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The Clark Howard Podcast
03.14.25 Clark Answers His Critics on Clark Stinks / Housing Market Update
00:39:50
Clark Answers His Critics on Clark Stinks / Housing Market Update
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- [00:00]
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- [00:53]
Unknown
It'S.
- [00:53]
Clark Howard
Great to have you here on the Clark Howard Show. You know our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. And today we're back with a weekly Clark Stink segment. I didn't know I could smell so bad. And later, the housing market has made a very important turn. I'm going to tell you the latest so you know what is important for you to know for your wallet. But without further ado, it is time to hear how I am stinking it up. Encouraged you to speak. You must think I'm pretty stupid. You should be ashamed of yourself.
- [01:36]
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Well, maybe I'm wrong.
- [01:37]
Clark Howard
Maybe I'm wrong. Maybe you're right, pal.
- [01:42]
Listener
All right, we're back. Weekly Clark Stinks Clark claimed that the cost to refiners to make higher octane gasoline is low and the prices charged are just marketing. I've been a refiner for almost four decades and I can tell you that the higher prices today for octane are due to a shift in the types of crudes we process. The Recent growth in U.S. crude production is from fracking in fields that produce lighter crude, which makes lower octane gasoline less supply but also more demand for octane as automakers push smaller turbocharged engines that meet stricter federal fuel efficiency requirements but require the more expensive high octane fuels. Jim.
- [02:21]
Clark Howard
Jim, thank you. I've never heard anybody say that. And I heard that at wholesale the cost difference is about 8 cents a gallon for what gasoline stations are marking up 50 or more cents from regular to premium. I'm going to check to see if I have out of date or incorrect data on that that it's not just a marketing technique to drive much higher margins to Gasoline sellers. And I will correct myself if what you've said is true and what I've said is false.
- [02:57]
Listener
I mean, how cool is that? This is what it's all about. You have a Clarky, a Clark listener who has actually an oil refiner. How can that it's so cool because.
- [03:06]
Clark Howard
Because you know, I'm a generalist and this is someone who does this for a living. Completely different scenario.
- [03:14]
Listener
Clark seems to be incapable of distinguishing between Amazon sellers who ship their own products and thus have their own return policies and products that are sold by Amazon, shipped by Amazon, which almost always have free returns. Why the subterfuge? Or is it just ignorance?
- [03:30]
Clark Howard
Terry, Terry, thank you.
- [03:35]
Listener
Thank you for that.
- [03:36]
Clark Howard
No, seriously, Amazon has become a much more complicated organization. Wasn't it funny that before the podcast today, Grace was talking about an issue she had with an Amazon return. I was talking about an issue with an Amazon return. And you're the Teflon woman who's never had a problem with an Amazon return.
- [03:58]
Listener
Knock on Formica. Not yet.
- [03:59]
Clark Howard
Yeah, so yes I am ignorant, but not, not necessarily about this. Amazon when you go to buy will say if you look at the box, which is harder to see on a phone which a lot of people buy on, but if you're on a laptop it's pretty clear it will let you know, just as you said, sold by Amazon, shipped by Amazon. It'll say that there very small percent of items sold on Amazon now are actually Amazon's own products. They are much more a marketing and fulfillment organization today than they are a seller of goods. And they found it more profitable to be what's known as a fulfillment house and marketing organization than an actual seller of goods. So if I have failed to clarify the difference between an Amazon seller, which is most things third party seller, and Amazon itself, I hope that now I've said it in a way that is clearer.
- [05:05]
Listener
This is not so much a Clark stinks as just a funny thing I realized about EVs. I recently took a little inspiration from Clark and purchased my first all electric vehicle, a 2023 Nissan.
- [05:15]
Clark Howard
You say Aria Rei I think is.
- [05:18]
Listener
Amazingly with only 2,000 miles on it. I was leaving at a shopping center and a gentleman stepped off the curb in front of me. So I stopped to let him pass. He was just walking very slow so I could tell he didn't realize I was there because he could not hear me when a truck pulled up behind me. He heard it, turned back and I think I almost gave him a heart attack. But I'm adoring the car. You're correct. They are very fun to drive. Billy.
- [05:40]
Clark Howard
So does yours make noise at low speeds?
- [05:43]
Listener
No, it's very quiet.
- [05:45]
Clark Howard
I have an electric car that makes noise at low speeds so it does this kind of hum thing so that people who are pedestrians, a biker, whatever, know that you're coming like they would with a gas engine.
- [05:58]
Listener
It's not the same though. I mean mine may make a low noise but I always assume people can't hear me. For sure.
- [06:03]
Clark Howard
It's really fun in a parking deck, parking garage where you're driving behind people and they're just walking right in the middle of the garage and they have no idea there's a car car that's 15ft behind them. But no, the fun thing with electric cars is they're so much cheaper to to run once you own them. But the big thing, they're so much fun to drive.
- [06:29]
Listener
I really don't think Clark stinks. However, I don't understand the problem with travel insurance offered by the cruise lines. For example, when looking at Norwegians insurance, the medical and evacuation parts look comparable to insurance offerings on insure my trip.com Norwegian also states separate from the insurance that they refund 100% if there's a medical reason and provide 90% credit if canceled for any reason. And for 80 year olds it's much, much less expensive than purchasing a policy separately, most of which don't have stellar ratings anyway. John.
- [06:59]
Clark Howard
John, thank you. Okay, so why have I said not to buy trip coverage? Because it's generally not insurance from trip operator, tour operator, airline, that kind of thing. First let's deal with the airlines. The airlines are only marketing those policies. They're just selling at a high markup policies available from third parties. It's not unusual for an operator like a cruise line to offer trip coverage that they are the ones. They know how profitable trip insurance policies are that they're selling themselves. You don't have a problem right now with solvency with ncl Carnival or Royal. They all three have recovered from their near financial Armageddons during COVID when they were grounded for so long. Would you call it grounded? A ship couldn't go at sea anyway. They couldn't. They were. They were docked. Yes. So the cruise industry has had a long history of having financial problems and cruise lines just all of a sudden vanish. That's not going to happen with an ncl, Royal or Carnival ship. And if you've looked at the terms and conditions, you're happy with the policy and you're happy with the premium and you want to buy from ncl, it's okay with me.
- [08:26]
Listener
I love your podcast, but your advice to the woman selling the cream puff used Camry with 25,000 miles stinks like durian. You suggested that she get an estimate of its fair value by calling CarMax or AutoNation. I did Carvana right. I did this recently and they offered me very low prices. Instead I sold the car myself using AutoNation Private Seller Exchange, which worked like a charm. It provided me with an accurate upfront, no obligation price range, handled all the paperwork and payments online and made the whole process painless and risk free. All for a 1% fee versus a $99 minimum. I sold the car this way for around 30% more than the mega dealers offered. I'm pretty sure I heard about this from you in the first place. It's way better than the mega dealers or any trade in. You failed to remember your own advice. Andy.
- [09:14]
Clark Howard
Andy, thank you. Gosh, this is something I haven't talked about in years is where you're able to put your vehicle for sale with a professional. In this case autonation, which is the largest dealership chain in the country. Don't know where all they offer this in the country and you pay the commission to them for handling the transaction for you. I'm so glad that it all went extremely well for you. I had a vehicle recently that I checked the value through autonation. In the case of the vehicle I was selling, it was not near what I was offered from one of the the other buying outlets. So you just don't know. And that's why no one method is going to work every time. And you do have to comparison shop what's available for you when you're selling a vehicle and not buying another one.
- [10:13]
Listener
On a recent show you had a caller that was distressed because they failed to make a payment and we're facing a huge credit score hit. You address their question well, but you failed to mention for other listeners to set up auto pay on all your credit cards for the minimum payment. Doing this will mean you don't miss a payment like this. The worst case is you might end up paying interest until you notice the charge. Thanks for all you do, Pete.
- [10:34]
Clark Howard
Pete, thank you. And actually we did talk about this on a podcast and YouTube show several months ago about because of the huge hit to your credit score from a single missed payment that where historically I wasn't a fan of doing these auto pays direct with the credit card company, at least for minimums that now I do because the Harm is just too great for someone who pays their bills historically on time from that single late pay. So yes, you're right, it is a good idea to do. There are people like the person to my right for those of you on our YouTube show who pays all her credit cards auto pay. And you have it set up auto pay balance in full, right?
- [11:25]
Listener
No, I have the minimum set.
- [11:26]
Clark Howard
Oh, you do? Oh, I. Okay. I thought you were doing pay in full.
- [11:30]
Listener
No, I just in case there's something wrong on there. It makes me nervous, but I never have to use it.
- [11:36]
Clark Howard
Okay.
- [11:37]
Listener
It was interesting that you chose to spend an entire segment on the net worth difference between homeowners and renters. First of all, your data is over two years old. Second, that huge net worth for homeowners in 2022 was after one of the largest run ups in home values in a three year period in history. Third, even by your own admission on the podcast, you felt uncomfortable sharing those numbers at a time now when homeownership is an all time high. Fourth, in a segment the week prior you had mentioned that workers need to be willing to search the job market every few years to ensure they're getting paid what they're worth. Taking a new job often involves relocating. And nowhere in your homeownership net worth segment did you mention, like you usually do, the importance of staying in your home for an extended period of time to offset the high costs of buying and selling a home. When I listen to your show, I'm hoping for up to date actionable content. This one missed the mark. That said, I'm so grateful to you for all you and your team do. Justin.
- [12:31]
Clark Howard
Justin, thank you. All right, so the purpose of that segment was to have people aware that what happens is when somebody has a home. And you're right about the things you said about how we've been an unusual cycle through Covid where home values escalated very quickly in a short period of time and we're likely to have sluggish home values for years to come to get back to normal ratios of affordability. But the point I was trying to make in there is that people who are buying a home paying a monthly mortgage are doing a method of forced savings. People who are renters paying a lower cost per month for housing than a home buyer in most cases that that difference tends to just vanish into the ether and is not invested. And so what I was trying to do with that, and maybe I failed to do it properly, is to get people who are renters who were having that monthly price advantage to take that difference and set it up where it automatically goes into a Roth ira or that they increase the amount they contribute to a work 401k to do something where they are building wealth for themselves and setting it up on automatic pilot like a monthly mortgage payment is for a home buyer.
- [14:00]
Listener
I love your financial advice. However I had one big gripe on your segment on worsening traffic. Instead of advocating for better public transportation, increased housing in urban areas, and using our legs to get to more places, your advice is simply to drive during flexible hours. This is short sighted band aid fix to a huge problem in urban American areas that will not be solved with the levels of car dependency we have. Love what you do and keep up with the great financial advice.
- [14:27]
Clark Howard
Alex Alex thank you. There's an old expression that people drive to the freeway exit that they like the price of the housing. And so if you look at where all the population growth is in the United States, it's in the south and the mountain states and parts of the west. And these are areas that developed in the area of the automobile and they are sprawl areas. You look at these areas like you look from Miami to West Palm, from Atlanta to Charlotte, from Washington to Boston, which gets into a very congested area. But the the sprawl is just there. And yes, we are overused word, we're densifying in more and more metro areas, but people's patterns are pretty much in place, particularly when they have school age kids, they tend to sprawl out. And the public transit solutions are very hard to make work in cities with low density suburbs and exurbs. So we are car dependent in so many parts of the country that are fast growing. And that's why even though I'm a big transit rider myself, would you like to see all my transit discount cards? Most people aren't going to be in a position to do that.
- [15:56]
Listener
Clark's Recent responses to 529plan questions have been kind of stinky. One person asked whether his family should use CDs or savings accounts instead of a 529 for kids near college age. Clark mentioned age based options that get conservative as enrollment approaches. Clark should have given a better answer that There are numerous 529 plans that have investment options in CDs and savings account. Virginia's plan, for example, has an FDIC insured option that is currently paying 4.5%. Some age based options that tilt toward bond funds nearing college age performed extremely poorly in recent years when interest rates were rising. Clark's beloved Vanguard had a fund targeting 2022 enrollment that dropped 8.23% in 2022, admittedly the worst year for bonds in a long time. Guaranteed FDIC insured options may be preferable to age based options whose bond and stock components can go down substantially for some investors. Clark also has repeatedly celebrated the new federal law that lets people roll unused 529 plan funds into Roth IRAs. While this is good information, Clark should ideally point out a caveat. Fifteen states do not conform to federal rules. California and others will levy state income taxes on savers who roll 529s into Roth. And California even adds penalties. David.
- [17:15]
Clark Howard
David, thank you very much. So the 529 going into Roth, why is it that I tout that so much? Because so many people stare down just the worst thing, that light at the end of the tunnel is a train coming at you. When you look at college costs, I mean both of us, Kristen and I both have college freshmen and you have a college senior as well wrote that last check. Oh man, the costs are crazy. And so 529 give you that path not knowing if your kid's going to go to college or not to save money tax free, have it grow tax free and then if your kid doesn't go to college or there's money left over, being able to convert it into a Roth. The reason I get so hyped about it, David, and I don't talk about the states that want to be Ebenezer Scrooge on people who do the right thing and save money for college, is that the tax advantage is wonderful except the state tax penalty you're talking about. But the fact is it encourages people who would be reluctant or nervous to save money for a kid's college because the tax bomb that there is at the end, if they don't go to school, don't have to worry about that nearly as much because it is completely free from federal taxes. You give a kid a big head start on saving for retirement by being able to migrate that money into a Roth IRA. And the 15 states that don't play this right, hopefully over time they will change their state tax laws to be in compliance with what the feds do and the other 35 states already do.
- [19:08]
Listener
All right, and really quickly, the lovely Nicole, who is an amazing Team Clark member who monitors our YouTube and social accounts and our community@Clark.com she pulled this one from YouTube. Someone named E. Care books Clark. Tell us more about the Aussie Aldi, please. Did you like it? Do they charge 25 Aussie cents for a shopping cart. I did see your video saying egg prices are not too high down under.
- [19:35]
Clark Howard
So I went to Aldi. We were in Australia two weeks, my wife and I, and grocery shopping. If you think grocery shopping is expensive in the United States, there's a shared monopoly for groceries in Australia. Two chains, Woolworths, if you remember them as a discount store. There are grocery chain in Australia and, and another chain called Kohl's and they charge enough for groceries that as an American you walk in there and you're like, oh my goodness, I'm never complaining about grocery prices in the US again in my life. And so Aldi is booming in Australia, as is Costco, which I went to twice also.
- [20:20]
Listener
You did?
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Clark Howard
Yeah. Anyway, it saves so much money going to Aldi. I went to Aldi three times in two weeks. Two of the Aldi's I went to were cleaner than a typical American Aldi and one was trashed. And so it is like Aldi's in the US that sometimes you go in one and they're very well merchandised, they're very well managed and others you go into and you're like, this place is a disaster. It was just like that. But the Aldi finds, you know, where you get all kinds of non food really cool items that are limited item things. Aldi finds are much more interesting in the US than they were in Australia.
- [21:04]
Listener
Did the Costco have the hot dog soda deal?
- [21:06]
Clark Howard
It was A$99 for the, but the Australian dollars worth a lot less. So it was actually cheaper than our $50. But then they had other food items. They had this chicken dish that was like chicken fingers and they had another one that was, I think it was called an Aussie pie.
- [21:25]
Listener
Oh, the handheld pies.
- [21:26]
Clark Howard
And they had, I think they had French fries too. They know about Costco there, let me tell you. The crowds were like you cannot imagine at the Costcos there. But I got, you know, there was some stuff that I had forgotten to get before I left the US and so there was Costco there bailing me out. So it was great. Enough about that. We're going to talk about something that is going through a transition right now. And we had, I think one or two Clark stinks about the housing market. I'm going to talk about the current state of what you're going to find as a buyer or a seller in the housing market.
- [22:07]
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- [22:32]
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- [23:32]
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- [24:02]
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- [24:29]
Clark Howard
And more@applecard.com so the housing market has gone into a bit of a slumber and this is so important for sellers to know and buyers to be aware of. Lots of things to tell you. First of all, we have the affordability issue, but consumer confidence has fallen off a cliff in the United States. I talked about tariffs surprisingly Enough across the political spectrum, it's led to lower consumer confidence. With the layoffs happening in the federal government, you know, change is disruptive people's minds. And corporate America doesn't know how to plan. Should they build a new facility, should they make a new factory come to life? I mean, things like that, with so many things changing at once. And so the home market, which is the largest purchase people make, is now feeling the effects. In Texas and Florida, the number of new constructed homes, you know, new home builders that built that are unsold, has skyrocketed. In two of the most important housing markets in the United States. Homes overall, the inventory available for sale across the country is now back to pre Covid levels. You got to go back to 19 to find an equivalent number of unsold homes available in the United States, new and used. And then certain states have a big rise in inventory showing right now. Two in particular, Nevada and Colorado, have had big jumps in inventories, but they're not alone. Arizona, Florida, Georgia, those states have seen big, big rises in inventory available for sale. The exception to this generally is in the Northeast and New England, where it's so difficult to build a new home. The inventory numbers have not really gone up like they have elsewhere in the country. But we are at a time where the power in the marketplace in city after city, state after state has flipped. Where we went through years of it being a strong seller's market, and then we went a little bit more than a year ago in many markets to neutral territory. Now we've gone in most places in the United States, with just few exceptions, we are now a buyer's market. And because of all the economic turmoil, mortgage rates have also come down. So all these factors have shifted. In the housing market, does it mean that you can go out and houses suddenly, wow, they're a bargain again? No. But the back has been broken of the momentum that kept the market as a seller's market. Don't know for how long, but as I predicted for a good while. And I mentioned earlier in this podcast, the way housing markets work is that if values escalate by a great deal in a short period of time, that will be followed by what's known as reversion to mean where housing prices come back to where more people can afford them, because eventually you outrun people's ability to afford a home. And that's where we got to. One other note I should make. There are a number of markets in the United States for apartment renters that the market is very favorable to Renters one that was one of the worst markets in the country for apartment renters. Austin, Texas has completely flipped and landlords are desperate for tenants offering all kinds of crazy move in specials because the apartments are sitting there unloved, sitting empty. And Austin is an extreme case. But this has been true in a lot of places where there's been enormous apartment construction that the market has moved more your way. So good news for buyers, best news in a while and potentially great news for renters. If you go shop the market, who's it not great news for sellers right now. You've got to be more accommodating. The things that before you didn't even worry about fixing in your home. You got to dress your home up for sale, repair things before you put it for sale. You need to stand out in the marketplace so that somebody wants to buy your home. I noticed over the last many months homes lingering on the market near me that used to flip really quickly that for sale sign would go up or there would just be a sold sign, a for sale sign, never going up, not now. The for sale sign sit there price reduce price adjusted the price cuts and offering different features, offering special financing. Who knows what to get home sold. So the market in so many places. Your friend. Now if you do decide to step out there to look at a place.
- [30:03]
Listener
To buy, we'll go to questions now. Billy in Massachusetts says hey everyone, love the show. I received a couple of significant bumps in salary the last couple of years. So I've been able to max out my Roth and HSA and now have a little extra margin to play with. Should I invest more into my employers for a 1k? I'm currently doing up to the matching my brokerage or pay down my HELOC which is currently at $50,000 left to pay.
- [30:28]
Clark Howard
First of all, congratulations on the pay bumps. Congratulations on maxing out your Roth doing the hsa, hopefully the max. If I were thinking about you asked me such a straight out question. If I was thinking what would be my priority. I would pay off the heloc. Why not create instant additional equity in your home, reduce having to pay interest in your life and I get the home equity line of credit gone. Just put your efforts towards paying it off. You know the return you're going to have on your money. Every dollar you pay in is another dollar of net worth in your life and one less obligation you have to pay every month after that. What do you think? I'd say so you put more money more in the 401k or put money into a brokerage account, 401k. 401k. And unless you're earning big, big, big money, where would I put it? In the Roth version of the 401K.
- [31:33]
Listener
Stephen Washington says I could use your thoughts on my current situation. I'm one of the fortunate ones with the pension 28 years and counting at my job. I'm 57. Besides that, I have a 457 deferred compensation plan through my work and my own Roth IRA with Vanguard. Unfortunately, I'm going through a divorce.
- [31:51]
Clark Howard
I'm sorry about that.
- [31:52]
Listener
We have a 16 year old and I intend to keep the house until she graduates. My question is, should I buy something like a condo or rent? I'm not sure which makes better sense. I'll be 60 by the time I'm ready to sell the house. I'd like to not have to worry about yard work. The only thing with buying is then having to pay an HOA for maintenance. I'd like your 2 cents on the pros and cons of each. Thank you again for what you do. The advice over the years has been invaluable.
- [32:17]
Clark Howard
Well, thank you very much. And Steve, first of all, what you are considering doing is a very common pivot once you become an empty nester. So going from a house with a yard and all the maintenance and all that to a place where somebody else takes care of it, but you pay for that generally general rule, you'll pay less in HOA fees allocated to you in a situation like a townhouse or a high rise condo than what maintenance and upkeep and all that cost you individually your own home. Generally not always. So I think it's fine for you to go in that kind of living situation. But then you said owner rent. So you're going to be an empty nester some point you're going to retire. You got so many years on your job, you got the pension you probably have already fully qualified to start drawing on it and all that. Where you want to live. Do you want to stay in Washington state in the general area where you are at the time that you retire, or do you have a desire to go live somewhere else in America? If your answer is you're unsure when you sell the home, become a renter. If you know you're going to keep your roots where they are in Washington State, that's where you want to be, then I think it's fine for you to live in a different kind of dwelling. But the advantage of renting for a while is you're not sure you're going to like some kind of community living versus living in your own home and that would place an argument for temporarily renting to see what really works for you best. But I live in high rises. I love living in high rises. It's what I really enjoy doing. Other people like Yuck.
- [34:12]
Listener
Jason in Oklahoma says I have the option to contribute to both a roth and traditional 401k within my company's plan. You often talk about contributing more to the Roth unless you're an ultra high income earner. You just said that earlier. I'm sure you've mentioned it before, but what do you consider an ultra high income earner? I'm currently contributing 17% combined with a higher percentage going into a traditional and a lower to the Roth every paycheck. But I'm wondering if I should switch my percentage of each to be more Roth heavy than traditional heavy. It looks like my current overall retirement Investments are about 25% Roth and 75% traditional. Thanks for still being there for us.
- [34:52]
Clark Howard
All right, so Krista, we got to look at current federal tax rates for me to give a precise answer to this because I've been asked this many times. So the question comes up that until your income as a single individual is above $200,000 you want to be in the Roth version of a 401k. As a married couple you want to be at about $400,000 before you would go into a traditional IRA. The reason is tax rates are by historical numbers very very low today. So with tax rates as low as they are, there's big advantage to doing Roth plus in retirement. Having two piles you're 75 traditional, 25% Roth. That's a bad ratio. I want you over time to get work much more to at least 5050 so you have the flexibility in retirement of both pre tax dollars and post tax dollars to spend. But again, if you're earning less than 200 grand a year as a single individual, you want to be a hundred percent and Roth if you're earning less than 400,000 as married couple, both of you in that married couple want to do Roth not traditional. I know there are people who might disagree with that advice, but let me tell you, you'll be really happy you listen to that at the point you retire way down the road that you listen to the man from Roth. And I want to thank you so much for joining us on this Friday edition of our podcast. And those of you who posted on Clark Stinks. You have no idea how much it helps me because you have a perception of how you're talking about something, answering something, and then there's the reality. And so you taking the time to do those posts is valuable for your fellow listener or viewer. For me this weekend coming up, know that we're available to you all weekend long with our free daily newsletters and at our websites clark.com and clarkdeals.com I hope you get empowerment through your weekend and enjoy it too, and know what we're all about you learning ways to save more, spend less, and avoid getting ripped off. And we'll be with you on Monday.