PODCAST TRANSCRIPT:

Ian Robertson 

Hey Beon, I thought of the perfect ancillary service to add to my inspection companies.

Beon DeNood 

All right, what is it?

Ian Robertson 

Mirror inspections.

Beon DeNood 

Mirror inspections?

Ian Robertson 

Yeah, I can really see myself doing that.

Beon DeNood 

Do we have the drum roll sound effects?

Ian Robertson 

No, not not this one. But I just thought that was building up in my brain I had to let it out.

Beon DeNood 

I thought it’d be like interesting set of photographs to include in your inspection report.

Ian Robertson 

Exactly.

Beon DeNood 

These creepy pictures of you taking photos of yourself in every mirror.

Ian Robertson 

Oh, that’s a real that’s a real inspector thing. That you do the inspection selfies in the mirror. That’s a real thing. You know, you gotta you gotta mix it up a little bit. You gotta do like duck face. Side pose. Stick your booty out with the toolbelt on.

Beon DeNood 

It’s like, you know, when they do the those, what are they like the Matterport? Like 3d pictures. Yeah. And you’re like looking at those tours, and everything’s looking great until you get to that one room where you see them hiding in the corner or?

Ian Robertson 

Exactly.

Beon DeNood 

It’s like a Where’s Waldo.

Ian Robertson 

I like those Matterport things though. They’re actually pretty cool. I’ve actually used those very quite a bit in making purchasing decisions in the past. I’m like, wow, this is cool. Okay, I can see this. Okay, here’s the floor plan. Those are pretty neat.

Beon DeNood 

Yeah they really are.

Ian Robertson 

Too bad they’re too involved. They’re very involved. They take a while to do if you could somehow. I mean, they’re talking about technology for it. Where basically somewhere between Matterport and 360 photos with Google. You can really get some cool stuff. But that’s a little ways off. Anyways, I digress. Yeah, we have our it’s hard to believe because I feel like we just did our q2 Market Outlook. I know. And now it’s time for our q3 Market Outlook. So I mean, we’ll try something new. You heard it here at Inspector Toolbelt Talk. Two guys will talk about stuff and their opinions on stuff.

Beon DeNood 

And Ian is Batman.

Ian Robertson 

Hey, you’ve never seen me and Batman in the same room together.

Beon DeNood 

So this is this is true. It’s true.

Ian Robertson 

We’ll have to get the editing department to take that part out. I don’t know what I’m up to today. But we do have our q3 Market Outlook. And, you know, this is probably our most popular segment, because it’s all on our minds. And there’s nothing horribly niche to our industry, the home inspection industry that really talks about, you know, what’s going on and what how it pertains to home inspectors, everybody talks about the real estate industry as a whole, which we’ll we’ll touch on that because that affects us. But what does that mean for us as home inspectors? So I think I think the inspectors out there, our listeners are really appreciative of that gives them something to chew on think about as they watch the market go. Do you kind of see that too, Beon?

Beon DeNood 

Yeah, yeah, we’ve always tried our best, I think from the first time we did this segment, we’re like, you know, we probably don’t know more than the next guy. But at the same time, it’s nice to be able to have the conversation. We have some perspective in you know, this market segment. And we’re learning as we go too, so you know, I think we put it the first episode was like two guys drinking coffee, shooting the breeze about the market. You know, we are not financial professionals here. So we always insert that disclaimer, but yeah, I think that guys gravitate toward because it, it does give them a bit more insight into where things could be going.

Ian Robertson 

Well, you know, we had that podcast a few weeks back with Jay, you know, one of our other very popular segments Drinking With Jay and yeah, you know, he we talked about lessons learned because we’re a very cyclical industry. You know, inspections are up, ok now inspections are down another up again, it’s constant emotional rollercoaster. But he, he kind of hit the nail on the head. Sometimes when we’re in the midst of our busy season, it’s easy to forget, we just came out of a slow season, then we get into the slow season. And then, you know, it’s a five-alarm fire and it’s like I’m going out of business. And then the busy season comes, we’re like, Oh, hey, cool. I’m amazing. Things are awesome.

Beon DeNood 

Right.

Ian Robertson 

So we’re in the kind of the midst of, I don’t want to call it the busy season for some guys is very busy. You know, guys that were telling me six months ago that they were doing 10 or 20 inspections a month, are now doing 40 or 50. And it’s like, oh, yeah, everything’s great. The markets finally changed. I don’t know if it’s quite at that point, to be honest with you, I think is just and we’ll get into this. I think we’re just in the midst of the busier season in a slow market. Because there’s still guys out there. Actually a guy just emailed me this morning, said I’m going out of business. I couldn’t I couldn’t get enough business and you know, these are guys that have been around for a little while. And it’s not necessarily their fault or anything like that. If you have a market of you know, two hundred home inspectors and there’s 20 houses for sale. I mean, I’m what are you gonna do? Yeah, can’t sustain all of them.

Beon DeNood 

No, it’s very true numbers have come up a little bit. Are we gonna dig into this?

Ian Robertson 

Yeah, let’s go ahead and dig into it. Let’s..

Beon DeNood 

Don’t want to jump ahead.

Ian Robertson 

No, let’s dig into it.

Beon DeNood 

But yeah, you go ahead. What’s your take? Where do you think we’re at with this thing?

Ian Robertson 

Well, not to jump to my conclusion about where we’re at in the market. But I do very much think we’re in a slightly busier season in a slow market. So there was an interesting article by Forbes about the housing market forecast for 2023, the second half of it. And it’s interesting that all the things working against the housing market right now. In other words, getting people to buy a house so we can inspect it, affordability crisis, and that’s really what it comes down to. It’s almost $400,000 is the average median house price. Now, it’s like 379, or something like that. I actually have some notes here. I’ll look that up in a minute. But that’s that’s a crisis, affordability crisis, fears of an of ongoing inflation. I saw an article on CNN saying that inflation is down, but prices of things aren’t coming down. And I’m like, how does that that doesn’t, that math doesn’t add up to me. But bank sector volatility, debt ceiling drama, and they’re also now talking again, about a double whammy recession, you know, like, something bigger coming. It depends on who you’re listening to and who you’re talking to. So there’s a lot working against our market as home inspectors right now, what are you seeing out there, Beon?

Beon DeNood 

Yeah, funny, you said something earlier that I agree with very much. It does seem like we’ve seen a slight uptick, I think, what is it for the last few weeks in a row, we’ve seen an uptick in new mortgage applications, which is a pretty big deal. I think everybody’s been waiting for that to start happening. Is that the sign that we’re finally, you know, on the homestretch here, and that the markets heading in another direction? I don’t think so I don’t think we’re quite quite there yet. But in the bigger scheme of things for where we are right now, at this point in the market, I think probably your two biggest things you touched on the one is inventory, I think inventory is still historically low, even though we’re much higher than where we were at the lowest point here a little bit bit ago, but year on year, we still pretty low. So if the supply is low, you know, your pricing still gonna be up there. And your turnover is going to be lower. But the other thing right now in the market seems to be the job market. Funny enough. And I didn’t fully understand how this all works. And I’m not going to pretend to say that I do now. But it is interesting that the job market, even though like you said, Everybody’s saying, well, inflation is calming down, and you know, this, that and the other, the job market is still looking strong. Now, when your job your inflation going up in a job market being strong, they kind of don’t usually go together. So I think a lot of economists are scratching their heads. But the bottom line is that the jobs report that just recently came out about a month ago was I think, was stronger than they expected it to be, which sent the bond market in a direction that affected the mortgage rates again, so your mortgage rate went up a little bit. So you know, still not the buyer’s market that, you know, we’re hoping for as home inspectors, but it’s not as out of control as it was we’re heading into safer waters, but I don’t quite think we’re there yet. I guess that would be another snapshot for me.

Ian Robertson 

Yeah and that’s what we kind of predicted all along that 2023 was going to be meh at best, you know, I don’t think anybody really expected it to be a, you know, a banner of a year. But I did find that note that I found and this is really what bothers me. So this is according to Nar, the National Association of Realtors, the median existing home sales price actually declined slightly in May compared to a year ago. It declined 3.1% to $396,100.

Beon DeNood 

Yikes.

Ian Robertson 

I know so I’m like I wish I wish these guys at NAR could read that in context, you know, a $400,000 home for an NAR executive. Oh yeah, I’ll do that as my summer lake house you know that I’ll go to never, for the average family that costs a lot of money that the average family cannot afford, the average income so jobs look good. Okay, cool. But the average income has not gone up to meet the average house cost 400 grand, man. That’s a lot. That’s just a few grand..

Beon DeNood 

It is. Yeah, and I mean, I’m just thinking of that like, I mean, imagine if Okay, so you can maybe if you put 10 What 10% down absolute minimum. That’s 40 grand you still your mortgage is 360 at what is the interest rate now? 6.7 something?

Ian Robertson 

6.7 something Yeah, six point.

Beon DeNood 

Yeah, goodness me. I mean, that is that is mega payment. Yeah, just just on the financing part alone. Yeah.

Ian Robertson 

And that’s for an average home, that’s not a great home. It’s also not a junky home. But that’s something that you have to move into and likely do some work to. So now you have that 40 grand. And let’s be honest, if you don’t want to, we’re actually going to talk about something that’s kind of hindering people from buying homes right now, is, if you really want to not pay PMI, which is primary mortgage insurance, you have to have 20, 20%, down, that’s 80 grand. What average American family is sitting there saying, you know, what, what am I going to do with this 80 grand sitting in my bank account and the extra 80 grand that..

Beon DeNood 

Right, burning a hole in my pocket?

Ian Robertson 

Yeah, exactly the extra 80 grand I need for the new roof and painting and fixing up the basement that yeah, it’s just horribly impractical for people right now. And I think that’s probably the biggest inhibitor to the home inspection market, bouncing back is inventory, and a home not being affordable. You know, the average person who’s going to buy a $400,000 house is probably okay with skipping an inspection more than somebody was buying an average home eight years ago, five years ago. Because you know, if you have a tight budget, right, I need to find out everything. Some dude just throwing it out there saying, Okay, let me see how much money I can make off of this house and whatever, you know, they might have extra money laying around. So basically, all I’m saying is, it’s a different type of buyer. That isn’t always the best for our industry, because they’re more likely to skip an inspection because they have a little bit of cushion than people who rely very heavily on our inspection to make a good decision. Right. It’s really, really not great for our market. In fact, I don’t know what you call this the for FHFA HPI, FHFA HPI. It’s the F H..

Beon DeNood 

I think you said it quite eloquently.

Ian Robertson 

The for FHFA HPI. So the FHFA HPI, they need to come up with a better acronym.

Beon DeNood 

I think it sounds like something from a Seuss book, actually.

Ian Robertson 

The FHFA HPI represents the trees. No. But that’s an index, the Federal Housing Finance Agency been around since the 1970s. We had a record high of 398 in March of their index, which is basically the highest that it’s ever been. So it basically means that q1 2023 was just off the charts. Expensive for houses. People can’t afford that. So that’s the number one issue that’s inhibiting us right now, if you’re listening to this, and you’re like, Okay, guys, you said this past couple of podcasts. If you’re still hurting right now, as a home inspector, don’t be surprised. There’s a lot of home inspectors out there hurting. I talked to guys all day, every day. And not all day, I mean, there’s a break in between. But when..

Beon DeNood 

Really, Ian, honesty, come on.

Ian Robertson 

I have to be honest about that. I breathe in between. I have a sandwich once in a while.

Beon DeNood 

Okay, thank you, you can continue. Yeah.

Ian Robertson 

But just the other day, I was telling the guy I’m like, Yeah, my numbers are down. He’s like, You know what, I’m glad you told me that. My numbers are down too, nobody ever likes to admit that. I’m like, Well, yeah, because everybody, it’s a matter of pride. But it’s just business. His numbers were down 20%. And that’s the most common number I hear. But I hear others saying my numbers are down 50 60%. And then like the guy like this morning, he’s just like, I went as far into 2023 as I could, to be honest with you. It stinks because a guy like that, banked away money, saved, worked hard, got his business in order. He made it six to seven months in, and then finally had to throw in a towel, not because he wasn’t prepared, but because his market couldn’t support him. You know that that stinks. That bothers me. It’s like, okay, you lose a decent inspector. I won’t say he was an amazing inspector. I don’t know him that well, but you lose a decent inspector. Because of the market. It kind of hurts and he’s just gone. So but that’s where some of those things are. It’s not. It’s not all terrible. Like you said the starting in July. The average interest rate was 6.71% as of June 29, actually. So that’s not as terrible as I was expecting. I was expecting it by now to be higher in the high sevens. How about you? Did you expect it to still stay around that?

Beon DeNood 

Well, though, I really had no idea exactly where it was going. I was expecting to go lower. You know, I thought that the interest hikes have done their job and things are slowing down and we’re looking pretty good. I was expecting that we would probably be closer to the to the six point fours or lower, you know, but it just doesn’t look like things have cooled quite enough and looking ahead at like, well at the rest of this quarter and to the rest of this year. To me that is one of the big things is to see, like, where where does our mortgage rate end up? You know. And a lot of that at the moment looks like it will be fueled by, I guess is it this week or next week where there’s like more big job reports coming out. And if those, again, are, are hotter than what is expected, we could be looking at more rate hikes. I mean, either way, if it’s, if it’s strong, we’re not going in a good place for the housing market. If the jobs report is spot on, or it’s starting to cool, then we can look at a, an upswing in the housing market, I think a little bit. But the other thing to bear in mind is that inventory, I guess, throughout the year, does sort of this graduated curve, it peaks in the middle of the year, and then it kind of drops off later in the year. So right now we were sitting at a peak, if that continues on the trend, that it always has an oil start to decline towards the end of the year, it’s going to cause it further to contract. So, you know, as home inspectors we’re hoping for, you know, a cooler job market so that the rates can cool down. And that you know, the inventory that’ll bounce everybody to try to, you know, flip houses and stuff like that, or not, you know, maybe sell the house that they’re in, and we’ll bring up the inventory. But I don’t think all of those things are going to align through the end of the year, we’ve always said 2024 is going to be where things are going to pick up and hit an upward trajectory. And I don’t see anything happening before then anyways.

Ian Robertson 

No, this is going to be a lean winter, in my opinion, if you’re listening to this prepare for this winter. It’s, it’s not going to be awesome. And it’s not going to be terrible. But it’s not, it’s just not, it’s really just save up for winter, get through it. It’s there’s so many factors, inventory is the biggest thing. If you have less diamonds on the market, the diamonds that are out there are more expensive, you have less houses on the market, those houses are more expensive. Interestingly enough, Massachusetts is passing a law or trying to pass a law to bill at the moment. And it is stating that they want to not have the ability of agents to have ability to either one advise not to get a home inspection. And number two, to force them to have to have that ability for the client to choose to have a home inspection. So in other words, I can’t put in a, I can’t put an offer saying I waive the inspection. The sellers automatically have to give the person the option to have an inspection. Now a lot of people read this wrong, I actually posted it on a couple of Facebook groups, and they’re like, oh, you can’t force inspections. It’s not forcing inspections, it’s a force, it’s forcing the option of having five to 10 days, instead of saying you have to hire a junky inspector in the next 24 hours, or just no inspection at all. Now, no matter what transaction happens in Massachusetts, if that bill goes through, you know, the buyer always has an option for a home inspection, that in my opinion, is a good thing for us. I don’t think forced home inspections is good, because I think that commoditizes our industry. But a forced option for it is, in my opinion, probably going to be good for our industry, Massachusetts would be first and then historically, you’re gonna have other northeast states adopt it. And then it’ll kind of work its way slowly through the US over the years. So I’m interested to see how that comes about. But here’s something that I have been wondering about, if it will affect us in a good way or a bad way. And I’m trying to see it’s the LLPA, the loan level price adjustment.

Beon DeNood 

You’re the acronym guy today. LLPA.

Ian Robertson 

It’s LLPA.

Beon DeNood 

Here we go. Little LLPA. All right, what’s LLPA doing for us?

Ian Robertson 

LLPA, so LLPA is basically if you put five to 25% down on your house, you end up paying higher fees in your mortgage. Oh, so this was to make it offset the difference between people that couldn’t afford the five to 20%. So now, those fees get rolled over into and people against the law. It’s it’s already out there. People against the law are saying well that penalizes people for being responsible. And the other side of the law says yeah, kind of if you want to look at it like that, but it also makes it so people who can’t afford to buy a house, make it more affordable and to bring more buyers into the market. Here’s my problem with it and the thing I like about it my problem with it is we don’t need more people in the market. This does not help with that. We do not have enough inventory. If you bring more buyers into the market, which this law just did all you do is add to a problem, So that part makes absolutely no sense to me, then, the only good thing I can say is it makes that $400,000 house less affordable to one crowd and more affordable to another. And kind of going back to what I said before, you know, people with less of a cushion rely more on home inspector. So they, they’re going to tend to hire us more. So it could help us that way. But that’s really spatial reasoning that that one is going to affect our industry very directly. You know, basically, I don’t know how the law works, I’m not going to pretend like I do. But to me, it kind of like sounds like saying, Okay, if you pay 20%, down, you didn’t have to pay primary mortgage insurance. But now we’re going to add something that basically almost equals that to you. So these other people can, can buy a house and not have to pay primary mortgage insurance. So it’s a weird thing that’s going to, we’re gonna see it translate into our market. And I’m kind of anxious to see how that how that translates. What are your thoughts on that?

Beon DeNood 

Yeah. So let me understand it. Right. So it actually penalizes or adds this fee onto folks who have a 20% plus like..

Ian Robertson 

Between 5% and 25% down.

Beon DeNood 

Oh, really? So?

Ian Robertson 

Yeah. As low as 5%. Yeah.

Beon DeNood 

Okay.

Ian Robertson 

And this, this is, according to Forbes.

Beon DeNood 

Oh, man.

Ian Robertson 

This is this was the by the current administration, federal, federal law.

Beon DeNood 

Okay. So then if you have more than 25%?

Ian Robertson 

I don’t know how that works.

Beon DeNood 

That’s an odd one. I guess I’ll just have to understand how it works completely. But, I mean, obviously, in a in a buyer’s market, when things are looking good on the other end of all of this, it could probably be beneficial, you know then but I guess I’d have to and like you said, I’d have to understand the structure of the law a little better.

Ian Robertson 

Yeah. And that’s, I’m just giving a basic overview of the law. And that’s, that’s basically just all it means if you put more down and, yeah, personally, I’m like, Okay, so I’m a responsible person with a high credit score, pay all my bills, I save 15 years to put 25% down on my house. And I work really hard and you penalize me. So in the minds of buyers, you know, it’s kind of like, well, that’s not fair. And to be honest, probably isn’t, nothing’s fair. When it comes to us, though, I just worry about it putting more buyers on the market, it’s not going to create a good thing. I mean, government and all that stuff, they don’t look at things from the home inspectors perspective, you know, until after, you know, now they have all these lawsuits, one of the reasons Massachusetts is putting this into law is because everybody’s skipping inspections. Now afterwards, they’re like, Oh, we needed that those guys and gals that go out there and look at houses, we needed that otherwise, it cost government and counties a ton of money, and that we can’t afford this.

Beon DeNood 

And I mean, this kind of legislation, it does take quite a while to go through the whole, you know, be drafted and go through all its whatever drafts and finally get approved, signed to law. So sometimes, from the market condition that, you know, made everybody feel that this was a good idea. By the time it’s actually implemented, maybe you’re at a totally different time in the market, you know, where it’s not going to have the desired effect. So it may be one of those things. I just, I quickly Googled, I was like, How does LLPA work? And it’s explaining to me how longest prefix match algorithm works.

Ian Robertson 

Oh, good. Yeah, that’s not it.

Beon DeNood 

Yeah, I don’t I don’t think that’s what you were looking at.

Ian Robertson 

No, try using voice to text and say LLPA. So but the that’s just one more thing out there. You know, it could be good. It could be bad, but it really comes down to inventory. Interestingly enough, inventory is not going to come in my opinion from existing inventory. Depending on who you ask, there’s CoreLogic, which said 97% of borrowers have mortgage rates below the current 6%. Well, below 6%, not even below the 6.7%. And then, I believe it was the National Association of Realtors or one of the other organizations said it was like 84%. So either way, the vast majority of people have interest rates on a house that are lower than what they can get an interest rate for now. Exactly. People aren’t going to move. Here’s the thing. If you look at Sam Khater chief economist at Freddie Mac, he said in a press statement, if the predicament that we see talking about the market with low inventory and all that stuff, if the predicate predicament continues to limit supply, it can open up an opportunity for builders to help address the country’s housing shortage. So it’s that’s really what our industry is feeling right now. A housing shortage. If you have less trains and you’re a train inspector, that stinks if you have less rocket ships and a rocket ship inspector That’s stinks. We have less houses. And we’re home inspectors. Yeah, that’s stinks for us. Yeah, it’s just simple math.

Beon DeNood 

Yeah it really does. It makes logical sense, doesn’t it? What you mentioned with the, you know, existing homeowners that you’re not going to be wanting to change for a lesser situation, you know, a more expensive payment somewhere else, unless you’re really desperate to have to move or, you know, you just have to, but yeah, with builders, too, it seems like builders came out swinging, what was it like a couple of years ago, year and a half ago. And they were actually picking up really, really good until the inflation turned against them. And the cost of building houses that they had sticker prices on, for sometimes, I mean their margins were getting razor thin, if not being annihilated. So they slowed down. So you know, that funny enough around here, I must say, it’s quite amazing in Florida to see how much construction is going on. There is a ton of construction going on. But I was reading another article where like the dynamics of Florida living has has changed, because the attraction for a lot of people who are moving to Florida, especially during the pandemic, was I can move away from my house up north somewhere, and that money converted into a much more superior property down here, you know, and prices are low down in Florida, even for groceries and everything else cost of living is lower. But all those dynamics have changed, property here is now expensive, cost of living is going up. So yeah, it’s that even has slowed things down a bit. You know, even if you want to consider the the old flow that we used to have to the south, at least it’s changed for Florida or changing I should say.

Ian Robertson 

You know, it’s interesting, we’ve talked about it before on the show that everything is very regional. In fact, one of the reports that Forbes actually put out, talked about how Western states are hurting right now. And more so than other states. So you have like Seattle market, most of California, and they picked out, you know, Los Angeles and San Diego, and you know, all the big markers for those areas. And they’re hurting a little bit more on the market than like Western State or Midwestern states rather, which I thought was interesting, because the Midwest was the one that was hurting. What was it six months ago, or eight months ago, they were the ones that were hurting. And it’s basically just a big back and forth. Like, okay, we came up on inventory a little bit. Okay, now we’re low on inventory. Okay, now we’re back up. And then prices are lower, they’re higher. And it’s just a constant back and forth. I was looking at that report, unlike it just flip flopped one side of the country to the other. And then probably next time we do this, it’ll go back the other way. But I really think a lot of this comes back down to the builders, because here’s a stat. Jake McDowell, Chief Investment Officer and co founder of Palisades group, I have no idea who that is. But he is, he is recognized nationally. So let’s listen to him. He says all right, inventory is approximately 46%, below the historical average, dating all the way back to 1999. So we have half the houses that we’ve ever had, at our lowest. And then on top of that we have more buyers than we probably ever had. So those job reports that you’re talking about. Good stable jobs, creates more buyers. But the problem is, this is happening at the wrong time. Yeah, you have a great job, I’m gonna go buy a house. Oh, good. There’s five buyers for every house out here right now and you have to fight like a crazy person over, you know, a scrap of meat. It just happened at the wrong time. So all that translates into, we kind of get stuck with no houses to inspect. So if we’re listening, new construction, first of all, hard to market in some areas, my market, people do not like to get new construction inspections before they buy their house or like it’s new, it’s fine. And you know, there’s good agents and there’s bad agents, I always work with the good agents, but even the good agents, I hear them say a lot. Well, it’s a new house, everything should be perfect. So okay, that’s gonna be a hard sell. If you’re in a market like that some markets, you know, like, I hear Texas, they get a lot of new construction inspections, my state, not really a whole lot. We really want to push those right now because builders actually they have an index that measures how happy builders are and how they the outlook on the builders market. And they gave them an index of 50 plus, which anytime you get above 50 builders are basically gung ho about everything. I don’t know how they measure this index of builder happiness in cans of beer. I don’t I don’t know. But basically, the 50 means they’re really like yeah, we’re going to crank out some houses. So if that’s the case, that means inventory will come up, but it’ll take probably a year before we start to see the benefits of that again, going back to a little less than a year from now is going to be spring of 2024. Going back to what we’ve been saying all along, that’s going to be our first signs of hope, spring of 2024. So 11th month inspections will start to roll around then, people will probably be buying some of these houses, some people will buy a house and move out. Foreclosures are low. So don’t count on foreclosures happening anytime soon. But it’ll just start making the market move a little bit more with this extra inventory. If builders actually keep up with what they say they can do. But builders have hit some hard times, like you said, Beon, building supplies are still up. I mean, it’s not like pandemic prices, like a sheet of three quarter inch plywood, back a couple years ago was like a slice of gold.

Beon DeNood 

Right. Yeah, at least now they can price their houses according to what the market prices on materials are, you know, yeah, and put them on the market and have reasonable confidence that they’re not going to get burned, that, you know, prices are going to continue soaring. So maybe maybe that makes them happy. And accounts for the higher index that they feel that things are stabilizing a little bit, as far as their own expenses are concerned. So but it’s a good point that you make, because then by the time we get to next year, we have more inventory, houses that have been sold, new new homes that are 11 month, inspections are coming due on, if our economy is slowed down a little bit, inflation has come down, interest rates have come down, all of those things may may account to I don’t know, if we’re going to see an immediate boom, but we’ll see things going the other direction. And it’s going to be a new trend, as opposed to a little blip on the radar.

Ian Robertson 

Yeah, that was well put, it’s not going to be a boom, it’s going to be the first glimmer of light and a new trajectory. Because, you know, there’s still some things working against builders, you know, shortage of workers is still a big thing. So actually, Jay Wynn brought that up on his podcast a few weeks ago, and I did a little bit of research. And that is actually one of their major concerns, cost of materials and lack of any kind of help, let alone skilled help. So they, they want to build 100 houses, but they can only do 50, because they can only get so many workers, right. But if all of this keeps up at the pace it is now we’re still looking at the beginning of a new era, so to speak, a new wave by spring of next year. Now. It does make me wonder it’s an election year in 2024. We are not political in one way or another. But anytime there’s an election year, things happen in one way form or another. I love election years in my area because they start fixing the roads. That pothole, the sat around for three years, all of a sudden, magically, six months before the election. We have a new paved road. I’m like, Huh, well, either way, I don’t have to drive over that pothole anymore. So I’m kind of wondering what’s going to happen with that? Are they going to lower interest rates to create like some sort of small boom, and kind of move some things along and get some people out of their houses with their low mortgage rates? You know, somebody’s at 3.5%? Can you entice them out of the house to a different house at 4.2%? You know, maybe that may work, right? Because that’s not a huge difference. But I’m kind of anxious to see how the election year goes, it could go the other way, too. But all in all, I still have a positive outlook. And I’m still, this is not a negative podcast, we went over all the all the difficulties, but it’s all falling together to be a new a new wave this coming spring of 2024 If you can hang on. And unfortunately, some guys are not hanging on some some it’s been a long time hanging on to be honest with you. It’s been a little rough.

Beon DeNood 

I think maybe that’s the overriding message here is yeah, we seeing things ticking in the right direction. But we’re not quite, we’re not quite through the woods yet. We’ve got some other stuff to happen. I mean, with you mentioning election year coming up, of course, it’s a try to avoid recession at all costs kind of situation. But if we were just to go there for a second, if we were to see more recessionary moves, no matter, you know, who’s seeing it, how are they seeing it, but if we happen to go in that direction, would it necessarily be bad for the home inspection industry? Or how do you see that?

Ian Robertson 

No, and I almost said this before, but I forgot because I was going off on a different point. I get lost in my own head. But I know exactly what you’re saying. We as a home inspection industry want a recession, not because of the recession itself. But just from the purity standpoint of every time there’s a recession it’s good for our industry, when there’s a boom, it’s not. So recession means less buyers on the market. Recession means more homes for sale. And again, this sounds evil and horrible to anybody who would listen to this outside of our industry. It’s not, I don’t mean it the way that I’m saying. But a recession is good for the home inspection industry. It means house prices come down and become more affordable. Interest rates will usually go down and people have lower interest rates. Everything falls into place when there’s a recession. So I hear home inspectors telling me, I’m scared of the market being bad and a recession, I’m like, those two things don’t go hand in hand. It’s either a recession and things are good, or the real estate markets good and we’re falling apart. So recessions are good for us, because a recession usually means at least a good five to eight year period of green work. Yeah. Little worries. And then we roll back into the same cycle. So yeah, if there’s a recession, that’s a good thing.

Beon DeNood 

Yeah. I think that’s, that’s super valuable information. And hopefully, that, you know, you as a home inspector can walk away with a few of these nuggets of information to be able to know how to interpret things as they happen, you know, because maybe you are kind of hanging by a thread. And you hear oh, recession you like, That’s it, I’m done. It’s like, whoa, you know, look at the look at the information in the context of our industry and what it may mean, and I think that’s just what we try to do for everyone is, is try to interpret these moves and see what effect it may have, so that you can have a better idea of how to plan or how to react to what to expect.

Ian Robertson 

It’s a sad reality of our market that, you know, dentists don’t like to talk about, you know, cotton candy, being good for their business. You know, it’s, it is what it is, when there’s a recession, we do well, do we want a recession? No, we care about our family, we care about our neighbors. We don’t want a recession. But when it happens, it is technically good for the home inspection industry, because that’s what people rely on us the most. Hey, there’s a recession, I really need to make sure this is the right home. Hey, we’re, interest rates are low, we’re taking a chance buying a home, can you make sure that we’re protected? That’s when people need us the most. You know, Superman flies in when it when all the bad guys are destroying the city. So when the city is falling apart, we swoop in our business does really well. Don’t wear a cape in a crawlspace, though, that gets weird. That’s a, that’s a problematic situation.

Beon DeNood 

You’re speaking from experience?

Ian Robertson 

No..Never.

Beon DeNood 

That’s awesome. Yeah, that’s great. I mean, you know, funny doing this. I mean, I don’t know how many market updates we’ve done so far. But I kind of feel tired. You know, I’m not a home inspector hanging in there at the moment. But I feel tired with you guys. You know, it’s been a long haul. So hopefully, we can see things heading in the right direction. Probably going to slow down a bit through the end of the year here. But I really hope 2024 is going to be the year we’re all looking at and hoping for.

Ian Robertson 

Yeah. And again, just summarize basically what I think I’m saying, and maybe you can correct me on what you’re thinking, Beon, rest of this year, we’re still riding the high of the curve. We’re going to do okay, late fall hits. And I think late fall, early winter, we’re going to feel we’re going to feel the burden of just a natural sway of the market. I think spring I think builders will have caught up for the most part by mid spring-ish. And then it’ll be working its way up from there. I think we’re almost through the worst of it. And we have a glimmer of hope, a lot of things have to come into play. But that’s where I’m at at the moment, how about you, Beon?

Beon DeNood 

Yep, no, I would agree completely. And if inventory numbers come up higher than we anticipate in the spring, and if interest rates come down lower than we anticipate. We could even see a bit of a boom through the spring and summer next year. But if anything, we’ll just see see things moving in the right direction. But hang in there. Should see better times ahead. I guess.

Ian Robertson 

One more thing as we exit out of here, because I appreciate you being on with us. One other element is there’s a lot of talk of boomers, they have housing stock right now that they’ve been sitting on you bought a house for 50 grand in the 80s. Now it’s worth 500 grand, you know, they’re retiring, and a lot of them go into communities, because you’re making your money stretch over time. So you’re taking that 500 grand from the house and putting it into a monthly payment and into your retirement. That is one thing that may actually work to our advantage here soon. Because as they say, Okay, we’ve topped out, I got to sell now or I’m never going to sell at all, then that could also cause an inventory influx in the spring as well.

Beon DeNood 

Interesting, yeah.

Ian Robertson 

So keep an eye on that because boomers are what? Late 50s to mid 60s right now. So this is the time where the vast majority of them are going to start thinking about selling their home. Because next couple years if they’re doing the math, they’re like, Man, I could make 100 grand less in a couple of years. Right? Why don’t I do this now.

Beon DeNood  

Right.

Ian Robertson 

So keep an eye on that metric as well. But Beon, thanks for being on, always great having you.

Beon DeNood 

Cool.

Ian Robertson 

I like how you wore a plain shirt so I couldn’t tease you about what you were wearing today.

Beon DeNood 

Totally neutral today, man.

Ian Robertson 

Yeah. But thanks a lot. Enjoy the rest of your day. And we’ll catch you next time.

Beon DeNood 

All right, thanks, Ian, take care.

Outro: On behalf of myself, Ian, and the entire ITB team, thank you for listening to this episode of inspector toolbelt talk. We also love hearing your feedback, so please drop us a line at [email protected].

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