‘Million Dollar Listing’ star on housing market, mortgage rates drop

‘Million Dollar Listing’ star on housing market, mortgage rates drop


LIZ: OKAY. ARE YOU IN THE MARKET TO BUY A HOUSE? THIS WEEK THE AVERAGE FIXED RATE FOR A 30-YEAR MORTGAGE CAME IN AT 3.75%. NOW THAT IS A SLIGHT GAIN FROM LAST WEEK, BUT MORE THAN A FULL PERCENTAGE POINT BELOW THE 4.68% FROM JUST A YEAR AGO. SEEMS LIKE A BUYER’S MARKET, BUT THE ANSWER MAY NOT BE SO CLEAR. LET’S GET TO THE STAR OF THE HIT BRAVO TV SHOW “MILLION DOLLAR LISTING LOS ANGELES”. HE’S THE REAL ESTATE AGENT WITH 2 BILLION DOLLARS IN SALES UNDER HIS BELT. JOSH FLAGG JOINS US NOW IN A FOX BUSINESS EXCLUSIVE. YOU LOOK SO L.A., JOSH. THANKS FOR JOINING US.>>THANK YOU. LIZ: LET’S GET TO THIS QUESTION OF WHETHER — IT SEEMS LIKE AN OBVIOUS BUYER’S MARKET BECAUSE THE 30-YEAR FIXED RATE IS SO UNBELIEVABLY LOW, AND, YOU KNOW, THE FEDERAL RESERVE MAY MEET NEXT WEEK AND DECIDE TO CUT RATES AGAIN.>>WELL, HERE’S THE THING, AND I WROTE AN ARTICLE ON THIS, WHICH ACTUALLY A LOT OF REALTORS THOUGHT WAS REALLY FASCINATING BECAUSE THEY DIDN’T THINK ABOUT THIS BEFORE, BUT LET’S HYPOTHETICALLY SAY YOU BUY A HOUSE RIGHT NOW, YOU ARE AT A LOW INTEREST RATE. MAKES SENSE. BUYER’S MARKET. LET’S DO IT. IF THE PRICES ARE DROPPING OVER THE NEXT FEW YEARS, POTENTIALLY THE INTEREST RATES ARE GOING TO GO UP, WOULDN’T YOU RATHER BUY A HOUSE FOR A MUCH LOWER PRICE AND TWO YEARS FROM NOW AND PAY HIGHER INTEREST RATE OR WOULD YOU WANT TO PAY TOP DOLLAR STILL AT A LOWER INTEREST RATES? LIZ: I DON’T KNOW, THAT’S WAY TOO COMPLICATED TO ME. I LOOK AT RATES AND SAY YOU SHOULD BUY NOW. YOU WOULD GET A FAIRLY PRICED HOUSE AT THE LOW INTEREST RATES. THE PROBLEM IS INVENTORIES, WE SAW NEW HOME SALES DAY MONTH OVER MONTH DOWN ABOUT 7/10 OF A PERCENT. OBVIOUSLY THAT’S BECAUSE THERE’S A REAL LACK OF INVENTORY WHAT ARE YOU SEEING ON, LET’S SAY, MIDDLE OF THE ROAD HOMES, NOT THE FANCY PANTS STUFF FOR THE STARS?>>OKAY, NOT THE FANCY PANTS STUFF FOR THE STARS. YOU KNOW, I CAN’T TELL YOU ABOUT INVENTORY, YOU KNOW, IN THE MIDDLE OF THE COUNTRY RIGHT NOW, WHAT’S GOING ON THERE. I CAN TELL YOU ABOUT INVENTORY, REGARDLESS OF PIECE, INVENTORY IN LOS ANGELES. THERE IS A LITTLE INVENTORY, BUT THERE IS A A LOT OF INVENTORY IN CERTAIN SECTORS. FOR INSTANCE, THE MODERN WHITE BOX, WHICH ALL THESE DEVELOPERS HAVE BEEN BUILDING FOR, YOU KNOW, THREE OR FOUR YEARS, THAT’S FLOODED RIGHT NOW. THAT MARKET IS FLOODED WITH THESE MODERN WHITE BOXES AND WHEN YOU HAVE SO MANY OF THEM AND THEY ALL LOOK THE SAME, YOU HAVE A PROBLEM, AND BECAUSE OF THAT THE PRICES ARE DROPPING. YOU HAVE THE MEGA HOUSES — LET’S SAY 40 MILLION, 30 MILLION, WHATEVER, IF THEY ARE SELLING AT 20 MILLION, THEN THE 20 MILLION DOLLARS HOUSES ARE NOW SELLING AT 10. AND THE 10 — IT’S CYCLICAL — WILL SELL FOR 5 AND SO ON DOWN TO THE 1 MILLION DOLLARS HOUSES. EVERYTHING AFFECTS EVERYTHING. GOING BACK TO WHAT YOU WERE SAYING ABOUT THE INTEREST RATE THING, THINK ABOUT IT FOR A SECOND. IT IS SIMPLE. WOULD YOU PAY 2 MILLION DOLLARS FOR A HOUSE AT A LOWER INTEREST RATE OR WOULD YOU PAY AT A SLIGHTLY HIGHER INTEREST RATE 1.5 MILLION? THAT’S WHERE — WHY I THINK THAT PEOPLE AREN’T REALLY BUYING RIGHT NOW. THEY ARE WAITING TO SEE WHAT HAPPENS AND MY CLIENTS ALWAYS SAY TO ME, I DON’T UNDERSTAND, WHY DON’T THEY JUST BUY THESE HOUSES, LOW INTEREST RATES? IT IS AFFORDABLE BECAUSE THEY KNOW IT IS GOING TO KEEP GOING DOWN. LIZ: YOUR SELLERS ARE ASKING THAT, I WOULD IMAGINE. HOW CLOSELY DO YOU WATCH POWELL AND COMPANY AT THE FEDERAL RESERVE? WE HAVE THE FED ANNOUNCEMENT NEXT WEEK — IN COUPLE WEEKS, OCTOBER 30TH.>>YOU KNOW, I’M NOT FOCUSED ON THAT. INTEREST RATES ARE GOOD. MY CLIENTELE IS REALLY MORE INTERESTED IN GETTING A DEAL. THEY ARE NOT REALLY AS INTERESTED IF IT’S 3.75 OR 3.8. MOST PEOPLE SHOULDN’T BE THAT CONCERNED WITH IT. YES, OF COURSE, EVERY POINT OR EVERY FRACTION OF A POINT COUNTS, BUT WHAT YOU SHOULD BE CONSIDERING RIGHT NOW IS HOW TO GET THE BEST DEAL ON A HOUSE AND TIMING BECAUSE THAT’S ALWAYS GOING TO BE MUCH MORE IMPORTANT. YOU CAN ALWAYS REFINANCE. WHEN PRICES GO UP, THEY GO DOWN, WHATEVER. OVER TIME, IT WILL HIT THIS AGAIN. I DON’T KNOW WHEN, BUT, YOU KNOW, FOCUS ON THE DEAL, NOT THE INTEREST RATE. LIZ: YOU KNOW WHAT? YOU JUST STATED IT PERFECTLY. RATES WILL PROBABLY GO LOWER, SO YOU WAIT AND GET A BETTER DEAL ON A HOUSE AND MAKE PEOPLE DROP THEIR PRICE. WHAT ARE YOU SEEING WITH YOUR CELEBRITY CLIENTS? ARE THEY VERY SAVVY WHEN IT COMES TO WAITING, OR ARE THEY EAGER TO JUST –>>NO — LIZ: SOME OF THEM ARE SELLING TOO; RIGHT?>>HERE’S THE THING ABOUT CELEBRITY CLIENTS. YOU NEVER DEAL WITH THE CLIENT. YOU DEAL WITH THE BUSINESS MANAGER OR THE ATTORNEY, WHICH IS GOOD AND BAD BECAUSE BUSINESS MANAGERS USUALLY KILL THE DEAL BECAUSE THEY WANT TO SHOW OFF TO THEIR CLIENTS THAT THEY ARE TRYING TO PROTECT THEM. NEVERTHELESS IF YOU CAN MAKE THE DEAL, THE BUSINESS MANAGER IS REALLY ADVISING THEM, LET’S BUY RIGHT NOW, LET’S SELL RIGHT NOW, INTEREST RATES, WHATNOT, BUT AT THE END OF THE DAY, THE CLIENT — HE’S GOING TO ADVISE THAT TO THE CLIENT AND THE CLIENT IS GOING TO SAY I WANT THIS HOUSE. I LOVE THIS HOUSE. PLEASE. THEY ARE GOING TO SAY OKAY, I’M LETTING YOU KNOW THE POTENTIAL OF YOU SHOULD MAYBE WAIT, MAYBE YOU SHOULDN’T WAIT. SO CELEBRITY CLIENTS ARE ALSO A DIFFERENT ANIMAL. I MEAN, THAT’S — YOU SHOULD REALLY FOCUS ON LIKE MY CLIENTS THAT ARE JUST WEALTHY PEOPLE THAT WANT TO BUY HOUSES. THEY ARE JUST KIND OF CHILLING FOR THE MOMENT, NOT DOING ANYTHING BECAUSE THEY ARE WATCHING THE MARKET.