Hey, ba fam, Welcome back to Brown Ambition.

This is a very special episode like to call the Baqa where we take your questions and try to offer some answers.

And usually I will qualify that by saying answers with like a lowercase A.

Please don't assume me.

You'll know I'm not your financial planner, not your investment adviser.

You're definitely not your real estate agent or your attorney.

So you know, just here posting the show for ten years talking to some badass brown women about their finances in their career.

But I am joined today by someone who is a bit of an expert in her field, probably at the top of her field.

And it's not every day you just talk to a bad ass brown woman who is in economics and working at one of the largest real estate I don't know technology firms in the country, but I am.

Very honored to be joined today by Darryl Fairweather.

She is a chief economist at Redfinn and she's here to talk to us and hopefully help us, like bring a little bit of sanity and under standing to what is actually happening in the US housing market right now.

So Darryl, thank you so much.

For joining me on broad ambition.

Thank you so much for having me.

I'm delighted to be here.

So tell us a little bit about what you do at Redfin?

What does one as a chief economist, and especially in your particular cime, you said you focus a lot on behavioral economics.

So what are you up to over there at Redfin?

Yes, I study the housing market.

We have so much great data that I have access to at Redfin, data about the housing market, and I connect that to the broader economy and also to the decisions that our customers make when they're buying or selling homes.

I have a team or we have a team of economists that analyzes data, we put out research reports, and then I go and communicate that research out to the broader public so that people feel more confident when they're making a decision about whethery're to buy or sell or rent, that they have all the information that they need about how to make that.

Decision for themselves.

O p' a perfect person to talk to.

So what's actually happening on?

What's going on?

I'm stressed.

I told you a little bit about my and I think a lot of the A listeners like I was saying, a lot of us own homes, and we were first time home buyers, got a little lucky.

Our audience is that elder millennial audience, you know, where some of the ones who if you were lucky you got a house before everything kind of went nuts post pandemic, when rates were going up and housing affordability became such an issue.

And I think I'm definitely in that camp of a homeowner who is who's like, yeah, it's.

Great to have.

It's a good problem to have.

But I'm feeling really stuck.

I live in such an expensive market in New York, and you know, I have my little house.

And a cute little rate, but we're looking to got I got two kids, want I want a bigger house, some more space, and it just doesn't seem feasible.

Like I think, housing prices in my neighborhood are up fifty percent from when I bought my house six years ago, which is like, yay for me, I'm such a genius.

They're very lucky.

But at the same time, if I sell it for that, I have to go buy a bigger house, which is going to be even more you know what I mean.

So can you help me feel less insane.

Is that just like, is that what you're seeing in your data?

That's exactly what we're seeing in the data.

There are record low amount of sales happening right now.

There was this boom in sales that happened during the pandemic because of how low mortgage rates were.

Everybody who could buy a home did buy a home, and everyone who already had a home they refinanced their mortgage and got a record low rate.

Now, after that, we saw mortgage rates increase.

And normally, when mortgage rates increase, that means that there are fewer home buyers out there, and that means that sellers have to lower their prices to meet home buyers where they're at.

But that did not happen because homeowners would rather just stay where they are with their really cheap mortgages than sell at a lower price than what they are hoping to get.

And if you're in that position where you want to upgrade, or you want to even just move across town, maybe you got a new job and you want a shorter commute, it's really to do that because of how much higher mortgage rates are.

You'd have to give up that cheap mortgage rate.

Three percent perhaps and get a much higher rate.

Right now, thirty year fixed rates are at about six and a half percent, and that could mean hundreds, if not thousands of dollars more each month you would have to pay just for a lateral move.

So many people are saying, no, that's not worth it.

I'm just going to stay where I am.

Some people are deciding to move, and they're finding this work around where they rent out the home or they have the cheap mortgage and then they decide to rent their next home instead of doing the whole selling and buying thing again.

But that can be pretty complicated.

I think a lot of people just feel stuck, like they're just gonna, you know, stay where they are because it's better than facing this really expensive market.

Am I holding myself back by feeling stuck?

Am I actually stuck?

Is it a bad decision to go and buy the one point five million dollar house that I'd have to That's like what you would have to have a budget for to get the size house I'm thinking about in my in New York?

But that to me is just so astronomically expensive.

Am I holding myself back?

Is it as scary as I'm making it?

Out to be at our rates as scary as they've seem.

Well, there's definitely a real financial reason why people are deciding to stay because of that rate difference, but there are also some psychological reasons why people aren't moving.

One is that the economy is just really uncertain, and a lot of people don't want to sign up for an expensive mortgage when they feel like their job might not be as secure as it was a couple of years ago.

Another thing that might be at play is the status quo bias people feel.

People tend to just stick with what they are doing because doing something new is scary and uncertain, and that keeps people in the status quo even when they might have something better waiting for them.

And then another thing that might be happening is that people might not feel comfortable stepping down from home ownership.

The housing market, yes, it's very expensive, if you look at the rental market, it's actually more affordable right now.

For the first time since the Great Recession, we saw and decrease in the number of homeowner households, and at the same time there was an increase in renter households.

Because if you're comparing apples to apples, say a one bedroom condo to a one bedroom apartment.

It's very obvious that the apartment is going to be cheaper to rent than the condo is to buy.

But a lot of people when they bought, they bought single family homes, and there just aren't that many single family homes available to rent, so it's harder to make that transition from homeowner to renter.

And then also you're losing that status as a homeowner.

So there might be more options out there than maybe you're considering.

But maybe those options, you know, they're too big of a change for you to give up the home that you're in.

Yeah, I mean, I just had a guest on, a couple of guests on this week.

They're best friends of twenty years, two women, they each have children.

They had come out from each getting divorces and decided, listen, we're just going to pull our finances together, move and buy a house together.

And one of the reasons they're in the DC area.

One of their reasons was the the homes that they were looking at were like to rent, like to rent for them.

For the size home they were looking for, it actually worked out to be a little bit more economical to purchase a house.

But you're saying that in some areas, is this like nationwide that renting has become a little bit more affordable than buying in a lot of areas.

Is that nationwide or are there like pockets where that's happening.

It's pretty much true nationwide.

I think the only exceptions were Detroit in Houston, where it's still more affordable to buy than it is to rent.

The reason why renting is more affordable is because the rent, like when someone is renting out an apartment, they're not really considering what their mortgage is like, just trying to get somebody to rent that out, so the price is much more flexible.

But homeowners and home sellers have been really they've been really sticky about their prices.

They're not willing to accept less.

And that might go back to this bias where people tend to value something that they owned more because it's theirs, and I think that's one reason homeowners are willing to lower their price.

We're actually seeing homeowners delist their properties or choose not to sell at all instead of lowering their prices.

Or you're just hoping to get more and more so you can afford that next step up?

Yes, are you still seeing as many people moving to less expensive markets at a time like this?

And I wonder if that's changed since there's been this year.

I think twenty twenty five was we were already heading there, but it was definitely the year of the return to office orders.

So a lot of folks are now you know, I know, before during the pandemic, you could move to a lower cost area and buy a house and whatnot.

Now it's getting more challenging.

But is that still Are you still seeing Americans packing up and moving in pursuit of more affordable housing.

That still happens, but in general, fewer people are moving at all.

And that goes back to the fixedness of the housing market, where people are stuck where they are because of that luck and effect from mortgages.

But it also has to do with the fewer firms are hiring.

Employers are hanging on to the employees they have and not opening up new roles.

And one big motivator for people to move is that they have some new job opportunity where they have an income that's at least better relative to the cost of living.

So we're not seeing as many people move period right now, we have heard anecdotes about people having to return to office, like somebody who bought a home and say Boise, Idaho back during the pandemic and then getting called back to the office in San Jose.

San Jose is the most expensive housing market in the country, and if you move left that area to go somewhere cheaper, and you're trying to move back and it can be very difficult to re enter into the housing market.

So some of those people are choosing to rent instead.

Yeah, I mean, I think there's a.

Lot of people who I mean I talked to them all the time where they'll get that return to office order.

And for me, it's kind of like a.

Soft way of laying off people.

We didn't lay people off.

We just told everybody they got to come back to the office.

And for all the reasons you just laid out, it's just not financially feasible.

It's so expensive to move.

Okay, So rate wise, I mean, the FED just reduced rates by a quarter of a percentage point, right that was not that long ago.

Do we how long until we'll start to see mortgage rates respond?

Like when is it going to get a tiny bit more affordable or are we going to see any changes.

You think, Well, mortgage rates actually came down before that FED meeting because investors in the market knew that that rate cut was coming and people who purchased mortgage backed securities already reacted, and that allowed mortgage.

Rates to fall.

So mortgage rates are at lows compared to the last three or so years, but they're still very far off from those pandemic levels.

There was a point where we had above seven percent rates for a thirty year fixed rate mortgage, and now it's down to six point five, six point four or six point three.

It kind of bounces around.

We anticipate that next year rates will continue to fall because I mean, the hope is that inflation becomes us so the problem there are also some worrisome signs in the labor market that unemployment is ticking up, and that would mean that the FED would have to cut again.

So margag rates will probably be lower next year, but it's definitely not a guarantee.

I mean, we forecasted that last year and it just didn't happen because we got the tariffs instead.

So anything could really happen in this economy.

Heyba fam we're going to take a quick break, pay some bills, and we'll be right back.

Yeah.

And I mean it's not just the rates that are you know, even if they're going up a little bit, they're still expensive relative to where they were a few years ago.

But it's like everything else that goes into home ownership is getting more expensive.

Furniture, Like, we need a new couch.

It's about seven years and we had two kids, a dog.

Our couch was rough.

We had to get rid of it.

And we're looking at prices and they're just three thousand dollars for a regular couch.

And that could be partially to do with like tariffs if you have these couches being made overseas and the cost of supplies to do any upgrades.

Has your data reflected any changes in how homeowners are, Like, are we holding back from you know, doing renovation upgrades or upgrading our furniture and everything else that goes into home ownership is that being impacted as well?

You're right that the cost associated with home ownership have been going up.

The cost of home maintenance has been going up, the cost of insurance has been going up, especially in places that are prone to climate change.

Like wildfire prone places in California or floodplone prone places in Florida.

So yeah, these hidden costs are starting to creep up and up.

One way that people get money for those costs is that they might refinance their mortgage, get a second mortgage, get a heelock.

But rates also impact how affordable is to take money out of your home.

So if you bought your home during the pandemic or before the pandemic, chances are you have a lot of equity in your home.

But people aren't really willing to tap that equity at these high rates because they're having to spend more money just to get their equity out, and people would rather just waigh for rates to come down.

So people might be delaying these kinds of expenses.

Yeah, one hundred percent people, I am people.

What advice do you have for someone who is maybe a first time home buyer wants to get into the market and is just not sure if this is the right time to buy.

I think the first step is to figure out what can you afford?

So that means looking at your budget and seeing how much of your income you would have to spend on housing and does that make sense given the type of home that you want to buy.

If you can actually afford that mortgage, great, You're going to actually have a really easy time in this housing market.

Because there are so few buyers.

There are more listings than there were a year ago.

Sellers are a bit more willing to come down in price.

We're seeing that the sale to list ratio, which is how much home self or relative to their list price, has been coming down.

Sellers aren't willing to budge all that much because, like I said, they still have this option of staying in their homes and keeping their mortgage rate.

If you look at new construction, that's where we'll that's where you'll see the most deals.

New construction tends to be more expensive than the existing homes because they're brand new, but builders are a lot more willing to negotiate.

They might even give you a deal on an interest rate or give you cash at closing.

So if you can afford that new construction, you'll actually have a pretty easy time getting a good deal on it.

I'm literally out my window right now, this behemoth of a new construction house that my neighbor you used to be an empty lot next to me for years and we're like, oh, it's so nice, we have some space.

Didn't realize it was just a lot waiting to be sold.

And yet mega house next to me, which just looks so hilarious in this neighborhood that's slowly being gentrified.

I live in a largely middle income, middle class Black and Latino neighborhood.

It's kind of a gem and a rarity.

And where I live outside of Manhattan and Westchester, which is kind of known for like the land of the Clintons and you know, the upper middle class elite.

You leave Manhattan and you want a family, you want some space, you moved to Westchester, and my neighborhood is just such a I don't know.

I don't want it to become a relic, but I'm wondering how have these trends in the housing market impacted neighborhoods like mine, where, you know, thirty forty years ago, a middle income Black or Latino family could move and you know, really build some equity and build some you know, start their home ownership journey here.

Well, one thing that could help with that is if that lot specifically, instead of it being developed into it sounds like a McMansion, like a giant single family home, if it was allowed to be developed into smaller homes like perhaps rowhouses where you can fit more than one home on the same lot, but they're really close together, or a duplex or a triplex.

That can lower the entry point for somebody who wants to buy into the neighborhood.

If we just allow for more dense housing.

Not everybody needs, you know, a three thousand square foot home with a front yard and a backyard.

A lot of times people just want access to what the neighborhood has to offer, whether that be schools, or amenities or job opportunities.

So if we allow for more affordable types of homes to be built when they're newly built, that can kind of alleviate that problem.

But just being these really expensive homes that only really wealthy people can afford.

Yeah, and then so much of what dictates what can be built and where that has to do with your local governments, right, Like you're my thinking about the town hall, the not the board of education.

But like these local you know, local municipalities, they can they decide who can build and wear right, they're the ones approving permits and approving what type of housing do y'all do any analysis of, like our local governments making any changes to allow for more affordable housing to be built.

Yes, so you've identified a very big problem, which is local control of housing.

It is these local planning boards that usually consist of existing homeowners in the neighborhood deciding what housing is allowed to be built.

And the problem with that is is that the only voices that tend to be heard are people who are already pretty well situated.

They already own homes, maybe they bought those homes, you know, decades ago when not everybody had access to these neighborhoods or access to credit, and they're the ones deciding who gets to become a first time home buyer.

The voices of people who want to move into the neighborhood, or the voices of young people who want to be able to afford a home one day are not heard when you just have this local control.

So what we're seeing nationwide is more of a move towards state control of housing.

In California, they have allowed for any single family home to have two additional dwelling units built on it, so that essentially can turn a single family home into a triplex.

You could put grainy flat and adu additional dwelling unit in the backyard and then like another suite inside the home and allow for just more housing to be built on what would have only allowed for one family before.

And we've seen legislation to allow for more condos, more missing middle housing they call it like townhomes and other states like it really doesn't it doesn't fit the normal left right spectrum.

We're seeing this in California, Montana, Florida, Texas.

We've seen a lot of progress recently, but there's definitely more progress that needs to happen.

Yeah, I think I've seen that play out in my area because we're close to a city.

Which is of course more diverse as it tends to be.

And then I'm like on the in between where the city kind of begins and where the more like where it gets a lot wider and wealthier, And you're not seeing affordable or more condos and multiplexes being built here, But if you just go a mile down the road closer to downtown, you are seeing like a lot of condos being built up.

And you're right, I mean, these Westchester are elite.

They are the loudest and the most present they're available at these random times when these meetings are happening to use their voices.

But yeah, it is a good you know, in terms of like feeling helpless and like how what do we even do in this kind of economy.

It's like one thing is actually go to those meetings, try to get organized in your community and show up and electificial who are for more affordable housing.

Yeah, it's it's it's tough.

I also think property taxes, my god, like I'm thinking about you know, one of the as like you mentioned, you know, when you were able to buy your home a while back, and you can build up a lot of equityay, but in a place every year we get a letter from our our town and it's like, congratulations, you have your home is worth fifty thousand more dollars and by the way, we're going to raise your taxes even more.

And I mean, it's getting to the point now where my property taxes are inching up to be half the cost.

Of my mortgage.

And it to me that is one of the most crippling parts of home ownership right now.

It seems a little out of my control.

Any advice for homeowners who are feeling that pinchip like property tax assessments and how much more expensive it could make home ownership.

Yeah, so property taxes can be one of these hidden costs that people don't really think about.

When people buy a home, they think, great, my house and costs are fixed, I don't have to worry about my rent going up every single year.

But in many parts of the country, your propery taxes might be large and they might increase.

One of the things to be.

Aware of about how propery taxes work is that your local government needs to fund itself, right, It needs to fund schools, it needs to fund local infrastructure, and they are allowed to use property taxes to fund that.

Usually they can't tap into like income taxes, which are more going to the state into the federal government.

The more homes that are allowed to be built in a municipality, the larger the base is that they can spread those costs across.

So a lot of times homeowners they think that like, if there are more homes built, that's going to be bad for them because it will reduce their property values.

But the more homes that are built, the more that the local government can be efficient with how they raise tax revenue.

They can spread that tax base across more households, and that can actually make it your property taxes don't go up as much as they would have if there wasn't as much housing being built.

So I guess my advice, though, on a more individual level, is to plan for those property taxes to go up.

And if you live in a place where you are allowed to develop your property, and there are some people who are are like kind of house hacking in a way where they're renting out that additional dwelling in it that they built, and that can be supplemental income that can help offset some of those property taxes.

I know that's a big burden, but if you're really entrepreneurial and you want to figure out how you can make the most out of the property you own, you can actually make your property something that is income generating.

Heyba fam, we're going to take a quick break, pay some bills, and we'll be right back.

So I want to talk about women of color in particular, and you know, just you know our audience, Like I said, larger women of color and a job market like this where even if you are lucky enough to have a stable quote unquote job right now, you may not be seeing your wages increase as much, and at the same time, because of the low inventory.

That we have with housing that's still going on right, it can feel really limiting and like you're looking at the market and you're wondering, like, how are we gon to be able to afford anything?

I want to start building a nest egg.

Are there any programs or organizations that could help, you know, make that pathway to home ownership a little bit easier on us.

These programs tend to be very local, like usually it's a state program or even a city program where they have down payment assistance.

There's also programs run by the federal government where you can get a mortgage with a reduced down payment, and there are some programs where people who want to fix up their homes.

There are special lending programs that the federal government has through Freddie Mack and Fanny May where you can get loans, especially if you are in a lower income band.

There are also and this is kind I mean, this is maybe for people who live in more rural areas, but there's some interesting programs run by USDA for homesteaders who want to buy land that they live on and grow something agricultural there.

So that's just like an unknown program where you can get actually pretty good benefits through that.

So just throwing that out there if anybody wants to start homesteading.

It's a big thing on TikTok.

Yeah, it is.

And there's specifically ones for black farmers too.

So that's why for for brown people, I feel like that's something that they might not have ever thought about.

Okay, Yeah, I think it's just the manner of like looking at the local level and asking and looking for that kind of support.

Yeah, So what else is, like, what do you what are the biggest fact we've talked about.

We've talked about jobs, We've talked about tariffs, talked about the FED.

Are there any other outside forces that can explain the kind of predicament that we're in housing wise right now that we haven't touched on.

Well, we're in a stagflationary econ name, which is a fancy economics term that means that things are getting more expensive at the same time that it's getting harder to find a job.

Normally you only get one or the other, like the economy is either too hot and you have inflation, kind of like we had post pandemic or the economy is just in the gutter like we had during the Great Recession, and nobody can find a job.

But when you have both problems at the same time, it's just this there's like nowhere to go.

There's something that the Fed can really do because they can't lower interest rates too much because that would mean prices would go up, and they can't increase interest rates to fight inflation because that would mean that the labor market would get worse.

So if you're feeling like this economy just kind of sucks, it is because of stagflation, and stagflation really goes back to tariff's.

Tariffs make goods more expensive and it also reduces the capacity for firms to produce those goods, which hurts both prices and it hurts employment.

So if you want to blame something, I guess you can blame the tariffs.

There is there's some more challenges for the economy, like what's happening with immigration.

About a third of construction workers are immigrants, and if we are not allowing those people to come into the country or staying in the country, and that can really hold back new construction.

New construction isn't doing so well right now anyway, just because of how high interest rates are.

But that could be another stagflationary force on the housing market moving forward.

Yeah, and that all comes back to we're not building more.

I mean there was that number.

I mean it's been a couple of years now, I think, but four million.

We have some kind of crow and shortage of about four million has that budget all or making any progress toward that.

It got a little bit better during the pandemic because there was a construction boom.

The construction boom was geographically limited though it really only happened in the Sun belt like Texas, Florida, Arizona, because that's where we allow homes to get built.

And now we're at the end of that and we didn't build enough homes to get us out of that that hole that we were in, and now more people need home, so we're kind of back to where we were when that number first came out, which is that three point eight million number deficit?

Oh neat.

Yeah.

Another thing that I should probably mention is that we did some research recently on home ownership rates, and like I said before, the number of homeowner households has gone down.

If you look at the home ownership rate.

It's really only Black households unfortunately, where their home ownership rate is declining, and that might be connected to what's happening with these federal layoffs.

Black people are more likely to work federal jobs, especially black women.

Black women are more likely to be the heads of their household than other races for that gender.

So yeah, I think I think that I think that that's quite concerning that that demographic of people, they're becoming less secure in their employment and that's spilling over to less security in their housing.

So is it that the rate has decreases that are we losing our homes to foreclosure?

Are we selling them?

Like?

Is there more information on where that like, where that's client is coming from, like how it's manifesting reality?

I get.

Yeah, it's not so much foreclosure, it's more people selling their homes and then not becoming homeowners again and then fewer first time home buyers.

Yeah, we're getting kind of squeezed from both sides.

And then you have my guests for earlier this week, two black women who pulled their resources and you know, got together and that was their pathway to you know, being able to afford a house in this market.

Daryl, thank you so much for offering those insights.

I want to give you a chance to chat about your book, because I'm never going to ignore a woman who has a brand new book on shelves right now.

So talk talk to us about Hate the Game and what it's all about.

Sure, So I wrote Hate the Game Economic cheat Codes for Life, Love and Work.

It's all about how to use economics to advance your career, to advance your goals in life.

I have some chapters about buying a home and selling a home, but I also talk about things like how to apply for a job, how to get promoted, And it's all from this perspective of game theory, like looking through your options, assessing what the options of other people are, and then doing the logic to figure out, like what is the best path forward, and how can I make a decision that I feel really confident about.

I know that in this economy everything seems so unfair, but one of the messages I try to convey in the book is that you can win unfair games, Like just because you're at a disadvantage doesn't mean you can't you know, outsmart the system essentially and find a path forward to get what you really want, and a lot of that has to do with defining what is that you actually want and just going for it.

Okay, that sounds ju see.

I'm going to need to get a copy of that, all right.

It's called hate by my guest today, Darryl Fairweather, again, the chief economist at Redfinn.

Darryl, thanks so much for joining me on Brown Ambition.

I hope to have you back again soon.

It'd be great to see you again, and it's nice to have a grown up in the room when we're talking about these housing trends that just kind of give the anxiety.

Thank you for having me.

Thank you, Okay, v a fan, thank you so much for listening to this week's show.

I want to shout out to our production team, Courtney, our editor, Carla, our fearless leader for idea to launch productions.

I want to shout out my assistant Lauda Escalante and Cameron McNair for helping me put the show together.

It is not a one person project, as much as I have tried to make it so these past ten years, I need help, y'all, and thank goodness I've been able to put this team around me.

To support me on this journey, and to y'all bea fam I love you so so so so much.

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