150: What We’re Reading VII: Home Price Drops, Medicare Premiums & Kim Kardashian

Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb, and Austin Wilson.

Austin Wilson:

All right. Hey, hey, welcome back to The Invested Dad’s Podcast, a podcast where we take you on a journey to better your financial future. I am Austin Wilson, research analyst at Hixon Zuercher Capital Management.

Josh Robb:

And I’m Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?

Austin Wilson:

Well, we would love it if you would subscribe if you’re not subscribed already. That way you get new episodes every single Thursday when we drop them and leave us a review wherever you listen to us, that way we can help more people.

Josh Robb:

That’s right.

Austin Wilson:

So today, Josh we’re going to be talking about, yes, what we’re reading, because leaders are readers, readers are leaders, leaders read. Right? Did I say it enough?

Josh Robb:

Yes.

Austin Wilson:

So, we each have three articles that we found interesting and what we think about them, and we’ll chat about them as we go along. Go ahead, Josh. Knock it off.

Josh Robb:

All right.

Austin Wilson:

Knock it off? Start us off.

 

[1:02] – Josh’s First Article: Required Minimum Distributions

 Josh Robb:

We will link all these in the show notes for your reference. My first topic involves RMDs (required minimum distributions). And so again, as a high-level reminder, if you have an IRA or a 401k, any kind of tax deferred account, if you hit the age 72 and above, you have requirement that you have to take out a certain amount each year. But this conversation is around how you take them out in a down year. If you remember just a couple things. They actually recently proposed a life expectancy table change-

Austin Wilson:

Uh oh.

Josh Robb:

which actually was a good thing. What the idea there was is they were changing how long they were calculating this, because people are living longer and so in fact it actually adjusted things a little bit. But what they found in doing so, they looked at accounts and how much people were drawing, and as the IRS is putting this together, they found that it’s estimated that only 20% of people who are subject to RMDs take the minimum.

Austin Wilson:

Gotcha.

Josh Robb:

So the 80% take more than the minimum.

Austin Wilson:

Right.

Josh Robb:

Because that’s how math works with percentages.

Austin Wilson:

1 minus 20.

Josh Robb:

Yep. So, the 80% though are taking more because they need it for living expenses. The concept there then is, those 80%, they really don’t care, they’re needing it and spending that money. But for that 20% and for those people who say, I have this required distribution, maybe it’s more than what I need, or I don’t need anything right now, but the market’s down.

And how they calculate RMDs is they take your beginning value or the ending value of last year, which is the same 12/31 and 1/1, it’s the same value, depending on looking at close of the one day start of the next day. But that is, that starting point’s how they calculate your RMD for the year. So in a year like this year, 2022-

Austin Wilson:

2022 not a good year.

Josh Robb:

Not a good year. The market’s down let’s just say 25%. And so the value it calculated on, and again, I don’t know if everybody’s IRAs are 100% in the stock market, but I’m just using these high level calculations. But if your value is 25% lower than what it was at the start of this year, your RMD does not change. You still have to take that full RD on the higher value they calculated on-

Austin Wilson:

Even though you’re pulling it out low.

Josh Robb:

Even though you’re taking, your actual withdrawal when you do it, let’s say you wait till the end of the year, you’re taking a higher withdrawal rate than they calculate on, because it’s on a lower balance at that point. By the way, just so you know, at age 72, the required distribution factor is 27.4 and you divide that into your amount, which means you’re taking 3.65%.

So, we’ve talked historically that 4% rules industry normed for calculating kind of withdrawal rate. You’re starting RMDs below that when you hit 80 years old because it increases over time. It’s a 4.95%, so 5% withdrawal rate, and that 90, you’re taking 8% of them. So, it increases over time, but your starting rate is below that 4%, which is why they design it to last your lifetime. That to say, that withdrawal, whatever it is, if it was a 4% withdrawal to start with, if you’re down 25%, it’s a little bit higher withdrawal rate.

So, what could somebody do if they say, I really don’t want to sell my stock and send it out my account because I don’t really need it, and I’m selling it at a lower point.

Austin Wilson:

Not good.

Josh Robb:

So, one thing you can do is you can do an in-kind RMD.

Austin Wilson:

I love in-kind.

Josh Robb:

It’s great. So in-kind meaning I don’t sell the stock. Instead, what I do is, let’s say I have an RMD of $10,000 and I don’t really want to send out $10,000, and I don’t need $10,000. I could just take one stock in that account and send $10,000 worth of that stock, still holding the stock into a taxable account brokerage account.

Austin Wilson:

Just a non-IRA.

Josh Robb:

It’s out of the IRA.

Austin Wilson:

Yep.

Josh Robb:

I will owe tax on that $10,000, but I’m not going to pay it on that distribution, I’m going to pay it out of cash that I have. But in doing so, I can allow that stock to recover, and I’ll only… Whatever it is, whatever’s down, I could allow it to recover. And so, I’m distributing my required distribution in my scenario $10,000, and I could let it grow back up to whatever it was before, $12,000 or whatever.

That’s one idea. You still a tax, you’re not getting around the required distribution. The difference is you’re just not selling it. And one thing to keep in mind is once you move it to the taxable account, cost basis matters.

Austin Wilson:

Yeah.

Josh Robb:

Cost basis.

Austin Wilson:

What cost basis do you use?

Josh Robb:

Correct. So, cost basis, because in the IRA growth is irrelevant, cost basis starts at the distribution.

Austin Wilson:

Gotcha.

Josh Robb:

So, if I have a stock that’s trading for $10 a share… In a sense it starts your calculation point at that. So, if I have a stock that’s trading for $10 a share and I need $10,000, I take that many shares, put it into a taxable account. In that taxable account, the cost basis starts at $10 a share.

Austin Wilson:

Not when you originally-

Josh Robb:

Not from the original, but that also means it’s short term for the first year because it’s starting at that point. Even though if I held that stock for 10 years in my IRA, doesn’t matter. On that distribution, I have to wait a year before I get long term capital gains, and any growth or loss will be calculated on the price at the distribution. Important that you make sure it’s tracked that way when it gets over to that taxable account.

Austin Wilson:

Yep.

Josh Robb:

That your custodian or whoever does that, they don’t carry that cost base over. But that’s one way to do that. And in a sense, if you do get gains, you’re only paying capital gains rates instead of income on that growth.

Austin Wilson:

Yeah.

Josh Robb:

So, just something I think about. Yep. So that was an article that for some people who don’t need a required distribution, forced to take it. We’ve talked about QCDs, there are other things you could do to avoid taxes. But if the tax aren’t, you’re concerned about recovery, this is one way to do it.

Austin Wilson:

There are certainly opportunities that a challenging market environment gives you. This is one of them, tax-less harvesting is another one, depending on your situation, talk to your advisor.

Josh Robb:

And I will say too. Nowadays, most custodians, they don’t charge a transaction fee for buying and selling. In a sense, you could sell your IRA, send it to a tax broker, and rebuy it. There’s no, there. All you miss on is how many days that it’s sitting cash in between all those transactions.

Austin Wilson:

Yeah.

Josh Robb:

So in a sense you’re doing the same thing, you’re just moving it over in-kind. But if you wanted to, you could sell, move the cash and then rebuy the same holding, which then would start your cost basis at the exact same point, and that’s all you’re doing. You’re just saving those steps of selling and rebuying. So that’s the idea. Thought it was interesting.

 

[7:08] – Austin’s First Article: Kim Kardashian Vs. SEC

 Austin Wilson:

That is interesting. All right my first article is about Kim Kardashian.

Josh Robb:

Oh yeah.

Austin Wilson:

So admittedly I don’t keep up with the Kardashians.

Josh Robb:

That’s true.

Austin Wilson:

Which I think is the name the show that made them all famous, right?

Josh Robb:

Yeah, Austin doesn’t keep up the Kardashians. Yeah.

Austin Wilson:

Yeah.

Josh Robb:

That’s the show.

Austin Wilson:

Yep exactly, that’s the show.

Josh Robb:

Yep.

Austin Wilson:

So, news out recently, this is October 3rd, I think this came out. Kim Kardashian pays over $1 million, I think $1.3 actually, to settle SEC charges linked to a crypto promo on her Instagram.

Josh Robb:

Oh boy.

Austin Wilson:

Apparently, Kim Kardashian failed to disclose a payment she received for really pushing an advertisement for a crypto asset on her Instagram page. This is such an interesting precedent because, if you notice it was the SEC that she’s paying.

Josh Robb:

Yes.

Austin Wilson:

SEC stands for?

Josh Robb:

The Southeastern… Wait.

Austin Wilson:

Oh yeah, that’s right. No, the Securities Exchange Commission.

Josh Robb:

Oh yeah, that’s right.

Austin Wilson:

Keyword being securities. So, the SEC essentially took her to court to say, you are promoting a security and you did not disclose that. The interesting thing is of how the SEC treats cryptocurrencies.

Josh Robb:

Yeah, they haven’t defined it as-

Austin Wilson:

They haven’t defined cryptocurrency as a security. However, she settled already. So, she must have felt like it could have gotten worse, so I’m just going to settle now. But with doing this, she also agreed not to promote any crypto assets for three years and to cooperate with an ongoing investigation probably around other people doing the same thing. Actually, in June 2021, she was also in another similar heat with the SEC and regulators over a different post. But this is a thought that I had as just, is cryptocurrency a security? As of now, the SEC has not defined that as that.

Josh Robb:

It said, no, it’s not, but we will come after you for it.

Austin Wilson:

That’s my, it’s just very confusing to me. So that’s why I found it so interesting. Again, we’ll link this article in the show notes as a CNBC article. The chairman of the SEC, Gary Gensler, his quote was, “This case is a reminder that when celebrities or influencers,” which is not me or you, “endorse investment opportunities, including crypto asset securities,”-

Josh Robb:

Ah, he used the word again.

Austin Wilson:

… “It doesn’t mean that those investment products are right for all investors.” Now, in her post, I saw a screenshot of it. It said, “#ad” in it. So I think she was kind of trying to cover that being a promotion, but apparently it wasn’t enough to satisfy the SEC. But-

Josh Robb:

Oh no, it’s not. The marketing rules for our industry-

Austin Wilson:

Here comes our compliance officer.

Josh Robb:

Yes. The marketing rules for our industry are very clear on what you need to do when you are rendering some sort of investment advice. And just saying, “this is an ad,” does not cover it. And who you are, even if your job is not normally to be an advisor, if you put yourself out as a person who is giving advice or offering advice, and I saw her one Instagram post, but I guess you could say she touts that what she says is advice, I guess-

Austin Wilson:

I guess.

Josh Robb:

… And other things. So long story short, in our industry, you really don’t want to kind of slip in and out of as a non-professional saying, “Oh, I’m getting promoted, I’m going to push this or that.” There’s a lot of regulation you need to be aware of to get that done correctly, and to not have this happen to you.

Austin Wilson:

And it’s a very popular thing on places like TikTok, to be an influencer giving personal finance advice when you have no credibility whatsoever.

Josh Robb:

Now personal finance advice is a little bit different than rendering security advice, which is where the SEC’s mad at here, because she was actually mentioning cryptocurrency in this case. I think it was, it is Ethereum? I don’t even remember which one she was mentioning.

Austin Wilson:

No, it was a new one.

Josh Robb:

A new one, okay. So, some of the TikTok ones, again, I’m not a huge fan of because most of their advice is kind of weird and out there anyways, is they’re not giving individual security advice, which is really what the SEC cares about.

Now there’s another marketing thing where you’re rendering investment advice when it’s financial planning, and that is a whole thing. But if they’re clear that they’re not a professional or… Which usually you hear them say that in some way or another, and they’re just giving an opinion on financial planning, that’s a little different. There’s a little bit more wiggle room there.

But when you actually mention something that you are talking or encouraging them to buy, that’s where the SEC’s really going to pay attention.

Austin Wilson:

That’s the problem. So, I guess my takeaway from this whole thing is, is cryptocurrency a security or not? The SEC wants to regulate like it is, but thus far it’s not.

Josh Robb:

Yeah.

Austin Wilson:

Also, I think Kim Kardashian has a net worth of 1.3 billion. So, I don’t think she’s going to be feeling-

Josh Robb:

What was interesting was I think she only got paid, how much did she get paid for this? It was less than a million, I know that.

Austin Wilson:

So she lost money on the deal.

Josh Robb:

Well, that’s what surprised me is, the penalty of the SEC wasn’t just you have to pay back what you got, it was we’re going to penalize you for doing this. So that was what was interesting to me was, I feel like she got paid like $200,000.

Austin Wilson:

It also probably depends on when she did the promo because-

Josh Robb:

Oh yeah.

Austin Wilson:

If she would’ve, before the crypto world fell apart, done that, she probably would’ve just lost a bunch of money on the whole deal.

Josh Robb:

Oh yeah.

 

[9:07] – Josh’s Second Article – Medicare Part B Premium Cuts

 Austin Wilson:

All right, so that’s my first article. Josh, what is your next article?

Josh Robb:

All right, so let’s talk about Medicare.

Austin Wilson:

Ooh, you had me.

Josh Robb:

Medicare.

Austin Wilson:

We were talking about RMDs, now we’re talking about Medicare, we’re just ticking all the boxes.

Josh Robb:

Oh, this is exciting stuff I read.

Austin Wilson:

Yep.

Josh Robb:

Amazing stuff. The Department of Health and Human Services.

Austin Wilson:

DHS.

Josh Robb:

Yes. Part of the Center for Medical and Medicaid Services, which is the larger grouping. Long story short, they’re the ones that decide how much you pay for your costs. They just came out and said that Medicare part B, which is the secondary… So Medicare part A, if you qualify for social security, is included, there’s no premium for that. Part B, there is a premium. They’re actually going to be cutting the premium.

Austin Wilson:

Wow.

Josh Robb:

Which is crazy when you think inflation is 9%+ percent this year for all the different things.

Austin Wilson:

… Get charged less.

Josh Robb:

They’re dropping 3.1% for next year.

Austin Wilson:

Wow.

Josh Robb:

Yeah. So you’re going to go from $170.10 to $164.90. That’s the average cost per month. Pretty good deal for people on Medicare. And the deductible is also going to go down about 3%. So not only premium, but your deductible is going down. So that’s great news. This is only the third time since 1965 that part B premiums have gone down.

Austin Wilson:

Wow. Third time. That’s a long time.

Josh Robb:

And now they mentioned the reason for that is, in 2023 that premiums are going down because spending on the new Alzheimer’s drug and other types of care turned out to be lower than they anticipated.

And so, they set the premiums on what they expect the next year costs are going to be. Because Medicare’s supposed to not be making any money. It’s a government program, so if it’s lower, they adjust it for the next year, which is great. But again, this is the third time since 1965. But for anybody on there, that’s great. Now, Medicare part A, if you don’t qualify for it to be free, those premiums are going to go up a little bit. Because those costs have not seen a reduction.

Austin Wilson:

So, Josh.

Josh Robb:

Yes.

 

[14:16] – Dad Joke of the Week

 Austin Wilson:

That’s fascinating, but I have a dad joke of the week for you, I think you’re going to like this one.

Josh Robb:

I’m ready.

Austin Wilson:

What kind of insurance would Moses have if he was still alive today?

Josh Robb:

Oh man, I’m not sure. What would he have?

Austin Wilson:

Medicare Part C.

Josh Robb:

Oh, part the C, I get it. Part C.

Austin Wilson:

See, I had to follow the Medicare discussion up with a Moses joke.

Josh Robb:

I like it.

 

[14:27] – Austin’s Second Article: Working from Home Vs. In-Office

Austin Wilson:

All right. The next article I had was from Bloomberg, linked in the show notes. Probably a paywall, so sorry if you can’t access the full version. But titled, Work from Home or Return to Office, A Rift is Emerging Among US Workers.

There is this tension between go to the office and work from home amongst not just United States employees, but employees around the world. There was a big survey done, 3,500 people commissioned by a company called Good Hire, which is a firm that performs employer background checks. They found that almost three quarters of respondents said companies should pay in-office employees more than work from home colleagues. And two-thirds are concerned managers view full-time remote workers as lazier. So those are statistics based on that pretty sizable group of people there.

At the same time, a third group of respondents are willing to quit their jobs or start looking for a new one if forced to return to the office full-time. Now that share is down from last year, which underscores a growing pressure in the workplace to get back to the office there. A majority think that work from home employees will be more at risk to lose their jobs in a downturn. And both camps agree on one important matter. Working remotely will probably hamper their career.

Josh Robb:

That is interesting. So, all those people are agreeing on that piece.

Austin Wilson:

Yes.

Josh Robb:

But yet a group of them-

Austin Wilson:

Still will do it and will threaten to leave.

Josh Robb:

A third of them will say, I will leave if I have to come back.

Austin Wilson:

Isn’t that crazy?

Josh Robb:

Even though I know my career could be hampered from me working, at least part-time. Now a follow up with that, while you’re thinking about what you’re saying. I saw an article that talked about Fridays being one of the ideal times to be working in the office, which seems to counter like why you would… You could have a longer weekend without the commute. But the reason when they talked to people was, less traffic. Because a lot more people are taking that Friday to be a work from home day, fewer people in the office so you get more done even though you’re there, and less demand on the office printer, things like that where you can just be more efficient.

Austin Wilson:

Yeah.

Josh Robb:

Thought that was interesting.

Austin Wilson:

Listen, if you have that opportunity, you take Mondays as your work from home day, and then work the last-

Josh Robb:

I saw that as part of this, I thought, that’s interesting.

Austin Wilson:

That’s interesting. I mean, during COVID we worked from home for a short period of time as we were required to or whatever. And there for a little while it was semi-convenient to do this or that, but the productivity levels being in the office is so much higher. So, I can see how people could think that people are slacking when they’re not there because man, you just got to come to work every day and do your thing, and that’s good.

It’s also a lot easier to separate work and personal stuff when you have that separation so, I don’t know. I like being back in the office. I know that a lot of the places around here are mostly back now. I think even Marathon Petroleum, which is really close to where we are, they have most people back to the office most of the time. But some of those bigger companies, it’s taken a while to get people back.

Josh Robb:

I will say my mindset has changed a little bit on this in that, if you’re in an industry or your job in particular can be measured very efficiently on what you get done and what your role is and what your expectation is, where you work can be very flexible.

If you have a job where you can easily measure, did you get your work done?

Austin Wilson:

Right.

Josh Robb:

And hours are irrelevant, but product is there. Then whether you work from home, whether you work in an office, whether you work nine to five or middle of the night, as long as it accomplishes that piece, then I think it’s irrelevant.

But the hard part is, that not a lot of jobs are like that. Right?

Austin Wilson:

True.

Josh Robb:

My job as a financial advisor is, I have to meet with clients. And so you can do that remotely for those that want to do Zoom or Teams or anything like that. But for those that want to meet in person, there’s only one solution to that.

Austin Wilson:

You’re not going to have everyone over to your house?

Josh Robb:

And the same is true, I mean obviously any kind of service industry, the service is the tangible piece there. But I’m sure there are a lot of jobs out there where you could not only do it from home, but you could do it very efficiently, and not a traditional nine to five. Which is what a lot of them were wrapping that into with a lot of probably dead time in there if they were very good at their job.

So, my thought process is it’s not an across-the-board thing.

Austin Wilson:

You have to look at it job by job.

Josh Robb:

But I definitely agree, when culture matters, when teamwork matters, in person just seems to be the ideal way for that.

Austin Wilson:

You can collaborate so much easier. Just pop into the office and have a question or whatever. Just yeah, it’s a lot different. So anyway, I thought that was very fascinating. Josh, what is your third and final thing you’ve read ever?

 

[19:12] – Josh’s Third Article: Investor Sentiment Survey Between Generations

 Josh Robb:

All right, this is it. The final one. This is about millennials-

Austin Wilson:

That’s me. And you.

Josh Robb:

And the Gen Zers, those youngins. But this was done by Orion Advisor Solutions, which they are platform, they’re in our industry. They have some software that people use, but they did a survey. It’s the inaugural Mind and the Market Investor Sentiment Survey. Which is pretty cool, I don’t know what all they asked, but they had 500 US residents with an annual income of more than $150,000. And of those, half of them are pessimistic about the country’s economic outlook.

Austin Wilson:

That’s half.

Josh Robb:

And 52% are pessimistic about the global economy over the next six months.

Austin Wilson:

So that’s half.

Josh Robb:

Yeah. So about half the people they surveyed are not optimistic. Now, despite that, 82% of millennials have a positive mind frame on their own financial future.

Austin Wilson:

Define financial future.

Josh Robb:

That would be how do they feel that they’re doing, and how their progress is. That takes those two, they’re part of that 50% that are pessimistic. And so this survey shows that along with that, not just the millennials, but millennials and investors who work with the financial advisor are generally more optimistic about their own financial future, the US economy and the US financial markets, than any other group.

But this is the key. When they broke this down, millennials may be pessimistic about where the economy is in the next 6 to 12 months. But what they’re seeing is, especially those that have an advisor are saying, it’s okay.

Austin Wilson:

Yeah, don’t worry about it.

Josh Robb:

Because I’m adding in, and they get the idea of, I’m not touching this money, millennials are not retiring anytime soon. And so they’re looking at this as an opportunity, whereas they can still be pessimistic about where the market and the economy is, but it’s not driving any kind of-

Austin Wilson:

Long-term fear.

Josh Robb:

Long-term fear of where they’re at or their ability to accomplish their goals. In fact, there’s quite a few of them that are actually optimistic because they’re saying, hey, this is a downturn and I’m adding money. This is awesome. The cool thing there is it turns out millennials, especially this is people with an annual income of over $150,000. They’re the ones that have the cash flow to be adding significantly to their retirement plan.

For an advisor to see this it’s like, okay, this is the opportunity that a lot of these millennials haven’t experienced yet. ’08-’09 millennials were not savers at that point. They probably were still in college or even before college at that point based on the birth dates. And so this is really the first prolonged downturn. Because COVID was such a short downturn, they really didn’t have time to think or adjust their savings or have to contemplate that spending. Now they’re seeing, we’re in month nine of this downturn.

I think August was positive, but other than that, we’ve seen a downward movement this year. And so millennials are finally getting a chance to put into practice what they’ve been taught if they have a financial advisor, or have been taught that downturns, when you’re saving money, are a good thing.

Austin Wilson:

I would say that the statistics from that same survey taken for people who want to retire in the next couple years, probably quite pessimistic.

Josh Robb:

And I mean you look at that 50 to 52%, half of the people surveyed are not optimistic about anything. And so that being case, if you’re not optimistic about everything going on around you and you’re looking to make a financial life change, you’re not feeling good about it right now, and you need to be talking to your financial advisor about how that impacts you.

 

[22:27] – Austin’s Third Article: Biggest Home Price Drop Since ’09

 Austin Wilson:

Absolutely. Well, my third and final article is titled… It’s also from Bloomberg linked in the show notes. Again, sorry for the paywall if you have one. Good article though, titled US Home Prices Now Posting Biggest Monthly Drops Since 2009. Median home prices fell 0.98% or 1% almost in August from a month earlier following a 1.05% drop in July. There was a mortgage data provider called Black Night, they’re the ones that put together all this data there.

These two periods marked the largest monthly decline since January ’09. So kind of like, it was before the market bottom in terms of the stock market, but things were definitely falling apart from a real estate situation at that point. The housing market losing steam fast with skyrocketing mortgage rates, driving affordability to the lowest levels since the ’80s. The Federal Reserve has sought to curb inflation, which has thrown cold water on the US real estate boom. So if you think about home prices in general, they’re falling over a month over month basis.

They’re still significantly higher than they were a year earlier when the buying frenzy was going crazy. So values are still up 12.1% from a year earlier in August. Now at the peak of all this, home prices were up like 20% year over year, which was obviously not sustainable. But it’s not just buyers who are stepping away from the fast-cooling market. The doubling of mortgage rates, so remember they’re at like 6.5% for a 30 year right now, that’s twice what it was a year ago. This is disincentivizing, would be, sellers. Because why would I lock in a new rate with buying a new house at a very high interest rate, and prices are coming down, why would I take less money than I could have a few months ago?

So, inventory was on the rise from May to July, it stalled in August. So that is going to put… I mean the real estate market is not in a, it’s the place to be right now, things are slowing down very quickly in that area.

Josh Robb:

What I would love to see is new home builds start. Because we’ve seen lumber come back down.

Austin Wilson:

Lumber’s pre-COVID levels.

Josh Robb:

So hopefully we’ll see some entry level houses being built. Because that’s who’s missing out on this, right? Is, these are people moving from one level to the next level. And we just know historically since 2009, we have not kept up with new home builds to offset the demand. And so if there’s a slowdown in people transitioning homes, I’d love to see new homes help plug/backfill some of that in so that we’re a little bit more normal housing market in general.

Austin Wilson:

The statistics that I am shocked by, which kind of pre this slowdown, were things like, okay, so your mortgage rate is double what it was last year. Home prices were up 20% year over year at the peak. So you combine those two things together and assuming a 20% down payment, your mortgage payment for the same house at the peak versus the year before, it’s double.

Josh Robb:

It’s crazy.

Austin Wilson:

…In a year. So that’s housing in affordability.

Josh Robb:

Yep.

Austin Wilson:

You can’t sustain that. And that’s why, no wonder people aren’t moving. If you’re locked in especially if you refinanced coming out of COVID or whatever-

Josh Robb:

3% or under three.

Austin Wilson:

Oh my goodness, you should not, this is not the time to move unless you’re just flush with cash.

Josh Robb:

Or there’s a life change that makes you move.

Austin Wilson:

Yeah, exactly. And think about the negotiation power you have if you’re like being relocated-

Josh Robb:

I have a rate here; I don’t want to move.

Austin Wilson:

Listen, this is my house cost and my rate and my mortgage. This is what I’m going to have to take over here, so I’ve got to capture that.

Josh Robb:

Listen, Kim Kardashian told me.

Austin Wilson:

Kim Kardashian told me.

Josh Robb:

Oh, sorry.

Austin Wilson:

Josh, you clearly are keeping up with the Kardashians.

Josh Robb:

She said, don’t move.

Austin Wilson:

So that is what Josh, and I are reading. It is a fascinating environment out there, a challenging one, but there are glimmers of hope in certainty of these areas. And while the market’s been challenging, we want to point out that it always has recovered in the past.

Josh Robb:

Yep.

Austin Wilson:

Stocks are down, bonds are down. But really your forward returns from this point, historically speaking, have been quite favorable. Again, past performance is no guarantee of future performance, but it should similarly move in similar directions. So, we’re optimistic about the future. We’re cautious and trying to understand what’s going on and what we’re experiencing right now. But we’re here for you guys as listeners, so if you have any questions, please email us to hello@theinvesteddads.com.

Or if you have someone who is asking about some of these topics we talked about today, share this episode with them, hopefully they will be able to learn something.

Josh Robb:

Oh, by the way, our Invested Dads stock draft is still going on.

Austin Wilson:

It’s still going on.

Josh Robb:

It’s still going on.

Austin Wilson:

You might beat us.

Josh Robb:

Yes, but check out on our website Facebook, there’s all the links to get there. There’s a password donuts4life, the number 4, but you can still sign up. The markets are down, so you could jump in and get some prices good if you hadn’t already locked in. So just wanted to throw that out there, it’s still available if anybody wants to join us.

Austin Wilson:

Great. Until next Thursday, have a great week.

Josh Robb:

Talk to you later. Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe and don’t miss the next episode.

Josh Robb and Austin Wilson Work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guest, are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.