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Welcome back to the Velocity of Money you are listening to KFNX 1100AM Arizona's news talk
leader; don't forget you can also listen online at WWW.1100KFNX.com. Back in studio of course
Brett Fallon our favorite and one of America's best financial advisors, and a very good friend of mine
for a long time also Dan Havey. Dan, what is the name of the book?
The name of the book that I am in the middle of writing is called, "Real Estate's Future" what it is,
is a model that I created with a friend of mine. Then we are able to add I'm not believe this one it was
first brought to me, but after working on it for six months and doing a lot of research I found that we
were actually able to predict in advance through a whole series of equations and data, we were
actually able to predict in advance the top of the last real estate market here in Phoenix by six months. So
we are doing a lot more research to see if we can take that to a broader national level and see if we
can come close to actually giving people an idea in advance of the top and bottom of the real estate market
And this is not the doom and gloom type stuff, this is reality this is not media spin or anything, correct?
No, this is just numbers. That's all this comes down to numbers a lot of different equations. I am not
going to bore people with all the complicated stuff
We want the algorithms; actually I think the algorithms will be good over the air
I will send them out to you, when I was in school I started out with a degree in computers and
mathematics and eventually ended up getting a degree in finance so I've got a lot of numbers
spinning around in my head.
Well I will tell you Dan Havey the work that you have done with Velocity Financial helping us put
together this loan modification hotline and the other things that you have done, we are very
grateful and I am also very thankful for you to be on the air with us today and to talk about this. The
amount of content you have put together to talk about these first time home buyers, we just talked
about what you should do when buying a home right now, you need to make sure that you get the
seller to pay as much as they can, obviously you want to pay as little for the house as you possible
can. You want to get the seller to contribute as much as they can. But Dan why don't you talk
about what it means to be a first time home buyer or for someone who could be in the market?
Well again with the numbers we were looking at, how this came about. Like I said last year we were
working on this model. And after the real estate market kind of took a crash here we put it to the
side for a little bit and the other day I said, it is about time to resurrect that because we have to start
looking at when is it going to be the bottom of this next market and people are going to want to know
that. So I started looking at some numbers here just in Phoenix and a couple things actually surprised
me it was very heartening for me when I saw that one of the metrics that we look at is whether or not
the median…
income household can afford to buy the median priced home. And right now in Maricopa County
the median family makes $64,000 and the median priced home is $160,000. And $160,000 home is
well within the means of the $64,000 income family. In fact just running numbers at 5 1/2 to 6%
you could probably buy as much as a $250,000 house. So then I took a look at where are houses
selling right now, and I found that 78% of all of the houses that were sold in Maricopa County last
month were under $250,000.
So if 78% were under $250,000, was their range like 150 to 250 or was it all just under 250?
Well the numbers that I pulled were all the houses under $250,000. I do believe that between
$100,000 and $250,000 is like 53% of all the houses and obviously there is some of the cheap stuff that
is being sold at the repo sales and that kind of stuff right now. Like I told you before, my brother picked
up a couple of REOs over the weekend and I think he paid $30,000 each for them. And there is one
other thing I would like to say before we move on, where I think it is a great time for first time home
buyers to kind of jump back into the market is another metric we look at is year over year home
sales and for obviously the last two years the home sales declining year over year, and what we have
seen is in the last 6 months there were at least a thousand to two thousand more sales per month
than there were in 2007.
And percentage wise that is pretty high, it is not just a thousand or two thousand the percentage is
significant. Sometimes the numbers do not mean a lot but when you are talking about an increase of 20
plus percent in a few of these months