each other. Does that make sense?

Joey: Totally.

Josh: Yeah. And whatever ingredients you wanna throw in the cake on the tailwind side or on the headwind side that's up to you and every investor, that's where the speculation comes in, but the principles are settled.

Joey: 'Cause I think one of the big factors would be... You said migration, and it just seems like there are a lot of people that are pouring out of the cities, and Redding is still... When you talk about California real estate, Redding is definitely at the lower end cost, it means by quite a bit...

Josh: It is. Yeah. Which makes it attractive.

Joey: Makes it very attractive.

Josh: Yeah. We're seeing a turnover a little bit, if you will, in our population. The composition of our population is changing a little bit. So you've got folks that are moving out and moving into Idaho or Texas or Tennessee, and we have families, mother, father, the children, and they're married off with kids. We have families coming in right now and saying, "Hey, our whole family is moving to another state." It's pretty... In 20 something years, I've never seen that before. And we see some of that right now. And then also on the flip side of it though, we see people moving up here from Sacramento, from the Bay Area, from Southern California, who are saying, "Gosh, we love California, we love the weather, we love the proximity of the big cities were Redding... Love the outdoors that Redding has to offer and we really like the price." So it's interesting, we're starting to see a little bit of a change in that composition.

Joey: Do you think that at any point we're gonna see like foreclosures or are we gonna see... I can't remember what the term is, but... 'cause we're being pretty positive right now, we're saying, "Hey, the whole Zillow thing really doesn't affect Shasta County because they never bought here anyway," but is anything gonna turn because... Is it all just roses?

Josh: Wouldn't that be nice, right? No, it's not all roses. You've got the pandemic-related impact that we're not talking about, and that's a pretty sobering conversation because no, there were people that understandably fell behind on their mortgages due to employment disruption and things like that, or even sometimes it was landlords who had a rental property and the tenant stopped paying, 'cause they had a disruption in their cash flow and well, now the landlord was expected to burn the responsibility to continue to make payments to the bank and they couldn't do it. So you have some distressed properties in the market. Right now, we have an estimate of just over 2000 property owners in Shasta County who are a period of time behind on their mortgage, and some of those are in a forbearance program, which expired at the... In the summer. And so some of these folks are in a situation or they're gonna have to make a decision, they're gonna have to decide, "Do I modify my loan with my existing lender, if they'll let me and maybe tack on what I didn't pay onto the back of the loan and pay it back over time? Or do I refinance my property based on whatever the criteria is that a lender is gonna require in order to start over again with my loan balance and get current?

Josh: And there are some programs I know of that are available for that. Some people might choose if they have equity in their home just to cash in, "Hey, it's time, we might be behind in our mortgage, but we have some equity still we're gonna sell our home anyway." Some are going to decide to do a short sell if they don't have the equity, so they can control when they close and how they close and kind of minimize the damage to their credit, and then unfortunately there'll be some that will ultimately possibly lose their home and go to foreclosure all the way. So we have reconciliation as a community that we are going to have to go through, because if those numbers are correct and it exceeds 2000 that are behind, a portion of those will get fixed and corrected and never reached the market, but there'll be another portion that will reach the market in one form or another.

Joey: So 2000, that number sounds really big to me, we're talking about Shasta County, that sounds like... That's a shockingly large number to me. I guess the good news is, if you are in that position, you're not alone and you do have options, and when you said equity in your home, I'm thinking, "Man, if you purchased your home more than two or three years ago, you should have quite a bit of equity." We've seen this market do very, very well over time, definitely for the last 10 years, but even over the last three years, the market has performed very, very well, so you shouldn't be upside down. There might be a... But I think that's gonna be a very small fraction of those people, so get ahead of this and do something about this now, so it sounds like they need to get in touch with either a real estate broker or if they need to get in touch with a loan officer. Find out where they sit. Get their options now.

Josh: Yeah. I agree. I think that if a person was in that situation, the very first thing you wanna try to do is figure out what is the actual value of our property right now, and there are means to do that...

Joey: Don't use Zillow. Don't get a Zestimate.

Josh: Don't get a Zestimate. On our website we have a place where we can check your value, you don't have to sign up for it or anything, it just will give you the value at that in there, but it's still only computer-generated, so it's not gonna be better than having an agent look at it, but it's still something. And I agree, I think you try to figure out where, if you have equity or not, ask yourself the questions. Do I wanna sell my own and cash in on the profits that there are now? Or if I'd prefer to stay and then go down the route of check-in with a lender and see what your options might be? Like I said, sometimes you can modify it along with your existing lender if they have a program for it. Some are right now, because of how many people nationally are going through this, lenders actually have some policies in place for if you have to check with each in the lender individually, but I know that I've heard that if you make a couple of months payments in a row, that then you can qualify for a refinance and so are some options...

Josh: The worst thing that somebody could do is just to put their head in the ground, we saw that last time, and that major... This isn't anything like that. But when we saw that for a closer market, we saw before, the ones that really got hurt the most were the ones that put their head in the sand, because by the time they finally wanted to do something, the protections that were awarded by the government were no longer there anymore. And that was the big price to pay for putting your head in the sand. Were the ones that kind of were proactive and working with the banks or doing a short sell or foreclose or whatever it was that they were trying to figure out, when they were proactive, they were going with the group, and with that comes some protections because, in numbers, you have some protections when you're by yourself, they're not gonna carve out a policy just for you, but they will when there are thousands of people that are in that situation.

Joey: And it sounds like there are thousands of them. When you said there are about 2000 homes that are in this, like at some point of this forbearance or there just behind, are you talking about people that have just missed their mortgage? What triggers as like they're two months are more behind or is it... I'm trying to get a context of how close those people are too, like, "Hey... Urgency."

Josh: Yeah, well, the... My understanding of it is, is that the current reporting agency is once you're 30 day late, they could report it is 30 days late, but because we're in that foreclosure moratorium, there was no... They wouldn't file a notice of default, for example, after 60 days. They didn't have the legal means to do that because that was the very thing that was suspended, but it didn't mean that you didn't have somebody tracking the fact that you're behind on your mortgage, and so I think that's where that information is coming from is that they're basically saying, "Hey, here's the number of people that are behind currently," it doesn't mean they're all gonna foreclose, it just means that these are the ones that are behind, and it's a number that will have to be rectified either they'll have to refinance, they'll have to do some sort of a modification to their existing loan or they'll have to sell it in some way, whether it be an equity sell or short-sell or foreclosure.

Joey: Do you think that that's gonna... 'Cause that sounds like a headwind to me based on what... How do you define a tailwind and headwind, if all of a sudden the market gets this huge number of inventory, do you see that having an effect on depreciation next year?

Josh: Oh yeah... Well, again, everybody's ingredients that they wanna put into a tailwind or a headwind is up to them, that's where the speculation comes in, and yes, from my own personal speculation in terms of the market for next year, that will be counted as a headwind.

Joey: You know, one of the other things, I think that we talk about markets... We're too generalizing when we talk about markets like the national market's one thing, the California market, the Redding market, but even within the market, there are market segments, and I've had friends that were looking to buy and looking to sell, and they're certain segments... I guess it's like stocks, just because the market went up 4% today, it doesn't mean your stock went up 4%, you might it went up 24% it might have gone down 4%. And so there's... Is there a particular segment, do you have those kinds of numbers, you're like, Yeah, out of those 2000 homes, the price is this, and so these are the segments that we're gonna... 'Cause I think of a bunch of inventory at $350,000 is not gonna affect home sales at 800,000 and vice versa.

Josh: That's a really good point. So obviously the... Well, the average sales price in the market, to your question is between... It's averting between 390 and 400. Really? Yeah, and it trans down in the fall, in the winter, it always does, 'cause fewer larger homes sell during the holidays, that's just... They're the ones that are doing all the entertaining, all the kids are coming to the big house, so the upper-end market tends to not have as many closings, which has an impact on the average selling price and the fall in the winter, and then that starts to change in the spring. The price point that's pretty much active year-round is the lower price point, so anything that's at that 350 year below in today's market, at that price point is going to move regardless or respective of what time of the year it is, and that's where most of the appreciation consequently actually took place during this whole pandemic, if you will, it's been, that's where most of the largest jumps and value off. What was interesting and COVID that... I look back and I go, "Wow," we weren't used to seeing upper-end properties sell at the volume they were selling at, that was...

Josh: That was shocking, but it was because we had people coming in from other markets like San Francisco Bay Area, Sacramento, Southern California, who were buying these expensive homes, at least expensive for us, it wasn't expensive for them, they're buying a 500 square foot Studios for a million bucks, so when they come up here and buy a 4000 square foot home with the beautiful pool for the same price, they're like "This is a no-brainer." But we've seen a lot of those transactions over the last year and a half, and that's largely being 'cause they're been second homes or people that we're able to work from any location, so they chose Redding as a wonderful destination, who wouldn't? It's gorgeous, especially if you still have to get back to the city once or twice a month for work. And so we started seeing some higher-in-price property selling, and I think a lot of it had to do with the pandemic, but what will be interesting going forward is that... Are we popular enough now? Have enough people discovered the beauty that we really do have to offer in the north state to have that volume maybe not stay exactly the same, but stay within a similar realm.

Josh: You know what I mean? Maybe it won't be the same number as last year, but if it could be 75% of the numbers of last year, that'd be still great. 'Cause, that would be a lot different than it was three years ago. We were pretty much a hidden secret up here in the North state three years ago compared to what I think we are right now.

Joey: And you have factors like telecommuting is much more popular now, COVID really impacted that. And also the Redding airport's expanding quite a bit. They've got direct flights, Vegas, Burbank, LA, obviously, they've always had San Francisco, Seattle. I was talking to Megan Spalding over at Shasta EDC, and she was talking about they wanna expand more, they're looking at like... She threw some things like Denver, Phoenix and that stuff will all have an impact on us.

Josh: Well, you'll be able to bring in a more of a working professional that needs to have the access to the airport, the biggest deterrent we have for the working professional, the travels is it's over two hours to the airport, and so we miss out on a market segment because of that, and the airport is obviously a point of attention, and I think if we have some intention with it in terms of expansion, better routes and things like that and if it's reliable. Let's not sugarcoat the reality that some people still have the stigma that it's hard to get a flight out.

Josh: Sometimes it gets canceled or whatever, everybody tells me it's gotten better, but for those who were trying to do this 10 years ago, fly out of Redding and then get burned once they're driving to stock right now. So maybe reporting those numbers, how often that they don't get canceled, that might be a good public message to get out there, but no, I think that as telecommuting becomes more viable... And they're still meeting too, it's not like these guys aren't driving back to the city or these gals aren't driving back down to the city to meet once a month, they're still doing that, so they still wanna be within a certain proximity of access to the city, but... Come on. Where would you rather live? You would try to live with... Do you have an hour and a half traffic every day that you have to contend with, or really have a five to 10-minute commute?

Joey: And a $4500 rent an apartment versus a...

Josh: Yeah, a $3500 house payment on a beautiful home that you can really enjoy. So we have... Our best days are ahead of us. For sure.

Joey: Well, that's good to hear. Yeah, that's good to hear. So you don't think that the 2000 homes that are in that are gonna impact us... People shouldn't be concerned.

Josh: Well, that... Everybody seems to be emotional these days. So what's gonna happen is, is that as soon as this conversation... Not our conversation, but as soon as the conversation of distress properties becomes more mainstream, you're gonna have articles written that are gonna try to make the worst presentation of it and try to make it look horrible. We had a rainstorm a month ago, and what did they call it? I forgot the name of it, but it was like some funny name for... It was like some cyclone bomb, is what they called it. Right. And it was like, "No, that's called rain. What are you talking about?" So you know they're going to paint a pretty dark grimson picture, but the reality is we have over 4000 homes that are selling here in the county every single year. And so let's say that even 50% of that 2000 or more end up coming to the market in one form or another, that's only a quarter of the inventory, it'll only take one quarter of a year to absorb that inventory and it's not gonna all come at once, so it's gonna get spread out, but it's gonna be... Some of it's gonna be distressed, and so there will be a conversation around it, some people are like, "Oh, finally, I'm right," but I have a feeling it won't last very long.

Joey: And they're expanding the loan... The packages, Chris Lam, I saw, he did a little bomb in video he was talking about them potentially offering 40-year mortgages, and I think you might have told me like, "Oh, they've had that around," you don't hear about it often, but it's gonna become a little more mainstream, which is only gonna open up buying power more. Right?

Josh: Yeah, yeah. For the listeners, a lot of people, when you go to take out a mortgage, you usually have a 15-year fix has been the historical or a 30-year fix. Those are the two that most people would choose from, but in Europe and in Canada, 40-year mortgages are pretty much mainstream, that's something that gets done all the time, and there's no problem with it, what I like about them or that I think makes them... Okay, is that they're usually fixed for that period of time, there's no balloon payment. And balloon payments are where you get people in trouble because you have to think as a borrower and you're like, "Okay, alright, so there's a balloon payment in five years. How do you know where you're gonna be in five years? Is the market gonna be up or down, am I really gonna be forced to refinance my property based on whatever the market conditions are at that point?" That's the problem with the balloon payment... Right, but these 40-year mortgages are fixed for the 40 years most of the time, and what it does is it brings down the monthly obligation a little bit because you're amortizing over a longer period of time, and so let's say that the fellow reserve raises rates a half a percent next year, and we know that the head one that's created is a negative 5% valuation as a result of that.

Josh: Well, if they go to a 40-year mortgage at the same time they raise the interest rates, then that may not have a 5% headwind impact, it might only be 1% at that point. So if they increase the availability of loan products as they're raising interest rates, we probably won't see a major disruption or major headwind created just from the rates alone... But man, I'll tell you right now, if they move to negative amortization or interest-only products with balloon payments, enjoy a 24-month run-up a value and then get ready for the crash, so I just hope they don't decide to get stupid like that.

Joey: Well, okay, that's a 24-month crash. I'm like, gonna set my watch.

Josh: Yeah, we already say it. 2004 and five was when they ran up the crazy loans available and people used them even though it didn't make sense. They still did it anyway. So hopefully, there are no products available in the market today, and for the most part, it's almost illegal because that DOD Frank bill that was passed after the mortgage crisis before for the most part, basically made it almost illegal to do something...

Joey: Well, the difference that I've noticed from then and now is back then you would hear people pulling out equity on the first home to buy the second home and equity is set on by a third, just... I don't hear that. I hear more cash buyers than I hear that, so...

Josh: Oh yeah. Absolutely. Well, and to your point, less than... It's roughly, maybe even at the most... And these are numbers that I'm coming from, but what we see in our office and when I talk to other brokerages, but it's 10% of the markets investors, so to your point, that's not happening, they're not pulling equity out and then going and buying another rental property with it, where before, that was very common.

Joey: If anything, it seems like the investors are coming from out of the area and they are cash buyers or they're very large down payment buyers, a lot of them, 10, 30 winning out of bigger properties and adding their portfolio by "Hey, I'll gobble up a single-family home in Redding with this $200,000, I need to recognize."

Josh: Well, people are chasing cap rates, and that's kind of a different conversation, but people are looking at the cities and trying to buy investment property down there and your cap rate might be 1% or up to 3% return on investment. Where in our area here it's... You're looking at 5%, even 8% cap rates on properties, and I think that people are much more attracted to those numbers.

Joey: I don't see a lot of inventory either, when you talk about the cap rate, you're not talking... Are you talking about the single-family home cap, reader you talking about more like multi-family?

Josh: Not... Well, just rental in general, so it could be a home or it could be a multi-family situation, but the investors for the most part, or shopping cap rates, and Shasta County has a better cap rate than a lot of other markets, at least currently, and so you do have investors that still wanna purchase, that's that 10% that are buying for investment, there's very little speculation going on right now, there are very few people flipping, there's not a lot of that, but there are people buying and holding, and that's that 10% that are looking at the cap rate and saying, "Hey, I'm gonna give X amount towards this property and I'm okay with the return I'm getting." It's not hard though, 'cause the banks are paying what, 1% right now at the most to save your money in the bank, and you're moving into an inflationary market where inflation 6%, if you don't put the money in a hard asset right now, your money, if I give $100,000, I'll put in the bank account today, based on the numbers, not my numbers, the federal government gave out where the inflation is over 6%, that same $100,000 is now worth $94,000, and that's just what inflict the cost of inflation is, but if I would have taken that $100,000, put it in real estate last year, right? Then let's say I bought a property with leverage, that $100,000 might be worth $150,000 today, so negative 6000 or up 50,000, which one sounds better?

Joey: Yeah, so if you really want to get the best of both worlds, you're gonna wanna buy a house and fill it full of crypto miners and then... And solar, don't forget solar.

Josh: Yeah. Crypto's a... You know... That's an interesting topic. 0

Joey: I was just kidding. I was just joking.

Josh: Yeah. Real estate is obviously the... It's a long game, but I haven't met too many people that bought real estate 20 years ago who lost money today.

Joey: No, no, exactly.

Josh: So if you can look at it from a long-view perspective, and as long as it's cash flowing, it just makes sense. I use this slide with the team and then I show on a slide of here since 1980s with rent increase. The most it might flatten out for six months, but that thing is at a 45-degree angle and it's been like that for 30 years. So the cost of living, cost of rent, cost of housing goes up.

Joey: Oh, absolutely.

Josh: And if you own a property and you secured a position in the market where your mortgage doesn't go up every month, it stays the same, but rents are going up every year in theory, or making more passive cash flow on that investment.

Joey: I guess one of the things that we've talked about, the big one for me would be... Because one of the things you talked about was access to materials to home builders, we don't have a lot of new construction, and it doesn't move fast here at all, so it doesn't take much for our inventory to drop quite a bit. The big factor is gonna be, I think, employment and locally it looks pretty good.

Josh: Yeah it's... Obviously, we have a pretty big disruption when it comes to raw materials. The good news is that in China right now, I was just reading this report, China right now is taking a pretty big hit on their new construction right now, and they compete against us for a lot of those raw materials and appliances and stuff like that. So if China is going through a correction right now where they're gonna have a reduction in demand that's gonna impact them, let's say 20-25%, then that means that we could begin to see our access to materials get better. Our biggest issue, I think, really is in the construction anyway is labor, do we have enough people to do what we need to do, 'cause I think that the material side of it is gonna fix itself over the next 6-12 months.

Joey: What... We're running out of time. I wanted to recap. So if anybody is part of that 2000, if you're behind on your mortgage payment, you have options, get ahead of it, don't get behind it, it's... It's putting your head in the sand. It's not gonna help you. No, but there are still programs right now, reach out to a broker, Josh, obviously reach out to Josh or your lender and find out, get ahead of this now, get ahead of the curve. And there are... You have options, you have solutions.

Josh: Yes.

Joey: This can end very, very well. It doesn't have to be a sad story, doesn't have to be a tragedy.

Josh: It can end the best it possibly can if you get ahead of it. Go with the crowd when it comes to these types of situations, go with the crowd because that's where the most protections are available at the government level.

Joey: Awesome. Well, thank you, Josh, I appreciate it. And until next time, look out for Josh Barker's market update, it comes out at the beginning of the month?

Josh: Yeah, we sent it out every month, it's more... This one's more free conversation, but the one we do each month is more confined to a couple of topics and put some time into that, so it's easy to read.

Joey: Awesome, thank you, Josh.

Josh: Yeah, thank you too.

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