Real Estate Show September Lender Update

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Real Estate Show Sept. Lender Update with Guy Giles, Churchill Mortgage

Alice Lema: [00:00:00] Hey, Southern Oregon. Welcome back to the real estate show. I'm so glad you could join us again today. I'm Alice Lema. I'm a broker here in Southern Oregon with John Scott real estate. And today we get to interview Guy Giles of Churchill mortgage. Guy comes on the show every month, beginning of every month and talks to us about what's going on with mortgages, with buying in general. And he also helps interpret all these changes happening, about the federal reserve bank and interest rates. So we get to talk to guy Giles today from Churchill mortgage is gonna be great to hear what he has to say, cuz it's been another volatile month with mortgages, interest rates and home buying in general.

In the meantime, before we bring Guy Giles of Churchill mortgage onto the show, let's talk briefly about what's going on locally here in Southern Oregon. So we've been watching week to week the trends in Jackson, Josephine, Klamath counties.

And I wanna [00:01:00] report that our listing inventory is becoming mixed. So here this time, last year, we have a 7% increase in Jackson county in the total number of listings. We have in Josephine county our total number of listings have gone up 9%, but in Klamath county they've gone down four. So that's kind of interesting. Our solds which is closed, people actually got their keys in Jackson county is down 2% from this time last year. In Josephine county, it's down 7%. And in Klamath county, our number of solds or closings are down 3%. So that's very interesting. Our inventory for listings are up a little bit, except for Klamath county. Our number of houses sold this time last year are down in all three counties.

But check it out. The prices [00:02:00] are up. So this is so interesting. Number of listings are up. Number of solds are down. How is it our number of solds are down and the prices can go up. Well, that's the problem was with pressure on the supply side. So here we are in Jackson county, compared to this time last year, prices are up 5%. Josephine county prices are up 7%. And Klamath county prices are up a whopping 9% from this time last year.

So fascinating trends looking forward to checking back next week, but let's now get Guy Giles of Churchill Mortgage on the show so that we can talk about what's going on with mortgage rates, home buying and just the market in general for the rest of the year.

We'll take a quick break with word from our sponsors. Please stay tuned. It's gonna be a very interesting show.

Well, hey there, Southern Oregon. Welcome back to the [00:03:00] real estate show. So glad you could join us again. We're gonna be talking to Guy Giles of Churchill Mortgage today. Welcome back to the show.

Guy Giles: Hey, thanks. It's good to be back. And hopefully everybody can hear me a little better. I finally upgraded my, my little radio here, my microphone.

Alice Lema: So yeah, it sounds great. And you know, we wait all month for you to come back and tell us what's going on with that weird world of lending. So where do we wanna start today?

Guy Giles: Wow. Well, we are gonna have a, a fed that looks like the consensus is that they're gonna raise rates about three quarter of a point again at their next meeting. So that'll be, you know, a little bit later in this month. But unlike the old days, when, you know, like Alan Greenspan just kind of depended on the size of his briefcase, what was gonna, what was gonna happen and you didn't really know until that day. Now we're just, we, we're kind of getting a heads up and I've been trying to get my head wrapped around.

Is that a good idea or a [00:04:00] bad idea, but instead of having such volatile shifts, when the fed actually does make a decision, I don't think it's all that bad of a thing. And it looks like it's, it's probably gonna be three quarters of a point. So, or three quarters of percent, basically that is gonna affect your credit cards.

If you get a home equity line of credit, it will affect that sort of thing. So. Just be mindful if you have that kind of thing floating out there and there's some way to get some of that debt paid off. It might not be a bad time to think about it because you know, the, the, the Fed's trying to fight inflation.

And actually they're, they're finally at a point where they're doing a a decent job where they've really recognized that it is an issue and they're, they're raising the rates accordingly, but that, you know, that's something that we should expect in the next, you know, couple weeks here is another big jump in that shouldn't really affect our home loan rates.

I, I say that, but that's just because they've already been affected our people by You know, we're, we're basically [00:05:00] investing in 30 years. So we already have that baked in by the time the fed raises rates. So I'm sure next time we'll be talking, you'll say the feds raised their rates and I'll say, yeah, the rates dropped just a little bit. Just cuz it's, that's just kind of how the thing works. We're anticipating.

Alice Lema: So let's, let's go back over that a little bit, cuz that is a very confusing a set of events and it happened at the last rate increase. The last rate increase was really big too, wasn't it?

Guy Giles: Yeah. Well, they they've been raising it pretty consistently at about a half of a percent for, you know, for this year.

Alice Lema: Okay. And so what happened last time is when the rates actually changed were when, when it kicked in the rates went down. Because as you just said, and if you could explain that again to people that the market starts adjusting beforehand, is that right?

Guy Giles: Yeah. Is that what they're doing? In, in the old days, we'd wait and then the they'd come out and speak. And we really didn't know for sure. We [00:06:00] had an idea what they might do, but we never really do knew until that day. Now we're getting, you know, somebody's whispering it or whatever, but we're kind of hearing what these things are gonna happen a little in, in advance. So especially with us, we're not, you know, if you, if you lock into a 30 year loan, you're stuck there until somebody refinances or sells that house.

You know, unless somebody it's an assumable loan that they can do. And you're, you're again, you're, you're just basically locked in for, for all of those years on how much interest you're gonna get. So in an inflationary environment, all of a sudden your, your money that you're getting for interest doesn't mean as much because. It's just getting eaten up in, in other ways. So we just really try to look ahead, see what's gonna happen. And I, I say we, I'm not a guy that invests in the mortgage backed securities, but the guys and gals that are really watching this stuff, we'll understand that, you know, over 30 years, that's really gonna erode your, your income.

So we've already got that [00:07:00] kind of out there where, where they're just playing a little bit more of the safe bet. So the rates had already kind of gone up and we've been getting a little bit of a reprieve when they actually raised the rates on that day.

Alice Lema: So, well, it just kind of messes with all of our expectations for timelines. But like you said, there may be an advantage to this newer way of leaking what's gonna happen ahead of time. And, and do you think they're doing that so that the markets will just adjust and get it over with, is that why they're doing it?

Guy Giles: I I'm thinking, but it, but the part of me that struggles with it is that it actually kind of makes sense. Nothing they've done makes any sense. So that, that's the only part that's throwing me off a little bit. But, but it's actually, it's been kind of, it's been kind of a welcome thing because we, again, we kind of know what's what's gonna happen going into it. So it's not hold your breath until the fed meets and then [00:08:00] surprise. And then everybody just goes crazy. It just it's a little bit of a heads up. So it feels like it's smoothing it out a little bit. Some other people may disagree, but for, for me, it just kind of feels like it's even, even though rates are up probably 3%, well, not probably, they're basically up 3% in the last 12 months, rates from where they were, you know, a year ago.

But you know, I don't know if we have time in this segment or, or the next one, but actually ran some math before, before the show, just to kind of illustrate that it's probably still not a bad time to buy. If you, I, I don't anticipate going forward that we're gonna have the appreciation that, that we've had for a little while, but it's, it's basically been unhealthy at that at, at that level. I mean, July, till July. We were up 15.8% from last year. So I, I, I kind of rounded the numbers a little bit and a $400,000 purchase price, if we, if we stayed at that, that $400,000 just wild guess, it's [00:09:00] high, what that house would be worth if it kept up at that rate for the next 30 years, while you had that mortgage, just 34 million is the answer. And that seems a little steep. I don't think that my wages are.

Alice Lema: That's kinda a concern, you know, wages is if the fed doesn't get this under control, what will the housing market look like next year?

Guy Giles: Oh, well, As far as core logic, which I, I, I think that's one of the more reliable ways to, you know, the, the ones that just track this. And that's really, they're just into, into data and that's what they do. Analytics, they're thinking that it's gonna be just under 4% for next year. So about maybe 3.8% for next year. Looks like the numbers for last month, they actually, the houses went down just a tiny bit for the first time in a long, long time.

But overall, I, I, I think that probably around 4% for next year is what they're gonna appreciate. [00:10:00] And if you, if you look at it, even with rates at six and a half percent, you know, which is a little higher than they are right now, but I just went, went a little uglier. At, at the end of your 30 years, you will have paid about $592,000 for that house, just $400,000, 20% down, you would've paid about $592,000, but with the, with the house going up, way lower than what we're talking about, even, even at 4%, you are looking at a 1.3 million house at the end of that. So it's still not a bad time to buy.

Alice Lema: I mean, no, that's incredible.

Guy Giles: Yeah. If, if, if you just look at the numbers and you know, some of, some other things that I ran was if you were to find a house right now for $1,700 a month, you know, at, at 6.5% rate at a [00:11:00] $400,000 purchase price with 20% down, your payment's gonna end up being probably just a little under $2,400. I had to guess on taxes and insurance a little bit. Right. And, and say, you're just sitting in your house right now at 1700 bucks a month, which would probably be a really good deal for an actual house, renting one. Just just based on where rents have gone, you know, say in the past 30 years where they would be, you'd be paying $6,300 a month, 30 years from now for that house.

And, and, and I know these were weird and, you know, I'm just kind of a numbers guy and I broke it down into 10 years and, and different things because people are probably not in it that long. But you're just assuming if you're not getting into the market right now that your rent's gonna still be $1,700, you know, 30 years from now, you're actually a little bit more buffered from, from this.

Your taxes, insurance are gonna go up a little bit, but if you buy a house that's a better hedge against inflation, then being at the mercy of a landlord, that's gonna raise your, raise your rent.

Alice Lema: Yeah. [00:12:00] Even though Oregon has rent control, I, I believe we're still the only state in the union that has statewide rent control. The, you know, you can, you can raise the rent 7%. Yeah. And plus cost of living. So it can go up to 10.

Guy Giles: Yeah. And, and, and the numbers that, that I figured I did this kind of first thing this morning, we're way under that. As far, I, I think I went, I think I went 6% as far as, as that, because I think the national average has been 8% tracking, since like 1940 for rent increase. Yes. Yeah.

Alice Lema: But really so 8% a year. The average.

Guy Giles: Yeah. And, and it's not something that I generally track. I mean, if you look, the average two bedroom was $25 in 1940 was the numbers that I saw. Wow. Wow. So, so it goes up a little bit, you know, either way, let's just say it got half of, of what I was talking about and, and only [00:13:00] ended up being 30, $3,150. You're still a lot better off being in your own house and having, having $400,000 compounding, you know, it, it's just, it just makes more sense and you're not even putting in the tax deductions yet, you know, after you owned your property for a year, then you get to start writing off your interest and absolutely improvements and things like that.

So, and, and if you have less than 20% down, you should be able to write off your mortgage insurance also. There's, there are some definite benefits to doing that. Yeah. You have to buy a lawn mower, but at least you own lawn. At that point,

Alice Lema: You should ask your friends and family for Christmas. That's what they should do for you. buy you a lawnmower.

Guy Giles: it was, it was pretty amazing after my daughter bought her house, how her Christmas wishlist changed to, you know, spoons and towels and things like that. Yeah. And you know what, whatever fun horse stuff she was into, but. [00:14:00] You know, I mean, you, you, at the end of the day, you don't want to go into a house over your head.

That's not fun. I have, I have been there in the past, but if you really look at the numbers and you can make it work, you know, you're, you're able to get gift funds from family members. There's different ways that you can come up, you know, with a down payment and. Who knows may maybe your parents just have it sitting in a bank right now where they're getting .02% interest on it, or, you know, might not be a bad investment to think about gift funds for down payments or different things like that. So there, there there's another strategy or two that we can talk to talk about after the break.

Alice Lema: Yeah, that would be good. And also how people maybe come together in a small group to do a purchase, how that works on a loan. That would be fun to talk about in our next segment, for sure.

Guy Giles: Sounds good.

Alice Lema: So you mentioned consumable loans that was big decades ago. Do [00:15:00] you see that coming back? We only have about 30 seconds, but , I, I, are those around you anymore?

Guy Giles: I don't see. I mean, it, it really just depends on the loan and the investor as far as whether it will be, or, or won't be, you know, generally VA loans are assumble. I don't necessarily recommend you let somebody assume your VA, because that's gonna be your guarantee that's tied up in that house. So that could, that could stop your ability from buying another. Not that you couldn't buy another house. It's just depends on how much of your guarantee is wrapped up in that one that you're letting somebody else assume.

So it looks really attractive for selling your house, but at the same time, you could actually get burnt as the buyer.

Alice Lema: Okay, well, that's good to know. We're gonna have to take a quick break. We're talking to Guy Giles, Churchill, Mortgage Guy Giles, the numbers guy. That's what we're gonna call you. We'll be right back after a word from our sponsors. Don't go away.

Well, welcome back to the real estate show folks. I'm Alice Lema, I'm a broker here in Southern Oregon with John L Scott Real Estate. And we're [00:16:00] having our regular monthly update with Guy Giles, the numbers guy from Churchill mortgage, and we've had a lot happen in the last 30 days. The market has been going up and down. How are your buyers dealing with all this volatility?

Guy Giles: Well half of 'em are getting out at the inspection period is what it feels like the last couple of the days. Yeah. I, I, it, last week was kind of rough with, with people just kind of backing out. I don't know if it's cold feet or there was really a lot of issues, you know, with these houses that they were, they were looking at, but, you know, we've, we've definitely had some fall outta escrow.

You know, some other people are feeling like things have settled down enough to where they're getting more comfortable making offers. So it is a little bit of a mix as far as that goes. You know, I think mortgage applications are down about 24%. I didn't write these numbers down this morning from what I was looking at, but so, so it, it is down substantially as [00:17:00] far as, as far as that goes from last year.

But we're, we're still putting some deals in, but it kind of feels like every other week, right now we're either getting a lot of referrals or we're, or we're not. So I'm just kind of been around long enough to learn, to just enjoy the rest, when you can get it. . So I'm not complaining yet.

Alice Lema: Well, and people still want to own homes and they still want bigger or smaller or rental. So as, as bumpy as it is out there, I think you and I both agree, it's still a good time to buy, in part for the reasons we talked about in the last segment, just running the numbers on what it does to your financial life.

Guy Giles: If yeah. If you just look at the math, I mean, that's how. It's the it's, it's the same math that the banks basically use to make money off of us by loaning it out. And I mean, they, they make most of their money up front hoping that you'll buy another house. You'll downsize. You'll get a bigger one, but really if you're, if you're [00:18:00] playing the long game, even at 3%, you know, this, this thing's compounding. So it's, it's not 3% on that from, from earlier in the radio show, it's not 3% on that $400,000 or 4%, you know, now it's it that same percent on $419,000.

And then the next year you add another, you know, $20,000 to that. And over the years, your investment is compounding at a whole lot. You know, it's just a bigger investment doing that. So as, as like with a bank loan, you're paying a little bit less interest every month as you go through the loan. With your house, you have something that's, that's going up in value that you know, it it's going off that start number at the beginning of the year. So actually, the math does make sense.

Alice Lema: Yeah, it really doesn't. I, I counsel a lot of first time home buyers that it's always hard when you buy a house. Right, remember when you bought your first house and you just didn't know if you'd be able to make that payment every [00:19:00] month. And your, I mean, your lender knew you could cuz you qualified, but it's that feeling, you know, in the beginning of, oh my gosh, how am I gonna do that?

And then two or three years later after you've started doing the tax deductions and the market goes up, it really helps your wealth building for your life. It's amazing what real estate can do.

Guy Giles: I was scared to death. I mean, I really, really was, and that was, you know god it's been 20, 25 years ago, I guess when I bought my first house. I and I still have it. It's a rental now. And it, it, in the long run, it's absolutely a good way to, to build wealth. I mean, you have to be diverse in it. You know, you're gonna invest a little bit in your 401k, maybe some precious metals you know, guns right now who knows.

Alice Lema: We're not giving advice outside of real estate. We're just talking, right.

Guy Giles: Yeah. But as an overall overall, you know, I, I think that, that, that my housing has [00:20:00] been my best investment overall.

Alice Lema: And, and when, when you bought your house, what was the financial environment like? Like what year was that? That first one?

Guy Giles: It was, it was 1998.

Alice Lema: Okay. So interest rates?

Guy Giles: Yeah. Man I was drinking beer back then. I don't remember.

Alice Lema: But it wasn't 3%.

Guy Giles: No, gosh, no, no, it was, I I'm sure it was, it was over 6%.

Right. And that used to be considered a pretty good loan interest rate. Historically an awesome rate has been 6% or under mm-hmm so we've, we've been really spoiled and, and that kind of dovetails into the other thing that I was you know, gonna gonna talk about was, was maybe instead of, you know, if you have your listing right now and you're thinking, man, I'm not getting anybody talking about it, or, you know, no offers instead of dropping that thing down $70,000, maybe you look at paying, you know, 10, $15,000 toward the buyer's [00:21:00] closing.

And he, or she gets to buy their rate down. I just, I did a little bit of math on that today, by the way, on a conforming loan, you can go up to, you know, if you have 25% down, the seller can contribute up to 9%. You know, just anywhere from 2% on an investment property, if you have more than 90%, you're allowed to go 3% 75 to 90.

Anyway, it it's a little bit of a sliding scale, but you can always count on 3% and say, you're doing a $500,000 loan, 3%, you know, that's $15,000. That'll end up buying your rate down about a point and a quarter, right? So even though our rates are up about 3% over the year, which is substantial, you can cut that in about half by just having the sellers pay some closing costs.

The seller makes out like a bandit because they didn't have to reduce the house by $70,000. [00:22:00] The buyer thinks it's a good old days and they're getting, you know, a better rate that they would've gotten a little while back and you're saving 350 bucks a month.

Alice Lema: Yeah, it's a excellent suggestion. And I'm just starting to see listings that have that in there that the seller will contribute to buying down of the buyer's rate. Yeah, it's a great strategy. Good idea.

Guy Giles: And, and if somebody just wants to come in and talk about it, you know, I mean, I'm, I'm happy to just kind of go over because it really does make sense. It I've actually done the math all the way down to buying, you know, paying 30, $40,000 of it just for fun, because I like when I got into business, I thought who in the world would pay seven points or percent when, whenever we're talking per or points, you can take the word points out, put the word percent in there.

And you're talking about the same thing. So. It believe it or not, there's, there's a time when that breaks even, and you end up way ahead with, you know, with whatever. So it really, [00:23:00] it's gonna become a, a individual decision. How long am I gonna be in my house? I I'm, I'm not a guy that, that thinks it's a good idea to spend more money than maybe seven years worth.

Just meaning if you're saving a hundred dollars a month and it takes you seven years to pay that back, you really want any points to pay themselves back in a reasonable amount of time, cause you don't wanna be hostage to a house. Just thinking it's gonna take me five years before I break even on, on the money that I spent to buy down my rate.

But if the seller's paying for, you know, it, it might not be a bad strategy. And, and again, you're just gonna get a lower rate out of the thing.

Alice Lema: Mm-hmm , mm-hmm but it's interesting, the side effect of all these rate increases, cuz wasn't the fed, trying to slow down the house, appreciation that we were all enjoying. I mean, isn't that how this all started? They didn't want us to keep making so much money.

Guy Giles: Their, their primary function is to keep, is to keep inflation under, under [00:24:00] control, you know, their, their target, you know, 2%. And you know, we're a little higher than that maybe at the moment. I think, I think they waited a little too long to do it.

Literally only two or actually three of the feds have actually held a regular job like you and I hold. These guys are appointees they're I, you know what I shouldn't say too much.

Alice Lema: But, but you're saying they're not business people. Is that what you're saying?

Guy Giles: Correct. Yeah. Yeah. Yeah. I I'm just saying that, you know, it's, it's like a police officer. If you take an 18 year old and turn him or her into a police officer, they don't have life experience. And I think it would be nice if the fed had a little bit more life experience, then, then just being, I mean, they just have a little bit on their shoulders as far as the decisions they make.

So , you know, it feels to me, but, but that's just sadly what, you know what we're dealing with. The good news is they have finally realized that this is a big enough deal, that it's not what, you know, what they call transitory that it's just gonna be. You know, a [00:25:00] couple of months or a couple of weeks, and it's gonna be over. They're out of denial on that piece of it.

And they're raising rates and it'll hurt a little bit for a minute, but overall it's what really needed to happen to just kind of cool things down. Yeah.

Alice Lema: Well, and it seems to be working going back to what you said earlier about Buyers change their mind in the middle of the transaction and and terminating you said inspection period. So there, there are a lot of people that are canceling their transactions. And then going back on market, my question to you is how, how quickly are those same buyers going back into contract? Do you have a sense of like like, are they going back in on something else right away or are they sitting out for awhile.

Guy Giles: To be honest, I haven't had a lot of that happening until about a week and a half ago.

Alice Lema: Okay. So that's real new.

Guy Giles: Yeah. And it's not to say that it, that it wasn't, because once, once people get, you know, a little bit frightened, they're, they're a little bit frightened and it's just it, it is just what it is right now. They're not feeling, or to me, they don't [00:26:00] seem as frightened as they were, you know, a month and a half ago. So it does feel to me like things are, you know, starting to kind of come back. But I think some of the people that were initially scared are maybe getting out. So I, I really haven't had 'em come back with a, with another house. I had, I had four dropout in about five days and they haven't found a house yet, but, but I don't think any of 'em have just said, we're just gonna wait.

You know, I think that there are some opportunities right now for buyers to maybe get a deal. And it's the first time in a while, you know, I think I would much rather go in at a realistic price and maybe ask somebody to pay a little bit of my closing cost to buy down my rate than have to go into a bidding war over a house that you're gonna take years to appreciate into whatever you just went over.

And then you're just crossing your fingers, hoping that the appraisal comes in. There are just a lot of variables in that market that I think are scarier than a little bit of a rate increase.

Alice Lema: Up markets, a seller's market has a whole nother set of problems and people were [00:27:00] overpaying left and right, mm-hmm last year and the year before. And so but it's not, that's not the market we have now. It's more even.

Guy Giles: Yeah. And if that was you that ended up buying, you know, then don't feel bad. overall. It's if you're not selling you haven't lost anything and they will go up, you know, even well, and also they got a house.

Alice Lema: That's the other thing.

Guy Giles: Yes. It's yeah that's true. And, that's, there's not as many of those around here is, is there really needs to be anyway. You know like I like that first house that I bought, I had it through the big crash. And I remember calling my insurance company asking him, why are you raising up my insurance rates?

I haven't had a claim and my house is worth half of what it was. Well, even though it took a, you know, it went up and then it went way down. It's still up a lot from then. And that was the biggest crash since what, the depression that 09 and yeah, so it's, it is a long game and, you know, I, I, I still think it's, I still think it's a, it's a good time, [00:28:00] if it fits into your budget to buy.

Alice Lema: Yep. I agree. We're gonna have to take another quick break, but when we come back, I wanna talk about how a lot of us are hearing that there's a big crash coming, but most of us just don't see that. And we wanna talk about the numbers. So we're talking to Guy Giles, the numbers guy from Churchill Mortgage. We just named him today. We're gonna take a quick break from our sponsors, one of which is Churchill Mortgage. Very grateful. Thank you. Also, John L. Scott Ashland, Medford, and our local Rogue Valley Association of realtors. Will be right back.

Well, welcome back to the real estate show folks. Alice Lema here, broker John L. Scott in Southern Oregon talking getting our regular monthly update with Guy Giles, the numbers guy from Churchill mortgage. Thanks for coming back, Guy.

Guy Giles: Hey I'm glad to be here just right in the middle of all this craziness, you know?

Alice Lema: Yeah. Well, it helps a lot, you know, this, the guidance you give us every month is really, really helpful and calming and educational. And that's what we're, that's what we're here for. So [00:29:00] before the break we wanted to talk about if this slowing down of the housing market is going to be a crash or not, cuz we've some people thinking it's gonna get really messy out there. What do you think?

Guy Giles: Well, for me, I don't see that happening again, especially like, like it happened before because just none of the, none of those variables other than a lot of appreciation are, are the same.

And what, what I mean by that is my industry was writing terrible loans at that point. Everybody was just at a race to sell as many houses as they could. We had a whole lot more investors that were in what were called option arm or negative amortization loans back then. And if you had a pulse and a 680 credit score, you, you could buy a house with, without documenting any in it, income or assets.

And, and people were doing that and they were buying [00:30:00] houses and everybody was under the impression that everything was gonna go up forever. And it, it just, it was really ugly, but mostly there were a lot of very poor loans being written back then. And that has not been the case. I we, we haven't really loosened up much at all.

Alice Lema: Yeah, yeah. From it, it kind of permanently changed. Didn't it after that.

Guy Giles: It really did. You know we do have, you know, some loans that are kind of no income, no asset ones, but it's only for basically investment properties that really do pencil out. And, and the investors thinking even if they default on this loan, we have a good asset and we're gonna be able to make rent on the thing. And, you know, it's, it's just not a bad deal. So that's the only weird one. And, you know, there are probably some investors using that, that loan a lot, but for the most part, we're all doing fully documented loans.

They're, they're getting a little creative in that for some of the investment properties. They're, they're looking at going back to 40 year loans where there's an interest only [00:31:00] period for 10 years. And then just because they, they have literally been priced out of the market and interest only loan isn't isn't the end of the world cause you're mostly paying interest on those upfront years anyway.

Alice Lema: Well, and there's people that can benefit from that. They're, they're usually more temporary, but yeah.

Guy Giles: And I can get creative, but I, I try to, you know, stay a little bit more in the traditional, you know, bucket, but it, it goes into a fixed rate loan after that first 10 year interest only loan.

So it's not even like you're gonna be subject to wherever the, the markets are at that point. You know what you're getting into, you know, in the beginning. And as we said before, You know, rents will go up. So I, I'm not necessarily saying that you should go into a 40 year loan. I mean, you're gonna pay a lot more interest doing that, but you know it's an option and, but that's about as creative as we're getting right now.

Other than that, we're just doing really traditional you know, just traditional loans where as an income asset. And there are some, some bank statement loans out there for what we call [00:32:00] the non QM market, where we're just looking at at bank deposits rather than, than your whole tax returns, because for real self-employed people, you do understand that you might write a lot off and that you still could afford a house.

So there's a little bit of stuff, but what crashed us before we don't have any of that. And we haven't had any of that going on for over 10 years.

Alice Lema: And so well, and also wasn't there like an employment, unemployment issue back during the crash that really kind of spiraled everything downward more quickly that we just don't have right now.

Guy Giles: Well, we don't have the unemployment, but to be, to be fair that's cuz the, the clowns that record that, if you have two part-time jobs to make up for that full-time job you might have had before that counts as two jobs. So I, you know, it's it's, yeah I mean I don't think we're in great shape.

One thing that's coming up, that'll probably be pretty good but, you know, not to get political, conservatives will probably take over.

Alice Lema: We're not, we're not a political show.

Guy Giles: I [00:33:00] know, I know, but it's a reality and it, and it does affect this. The Republicans will probably take over the house and the Senate. Then you have gridlock, then you can't have any big policy moves one way or another. So you have a president that's on one side. House and a Senate that's on the other. You don't have any, either one of them going in one huge direction. So markets typically like that. So actually yeah. I mean, it's, it's just about what the government can and can't do. And you know, it is what it is, if you're on the left or the right, but when you have gridlock like that, then nobody can do anything too stupid.

Alice Lema: So, well, that'll be an interesting phenomena if that happens. Then the markets might relax and stabilize just because they're not afraid of any more sweeping changes. Is that what you're saying?

Guy Giles: Yes, that's exactly. Exactly. What I'm saying. So you know, and again, that's, that's not to go political left or right. I'm pretty anti all of them. So , you know, it just is what it is you know, but. We're [00:34:00] here for the people, the regular people that, that need a house to be in and, and that could settle things down a little bit after the midterm elections. You just, you don't want anything going too far either way.

But we're also, we're still digging out of a hole of a big fire a couple of years ago, too. So, you know, it, it's one of those things that, you know, our housing from 1991 has gone up 514% here in Oregon. Wow. It's, it's, it's pretty insane. And, you know, and, and obviously we're, you know, we have Roseburg and then higher markets like Portland.

So it's, it's all a mix for the whole state. But down here in our little, in our little section, you know, we still don't have the housing that we need to even replace the housing that we had. And that's, that's not factoring in any other people moving in. So, you know, or so I, anyway, at the end of the day, I think it's still gonna be a strong market around here.

And I don't see any kind of a crash. Definitely not coming from our side [00:35:00] of things this time, not a housing crash. No. Yeah, something maybe a little bit more healthy in the way of appreciation would be a welcome, a welcome thing. But, you know, I don't know, just get in, talk to your lender. Hopefully it's me.

Hopefully you'll go see Alice when it's time to buy a house, but you know, just talk to us and we're, we're really willing to sit down and have a conversation with you. No pressure to use either of us, but, you know, come in and talk cuz it's, it's not as scary as everybody thinks it is out there right now.

Alice Lema: Well, and we're tracking these micro movements you and I, week to week, and then we, on the show every month. And that helps the the folks that are out there buying and selling, understand the little trends that can lead into a bigger trend. So you can make a more informed decision. Absolutely. Yeah.

That's super important. So different economic conditions than the housing crisis we had in [00:36:00] 09 and 07 depending on what, you know, what your finances, where you got hit first. So we're not really looking at that much loss of our home values. We're just not.

Guy Giles: No, I don't see it at all. You know, I mean, I, some foreclosures, you know, I've read something the other day that they're some of them are ticking up a little bit.

Alice Lema: But it's so small though. Yeah. It's like one in two .

Guy Giles: Yeah. It's it's it's it's yeah, it's really weird. And especially with all the equity that people have, it seems really weird to me.

Alice Lema: That's why, they just sell their house and then they don't lose it.

Guy Giles: It makes a lot more sense for sure. Yeah.

Alice Lema: Well guys, if somebody wants to talk to you, what's your phone number? We're gonna have to wrap it up here.

Guy Giles: Yeah. It's 541-944-6987.

Alice Lema: Awesome. So give Guy Giles a call, the numbers guy from Churchill mortgage.

Also wanna have you start tuning in to listen to the show at 99.5 FM KCM X is changing some things up. So [00:37:00] the eight 80 station will be dissolving in January. Have a great weekend, everybody.