7 Non-Obvious Stats Part 2

Apr 23, 2021

We are going to spend this next session going over the numbers again, but this time we are talking our things that affect YOU personally. Like we said last time: the significance of SEVEN is that it represents wholeness and completeness. The idea of Powerful Homes is to provide every person with the mindset and tactics (information) so they can use real estate to empower their biggest dreams. In part 1 we went over these statistics: 8 billion people on earth; $300k average home price in America; 128 million homes owned in the United States; $1200 average month mortgage AND rent; 3% average interest rate today; $30 trillion value of homes in the country; $100k average net worth of an American. In this video we go over some of the key statistics that may help understand the market and current context to making a decision to become an owner. As always, feel free to text Matt directly at 303-885-1644.

Episode Links:

https://www.financialsamurai.com/the-...
https://www.cnbc.com/select/credit-sc...
https://themortgagereports.com/18520/...

Episode Transcript:

Welcome to the housing literacy podcast with host Matt Guarino, founder of Powerful Homes. Matt's mission is to empower dreams through home ownership. We're here to help. We're going to do this together and now Matt Guarino.

Hi, my name is Matt Guarino and I'm the founder of Powerful Homes. And our vision is to empower dreams through real estate. And our mission is to help 10,000 people in the next 10 years purchase their very first home or their very first investment property. Because we believe that everyone should be able to do that regardless of their age, their race, their education level, or any of the other ways our current systems may shut them out of that dream.

So how do we do that at powerful homes? We do that through a thing called housing literacy and what that is, we help people with the mindset as well as the a set of values based tactics, proven methods to help people execute their real estate goals. So how have we learned that for the last 25 years or so? I've been purchasing assets, real estate assets all over the country. Now, all different kinds of assets, land, land development. I've built from the ground up. Residential homes purchased a lot of multi-family properties, commercial properties, and throughout that whole process of buying and creating value and selling, I realized that there was a set of principles that we use. There are set of values that we use, but there was certainly a mindset. And that mindset helped us and me get through difficult times as well as the good times.

So I wrote a book last summer called Powerful Homes. We've created an online course, and we're real excited to share that with you. So our goal here is to provide this information and hopefully it's a value to you as you contemplate buying your first home, buying your first investment property. Or if you're a seller and you own a home and you want to buy a second, or you want to buy an investment property. We believe that these skills, these tactics and the mindset could be helpful to you as well.

So a couple of ground rules, if this is your first time here, welcome if you're returning welcome back. Quick ground rules are, we're not pushing any agenda here. We are just providing this information, so take whatever works and kind of leave the rest. We're not trying to sell you on anything or convert you to our religious ideas or political ideas. This is just a thing that we're sharing and we're excited to do that. And we also don't think we have it all figured out. I've certainly made a ton of mistakes. I continue to make mistakes in my career, but I try to have a growth mindset and have the right mindset to go about that. So we're just trying to be vulnerable.

We're trying to share things that others may not talk about. In some of the best-selling books you see, or certain podcasts we're trying to give you some non-obvious tips. Non-obvious things about our mindset. So those are the ground rules. So today I love this topic. I was a numbers guy growing up as a CPA in my twenties. So I kind of see things in terms of numbers and statistics. So today's topic is the seven amazing and non-obvious real estate statistics part two. So we had part one last time about housing literacy with the mindset and tactics, and the first part talked about seven statistics that had to do with the market, had to do with the national and international real estate market, giving you context.

The reason we're using seven is that that's kind of a known number that talks about completeness, wholeness, and perfection. And our whole idea here is empowerment, empowering you to have the confidence and context, to make big judgments and feel really good about them. So we're hoping that you could be whole and complete with these seven statistics and they give you the confidence. So last time we talked about real quickly, 8 billion people on earth, talked about how the world's population is growing and why that affects real estate. We talked about 300,000 being the average home price of a home in the United States. There are 128 million homes that are owned in the US, about 40 million that are not own, they're rented. We talked about that $1,200 give or take is the amount for rent and a mortgage payment today, almost the same number. It's kind of crazy to think that.

3% is another statistic, s number we talked about, that's the average interest rate today. There's $30 trillion of homes in the US ,42 trillion or so of overall real estate, which is tied with China for the number one in the world. And here's the biggest final one was that there's a hundred thousand dollar average net worth of an American at the end of their life. So those were the seven that we talked about last time. We're very excited to get into it today. And then we're going to have seven amazing and non-obvious statistics with real estate related to you and we always have a governing quote or theme, and today's is from Aristotle way back in the day. And his, it says that knowing yourself is the beginning of all wisdom. So knowing yourself is the beginning of all wisdom. So these seven statistics have to do with you or other people, individuals thinking about real estate.

And if you can project yourself into these statistics that will give you some context and some confidence about making a decision to take action. So the number one statistic today is 33, and that's the average or the age of a first-time home buyer in the United States today, 33 years old. And that's the oldest that it's ever been, and it's getting older and older and older. So the overall age of someone who's buying a property in the US is 47, which is also the oldest it's ever been. And that's up from 31 in 1981. So it's gone from 31 to 47 overall home buyer. The average, the first time home buyer age is 33, the oldest has ever been. So why is that happening? And why does it matter?

Well, today's world people in their twenties have more debt than they've ever had. A home prices are going up faster than they ever have. There's 1.7 of trillion dollars of student debt out there. So I think people are just putting it off those couple of reasons, as well as many others make it, people are putting the decision off to buy a home. So we'll get to that next one, we'll connect that to one of the other ones later.

So the next statistic that'll help you that knowing yourself as the key to wisdom is 717. So what is 7177? That's the average credit score that's used to buy a home today, 717 and having a credit score of over seven, is good, 717 is very solid.

So what's the non-obvious part. The non-obvious part is sometimes people put off buying home because they think their credit isn't good, or they have some shame or guilt around it. Maybe they have a charger offer, they didn't pay a credit card bill or something. But the crazy part is the non-obvious part is there are programs like a conventional loan. The lowest you can have is a 620, an FHA loan you could have a 580 credit score and credit scores go from 300 to 850. So 650 to 750 is kind of where you want to be. But there's programs, like I said, 620 is the conventional starting point, FHA is 580 and a VA loan is 620. So 717 is the average, but you can have a lower credit score and still get a loan. That's just something that's not obvious to everyone. All these things vary from state to state, but these are just general guidelines.

The other thing, I just want to say, when we're talking about credit scores, they're based on your payment, history, credit utilization, length of credit, length of your credit history, your credit mixed mix, any new credit cards you may have and things like that. So if you don't have a great credit score, you can get it repaired. It takes six to nine months. We at Powerful Homes would love to be your guide, if you want to looking for any thoughts on how to do that, but you can repair it. So 717 is the average. If you don't have 717, it's okay. You can still get loans at other rates and you can drive up your rate if it's lower. So that's number two.

So the third statistic about you knowing yourself and getting more wisdom and more completeness and wholeness in your life and empowering your dreams, is 6%. It's one of my favorite ones. If you asked 10 people off the street, how much do you have to put down for a house? 6% is the average down payment for a first-time home buyer. That's compared to 12% for any home buyer. But I think if you asked 10 people on the street, they might say 20%, they might say 10%. But here's the reality, it's not 20, it's not 10. It could be even as low as 3%, 3 1/2% with FHA. So there's lots of different programs out there. But the point of bringing this one up, knowing yourself, knowing what's possible is that 6% is the average. So if the average home, as we said earlier is 300,000, you might need18,000 or 15,000 or $10,000 to do that. So much lower than people think.

So, but if you are under 20%, this might be where that misunderstanding comes from. You'll have to pay a thing called private mortgage insurance which is just a fee you're kind of, you know, insuring if you default, you're ensuring that their lender will get paid back. Here's a crazy thing too, a non-obvious thing related to that. If you buy a property, it appreciates, the value's higher, you now have equity. So you can drop that PMI, they call it at any time when you get to that point. So 6% is the average amount of down payment could be as little as 3%, and you could drop the PMI. These are all kind of housing, literacy things to understand that are very misunderstood.

So the next one is 13. 13 is the number of years that a homeowner stays in a home. Even if they have a 30 year fixed mortgage. I think one of the reasons people, young people and some people put off buying a home is because they think that's a big decision. It's a 30 year commitment. Well, it is, but you can sell the property. You can move, you can refinance, but the average number of years at home owner stays put in that property is 13 years. Here's some non-obvious stuff with that. Renters if you're renting, they stay on average in a lease for three years, and there's nothing inherently wrong or right with that. But if you think about what moving every three years does, it costs money. It's very disruptive. If you're moving within the state or within your city, the average cost is 2,500 to $3,000 to move. And if you're doing that a every few years, that's a heavy expense. And that's not even including the soft costs, that's just the moving cost. And $4,500 if you're moving to a different state.

So there's disruption in being a renter, there's disruption and moving, planting your roots for 13 years. There's something that happens. There's something gets activated when you put down roots, when you buy a home, not only financially, but just kind of having a home base. So one thing about the 30 year idea, and you might be putting things off, a fixed rate mortgage can be paid off earlier. Here's some housing literacy, if you make $100 payment, every month, you will shorten the 30 year term to six years, just like that. That's something that's very interesting to know. You can also choose to have a 15 year mortgage, not a 30. But if you wanted to shorten the 30, you can just drop a hundred dollars extra into the payment every month, housing literacy right there.

So the next statistic, the fifth one is $250,000. So that's the personal gain exemption. If you own a home and then you want to sell it 10 years later, or 13 years later, or 15 years later, the IRS gives you an exemption. If you've lived in that house, and it's been your home, your personal residence, you've lived there for two of the last five years, say you had a 250,000 or gain. You don't pay tax on it. It's an exemption. And if you're married, you can, the two of you put it together and it's $500,000. Let that sink in. You have a gain of $500,000. The IRS code says that you cannot pay tax on it, and you can use your proceeds from that sale and invest in the next home that you live in and do it again. And you can do it at an unlimited number of times. Incredible.

So these are amazing, incredible statistics that are non-obvious. If you don't know that, think about that. If you own, if you make a $50,000 salary and every single time you get a check, you're paying taxes, you're paying FICA tax, you're paying other tax, you're paying the income tax. So it could be 20 to 30%, depending on all those things and your taxed by could even be up to 40%, every time it's reportable, you pay it. So when you buy a home and sell it, you choose when you sell it. And then when you do sell it, it's not taxed incredible. If you don't know that there's some incredible housing literacy.

So the next number, the sixth one is that is $225,000. And what is that? That's the amount gen Z. The new, the latest generation will pay renting for about 12 years before they buy a home. And this is going back one of the first ones, the age 33, right? By renting for a decade, so they may lose the opportunity for appreciation for a decade, if they put that decision off, plus they might lose 25 to $50,000 of tax savings getting to deduct their mortgage and their payment versus just throwing money out the window with renting. So if you take decade, that first decade in your twenties, the youngest decade there, or it could be 30 to 40, just a decade of renting or even two decades, and you were owning and getting the appreciation and having the tax benefits. And you invested that and earn 5%, that could be a million dollars 40 years later. So just let that sink in. That 225,000 you're paying in rent could be earning you appreciation and increase in value.

So, the last one, this is the one I want to sear in your minds as very interesting, fascinating non-obvious real estate statistic that will help you know yourself, is that 40 is the number. Forty is the last one. What is 40? Forty from the federal reserve indicates that it's the person who owns versus renting after a long period of time, their net worth is 40 times more than a person who just rented their whole life. Know yourself, if you're in your twenties and you're not, you're not buying and you rent your whole life. That's okay, but just know that your net worth will, and the numbers exactly are, you'll have a net worth of $6,000 give or take versus about $250,000.

Remember, from the last time we said, the average net worth of American is around a hundred thousand dollars at the end of their life. If you rent or buy versus renting, you could get to 250 like that; two and a half times average. If you rent earlier, because we always talk about the opportunity to buy, but we really love the idea of buying as early as possible for as long as possible. So if you didn't skip that decade, if you bought in your early twenties versus your early thirties, you could have another million dollars if you invested the money that you've your homes appreciated and save you taxes, staggering numbers. So 40 is the big one of all here saying that the net worth of an owner is 40 times that of a renter.

So, self-knowledge is the beginning of all wisdom, as Aristotle says, knowing where we are in our lives. And that knowing that the decisions we make today can help create resources tomorrow or down the road, so that we can be the best version of ourselves, whole and complete using these seven different statistics from last time and this time. And we can empower our biggest dreams if we do that.

So, glad you're here. My name is Matt Guarino, I'm the founder of Powerful Homes. My cell phone, if you have any questions or comments is (303) 885-1644. I would love to hear from you, subscribe to our channels. If you're interested, we'd love to have you do that and if you have any comments, feedback maybe some non-obvious statistics that you would love to share. I'd love to hear them. So again, so glad you're here. If you're here for the first time, welcome and look forward to seeing you next time.

Thank you for listening to another episode of the housing literacy podcast. Don't forget to like comment and hit that subscribe button and stay connected with Matt Guarino by visiting www.powerfulhomes.org.