Foreign. Hey, welcome back to the Podcast I Have today Steve Harney founder of KCM I was digging through my podcasts and YouTube just this morning. It has been since 2019 since this guy and I have shared the stage or had an opportunity to really chat like this. Yes, maybe for a second or two during the pandemic, but usually that was David Childers and I So Steve It is an absolute pleasure and as uh as John Wick recently said yeah, I'm back.

It's good to have you back. Steve Harney Uh, it's good to be back. And it's an honor to be on the podcast time. you've done phenomenal work for the industry.

and just to be a little piece of that of your little morsel to all your hard work uh is an honor to me. Truly an honor. I Appreciate that. I Don't think you need an introduction, so uh, instead, let's just go right at it.

Steve I Wrote down about seven or eight topics. Um, really thinking about. you know, the almost 81 events I've done so far this year in the U.S Canada Mexico and Australia now and and and the I'm just going to hit you with sort of the emotional sentiment, the questions, the things that are on the minds of people that I'm talking to every day all over the world. Um, so I'm gonna go right to the first one and that is the micro and macro housing market.

There is just a lot of confusion and we'll unpack a whole bunch of things inside there. but just just give me high level like how's the Market Steve micro and macro. how's the market? Well, it's all according to who you want to listen to. If you want to listen to the newspapers and the headlines, well, you know it's Armageddon.

If you want to look at the facts, you know things are not as bad. I'll give you one quick example of that. The existing home sales report came out. The last one that came out showed that you know prices were down point nine percent and and that's if it's 0.2 percent.

uh, Led the previous month and I'm like. first of all, it's medium prices and once you get into that the definition of median price. So they understand that, that should definitely be something we covered here. But forget about that.

So all the news was, well. prices are down, Prices are down well. Let's dig a little deeper into the facts. Prices: The there are four regions that knock covers.

Prices are up in the Northeast Prices were up in the South Prices were up in the Midwest, that's three or four and in the west. Yeah, they took a beating. Okay, now if we take a look at that and we say all right, you know, is that a housing issue or is that a local economy issue because at the same time, places like San, Francisco and Seattle and Portland Well, what is their business? Their business is Tech and you know we did the study. We did the stats on this.

There were more layoffs in the fourth quarter of 2022 than the first three quarters in the tech industry. Yeah, and there were more layoffs in the first quarter of this year than all of last year. So of course San Francisco in in Seattle And those and people say well, Steve it's not just the West Coast What about Austin All right, let's talk about Austin What is awesome Been known for for the last 10 years. The Tech: Capital They're the San Francisco of the Texas.

So I think that some of this has been like. It's an easy narrative to say prices are falling. They're not every single price index that's a repeat sale index. K-shilla Fhfa Black Knight Fannie Mae Freddie Mac and I could go through that I think there's nine of them.

Every one of them say prices are now going up so I can let like the Armageddon that was in the paper last year. The headlines that were in the paper last year that oh my God the um, well winds up taking place is we're gonna have this 20 25 drop in prices. Well let's get a Living Daylights out of people. but it didn't happen and like it's gonna be like 2008.

it took us almost six years for that correction to finally work its way through six years. Yeah, back then yes, this is going to take about six months. this might already be over. So I Want to say this right now Steve for my friend listening in the comments, whether you're on YouTube Instagram wherever you find yourself on my podcast I want you to answer two questions for me in the comments? so listen up I Want to know first and foremost, uh, are home prices up in your Market yes or no? put it in the comments and in the same comment I Also want to know, are you experiencing multiple offers right in your marketplace right? Just answer those two questions, put them in the comments I Can't wait to see what you guys have to say.

So Steve I think what we're what you're saying here. at least the the phrase that I always write down when I look at National versus local when I look at you know the the click bait headlines that capture one point is I always try and find the correlation and inside the correlation there's the story right to educate to be the the you know to be the knowledge broker. So the correlation I'm hearing is if you're looking at the the marketplaces that are dominated predominantly by Tech right? They laid people off in the fourth quarter in the first quarter and whether you're looking at Austin Texas which by the way had what a in a 30-year period something like a 900 percent increase in home valuations more than 30 percent higher than the rest of the country. So if they give a few shekels back right for a short period of time, it's probably okay.

But even looking at the Austin market now talking to my clients here, they're like it's back off to the race. Again, it's back off the races but staying in that local tone. What do you say to the person that's in Los Angeles right who's feeling the crunch? especially when you look at Ula right? and I'd love to get your Insight on that I was looking at the numbers I Reported recently on Twitter that in the month of March there was 128 closings north of 5 million. Now remember, that's residential commercial.

It doesn't make a difference, it's anything real estate. They added a new tax and in April there was like two or three they went from everybody trying to close before. April First with that new text, what do you say to that agent I've got so many of my friends in in Southern California are dealing with these tax issues? What do you say to them? Well, what we have to realize in in A it's going to almost sound like a two-sided coin two-headed coin here. Um, it cost you to live in California like and and I think that the majority of Californians understand that like so the bad news is that you have that and the reason you you hit it on the head already.

The reason there was so many before and so few Afters everybody pushed it up. It wasn't like you know, you know now it's going to die off and it's only going to be two for the rest of our lives. It's just that at that moment in time people said well I don't want to pay the tax so let me do it before the tax date, before the the date of the tax. But if you live in anywhere in California you have a decision to make, you're going to pay more money in taxes and things like that and you're probably and I don't mean to insult the rest of the country because I don't live in California Yeah, you probably have the best lifestyle in the world, but you so it's both sides.

There will be people that are willing to pay that extra money and deal with that and say all right fine uh because I'm gonna have sunshine. you know, 365 days a year or 362 days a year this year. Maybe it's down to 355 days a year because you had a little bit more rain out that way. but the uh and they'll pay that now.

what we're seeing is like how this all works out. when the pandemic came and people saying listen, California's crazy anyway I got to get out they went to Boise Idaho and those same people that left California you know, turn and many went to Texas like a very prominent speaker I know and the um uh they went to Boise Idaho and the first time they said listen up they said what is this what do you mean it's not 78 degrees wait wait a second wait wait where's the sun all right and then you know like boys I know it took a little bit of a beating because everybody ran there thinking that was like you know Nirvana and then when the snow came with the or the cold weather came if you were originally from San Diego you're saying what am I doing here Uh but I do think that there has been if we look at the migration patterns. there has been Recreation out of California because some people are just sick and tired and fed up with some of the the taxes there. That's one side of the coin.

the other side of the coin is you're right, you're gonna pay extra taxes and but that's all going to settle out because in the long run what's going to wind up taking places they're gonna say but I live in California you know, you know and welcome I would just yeah I would just make a comment you know, just you know, maybe being close to it and you know you're exactly right. like I used to say all the time when I was living in Newport Beach uh when people were like oh my God the taxes there and I'd say yeah I pay weather tax right? Yeah right that range 22 days last year. Um but this is what I would tell all my friends that are listening in the high end look to our friends in the Northeast that when interest rates went to seven Steve there was a lot of people that said no one in their right mind is going to buy a house and you know whether they're sitting today at 6.3 or if you buy down the rates and there's all. the reality is population and Cycles population and Cycles population growth continues to happen so people are always going to need a place to stay.

And it Cycles So I say to all my friends in the on the west coast in these higher end marketplaces. Okay, so it's a little slow right now. Tragically, it was also slow because of the emotional mindset, the sentiment, the Zeitgeist post 911 and then the market roared within four to six months depending upon where you were in the country. and what? I tell my friends in La that are dealing with stuff my friends queens or New York City that had these exorbitant taxes I just remind them you still live in one of the greatest places on the planet.

People are still going to buy there so it slows down for 30 to 45 days. Maybe it's 60 days. Then it always picks up because it always does because of population and Cycles it's sticker shock and like you were just mentioning, the market trades, the mortgage rates just stick a shot. You know my wife does all the shopping.

That's not because like you know, we have a you know, like an old school man-woman relationship. just she does a better job of shopping than I do. So she does the shopping and one day she was sick and I said well I gotta go do the shopping So I went down and I turned around and I looked at the pro a loaf of bread. I said I'm not going to pay that much money for loafer but this is absolutely it's the last time I looked at a loaf of bread.

it was years ago I said I'm not paying four cents and I walked out without the bread. when I got home I said I really want a sandwich and I got back in the car and I went down and got a loaf of bread so the sticker shock will stop us. But then we have to realize we have to get on with our lives because I really wanted a sandwich badly, right? All right and people say, well, that's a loaf of bread. It's not.

Let's look at cars right. How many times has somebody who haven't bought a car in four or five years they walk into a car dealership, they look at the sticker price and they go I ain't paying Africa These people are nuts. But then when they start walking around, they say but I can't walk the work I still have to do it. So do I think that the the and I'll argument it's not really mortgage rates, that's not really the Big Challenge right now.

But the the big challenge is listings but with mortgage rates you know there were people if if if I realized after 20 years that I married the wrong person and we're at each other's throat I'm not going to stay in the same house because I have a three and a half percent interest rate I'm not going to do that right if I was a young Millennial 10 years ago I bought a a condo and a mixed-use building. Of course our walkability score I could walk right across the street to Whole Foods I could walk down the block to a nice little Bistro Well now instead if I just found out that you know as a couple we're pregnant with twins that's 500 square foot condo over with a walkability score also becomes not important and the mortgage rate becomes unemployed because the children are more important than saving a couple of hours. So that's the case. and to be frank with you I think the mortgage rates affected more the listing side of it and I'll share some stats with you which are like kind of crazy but I people say was to demonstrate there was a fear put into this nation last Fall by all sorts of media saying price is going to fall 20 25 percent.

we start calling that at Casey I'm very early saying this is baloney. Okay, this is not true. There's no evidence. Well there's going to be a flood of listings foreclosures coming to the market.

No, there's not all right. Well everyone's going to try to sell their house David Three in here for example. she's not gonna be a flood of listings coming through tomorrow. So they were wrong.

but the fear was in there and we have actually quite a Quantified the amount of fear. the Fannie Mae does a consumer uh, confidence index and one of the questions they ask is do you think prices are going to whoop it down this year So I looked at the last I looked at December since they've taken that survey which is more than a decade every year in December that number goes somewhere between 11 and like 16 percent coming into the new year. last year was this past December it was 37 percent more than double any other year outside of the year before because it was ticking up a little bit. That fear that was in people caused them to go to the sideline.

Now I'll give you another stat that's really amazing. How do we overcome that fear? Well, we don't have access to CNN We don't have access to say we're going to put the cover on the you know front page of the Wall Street Journal that had a story the other day that was like I attacked like you did. This is ridiculous. But what we do have is we have individual conversations with people and you're pushing people out to have more and more of those conversations.

Well let me give you a stat from a friend of ours Mark Davidson and his group thousand One just did a survey and asked homeowners who were thinking about selling in the next six months like did you talk to a Realtor yet And those who did talk to a rail that I asked him a simple question by talking to a realist. Did it make it more likely you were going to sell your home 64.5 percent. Two out of three said by talking to a realtor, there were more likely to put their house on the market. So wait a second.

There's a fear in the market. but if an agent sits in front of a homeowner, most of that fear goes away. So now, why do we have to be able to? Why are we doing this Market Why are we doing this Market This is what you do when you get up in the morning. The first thing you do is you call 10 people.

just 10 people you know Go to your contact, just call and say Hey listen I just want to let you know the market a little better than people are saying it is and every day religiously do that Now I Know you get up at four o'clock in the morning. You do all sorts of crazy stuff. So I'm not suggesting cold people at four o'clock in the morning if you get up at four o'clock in the morning. But when you start your work day, that should be the first thing.

You don't forget to do it. Yeah, All right, you're telling people. geoforming, Call people. Dude, that's exactly what we have to do now.

And if I could take another second time back in 2008, we didn't know what to do because we didn't live through 1929. we didn't live through the whole world. Economy collapsed, We needed a new playbook there in 2020. Unless you lived through the 1918 you know pandemic in San Francisco you didn't know what to do.

You need a new playbook And thank God you titled your playbook the new playbook pivot and you did a phenomenal job of helping the industry get through a very challenging time. Well, while we're in now, we don't need a new playbook. This is, well, higher interest rates. Yeah, that's called a real estate cycle.

Yes, yes, we have to go. To get out of this. you need something new. Go find your role Playbook that worked for that first 30 years of your career.

Dust it off and say, what do we do in a normal market and a regular real estate market without the world economy crashing without millions of people dying because of a pandemic. What do we do? You're giving them great advice I pray to God that they're taking it. All they need to do is talk to more people that we will get more listings and the more listings we get that will drive sales. It's not the mortgage rate, ladies and gentlemen.

Now we could talk about how the mortgage rate is going to come down and why I think that, but it's that doesn't even matter. We need listings now it almost everyone and I'd love to see what your your things are. Multiple multiple orphans are going through the roof. There's pictures posted everywhere, open houses.

The line is around the corner and down the block. Yes, it's not mortgage rates. Get this out of your head it to some degree, it is all right. But if we had more listings, we'd sell more houses.

Okay, so let's see. that's what we have to concentrate on right now. So let's say let's say focus on that. So um, I've got about nine things I want to go through with you, but one of them is how do we solve the inventory crisis And I think part of that is also you know seller.

You know seller psychology. You sort of mentioned you know nobody. Nobody that's getting divorced is going to stay there. So we all know you know when circumstances change, right? Death.

Divorce. babies. All these things that you know life happens I got a puppy, my wife's like we're on the 39th floor. we should get a house I'm like that's an that's a very expensive dog honey I'm like I kind of like my apartment and I like being on the 39th floor.

but um, probably the probably the biggest issue that I hear Steve every day is affordable housing. So is there is there a a path forward for affordable housing in the U.S And if so, what is it all right? So I might get a whole lot of people that hate me right now. but the um I'm just trying to figure out how to where did I know what I want to say I'm trying to figure out how to word it I've been dedicated my whole life in reality. if you go to my real why yeah, is that almost every challenge we have in this country is poverty.

poverty driven. Crime is poverty driven. Uh, education is poverty driven. And once everything is poverty driven.

And this is what I learned very early in my life. If you own a house, you have more net worth no matter what you want to come to, no matter what your income is, no matter what your age is, your crosses everything. We have proof of that. We have all sorts of stats and data to prove that, so owning a house is quickly crucially important.

So my goal was all right. Let's go ahead and do what we can do within this industry to get more people into homes. Okay, now an answer to your question of affordability. because affordability comes in two different categories.

One is there needs to be affordable housing for everyone and that's more of you know, um, not a political a government issue. that's more an issue of well in. California Will they let Adus exist? Yeah, uh. In some cities, Will they allow two and three family homes instead of single-family homes to exist? And that's more of you know, we have to get the right laws.

We have to get the right thing. We have to worry about the nimbies and we have to. Most people are yelling about hey, we should build more affordable housing say as long as you don't build it in my backyard I'm all for it all right? So that's one side of it. The other side of it is to say all right.

Fine, we have an affordability challenge right now. or for it on the other side of that. Not just affordability for anyone, just have it at home. A place to live like a home, but to buy a house.

We have an affordability issue right now. The good news to that is what's taking place. I Did say the prices are no longer going down, but it looks like they're going to turn out to be about flight this year in. KCM We thought they were either going to be up one percent down two percent.

you know, somewhere in that range. that's what we called back in November and I think that that I'm so comfortable with their range only to the high side, they're going to go up about one percent. Two percent. All right.

That means that wages have a chance to catch up with that. Okay, so we have wages have a chance to catch up and that's already happening. We you know we have a new You Know Chief Economist that no other former senior economists that, uh, Realtor.com came to join us. So he's you know, dissecting all that data that I'm not smart enough to figure out and he just showed me a graph that we'll share soon that wages have gone up over 50 from the 50-year norm.

So now we got more people making money and that's really good. But the issue is mortgage rate. Mortgage rate has a much bigger impact on the affordability than price does. So now, well, how can we control the mortgage rate? Steve We can.

We can, because the mortgage rate is made up of two things. the mortgage rate up to the 10-year treasury which we have no control over. Jerome Pow is going to decide what that is and right now it's coming down. But then there's a spread.

There's between that and a number that makes the mortgage rate. what determines that spread. Three things. First thing is all other interest rates, all other interest rates and we don't have any really control over that.

The second thing is inflation. In times of inflation, this spread goes up. and the third thing is the strength of the housing market. We have absolute control over that so one-third of the formula that's causing the spread to be so high.

Let me explain to you what that means in real terms. We grafted this spread for the last 50 something years and it runs directly with the Um 10-year treasury with a spread of 1.72 Sometimes it goes up to two, sometimes it goes down to one and a half, But it's 1.72 is the 50-year average. Right now, we're over three. We have the largest spread ever.

So we what are we saying there? What we're saying is that if we can get this spread down by one point, we'd still be well over the 50 year average. That means interest rate go from six and a half percent to five and a half percent. Well, wait a second. Would that change the market? Talk about you.

Talk about psychology. Yeah, Oh, without uncomfortable. Even though I have a three and a half, I Don't feel like a joke. Taken to six and a half, right? Five and a half? I Got a deal? All right.

So what do we have to do? Well that one third of the equation that we do have absolute control over, We have to make sure that the housing market is strong. How do we do that? Stop, Stop. And and I'm not trying to insult anybody here. Stop belly aching and go get a listening thank you.

All right thank you. Stop affiliating. You want to make the housing market strong. The every listing you get right now is going to sell.

so the strength of the market is going to take that piece of the equation out. Oh, but Steve Is that really going to lower? At one point? let's assume it lows. At a half a point, we go to 5.99 What is that going to do to the market? So this this thing that you know people, it's all about inflation. We have no control.

Baloney. We don't have control. We're the only ones in control. Yeah, All right.

If you look at the CPI numbers, yeah, the CPI numbers are trending. we're going to be in the fours, right? By the time they report again, we're going to be in the fours. But we're also Steve gonna be in a recession and both those things equal lower interest rates. A recession means lowers rates are going to come down, but I think I already have that baked in.

Yeah, because when we talked about inflation, you know the recession will be the result of bringing inflation down. so we'll eventually. If we had normal numbers right now, we'd actually be at a five percent. A little less than a five percent.

voluntary. Okay I Want to throw us I Want to just throw a challenge to my listener I have a client Jim Allen who you probably know from uh North Carolina right? 40-year veteran of the business been on my show. we we talked about this strategy: I think you should go on the MLS today and whether it's remind or any other sort of property data mining solution and you should look for in your search query, show me every lot in a 20 mile radius Circle that currently has an Sfr on it, but it's zoned for two, Zone for three, Zone for four, Zone for five and you should start marketing to every one of those properties with the intent to buy them. And before you say, Tom I don't have the money If you have the deal, the developers and the money is the easiest thing to get, but what we need to do and this is what Jim does.

he's like Tom I don't have an inventory problem. The only challenge I have is getting myself and my sales team out in our cars to go knock on the doors of people that have got a zone three sitting with an Sfr on it and we basically say we'd like to buy your house and then they tear it down and they build three houses on it and now they've got three more listings to sell. So that's one strategy. The other thing: I Object I object to that strategy.

Tell me. Tell me why I'm in North Carolina why'd you tell him instead of calling me and telling me to do that because that's a brilliant that all that stuff. especially since he's from North Carolina oh yeah it is. it's you know.

And and yes, if you go back to the podcast and you listen to Jim Allen he's going to say to you and then I partner with a bunch of developers and then I became a developer because it's just why would I make two and a half percent when I can make 12 or 13 and solve the biggest problem we have right now in the U.S which is inventory the second thing and this is hard Steve I You know I don't know if I shared this with you I was in Boston recently with my Uncle Frank the last day he was 99 right the next day he turned 100. he is the last survivor of the 101st Airborne Division right? the last of those men that paratrooped in on D-Day and he's a hero and I I got I got like Goosebumps just thinking about it right? like sitting with him. that the hard part is that if you look at population the the men and women that are in that sort of age group that that super silent generation or they've referred him as the greatest Generation there's only like 1.25 million of them left, right? You go to the next part, the silent generation and I don't want to misquote the number and again, from my friends, maybe from Canada around the world or Mexico listening we're talking about us here. it's it's maybe four or five million people, right? Every single one of those people owns a house and and what? I hate to even say it.

Steve But I'm making the argument right now that if you don't go into your Marketplace and do some demographic research and say to yourself, show me every person that lives in a two-story house that's owned it for more than 30 years, there's a pretty good chance they don't have a mortgage on it. right? Two-story house 30 years or more. If you aren't writing them yellow letter notes, if you are not knocking heads up, they're not on tick tock, they're they're on Facebook But they might go there once a week. But if you aren't compassionately empathetically understanding that consumer situation, they are in a house.

They've been there forever. They're tired, They don't know what to do with it for the most part. Steve In in our research, what we're saying is they're just. they're embarrassed to even reach out and talk to somebody about selling their house.

So I would just I would argue. Steve's saying, you know, have more conversations, do more and I agree with all of that because I say all the time people, show me your last closing, Show me your last closing. They didn't start with a conversation and an appointment. So since those are the only two leading indicators of success, and if you're not having conversations every day and booking appointments every day, you're not even in the game, you are a part of the problem.

You are a part of the problem now. I Know you're one of my clients and you're listening this. You're like Tom you know I'm doing that I'm talking to that other gal that other guy who's bitching about no inventory, conversations and appointments. but those two strategies Steve The smart agents today.

Big shout out to Maureen Fallon The queen of Queens The number two their number 14 broker in all of the boroughs get this. She's doing seller seminars and the median age. The people that are showing up are 65 years old and Steve get this two in January takes February off two in March two in April 12 each time. Whatever.

that number is 60 70 something, right? And she's like yeah, I've already taken seven listings from that She said I Started out by saying here's the things you need to know and then very quickly when it got to Q A, she realized they wanted to ask a bunch of questions. She just flipped her entire presentation just to answer the questions we're on the minds of the customers starting in New York As you know with the taxation, once you sell the property, what does that look like? how do I transfer this over to my kids? She's answering. All Those Questions including what is the minimum you can do to fix your home up to get it ready to sell. And she's taken listings like this from it.

There's so many ways to do it, but for the person listening. but if you're not willing to have conversations, book appointments, you're not even in the game, you are a part of the problem. That's a perfect example of what. I Love this business because I always tell agents forget about the money.

This is a beautiful business we're in. The more families we help, the more money we make. So what she did is, she turned it around and said, these people have challenges, They're a little afraid. and by the way, Tom The number of people who own the house freaking click or should talk about they probably don't have a mortgage.

The number of people in this country they don't know how screen clear is 38.7 percent Yes. And then there's another 30 percent that have at least 50. Equity So there's a whole lot of equity out there, so when you have those calls, those people can make a move. The mortgage rate is not going to matter as much because they have a lot of cash going into that next deal.

Um, but going back to that situation, she figured out a way now. I'm sure the trigger of it was how do I get more listings? How do I build my business But she turned it into how do I help more people? Bingo! Bingo If you help more people, then you get more deals. And if you get more deals, you make more money. So let's forget about the money right now and just call people to help them.

Yes, help them understand that prices are not going to fall 20 even though the last the last month or this month the number went down from 37 to 32. It's like the second highest number of people thinking prices are going to fall. prices are not going to crash this year. And we what we have to let people know that because the mainstream public again they'll use a median price and things that they shouldn't do.

All right. But I Love the fact that code of ethics uh, that everyone swears to says we should help people. That's what that's about. Yes, so you know in the code of ethics and understand that everybody's on this call.

There's a Realtor. This isn't like terms and conditions like at the end of your phone thing where you click the button. Yeah. I Read it all right and you never read it.

You were forced to read it. And some states you were forced to take a class and pass a test on it. All right. And so now you have a code of ethics.

The word responsibility appears 16 times in the code of ethics. The word Duty appears 31 times in the code of ethics. So this is a document that you put your first name to, then put you a family name to saying yes. I'm gonna do that well here.

Let's do something simple. Let's do what we swore that we were going to do. Bingo Bingo Bingo All right Steve I'm gonna hit you with a bunch of Rapid Fire questions and I just want some clothes blue B B All right, so you ready? Uh, First thing I want to know is this is a rapid fire question. You ready? So I'm looking for a rapid fire answer.

What do you think is going to happen between the Nar lawsuits coming up in October What's your prediction? Uh I Think that whatever's gonna happen is going to happen and we have to forget about it until it happens and go back to work. I Think it's the biggest distraction in the history of our industry and it's going to work out because it's going to work out all right and whatever way it works out, we're going to adapt to it, especially if there are client of yours because you are the best at helping them adapt to any change. But right now let's not worry about what might happen because Mars might attack Us in between that and kill everyone on. Earth So there's a lot of things that could happen before that we need to make sure that we somehow tag Joe Rogan and Elon Musk in that segment right there about.

Mars Okay next one: Biden's mortgage plan to help bad credit buyers, but somehow hurt the ones that have good credit. I I Think they just yanked that? Yeah. I Heard that I Heard that yesterday. Is it confirmed? Yeah? I think that yanked it I Don't like to discuss legislation be before it comes.

locals. Most times it doesn't right and that's that's an example of that. Love it All right Fed predictions and Lawrence Yoon's comments around them: Uh, if you talk about Long John saying they made a big mistake I don't know that I disagree with him. Um I do think we have to get inflation under control I Don't think that Jerome Powell has an easy job I think that's a very difficult job, but again, that's that's a piece of our industry and it's it's a big piece.

I'm not arguing that, but I'm a very big believer in less control what we can control and let's not so. I'm glad that Lauren stepped up. I'm glad he went to the podium. It's not his style to be controversial.

it's not just all to be contrarian. So I was glad to see that he did that. I Don't disagree with him, but again, I don't want to spend a lot of time talking about what Jerome Powell is doing because we don't really going to have a lot of control over that. What we do have control over is that piece of the puzzle.

The piece of the equation that if the housing market strong mortgage rates, the spread goes down. Lots make the housing market stronger. That's what we can control. But you're right, inflation's going down.

Uh, more rates then will come down so all those other two components are already heading in the right direction. But let's start to concentrate on what we control instead of complaining about somebody's not doing a good job of what they can control Because if we're complaining about they not doing a good job, what they're controlling. That means we're not controlling what we can control because we're being distracted. Bingo God I Love you.

In 2019 you and I were together in January or February. It was the last video of you and I kind of live together at an event and the stock market had just had a massive Hiccup and even though it improved by three or four hundred points by you know Wednesday from Monday Um, you know I'm I Know we're all historians here so go back to you know, go back to early 2019. You made a comment from the stage. Then you said we're going into a recession.

Everybody's talking about it. We don't know what it's going to be, but you and I both remember it was something around I think nine or ten when you asked every Economist why we were going, what was the cause of the recession? It was like you know number nine or ten was real estate. It was. It wasn't even on their radar but was what was on their radar was things like a war.

was the stock market. You know it was all these, you know. Uh I think it was like things like uh, you know, trade around the world. It was all these factors.

So we're going to a recession now I Want to know kind of two-part question. why are we going into it and then what's the playbook in your opinion? All right. Well, there's a couple of things on that. There are some out there that don't think that we're actually going to hit a recession and there are some out there saying we've already technically hit the definition of recession.

That's always been the definition for 50 years. not that changing the definition. so the word researcher is an interesting thing. Mark Zandy's out there saying no I Don't think we're going to actually do that.

There's going to be a soft Landing Whether it's going to be, it's not going to be a crash, The plane is not going to crash that we know. So whether it's going to be a soft landing and or whether it's going to be um, um about bumpy Landing uh, it's the plane's gonna land. So what again that I will keep on reiterating is the fact that the Um we have to control what we can control. So let's talk about a recession and let's talk about how bad the recession is.

I'm going to quote uh Dave Duncan who is the the I think he's the chief Economist at Fannie Mae uh and I sometimes get the names of maybe it's Freddie Mac on there but his name is Dave Duncan He just came out in a paper saying that the thing that is gonna help or assure a soft Landing is the fact that he can't believe how resilient the housing market is. Yes, so there is a time in you know, actually 2008 where the housing market cause a recession and prices drop pretty dramatically. Time the housing market took us out of the recession and prices actually increase dramatically over normal appreciation during those recessions and people say well, how could that be a recession prices are going to go down So no, no no no no Because during a recession as you've already said the the mortgage rate goes down and that allows more people to buy a house. So actually we sell more houses not less houses.

Some people are knocked out of it because they lost a job, haven't forbid they lose their job and and I feel for those families. But there's another group of people that if the unemployment rate. First of all the unemployment rate. Historically over the last hundred years is 5.73 so we're at 3.5 and it's star hello.

So even if we want the five, we haven't reached the norm and I would feel for every one of those people lost their job. I'm not trying to diminish through the the impact it's going to have on those people, but it's also going to allow a whole bunch of people that are saying I can't afford a course on mortgage rates not be able to afford a house. So for our industry, we're going to help them come out of that. What's going to cause the inflation? What's going to cause a recession? I Don't want to get into like political theater here, but you know in 2008 we didn't do enough to help the American people right? and and Devastation it took us six years to get out of that.

um Americans felt that the government felt that so when 2020 happened with the pandemic happened, we left the pension and swing too far the other way and we just gave money Galore To anyone that wanted to have money, they got tremended. I mean I could tell you personal stories in my family what I'm saying and you took that money. You should be ashamed of yourself. All right the uh.

so they were just pumping money out because they they wanted to save the American economy the whole thing and that caused inflation and now we have to balance it out Like you were talking before about. Austin Well If your prices went up 700 and now they're going down two percent, shut up and be quiet. All right, you don't have to worry about that. Yeah, I Love it All right? So here's what I'm thinking: Don't you think that every agent listening right now needs to know the population numbers right? Is is the population increasing or decreasing in the market that you're in in the country that you're in in the state that you're in, wherever you are in the world? Province Etc Are people moving in? Are people moving out right? I Think that that key number I Keep I keep going back To you Steve Two books.

Uh, the fourth churning right by William Strauss Right. Published in like 1997 that just talks about Cycles right? Cycles and cycles and cycles and cycles. And the four you know, the four turnings. And the other book I'm obsessed with is the End of the World is just the beginning.

Kind of a kind of a scary headline title, but the whole concept is. let's look back over 2 000 years and really what it's about Steve is one thing. population. The reason why China's in trouble with the 71 you know, one child policy.

The reason why Japan is already destroyed because people aren't getting married and they're not having kids. The number I keep going back to is 2.2 kids per household keeps the population growing and population drives real estate. Cycles Drive real estate so I think they should know population growth I Also think every person listening should go back through whether it's remind or any other data mining solution to figure out of the of the number of homes in my Marketplace How many homes have no no debt at all 100 no mortgage? How many of them have I don't know 50 Equity Sitting inside their property, you need to know these numbers. So when people say the world's falling apart, you could say I think somebody with like 80 you know Equity is not going to foreclose I think they would just put their home on the market as an example even if they the worst case we all knock on wood, somebody loses their job.

But the other one is to really understand that circumstances change every single day. and if you aren't putting out good content, good information being the knowledge broker and that does not mean in my opinion Steve Going hey guys, but no like circumstances change every single day. Here's what's going on the market. Here's what you need to know and and KCM does this.

but those are the three things I'm hearing you say over and over again along with number four. Make your phone calls and book more appointments. Yeah, the going back just for a second. The demographics are crucially important.

the migration rates in and out of your state or in out of your your uh, your particular County are very important. Uh, what really drives real estate is household formations and very obviously what you want to do. that not only if you can dissect it down to um, not just the migration rate or just the population growth, but what ages of the population you know like are they? you know first-time homebuyer age groups that are moving in and moving out and I agree with you. you should dissect that data.

but this is what I will tell you on that. All right. I Think that there should be a a scheduled time in your day that you let's assume that that's a big thing. Whatever the big thing for you to do is to research whether it be you know, houses that a single family that are on, you know, uh, lots that a lot of three family.

whether it's due to population growth or the migration rates in and outside of your city you. whatever it is that you're going to spend a lot of time like really trying to understand. Take an hour of your day to become a specialist because a class you know, a college class, a college degree. You need 120 hours if you took an hour a day and you did that Monday through Friday That's 250 hours by the end of the year on that subject, you will become an expert.

At that subject. You will have a PhD You will have to put in the hours of a PhD on that subject. Now here's the challenge to that. You're just as disciplined as you have to be that you get up every morning and call 10 people and say things aren't as bad as they want that you think they are.

Let me explain it to you. Perfect example: You talked about the The Equity. We put together a great slide showing that so many people have so much Equity right that when I put that on on Twitter it got almost 100 000 views. Yeah, which is like for the roof for me.

I only got 3 000 followers and I got a hundred thousand views. So that means it just kept on getting pumped out, pumped out pumped out right? So people didn't know that people don't know the Equity. So I I I want you to do that all right. but make that like an hour of your time because what sometimes happens when you're confused as to what to do? you almost make busy work.

No, you have to be it's disciplined I Don't know if you have to be as disciplined as Thomas I Think he's like a little bit crazy, but the uh, he, you know every morning he's waking up. At this time he's at the gym, he's posted us from the gym, he's getting shots and they said I I Don't know if you have to be that busy, all right, but you have to be disciplined enough to know that there is Prospect in time that I have to prospect and there's research time after research and I can tell you from from KCM members. Sometimes we have to tell the KCM of no, your job is not to be a research analyst. Yes, your job is to go listening All right.

So I want you to do the research, but if you just take a half hour a day, not even an hour and just say that half hour, I'm gonna dedicate to making sure I understand this topic really well. By the end of the year you're going to have at least the master's degree in there. so that's how many hours you put into it. All right.

But the first thing when you start your day with a date clicks for you. It's you know, much earlier than for many. But if the day clicks at nine o'clock for your work day, you sit down at your desk. The first thing you have to do is call 10 people and say hey guys I know the Wall Street Journal came out yesterday saying one-third of the country.

They put a headline one third of the country lowest value in the first quarter and I want you to understand two things. The first thing I want you to understand that means two thumbs to the country went up. In fact, yes, they didn't say that because that doesn't. that doesn't carry.

And the second thing I want you to understand. and I want to spend the time on this. It's not gonna be a quick that quick answer. Median Price Asians Have to understand that when I reports the report of median price, let me give you an example of that.

You have two dimes and a nickel in your pocket. You put them out on the table. nickel, dine, dine. The median price is the middle one.

It's not the even the average. It's not what they were. It's the middle one. So if you have two darns and a nickel, what's the median price of the coins in your pocket? Yeah, Oh no no no, you're right.

Yeah, it's 10 cents. Yes, Thank you. Now let's assume you have two nickels and a dime in your pocket. Nickel.

Nickel. Done. What's the the median value of the coins in your pocket? A nickel? It's the middle one. That's what Nar report's on.

And if you have those coins in your pocket, the nickel is not worth more or less money. The dime's not worth the decals is you have to do the repeat sales indexes Not has always done the um, the median price because in a normalized regular cycled Market it's pretty close in. This market is not and not in their own methodology. The last line is if the cohort meaning the types of houses that are selling is changing and we know the less expensive houses are selling more now.

So the call Understanding If we're in a market where the quality is changing, the median price is useless in their own methodology. They tell you don't use median price right now, but people still because it's easy to get. It's an easy headlines get the number. It's a simple number to understand.

Yeah guys, if you have two dimes and a nickel, the median price is 10 cents. If you have two nickels in a dime, it's five cents. It did not change the value of any coin in your pocket. The median sales price does not change the value of any house in discussion, but they'd like to tell you what's down 12.

No, that doesn't mean that houses lost 12. That means we're selling less expensive houses. but your client. The one I'm asking you to call is reading that houses are down 12 percent because they don't have.

They're not nuanced enough to know the difference between median price and real price. Yeah, yeah, but you have to be and you have to call them and let them know that. So if you say well, what do I say to them there's enough negative Technologies to come out every day and read it, understand what it really means and get on the phone and say the Wall Street Journal said this yesterday I Just want to let you know they don't know what the hell they're talking about. Yeah, you might say look, you're a little smoother than me I know I like the I like the Long Island you know, just they don't know what the hell they're talking about.

All right. So Steve Steve Uh listen to this campaign that we started running. So so last year it was CMA a day and we'd say actually build a CMA send it to the client. You know, like you're like your stock person would send you.

here's your portfolio update right? So we're like just send them a CMA and then follow up the phone call and that response was unbelievable last year, right? Even as even as the world was falling apart on the second half of the year because of interest rates and everything else and you know, consumer, you know, sort of panic. But this year you know what's killing it Taking a screenshot of their home on Zillow just a screenshot texting it to him, texting it to him and saying hey, Steve I was thinking about you and Kathy today I was on Zillow What do you think about this price? I've got my opinion question mark send Oh that's brilliant. That is brilliant now. So so you as a marketeer I'm stealing that one I'm sorry I'm stealing that one.

You know what, You know what happens. Easiest way to have a conversation with the past client someone you haven't talked to in a while. Easiest way to talk to a lead. Easiest way to follow up with you know a person that says they want to sell their house in two years Every single person in your database.

This is the argument I made yesterday on Twitter We don't have an inventory problem. You have an inventory problem. the person watching. right now you've got an inventory problem and the only way you solve that is conversations and appointments.

And the easiest way to generate a meaningful conversation with someone in your phone. The 863 people that you never reach out to in your phone is to send them their homes value on Zilla Now someone's going to say well, but that price is wrong I should send them something from Rpr or I should send them like a CMA The point is, the price is wrong. The point is the price is wrong. You send them the wrong price and you say I've got my opinion.

What do you think and Steve I have a client who said like 500 of those last year listed 21 properties. Yeah, what we keep on saying in some of this thing is ingenious and that's why I Love how closely embedded we are with with Tom Ferry Because the you know no matter what Market we're in, he's giving you exactly what you need to do. All right. Um, what? I try to do maybe a little differently and say you have a more moral obligation to do what he's telling you to Do responsibility, hold your feet to the fire and saying that you're a bad person if you don't do this all right because it might sound salesy or something, but I have any problem with that I'll hold your feet through the fire.

You swore in a document with your family name that you signed to it that you were going to do the right thing by these families. Tom has given you ways to help these families make better informed decisions. not out of fear, not out of the fear of a headline, not of misinformation or disinformation because somebody has an agenda they're trying to push forward in their particular paper. All right.

Give them the real truth and then sit and talk with them. Tom will give you all the way That way was brilliant I Love that he'll give you all the ways to do it and that's why we're aligned with Tom There's a reason I'm not trying to give Tom a commercial here I'm trying to say listen to him. All right. There's a reason Tom is the number one coach for like eternity now like it's I don't even remember the last time I Don't know if there was ever a time he wasn't the number one and that's because he's given you great advice and the last thing I'll say throughout all of this, there are some gurus out there right now telling you we've got to cut expenses and cut this And don't go to that conference and and you know, don't no, no, please please leaders When the last thing you want to do is disappear when your client needs you the most, don't do that.

This is when they need you the most. Where they're gonna all the credibility you've built over the last couple of years, this is your time to cash in on that credibility if you disappear. If you just say, well, I'm gonna I'm gonna listen to this guy and cut my expenses. No because there's a major Harvest coming in about six months and you ain't gonna get any of that Harvest If you do that, Leaders in times of trouble leaders Don't Run for Cover They dig in and help but there's so many people say well I was going to go to this conferences I'm not I said no, no, no, what are you doing No, let your competition decide, they're no longer in the business, right? You shouldn't make that decision all right And John's helping you through that process and I just wanted to give you the piece.

That's just about time. Whatever you're going to plan to do right marketing, this is the perfect time to do it right. There's that very famous Bane Bane and Company Uh slide. Jason Pantana shared it We you know I Think you and I were tweeting back and forth about it and then somebody else said hey, he sent me it and I read it and it was fantastic.

And here's all it says my friends. It says in the in the History of business during a recession, during challenging times, companies that stop marketing that stopped putting their voice out that hide the Duck and Cover never recover. but the ones that continue have 14 15, 16 lifts in their business and then when the market turns it gets even better. So the argument now is I don't I'm going to say this: Steve We probably should have said in the very beginning, if you haven't gone to try Kcm.com try Kcm.com Go forward slash Tom Ferry You'll see David Childers and I and a whole bunch of slides that they're pumping out including many of the things we talked about today the Equity Report across the country.

Try Kcm.com forward slash Tom Ferry Check that out. there's so much there. Steve Two last questions, easy one blue, are you like John Wick Are you back? Yeah uh. There's a famous scene in the first John Wick movie where people concentrating your back he's going no no because he retired from his role as this assassin and then finally they get them something.

they kill his dog and and they steal his car and finally they get him into a point that he's on one knee and and the villain of the movie says well John you know why do you think you but he you dig your back and he looks up and he just says everyone keeps on asking me if I'm back and you know what I'm thinking I'm back and I love that clip all right and that's exactly how I feel right now. I'm thinking I'm back I I missed the business I thought I could like kind of drift off into the sunset and and and put that this is in me I I You know I'm not in a real estate business. The real estate business isn't me. Uh, we've talked about poverty.

When you're talking about affordability, we'll talk about all those things we have some control over that. We have control over helping people get into a home. We have helping people building their investment by some of the great things that Tom's even talk about investing in different types of property. Let's use that power that we have to help as many families as we possibly can and I'll go back to.

Maybe the main reason we should do this? Because we swore we would. Yeah, we gave our word, we would. So let's just stick to that word and say every day when you you I don't really feel like making 10 calls right now, you put your family's name to a piece of paper saying you wouldn't do the duties and handle the responsibilities of your job. And one of those duties right now is to get the right message out to the market whichever way you decide to do.

I'm not asking my second question Duty And responsibility Steve Harney I Love you I Appreciate you always. You've always been a mentor and a friend. Thank you for being back and thank you for being on this podcast and sharing with so many people. Make sure you're following this guy on.

Twitter at Steve Harney Steve Closing thoughts: The only thing I was going to say is you're thanking me It was an honor to be on this call. Um ladies and gentlemen says one thing I can say to you is there is a harvest coming a major Harvest Coming in just a couple of months, this isn't going to be a six-year thing, It's not. By the end of this year, mortgage rates are going to be in a much better place. Uh, the economy is going to be in a much better place.

Inflation is going to be in a much better place. and if we go out and get the listings, your pocketbook's gonna be in a much better place. But don't think about that. Think about that family that's giving you the commission.

Forget about the commission. We live in a great business. If we help more families, we make more money. If we help a lot of families, we make a small fortune, all right.

So just worry about helping the people and we'll be fine. And again, you have a responsibility and a duty to do that. Just in case you didn't realize man. I Love that hashtag Responsibility and Duty All right! Steve Thank you so much for my friend watching.

If there's a friend or two you think you need to share this with, that would mean the world to me. Uh, continue to make comments I Appreciate you always. Uh, being a listener, being a watcher, being a part of our ecosystem. So all right, responsibility.

And Duty Let's get to work. Let's go have some conversations, make some appointments, and go help more people. buy and sell real estate. We'll see you on the next podcast.

Thank you.