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Welcome back to Go Gaddis Real Estate Radio, right here on AM nine 20. The answer in this. We're gonna do a review of the housing market in 2022. It was not the year that many of us expected, and we're gonna talk about that in detail.
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We have got an excellent, excellent guest on with us this evening, Mitchell Palm of Smart Real Estate Data. Mitchell, it is so good to see you again and happy New Year. Happy New Year. Pleasure to be back please. I hope all is well with you. Totally, totally, totally. So, 2022. Wow. It didn't end up the way it started.
It did not. It did not unfold the way it we expected it to unfold. As we get started, I wanna make sure that everybody knows who you are and what you do. I met your father many, many years. Uh, when the company had a different name. But you do lots of market research and most of the big builders in metro Atlanta, they rely on you for your data to help them understand what's going on in the market.
So when I tell people that I don't think there's anyone else who has a finger on the pulse of the market any better than you, I don't really feel like that's an understatement. So you are an Atlanta real estate market expert. Now you have expertise in Charlotte and Tampa and places like that as well. I know you've expanded, but Atlanta's your home, Atlanta's your home territory.
This is. Your major area of expertise. Am I right? That is correct. It's my baby. I, I live here, grew up here. And it was our original market. But like you said, we have expanded quite a bit. So I'm having to expand my, you know, knowledge geographically through throughout the whole southeast now. So you have, uh, I have to disclose that your father love him very much.
Was always a, uh, sky is falling. Uh, person. I don't think I was ever in one of his meetings where he didn't think the sky was falling. You are less so that way. But I'd love to get your thoughts. Tell us some key. Facts about what happened in 2022, and then unless you and I bounce 'em around and discuss 'em for the benefit of the listeners.
Yeah, definitely. I think we last spoke probably, you know, middle of the year last year and you know, we, we, we start, we mentioned this, you know, real estate closings were finally starting to slow down, slow down quite a bit, and we were pretty much flatlining. But towards the end of the year, you know, we saw some Jurassic Jurassic drops in closings, uh, for the existing home market especially, you know, we ended up almost 18% down from 2021.
We've been tracking this data since the late nineties. That's the highest year over year drop we've ever seen, which is interesting. So, hold, let me, let me stop you right there, because I, as a resident of Metro Atlanta, also in the real estate business, you know, have a hard time believing, and I do believe you, but I have a hard time believing that we had a, the bigger decrease in 2022, over 2021 compared to, for example, 2009, over 2008 or something like that.
But it's true, this was a bigger drop than even during the recession. That is very true. A big, big change though. And it was very close. I mean, back, if you look back at 2007, we had a 17% drop, so we're just over that. Okay. Big change though, as you look at the resale prices back then, you know, we were, we were, uh, capitulating, we were, we were going straight down and there was no slowing it.
60% drops year over year. And what's different with this market is we're, we're actually seeing prices still going up a little bit. Yep. Um, beginning of the year, we were still seeing those double digit increases year over year. It has slowed down quite a bit, you know, single one, two, 3%, which is very normal.
That's what you actually wanna see in the normal market. It's kind of, you know, three to 4% year over year increase. Yeah, you, you don't wanna see 20% like we were experiencing in 2021, especially year. It's, it's not sustainable. And I was reading something the other day that says the historic average, if you look back over time, they said it's between four and 5%.
Let's just figure they're erroring a little bit high. And so home, home price appreciation in the three to 4% rate is very healthy. And what's interest? Is Mitch, and I'm sure you agree with this, that people have started to look at their homes as ATMs. Not that everybody was refinancing them, but they look at 'em, gonna buy a home and I'm gonna get rich buying a home.
And the reality is, there's nothing wrong with buying a home because it is where you and your family need to live and it works for you. And even if the house appreciates very slowly over a 15 or 20 or 30 year period, you're paying it off and you wind up having equity in the home. In other words, there's nothing wrong with buying a house just cuz it's the right place to.
That's exactly true. And what good news is, I mean, we did see, you know, pretty drastic increases from, you know, 20 20, 20 21. Yeah. It also allowed people to have a lot more equity in their house. Yeah. Uh, which, which, if you do wanna sell, you can possibly put more down in that case. But like you said, the atm, it's not, uh, and this happened a lot with like, you know, other companies buying up homes and selling 'em instantly and they're making quick profits and that's, that's not really.
Anymore. Um, I think this is gonna continue. I don't think you're gonna see any Jurassic increases these next couple years, and I'm sure we'll get this in a little bit. I think the mortgage rates, obviously that is really the main reason for these Jurassic drops. The demand, it's just, it's just not the same.
It used to be, uh, you know, one of them if you wanna talk about is really the, the ability to buy a home. Yeah. It is completely different. If you look at the rates from 2.7% that we experienced, you know, just over a year ago. Uh, and that's that let's say somebody's buying a home for 350 grand, right? That was like average home price back then, right?
They're, they're paying about $1,100 a month in mortgage payments. That same buyer today, if they can only afford $1,100, can only afford a home that's 220 grand. Mm-hmm. . So that's more than a hundred thousand dollars difference. Yep. And I think that's why you are seeing this market contracts so much as it is, um, it was bound to happen.
Luckily, RC Mortgage. Drop a little bit right now. Yep, yep. Which I, that gives me, you know, a little bit more positive outlook moving forward. I think if we can continue to drop those and have the market prices relat, say relatively flat over these next 12, 24 months, I think that that would help correct this entire market.
Hopefully get back in more than normal range we saw. You know, leading up to covid in early two thousands as well. It'd be nice if, um, the, uh, income, average household income would rise all at the same time. Who knows? There's probably not going to happen. Mitch. That is a big impact there. If anybody is listening and they'd like to reach out to you, you, you certainly are not in a position to help the average homeowner, but you might have some builders listening or people who need some of your market data.
How would they. . Yeah, just I would just honestly Google. I think everybody Googles nowadays. Okay. Uh, smart real estate data. Okay. You can also go to our website, smart data.com as well. Um, you know, we obviously have a question on there. You can, you can fill out a sheet and we'd be happy to, to help out any way we can.
Awesome. And I would assume brokerages or builders or lenders who might want to use you to do some speaking, give some market updates, you probably always open to that as well. So your opinion is that the difficulties in the market are being caused by the fact, number one, that prices do continue to rise.
Number two, you mentioned that, uh, mortgage rates are the highest and I think you. You told me off air, or maybe in your notes, that they were the highest since 2002. Yeah, I think it was April, 2002. Wow. And if you ask any of the older listeners, you know, well, I bought a home in the early eighties and you know, we paid 18 20%.
You know, if you actually look at the average mortgage rate over the last, I think it was like, 50 years. We're actually still below it. So what is the historic interest rate over the last however many years? Yeah, so this is actually a graph that we keep up with quite a bit. And if you look at the last 50 years.
Yep. Cause we always show this because people are thinking, you know, especially today with rates, you know, shooting up the six and a half. Uh, you know, the average is actually seven and three quarters. Wait a minute, so we're still well below the average. Wait a minute. For the last 50 years, the average interest rate on a 30 year fixed mortgage is seven and three quarters.
That is correct. Wow. If you look at early eighties, Pretty much to all the eighties actually. But we had some periods where your rates were hitting 18%. So I obviously look at maybe the last 10, 20 years much different. We're probably more around, you know, six, which is still relatively where we are today.
Yeah, it's just amazing when you think about it. I got my first mortgage in 1992, and I know you hear people all the time to say, when I was. 12 years old I did this and my interest rate was 8.875% and I didn't think about it at all. I didn't compare it to anything. Uh, honestly I felt like if those people knew me better, they probably wouldn't have loan me the money from my house anyway,
So I felt lucky to, to have it. Hey, let's dig into this just a little bit more. So you mentioned. Previously that someone who had in the past $330,000 worth of buying power because of the increased interest rates, would have maybe 220,000 in buying power. And we have done some analysis. In fact, we've done many, many, um, different scenarios looking at whether it makes sense for somebody to rent a home or to buy a home.
And I have yet to see a case even at almost 7% interest, where it makes better sense to rent a home than to buy a home. So I'm interested in your thoughts on that particular topic. Yeah. You know, it's, it's the American dream is what everybody says, but typically buying a house is the, the safest investment, probably largest investment any person will ever take in their life.
You know, we're getting to more that normal range of the, the three to 5% year over year appreciation, which is very normal. You know, if you could look back on it, if you buy a house today, it, it should be appreciating on average of that rate, you know, today, you know, we're probably gonna see home prices re remain relatively flat all of next year.
Yep. Um, but you will see rates go down. So even as you buy a home today with a higher rate, you know, you can always refinance next year as well. So there's always. The ability to, to, to change, you know, your, your, your, your financial situation on buying a house. Um, and, and you mentioned rental prices. I mean, those are, those are also out of control right now.
But they went up market getting crazy, but I read they went up 11% last year in the United States of America, 11% last year, which is absolutely amazing. I do have people who come to me quite often saying, Hey, is the real estate market gonna crash? And my answer. No, I would love to give you an opportunity to answer that same question.
Is the real estate market gonna crash? Yeah. Define crash. Um, do what it did before during the great recession. Yeah, and I, I, I'm, I'm only saying that because I don't have any other experience besides that crash. Yeah. I mean that's, that's a crash everybody remembers, obviously. And it's something that will always be compared to any future potential housing.
Um, you know, even slow down right? Going forward, but I don't think you'll see a crash like that ever in our lifetime. Again, I really hope, hope that happens, obviously. But, uh, I, I, this is a natural slowdown. It's softening a, you know, something that had to happen. You can't have prices go up 20%, so that's why we're seeing prices.
They're still actually going up. The biggest difference today though, is the months of. Even though rates are relatively similar to what they were back in 2006. Yep. Around 6% months of supply is sold just over two months of supply, and back then it was about six to seven, which makes it a triple. The inventory today.
Yeah, which makes it a seller's market. I remember looking up some properties that were over a million dollars and it was an 18 month supply of inventory one time. Mitch, will you come back and see us again? I would love to join you again. Awesome, man. We're gonna take a quick break when we come back.
What's the difference in a unilateral and a mutual termination? In a real estate contract, and what are best practices to getting your home sold in today's market? Stick with us. We'll be back.