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Shop Talk - The Real Estate Agent Podcast

Real Estate Agent Podcast 41: Questions Surrounding COVID-19

Questions Surrounding COVID-19
April 7, 2020

This episode features a webinar with Keeping Current Matters, answering questions regarding the coronavirus pandemic.

The better information you can get to your clients, the better you're going to stand out, the more likely you’ll hold on to that business. So right now it's really about education, you know?

Michael McAllister

About This Episode

Coronavirus has presented many challenges in the last few months, and there’s a lot of uncertainty in the real estate industry. To help answer some of your many questions, The CE Shop put on a webinar with Keeping Current Matters.

The webinar had a corresponding slide deck that’s referenced on occasion, which you can find here: Questions Surrounding COVID

For more from Keeping Current Matters, visit their coronavirus page here: Being A Voice of Reason in Uncertain Times

Sign up for The CE Shop’s free course, Doing Business During COVID-19 here: Featured Courses: COVID-19

Ready to Get Started With The CE Shop?

Whether you’re a new agent looking to start award-winning Pre-Licensing education or an experienced veteran wanting to finish your Continuing Education, we’ve got a 100% online curriculum that’s one of the most diverse and groundbreaking in the industry. And if you want to network with your peers, join our Facebook group and get connected!

Episode Transcript

JON: Hello and welcome to Shop Talk: The Real Estate Show. I'm Jon Forisha and on this episode we're trying something a little different. This is the audio of a webinar that The CE Shop co-hosted with Keeping Current Matters. In it, we reference a presentation a few times, and there's a link to those slides in the show notes. Without further ado, here's our webinar.

JON: Hello everyone and welcome to our webinar, Questions Surrounding COVID-19 and The Housing Market. I'm Jon Forisha, the Content Marketing Manager at The CE Shop, the leading provider of real estate education. And we are co hosting this webinar with Keeping Current Matters, who helps real estate agents become trusted advisors through curated market insights.

JON: Running the webinar today, we've got Michael McAllister from The CE Shop. He's the Founder and Chief Strategy Officer at The CE Shop. At one time he was the youngest licensed broker in Colorado and Michael's career has since been focused on utilizing the best technology to educate real estate professionals across the country no matter where they're at in their career. And on the Keeping Current Matters side, we have David Childers, he's the Vice President of Content and Marketing at Keeping Current Matters. He spent more than 20 years working within the real estate industry, focusing his career on helping real estate professionals become trusted advisors through education. Thank you both for joining us.

MICHAEL: Hey, thanks for having me.

DAVID: Yeah, I'm excited to be on here and get to spend a few minutes with everybody and talk about you know, what's going on. So thanks for the invite.

MICHAEL: Jon, as always. Thanks for the T on this up. Um, obviously during this time of a lot of change and uncertainty, we want to make sure that we are providing the very best education to our students and prospective students and really the real estate community as a whole. So thank you everybody for attending. I do want to start out first and just extend my thoughts and support and prayers to all the families out there that are impacted by this, both from a health perspective and from an economic perspective. My thoughts and prayers all day, every day are that I hope we can bring this to a rapid resolution to minimize the damage on both ends of that spectrum. So those of you that are impacted, please know that The CE Shop and the KCM families are with you thinking about you and support during the, um, pretty unprecedented point in time. As a Founder of The CE Shop, I can tell you that I, one of our foundational principles and core values as a company is to give back. So we've scrambled over the last two weeks here to create content, curate content, work with outstanding partners like KCM as well as create our own content to provide to you so that you've got the very best education during times of uncertainty at all times. But certainly during times of uncertainty, it's important to surround yourself with the very best education, the most facts, the best facts that you can find. And what we're hoping to provide for you today is good, accurate information that's timely but also contextual.

MICHAEL: There's a lot of things you can read. There's a lot of things you can watch on TV, but it doesn't always connect the dots to what that means to you as a real estate professional. So we hope that you find value in this today. I can tell you that when we circled up the team internally, when all this was transpiring and thought, where can we go for additional sources of information to keep all of you informed? KCM immediately popped to mind. Keeping Current Matters has been a long time partner and friend of The CE Shop. I can tell you that nobody does a better job in our industry of curating the very last, the very latest and most up to date information. So really excited David, to be online with you today. Talk about some of these things that are going on. I know that there's a number of things that are kind of floating around out there and people's minds, a lot of uncertainty and there's a lot of changes every day. You know, all the graphs, all of us want to see those curves get flattened. But there's all kinds of data that we're looking at. Right. What are the updates that I find most interesting in the morning is, um, Governor Cuomo from New York's updates. I think he's done a phenomenal job of providing good, consistent leadership and information to the world. So we're kind of looking at you as the Governor Cuomo of real estate here this morning to help steady the ship a little bit.

DAVID: I don't know how comfortable I am with that, but no pressure, no pressure. I think you're right. You know the, and thank you. I mean you, you said just what, um, why we exist at KCM and why we've been fortunate to have a partnership and, and know you and, and The CE Shop for a while because I think we both are in this business and want to help people do more. You know, we're, each one of us are coming to this Facebook Live from our homes right now as you know, probably most people are viewing it from their homes. But if we were in the KCM office, I'd kind of point back to here because there's a, the wall right when you walk in that really encapsulates our why, which is we were founded 12 years ago to help buyers and sellers and really families feel confident about the real estate transaction.

DAVID: And if, if there's anything that, that I hope to do today is to be able to give some information to everybody on here that you can use to take back out into your market. I mean, that's what we're talking about. And Michael, you just mentioned Governor Cuomo's leadership and we know his agents right now. Leaders will be defined in this time. Agents will be defined, you know? Absolutely. Um, the thing that I think of in that is in times of uncertainty, people follow the certain in while I don't see every one of his news conferences, he's very certain of here's what I have today and here's what we're going to do. And he doesn't know what tomorrow's going to bring, but he's got a plan for today. And I think that is a backdrop is what I would, would hope to bring. Um, we wrote a blog post yesterday on the KCM blog. Uh, the difference between good advice and perfect advice and nobody's able to give perfect advice right now, but we can all give good advice based on what we know today. And so maybe, maybe, maybe that is a start. Uh, we can kind of go through that and um, I know we've got some questions to talk through and, and, and let's just talk about where we're at so that we can, uh, do the best job we can getting this information out the market.

MICHAEL: For sure. For sure. Yeah. Thank you for that. But thank you for that introduction. Couldn't be better. We are committed to delivering the very best information that we have at any given time. And I know David's got some great information for you today. So as we see things really changing day by day in a variety of different areas, tell, talk to us a little bit about kind of generally or foundationally what's happening within the real estate industry as it relates to COVID-19.

DAVID: Sure, sure. So let's, let's start there and I'm gonna pull some slides up here in just a second and we'll, we'll walk through those. And again, Jon, you and Michael, you guys have those slides. Let you send those out. Um, please use those slides to everybody on the call that we're going to go through today and whatever way you want and videos and sending them out to your customers and helping articulate the message.

MICHAEL: I was going to reinforce that, David, that you know, we're here to educate you because you're hearing the message, but it's really important you share this information with your colleagues who can't be here, your broker, um, and let them share that with their clients and their customers. Cause the more you can stand out as informed real estate professionals, the better that's going to serve you today. It's going to serve them today. So, right. Totally agree.

DAVID: Yeah, absolutely. Uh, and whatever, however we can support that. Look, you guys let us know and we are happy to do it. Um, so let's, let's talk about how we started out this year. Um, we started this year with going into the market thinking the biggest challenge we were going to have in real estate is inventory, right? Um, we knew that across the country, by and large, that has been one of the challenges, uh, that our market has faced. Certainly you open this call up and said, Hey, we're in a time right now where we're seeing challenges that we never could have expected. Um, what we know is, is from a, from a market perspective, even February, uh, numbers that came out yesterday. Now all of this is changing of course, but, but we know that we are significantly up year over year and transactions before all of this started.

DAVID: Certainly gonna see a decline in that. So let me pull up some slides with that as a backdrop and let's talk about kind of where, uh, where we're at right now. So you should be able to see a slide that says keeping current matters on it right now. But I want to start off with a quote that I pulled from Danielle Hale who's the Chief Economist at And so, uh, if you can see that up there, she says, normally when an economy goes into recession, it develops slowly over time, but that's not what, what's happening this time around. It's pretty clear that the economy is grinding to a halt pretty suddenly. And so, like I talked about the start of this year, inventory challenges, you know, things that we thought were going to happen, uh, seeing year over year, uh, home sales being higher in February and we're seeing this, this pause or this drop in the economy due to everything that we know, we see a lot of, a lot of industries being, uh, affected by that.

DAVID: And I'm going to talk a lot about the industries and the business piece of this today. It doesn't mean that, um, I want to turn a blind eye to the, to the challenges that, that people are facing across this country to the, you know, the families that are impacted to me, you know, folks that have family members that are, uh, dealing with it or that are serving in the healthcare community and putting their lives on the line to take care of it. But what I do want to talk about while we need to obey and listen to what from a local level and a state and national level, we're being told, uh, relative to, you know, being at home or, or behavior that, that we need to, uh, to exhibit. We can look at this and say, okay, for our business, for real estate, what do we know and what, what can we control?

DAVID: And we can control that messaging. So when we think about this quote here from Danielle Hale, um, we started to look at on the, from the KCM research team. What are, um, folks that are, you know, that measure and forecast GDP in the economy? What are they talking about right now? Because we're hearing a lot of talk of recession in. So what you can see here is a, uh, a graph of four, uh, projections from Goldman Sachs, Wells Fargo, Morgan Stanley, and JP Morgan. And once you start to see is this V-shape projected, um, you see, you know, this, this decline already starting in quarter one, a further decline in quarter two. And then you see this, this, this rebound, this, this growth of economic activity activity in the second half of the year. So when we look at what experts are saying, they're saying, absolutely, I saw an article yesterday morning that said, um, something to the effect of it would be a historic recession coming.

DAVID: And that was the headline. But the article went on to say, and we expect tremendous growth in the second half of the year. So when we look at this, we see very much a, a, a V recovery and what, um, what is being projected. Now, the question on everybody's mind is, uh, how long does this last? And I certainly don't have, uh, an answer to that. Um, I, I think we need to trust in, uh, in folks that are guiding us that way, but, but, but very much a pause in the economy. And then, uh, growth projected after which is different than what we've seen in past recessions. And we'll talk about that in just a little bit, but I pulled another quote from John Burns consulting. So John Burns consulting does a lot of consulting, uh, to the home builder industry to um, private equity firms that are in the real estate business.

DAVID: And they say historical analysis showed us that pandemics are usually V-shaped, sharp recessions that recover quickly enough to provide a little damage to home prices. And some very cutting edge search engine analysis by our information management team showed the current slowdown is playing out similarly this far. So if we start way back up, Danielle Hale saying, Hey, look, the economy is, is slowing down, grinding, uh, to, to, to a halt. We see these, these projections forming this V pattern. And we know historically when we look at, at this quote from John Burns consulting that we should probably expect the V-shaped recession. Um, the, the, the last slide I want to talk about is as we talk about this question Mike, is we, we pulled a study that was recently done from Price Waterhouse Coopers and it was done to 50 leaders, business leaders from cross-sections of industries and they said, you know, if this were to end today, how quickly would your company get back to business as usual?

DAVID: And two out of three of those business leaders said within 30 days, uh, the additional 24% making that nine out of 10 said within 180, I mean, within 90 days, within three months. And so you, you see this while this, this pause is happening due to an external threat being, uh, a health threat, um, that when we can get through that in some form or fashion, whatever that means, uh, that business leaders are optimistic that the, you know, the, the, the, the pause button will be unchecked and within fairly quick order, they would be back to business as usual. That's really, really helpful. David. You know, it's a, it aligns with what I'm reading. Even in things like the wall street journal around, you know, the this sudden shock to the system is what kind of turned the lights out. There's turning the lights out really quickly.

MICHAEL: But it's not necessarily that there's some systemic major problem that is creating, you know, the slower slow down as you talked about in an earlier slide that's going to take us a longer time to pull out of. So we can see that as really positive news.

DAVID: Yeah. The question starts to come up is this 2008 all over again and we're going to talk about that on the call as well. But if I hadn't drawn analogy right now for our business for sure, and I don't say this to, to not say there aren't businesses that are going to be affected in this because there are, um, but for the housing industry, um, 2008 was probably if we, if we had to make an analogy to weather, uh, situations was a tornado that came through the town. It ripped up homes, it ripped up power lines. It, it crushed the courthouse in all of that had to be rebuilt. What we're seeing in our industry right now is the equivalent of a, of a heavy snow storm. I know you're in Colorado and uh, and you get that. I'm not as quite far north in Virginia, but we've got 16 inches of snow right now on the ground. And, and we can't get out. We can't get to the courthouse to record a deed. We can't, uh, do things that we need to do. But what we know is when that snow starts to let up, um, you're going to see people and go back out. You know, the biggest problem we say oftentimes is, um, people are going to be able to go to a baseball game and a basketball game or football game. Your biggest problem is going to be, you're not gonna be able to find a ticket for that. Everybody's going to want to be out there. Um, you know, we're, we're gonna want to go out to dinners with our families and then the challenge is going to be, uh, getting into that restaurant and in, we'll probably all wait an hour and not have a problem with that. Mmm.

MICHAEL: Yeah. I think we're all going to be really excited to face those face those challenges. Right. It'd be a nice relief.

DAVID: It also, I'll, I'll speak for myself personally and with our children and with my family. You know, you really start to think about what are the things that I take for granted every day that I don't have access to.

MICHAEL: Absolutely. I think one of the greatest blessings out of this whole thing is people are reflecting on all the things that are good. Yeah. All the things. I appreciate it. I appreciate the analogy because at The CE Shop, we always try to develop an education that's contextual. You know, I think the consumer out there today, and certainly the group, this, this audience, so they have real estate professionals have a certain degree of PTSD, at least those of us that have been around for a little while. Thinking, Oh my gosh, you know, what is this like again, was kind of leads me to my next question. So, um, you know, how does what we're experiencing compare to other really formative events? You know, I've been around the real estate industry for years as have you, and there's been some really formative events that have affected our market, including massive stock market fluctuations, other recessionary periods. What does this most like, or how does this compare to some other things that we've seen in our lifetime? Because I think it's really important that people understand and are able to delineate between the two and then really coach and counsel their clients and customers, you know, those that are thinking about listing their home or those that have their home on the market or people wanting to get into as buyers. I think it's really important that we draw some of those analogies contextually because that's how the human brain works.

DAVID: Yeah. It's, it's the question that's on everyone's mind right now. Um, and, and so what I want to do is, is there a research team? Uh, you know, and, and I have to say, just a shout out for any of them that are on watching right now, the KCM crew, the 25 people that support all of this research, uh, over the last couple of weeks. We, we've kinda had to go, okay, look, we've got to dive in and, and help, um, bring some, uh, some of the narrative to this and some of the, some of the research and, and they've all worked tremendously hard to do that. And one of the things we did is we went and looked at, uh, the stock market's reaction to previous viral emergencies. And I want to pull that slide up real quick here. So what you see right here is you see the market's reaction to these previous viral emergencies.

DAVID: And before somebody says, well, we're in a totally different situation today. We are. Um, but what we can see in the past is when viral emergencies have been present, there has been a stock market change. And you can see that the degree of that from SARS to the Zika virus and things in the past. And I'm more show that to you to say the stock market has reacted in the past and viral emergencies, but what we know is over time it's recovered and we're certainly in a in stock market, a reaction and correction right now. Uh, we don't know where all that's going to settle out, but if history repeats itself, that will recover. And that's important to remember as we look at this. It doesn't minimize what's happening, doesn't minimize the impact of your 401k right now, but we can take a, if we have a futuristic view, we can know that that's, uh, uh, that's recovered over time.

DAVID: So the next thing that our research team did was took a look at the housing market and, and you mentioned everybody in our industry that was around in 2008, uh, that lived through that. And consumers, we all remember that well, and we all remember it for as a time that, uh, that I think we all hope we never go through again. But we do remember it may be in a lot of ways, um, in a, in a different way, but it may be some similar ways that we heard about people remembering the great depression back in, uh, in, in, in the 30s and you know, lifestyles and things that were the way life was lived differently after that. So when you start to compare that, I want to bring this slide up in. This is a view of the stock market and the housing market during the housing and mortgage crash.

DAVID: And what you can see on the left side here is the S and P went through a correction of about 51%. And at the same time of 2007, 2008 and 2009, we saw the housing market depreciate just under 20% cumulatively over that time, we all remember it. Well now the biggest, uh, thing that is different today, let's be clear on it, is the situation we faced has not been, uh, our, our industry is not been the epicenter of that crash back in 2008 housing. The mortgage process, the real estate business in general was, was, was the epicenter of, of the financial doubt, uh, downturn the economic slowdown that happened after that. And so it's important to remember that we're not there today and I'm going to point some things out to show you the difference between where we're at today and where we were then to draw some stark differences for you.

DAVID: What we start to see today is that we, we look much more event based like 9/11. And if you remember back, uh, for those that, that lived through 9/11 and we're even in our business then, um, you know, we were fearful to, to do things, to maybe get on an airplane, being a shopping mall, do other things for the fear of another attack. Today we're very fearful to be out in crowds, to be on an airplane for the fear of getting sick, um, contracting the chromosomes. And so that start that, that's probably one we can look at a lot more closely to say, okay, what happened then? So our team went and looked at that. It looked the .com and 9/11 crash and we see in the S and P a correction of about 45% so we, we've lost value there, but we actually saw homes appreciate during that time and you can see that there on the screen as we went through 2000 2001 and 2002.

MICHAEL: So just a quick comment. I mean the, the light that I see here in these couple of slides is that during nine 11, we actually saw, although the stock market and portfolios got beat up about the same as they did during the housing crisis, we actually saw appreciation of property, um, greater than depreciation. Right? In other words, we saw more appreciation during this similar event where we're experiencing right now then what we saw in depreciation in an event that really isn't like today's where it's more of just our, uh, PTSD. I've used that word with all due respect, um, syndrome coming forward and projecting for it. So this to me, the, the combination, these two slides are really, really critical as it relates to agents and brokers talking to their clients about what's this represents.

DAVID: Right, right in, you know, I think the, if there were one message right now and we may have KCM members on here, I don't know, uh, that, you know, the, that our, our The CE Shop, uh, uh, numbers of customers as well. But the, the one thing I would tell you is this, in getting this message out there that recession does not equal housing crisis because to your point, um, you know, let's, everybody remembers recession as housing crisis and we have to remember that, um, and we have to probably in our business fight the curse of knowledge that while we may know that people, that buyers and sellers are out in the market right now, consumers think this was 2008 all over again. And being able to get out in the market to say this is very different than 2008 and that recession does not equal housing crisis, um, is probably one of the most important messages.

DAVID: I don't know if you've seen this, this, uh, this visual before it's been out in the market a lot, uh, here in the last few weeks. But what our team did is we went back and looked at, um, the home price changed during the last five recessions. What happened in the last five or sessions relative to home price and what we know is in three of those five recessions, price was actually appreciated. Uh, we saw marginal depreciation, uh, in one of those recessions, but what we all remember is 2008 and the drop there. And so the definite, the pure definition of a recession. Now the widely held definition are people are going to say is two consecutive quarters of negative GDP. We're more than likely in that youth. We saw that from Goldman Sachs and the slide that I showed earlier, what economic, I mean, what recession really is, is an economic slowdown.

DAVID: When people hear the word recession, there's a different response. But what we see every day by the fact that we're coming to this by our homes, by, by what we know is happening out in our markets, wherever we are, we're experiencing an economic slowdown. So that's, that's, that's undeniable. How long, how deep. Those are questions that have to be answered. We can look to experts to help us understand that. But really understanding this does not correlate to, um, a decline in home prices every time it happens in being out, you know, they say a picture's worth a thousand words. Being able to get that out in the market, that message out in the market helps people start to see that and start to understand that.

MICHAEL: Yeah, really, really powerful. I liked the delineation between the technical definition of the recession versus more of really the emotional, right. You see the market guts and emotional response might not trigger that technical definition of a recession, but it certainly is recessionary and energetically, right?

DAVID: Yeah, I mean it's like if you and I were having a conversation, you say, Hey, are we about to enter a recession? You go, well that's, you know, we've got to answer that question. There's a lot that needs to happen. And usually that's viewed in a rears because you need two consecutive quarters. Are we entering an economic slowdown? Oh, I think we all could agree on that, you know, um, and doesn't have the same impact.

MICHAEL: But everybody's got their own sense of what that word means. Right. Which kind of leads me to where I, where I think we need to go next in that kind of what's going to be the outcome of this or what isn't the outcome of this, you know, because the great recession is, it's been termed of 2008 had massive impact to a lot of families relative to their own housing. Right? I mean, sure, people took out way too much leverage on their homes. They had no equity. There were some kind of crazy things happening in there. So I'm really interested in your thoughts and kind of what's happening now relative to, are we, are we worried about foreclosures or any of those?

DAVID: Right, right. So I, I've got a few, I've mentioned we would, you know, talk about this. I've got a few slides that I want to share, but I want to say a couple of things before that. Um, it, you know, certainly a lot of people in our business are hearing a lot of talk right now on the mortgage side and things are moving there and, and happening. You know, when we look back on 2008, we look at today there, there are things happening right now that I think you see our industry and the federal government responding to a first you've seen Fannie, Freddie, uh, and FHA, uh, suspend in, in if you want further information, you can go to the KCM blog. We've written a blog post on this suspend the start of, of foreclosures. You're starting to see servicers and banks saying, we are going to do something to help people work this out.

DAVID: Um, you know, whether they, uh, suspend payments, put them on pause, whatever that is. I bet that's going to vary by bank, by bank. Um, there are things that are having to be worked out right now in the secondary market with mortgage backed securities and some products, uh, you know, jumbo products and FHA credit requirements. There are some questions to be answered there, no doubt. But the one thing that I do know is I believe the federal government and the fed specifically is addressing this situation. And I know as someone that worked at the largest holder of REO properties, a bank, uh, in 2008 banks don't want 2008 to happen again. So I feel confident in saying they're motivated and invested in doing anything they can to not have that happen. And I think there were some, in 2008, there were some mistakes made and some lessons learned.

DAVID: And, uh, and my hope is, is that through those mistakes and through those lessons, those, those learnings are being applied today to say, Hey, how do we not end up with, uh, with, with what happened in 2008.

MICHAEL: Whole heartedly agree wholeheartedly. We should have hope, right? As a human species, we should learn from our past mistakes.

DAVID: So, and that's the, you know, I'll tell you this, living through that in our industry. I learned a lot of things that I didn't want to learn, you know, and I think when you go through things like that and you go, you know what, let's let this inform me next time we go through it. Um, so let's talk about how things are, are different today because that's what we can really point to and, and look at the difference between 2008, uh, and today. So the first thing I want to pull up here, I'm gonna pull a slide up that shows annual home appreciation.

DAVID: So on the left side here, you see the six years leading up to the crash and on the right side, you see the previous six years in what we know leading up to the crash is we had a home appreciation a lot higher than where we see it today. Matter of fact, the highest year in the last six years is not even up to the point to the lowest years, uh, leading up to 2008. And so while we can say, yeah, prices are appreciating, prices are high for homes, we don't see runaway appreciation like we saw leading into 2008 big piece to draw the difference between today and what we saw leading up to, uh, to the housing crash. The second piece, is it easier to get a loan today than, than what it was back then? What we look at at KCM is the mortgage credit availability index. What this does is this gives you a tangible number for the, the, the credit availability for housing.

DAVID: And you can see on the left side here, the, the housing bubble and the higher this index is, the easier it is to get alone. So what we used to say pre 2008, it was, it was hard not to get alone. Um, if you wanted to go out and get mortgage financing in. What we saw after 2008 was this pendulum swing, uh, to guidelines and the things that made it harder to qualify for a mortgage. And, and what you see is that being held come up a little bit. And there's still even some, some people that might say, Hey, credit guidelines are too strict right now, but we're nowhere near what we can agree on is where we were pre 2008 and being able to articulate that is going to be very, very important today because there are a lot of consumers that may be here or think, you know what, it's just as easy today to get alone as it was back then.

DAVID: And we're heading right down the same road that we went down in 2008 and it's simply not true when you look at credit availability, uh, in, in on the mortgage side of things you don't on the note that I would add to that, David is, you know, it can be really frustrating and arduous to get a mortgage loan today. Sure. But here's a good reason why, right? I mean, I think anyone who was around during those periods of time would be willing to put in a little more time, energy, effort and you know, process today to mitigate what we ran into before. So good reason for it, right? Absolutely. That's where, you know, you're hearing a lot of talk today about non QM loans. Well, you have to go back to QM, which was the qualified mortgage. And when I say this, she'll probably remember it.

DAVID: The qualified mortgage was based upon the fact of the ability to repay. We said we're going to start giving mortgages to people and we're going to verify they have the ability to repay. Yeah. What kind of a kind of a fundamental baseline thing. That pretty foundational, right, right, right. So I think you have to take solace in those things that have been done in certainly for our industry. We fall on different sides of that on regulations and what do we need, what don't we need, but what we can agree on and what we can see visually is we're not where we were. Um, and so the next thing we want to look at is where are we at in this country relative to inventory? We started the call out talking about inventory starting this year with inventory being the biggest challenge. I mean they, even some of the articles that we saw coming out and, uh, that, that they'd KCM, uh, that we wrote our, uh, inventory could be in a tougher situation this year than what it was last year.

DAVID: And what we know leading up to the crash is we had just over eight months of inventory across the country. And today we sit at right at three months. And this, uh, you know, I think as, as you know, this market goes on through the next month that that that number's probably lower as people take listings off the market, uh, during this time. Um, and so what we know is going into 2008, we had an over supply of housing coming into the day. We have an under supply. So another reason we don't see the same, uh, market situation, uh, today is what we saw in 2008. Um, the next big thing we want to look at is the percent of median income needed to purchase a medium priced home across the country. Back in 2006, uh, about a quarter of someone's income was devoted to, to their home today because of two things, really rising wages and lower interest rates.

DAVID: We see that at about 14.8%. So, um, uh, really speaking to how leverage the consumer is relative to housing and that number has decreased over the last 12 months. But, but the, the, the last piece that I want to show you is really telling, it's the total equity cashed out by homeowners in a cash out refi buys in the three years leading up to 2008. And when you look at that number, it's $824 billion was cashed out as refinances and primary residences. When we look at today, and in the three years leading up to today, that number is 232 billion, literally a fraction of what it was in 2008. Michael, we talked about learning lessons from 2008. There are a lot of people that learned a lot of lessons about home equity. Uh, back in 2008 people were, uh, you know, refinancing homes and financing their lifestyles, you know, harvesting equity and putting it into depreciating assets, thinking this is never gonna end.

DAVID: And coming out of that, a few people said, you know what? We're going to build up some equity in our home. And we know today there's more equity in homes across this country than there's ever been. And we know in 2008, when, when consumers were leveraged, respect, respected to housing, it was very easy when that market turned in and now all of a sudden you owe more on a house than what it's worth. You walk away. We're not in that situation today. And, and, and this, uh, this graphic really points that out. Uh, as you know, the fifth reason, those five reasons I just went through that were drastically today than 2008.

MICHAEL: Yeah, this is, this is fantastic. It's good to see that proof is in the data that people were viewing their home as a place of savings, as a place of equity, as a place. You know where cash can reside and they can feel really comfortable with it there. I remember those days pre housing crash really, really well and people can, you know, borrow 95 97% of their homes value out of it. They were buying boats and cars and doing all kinds of crazy things, but when things were appreciating so fast, they thought it was a sure bet. Right. So yeah, just systemically things are just so different. And I think that we often talk about with our team and our customers, David is the, you know, the housing crash, the real estate industry really led that. Yeah. Right. Rove ourselves into that, into that mess. Um, and I do want to believe our business.

DAVID: We were in the epicenter of it. Totally. Totally.

MICHAEL: And so now I think we've learned a lot of lessons based in proof of that is in the data that you're showing. So it's really, really nice to know that, you know, let's look at what's happening today. Much more like the 9/11 these sharp shocks to the system. But overall trajectory and positive economics are going to pull us back up to where we were.

DAVID: Absolutely. You know, we, we, um, we wrote a blog yesterday on the KCM blog on the economic impact of one home in this country. And you know, there's been a lot of debate over the, of the, you know, the weekend and time in spice state on what can we do as an industry. Are we essential? Are we not essential? All that. Uh, and that's, that's gotta be figured out, no doubt. But the one thing we know the economic impact of our industry and our ability to be able to, to help lead this country out of, uh, out of that V, uh, no doubt, uh, is strong.

MICHAEL: The most important thing cause we get a lot of questions from customers and students right now. You know what should I be doing right now? Yeah, no. Most States are saying don't go show homes, don't do open houses. Buyers are sitting on the timeline. Agents are sitting around thinking, okay, what do I do? What do I do to keep the wheels on my business turning? And what we're saying is educate your consumers. Sure. Educate your clients, educate your prospects on what's happening. Because that differentiation today, and I know this is the underlying theme of why KCM exists is true. As an agent or a broker, the better information you can get, that's contextual. Whether they're buyers, sellers sitting on the sidelines or actively in the game. Better information you can get to them, the better you're going to stand out, likely to hold on to that business. So right now it's really about education, you know?

DAVID: Yeah. I, I think the, so, you know, I referenced the KCM blog. We're talking a lot about KCM. Let me, let me say this, in the frame of that, what we believe in any market is the educated agent wins. Um, that clear and strong communication wins. We started off this, uh, this Facebook Live talking about Andrew Cuomo's press conferences, clear, strong communication wins. Um, and, and, and my point would be whether you use KCM or not, do that. Be educated in the market, have a relevant market opinion. It's not hard to find somebody right now that says, Hey, I don't know what's going to happen', but it's going to be bad. It is. It is much. Uh, it's, it's much harder to, to be out there and go, okay, here's what we know. Here's the best advice for today and here's what we're delivering. I want to show you one quote that I pulled, uh, really speaks to this, to housing wire quote that came out and it says, how can you differentiate yourself from a pandemic by creating educational content that keeps your clients and prospects informed during these times?

DAVID: So that idea right there, I, I just wanted to show that real quick. The idea of being able, we've all been told for the last two years, whatever it is, we've got to record videos. We've got to be out in the market. We've branded ourselves as the trusted advisor and the trusted expert. Now's the time to be out there and to be delivering, uh, that kind of of information that we see. Okay. What can we help people with in making decisions? Reasons, people that buy and sell homes are not going away. Matter of fact, our industry is, is like if I were to draw an analogy, you look at the restaurant industry right now, every day that passes in the restaurant industry, if they don't get a takeout order, they lose that meal.

DAVID: Our business doesn't lose the transaction. It just gets delayed. If somebody's going to buy or sell a house, they're not gonna all of a sudden, there may be some that do that, but by and large, they're going to say, okay, we're not going to do that right now. But once we get out of this, we know life events don't start stopping. People are still having babies. People are still having life events that, you know, it's a divorce. It's something that causes this need for a housing transaction. Those are going to happen. If anything, when we come out of that with, with the inventory situation on the other side, agents that are in that position are probably going to be busier than they've been, uh, helping people in that. So you know what, and you and I were talking yesterday just about, um, all the things that both of us, uh, The CE Shop and KCM, what we're doing to get this word out there.

DAVID: There are three things that, that, that I would say right now or not right now, but, but we have to do in our business every day. We've got to generate leads, we've got to nurture leads, and we've got to close leads. Those are the three things we do by and large, uh, as an industry closing leads, that's, that's gonna be taken away in some cases in different parts of the country. You know, that's going to take on a different meaning or, or maybe gone altogether. Our time right now to nurture leads and to get in front of people and say, what questions do you have? Because they're out there. Is this 2008 all over again with unemployment going as high as it did, uh, this past week? Are we about to see a new way before closures being able to bring this information to the people that we serve? That's what we mean need to be doing right now. That's the differentiation that we can, we can make.

MICHAEL: Well we know activity bridge results. Um, and that's the activity that should be taking place in our industry. He wants to agents and brokers today, it's a little analogous to the investment advisor that's calling all their clients right now talking them off the fence. Right? Right. We need to be talking to all of our buyers and sellers, that whole funnel, that nurture phase, and you talked about and literally setting up one on one meetings, video meetings, phone calls. Can't see clients in person right now, but that's okay. And sharing relevant information right now to both bring them solace and to nurture that, nurture that funnel of business that as you say, will pop out. My theory and my belief is that we're actually going to see even more pent up demand. Yeah. I think, you know, when people make the decision to buy or sell, it's like, okay, let's go time, let's go. And so right now there's kind of pressure building up in bottle and once we get the all fair, I think it's going to be really, really busy. So now is a great time to get out there. Talk to all those folks that are maybe even thinking about it. Not necessarily move the transaction forward, but as David said, to educate them on what's happening. Right. Because even if they're not active in the market, you think they will be in say a year. This is still the kind of information they need and frankly every homeowner is out there thinking about this stuff right now. So take advantage to read better. Reach back out. Past ones. Yeah, just educate, educate, educate.

DAVID: I think that, you know, I'll bring in one, one last thing when Keeping Current Matters was formed 12 years ago, it was in 2008 when there were a lot of questions that we didn't have good answers to as an industry. We even joked around at that time is the worst thing that could happen for somebody thinking they were going to buy a home back then was they would run into a realtor, you know, because they would go at, I don't know, I don't know what's gonna happen. And, and there was this quote from Dave Ramsey, some of you know, Dave Ramsey, the financial guru. And he said, when you're looking for, uh, uh, something like a mortgage, uh, real estate transaction insurance, look for someone with a heart of a teacher, not the heart of a salesman. And so if there was anything I would leave this call with, is adopt the heart of a teacher right now.

DAVID: Help people see this is what's happening. We set up a, a page on Keeping Current Matters. It's keeping current matters slash coronavirus and we said, look, we're going to try to get as much of this information in the market for you to be able to get that message out there. I, you know, these slides, uh, Jon and Michael, you have those, uh, send those out, use those however you wish and videos and things like that so we can adopt the heart of the teacher. If we can support you guys on that. We're all about it. I know Michael, you guys have created a course, uh, that, uh, you're going to talk about, but I am just grateful for the time to get a chance to share a few minutes with you and uh, and, and grateful for your support of what we do.

MICHAEL: This has been an absolute treat, David, so appreciate it. The heart of a teacher. I love that. You know, I talked to the team all the time about a career in real estate really is one of the greatest entrepreneurial opportunities there is and how impactful it is in the lives of consumers. We're going through marriages, divorces, having babies, babies leaving the nest. Like it's a nurturing opportunity to help people through these major life transactions. Well, this is a major life event that's happening. Step in, play your part, take on the, the, the energy of a teacher. I love that. And in that spirit we've, um, I want to thank our team. We've got an exceptional group of writers, instructional designers, research people as well that have created a free course for the real estate community estimates somewhere around an hour, hour and a half worth of content that's talking about the facts of what's happening right now. What is the, what is COVID-19, you know, what are the things that you can be doing right now? It's going to echo a lot of the things that we covered this in this, um, session today. It's out there for free. Spread the word, enjoy it. Those of you that taken our courses know that we invest a lot of time and energy and effort into keeping resources current. I think you'll really, really enjoy it. Um, and that's our way of giving back. As I mentioned, you know, one of our key philosophies and provides as a company is to give back included this as a time. So take advantage of the time to learn. Take advantage of the time to study, Polish up on your skills, fellowship on the things that you need to know to be well-informed and to support your clients and customers. In addition to that, you'll find when you go to our website, we've created a page that will keep you up to speed on all of the regulatory things you need to know relative to your education.

MICHAEL: If some of you have Continuing Education requirements that are coming due, hit that page. It'll let you know if the regulator has extended that deadline. Um, we are really pleased and honored and humbled, frankly, to be able to provide all the education that you need from the comfort of your home. So certainly take advantage of that and know that we're here. We'll continue to update all these materials that we've been providing. Before we close, I really want to thank you, David. You talked about Steve and his vision in 2008 of starting KCM. He really was a visionary. He knew there was a lot of confusion in the market. Here's another opportunity and thank you and to everyone in your team, um, to bill and Steve and everybody else, all the people that I know and those that I don't know for your continued focus on keeping the most current information out there. And we'll certainly keep in touch. I know Jon and his team will be sharing and propagating all the good blog posts that you've got out there and all that great content cross pollinated so we can make sure that our real estate community is taken care of and well-educated.

DAVID: That's true. Absolutely. Absolutely. And just to follow up on that course, the one thing I want to say about that, that I heard somebody say is now is the time to become a student of our industry. You know, to, to really, and you mentioned Michael using this time, uh, effectively in developing, Hey, by using this course, by using different things that you're learning, have those answers when they do come up. And, uh, and that's the best thing we can do today to deliver the best advice, um, we can to, to buyers and sellers. We're serving. So listen, I'm grateful to be a part of it. And, uh, in certainly grateful for our team that puts all this together and how are we can sport we want to do this again. I, I'm all in and the great, great work for our partnership.

JON: That's it for this episode of Shop Talk, thanks for listening! If you enjoyed this episode, you can leave us a review on your podcast player of choice, and download the slide deck from the link in our show notes. Shop Talk is a production of The CE Shop.