Real(ty) Talk
Real(ty) Talk
Election Cycles and Real Estate: Navigating Market Shifts
How do election cycles shake up the real estate market? Get ready to find out how political uncertainty affects consumer confidence and homebuying decisions. We'll break down how negative political ads can influence buyer behavior.
Plus, get an insider look at how national builders handle tough market conditions with strategies like rate buy-downs. Whether you're a potential buyer, a current homeowner, or just curious about market trends, this episode offers valuable insights into the real estate landscape during election seasons.
Ever wondered what it takes to seal the deal on a distressed property? We'll talk about the roller-coaster experience of buying a custom home with issues during the post-2008 financial crisis. From battling water damage to dealing with outdated listings and unexpected flooding, we share the highs and lows of securing a troubled yet promising property. This episode is packed with practical tips and real-life lessons for anyone considering a bold move in the real estate market. Get ready to be inspired by persistence and strategic thinking in the face of challenges!
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Stephen Couig:
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So there was like a finished attic. We poked our heads up into the finished attic. There was a dead hawk in there. There had been probably 10,000 bees were dead on there, it wasn't just the basement.
Speaker 3:A lot happening.
Speaker 1:Yeah, it was special.
Speaker 2:Welcome back to your favorite podcast on the planet. Not just the United States or Spain, if you listened to our last episode, or El Paso, texas, if that's where you're from. We have the queen of the closing table. That is international.
Speaker 3:Yeah, from our last story.
Speaker 2:If you haven't listened to the last episode, give it a good listen. You will understand that she is literally the queen of the closing table. She closes deals at the table in Spain, and we've got the lending king, stephen Kuick, here with us Today. We have two topics to talk about, very simple topics. Excited to talk about them. The first one is very interesting. I think it's extremely relevant.
Speaker 2:I want to get perspective on how the election cycle changes our businesses or industry. Not, we don't need to get into who we like or who we don't like, or you know if we don't like either of them. I mean you can if you want, but I'd love to get input on you know what changes based on the outcome.
Speaker 1:Well, you know, these only come along every couple of years, so two years for certain elections and obviously every four years for the big ones. And it's interesting, I mean, I think at any point in time you have people that are buying houses because they need to, and people are buying houses because they want to, and so it's. You know, it's really. It's about how does an election cycle, I think, affect, otherwise affect people and their attitudes towards purchasing probably the biggest investment that they're going to make in their lives, the biggest investment that they're going to make in their lives, and so this year, I think, will be a little bit more contentious than previous years.
Speaker 1:Just in general is what it's seeming like, and the two candidates are fairly equal as far as the poll numbers, or the poll numbers that I see. I'm not trying to get into politics, so I think it will be a sort of bitter fight and I think the ads in general will cause people to feel less excited about committing to a big purchase and big financial commitments. Just my thoughts, I don't know.
Speaker 3:Yeah, I think, I agree. I think the uncertainty ever I mean in every election cycle it's we hear it out in the field. I want to wait until the election and see what happens. I think people feel overall you'd probably agree that they feel like interest rates usually go down around election time so that could bring. If that happened I would say that would probably bring some buyers even in the game. But overall it's just that sense of uncertainty that I think people don't necessarily feel as comfortable with. So we see a little less action, I would say historically.
Speaker 2:And they're gaining that sense of uncertainty because of the friction right.
Speaker 1:Well, if you listen to the commercials, the world is always ending because of the other person, and so it's one of these things where there's no positive marketing for the most part, unfortunately, but in's, you know, in general it's just it's critical opponent advertising and so that you know that's not going to make anybody feel really great about.
Speaker 3:Well, it's pretty split. So it's, you know, 50% of people are like I'm I don't think I should buy a house right now. Who knows what's going to happen when this person gets into office. So you know it, it really, I mean, I mean, it affects us pretty greatly.
Speaker 2:What we're saying is that, as a nation, we're going to allow this thing to get us so worked up that we're going to affect the overall GDP and the buying behaviors and sentiment and the way that the world goes around, because we're arguing over who's right, you know.
Speaker 1:I mean, I would definitely it would be interesting if you went back and looked at it historically, whether that actually is the case, and I'm sure it does depend upon the election and the candidates as well, right, but yeah, um, yeah, I'm relatively old, um, I don't feel like right so I don't, uh, I really don't feel like I've I've ever seen the united states so divided, um and and uh, people saying not only am I right but you're wrong.
Speaker 1:So I don't think that makes anybody feel great. You know, the other dynamic that we have going on right now is there's only four million resale homes transacting every year and that's down from five and a half to seven at the peak, so there's not a lot of transactions going on. There's also not a lot of inventory, so that's causing also prices and affordability are definitely strained. So it's, you know it's tough, in any event right now.
Speaker 3:Yeah, that's what I was going to say. I think you touched on it initially. When we talk about, you know, interest rates and really what's happening in general, it's people that are moving, have to move.
Speaker 3:You know it's there's not, we're not seeing a ton of like ah, you know, I think I just want this nicer house. You know it's more of an event, a life event that we're already seeing. So I don't think an election is necessarily going to help that. You know. If interest rates go down, I think you know, maybe we would see some movement there.
Speaker 2:Yeah, it's interesting, like on the resale side, we look at, you know, when we buy something, we look at what's trading in that pocket aggressively and in certain circumstances we're competing against builders, national builders, and you know, obviously they've had a great two, three, four year run, Right, but they're manufacturing a lot of that through rate buy downs, Right, and I think that's probably slowly starting to maybe unwind a little bit. But that is something that's taking place really aggressively, with very little inventory being sold on the resale side. It's really tough for people to offer big rate buy-downs like those national builders. So it's almost like a never-ending cycle to a certain degree. But yeah, I mean I probably have a somewhat unpopular opinion from a political standpoint. Maybe we can make a difference here with that. So I'm a little bit hypocritical because we're in a social platform you know in this environment, but I think the separation that you're expressing, I feel the same thing.
Speaker 2:I think it's primarily because in the past there were people that were not very in tune with that political climate that are now being delivered that information very rapidly on their phone. So 20 years ago, or 15 years ago, before social media, to really get a pulse on it, you sat in front of a TV or you read the newspaper or you? Really dug in to get an opinion.
Speaker 2:Today people are being delivered information and some of it's factual and some of it's not, and and you know a lot of it they don't even ask to see, right, they're not searching for that information. It's being shoved down their face, right. And so you're getting all this angst and energy and excitement around something that in the past was probably irrelevant to them. I mean, they just went about their lives and and you know like kind of questioned who their guy was, and then went with it, but and I don't know if that's good or bad, maybe that's a good thing, but you know, I, I am terrified of how social media could impact.
Speaker 2:you know something that changes our country so aggressively. Um, and you know, for, for our business to a certain degree I mean transparently when inventory is low it's better for us On the resale side, it makes it difficult, you know, to buy new deal flow. But you know, I don't know what's going to happen in the election. But you know, I think at least our inventory we have now will probably, you know, be pretty good.
Speaker 1:Yeah, and I don't think that's going to change for the foreseeable future for sure. Going to change for the foreseeable future for sure. If rates get a lot lower, then people feel a little bit more flexibility to go and move if they are wanting to move versus having to move. But until that time, I think most people are going to stay put.
Speaker 2:Yeah, so we can give you the secret this year we know what's gonna happen in the in the election cycle year, realtytalk podcast will be the most listened to podcast you don't need to go to CNN. You can just come here. You won't hear us talk about either candidate, you'll just hear us talk about how it affects our industries, you'll be much happier. No fear, it's gonna be like that. Yeah, I'll be there every week we're everybody's happy place.
Speaker 1:Yeah, happy people in a happy place. Yeah, I like it, this one.
Speaker 2:I'm really excited for second topic today. Uh, much more interesting to me than the first topic, although that was intriguing. We would love and the listeners would love to hear about the most interesting real estate transaction for you, steve in your life non-business related.
Speaker 1:Sure. So I think definitively the most interesting one has been I bought a couple of houses and and sold one house, so our current family house is a property that we started looking at. So we got married in 2000 and then had a baby, had another baby, had another baby.
Speaker 1:so we had to go and make a move. This was 2011. And so, obviously, the market had just gone through 07, 08, 09, and things were not going down anymore, but they weren't really going up anymore either, and you still had a lot of houses that were underwater as far as from a leverage standpoint, and so you had lots of short sales going on. So, you know, we were looking at houses. We weren't urgent because we wanted to find a deal, because we felt, like you know, there was deals to be had out there.
Speaker 3:That's like every buyer I talk to, by the way. Go on yeah.
Speaker 1:So you know, had our eye on a property that had been sitting for a long time On market, on market. Okay, it had significant issues because the house had been vacated, there was some water issues, which I'll talk about, and so the bank didn't nobody wanted to foreclose on it, so it was just a property that just kind of sat there.
Speaker 2:Because they didn't want to take it back.
Speaker 1:Nobody was going to touch it, it was like you know, and I'll get into you know why buyers didn't really want to touch it either. So the so anyway. So the house is sitting there and I put in an offer and it was a very low offer, especially relative to. It was probably half of what the house had traded for not too many years before that.
Speaker 2:So it traded before the correction in early 2000s.
Speaker 1:Yeah, I think it was like 07 or something, maybe 06 or something.
Speaker 2:But it's not a track home.
Speaker 1:It's like no, no, this is a larger custom home, so half.
Speaker 2:That's a big number, because those usually retain a fair bit of value.
Speaker 1:Yeah, that's a big that was a big number. He's looking for a deal which is probably why for a year I got no response back. Send the offer.
Speaker 2:But it was a fair number.
Speaker 1:After I got no response back, but it was a fair number. After a year of it being on the market it went off the market and it came back on. So I contacted the broker again a listing agent and said you know, here's my offer. And you know, finally I got the phone call back and he's like, well, if you could get up to here, I think we can go do a deal. And I said, okay, well, that's great.
Speaker 3:That was the first time you've called me back.
Speaker 1:So we agree on a number. There's a second that needs to be paid something. So the selling agent has to negotiate all of this stuff with one of the national banks that held the first, and they were gonna be taking a significant write-off on that as well, as the second was and the house one of the reasons why it was sitting there and not selling is that they had had the house has a basement and there was one of the rooms there was water getting in through the wall and so they weren't really quite sure. And again, nobody's living here and the bank's trying to figure it out. So, um, and then, while there was a showing during this year period, apparently the there's basically the drainage from around the basement goes down into the basement and then you have a sump pump that puts the water up to go out.
Speaker 2:Oh, bringing it back to street level.
Speaker 1:Correct. Yes, because the house sits down below the street and unfortunately there was a big, I think that January there was like 10 or 11 inches of rain in January alone or some huge number maybe it wasn't that high, but like five inches or something and um, the sump pump went off, uh, it was plugged into like a you know just a uh an outlet and um, the apparently the power went out or the thing shorted and stopped working, and so then there was literally a flood in the basement of like inches and inches of water when the agent came. So then you know everybody's like yeah, it was one thing you had, like you know, the wall and you had water coming through there. So the the interesting thing is, when you went to see the house I mean, the listing photos were kind of older photos and it all looked normal when you went to actually see the house, they had dug around the basement, like on one corner of the building, to try and get to the wall issue that they had.
Speaker 1:And figure out where the water was coming from Correct, yeah, so, and then they put the dirt. So it was all of this dirt and they put the dirt basically like right in front of the front door. So you literally to go see the house, you literally to go see the house, you had to go up and the dirt was, I mean, literally like probably four, four feet high, oh man so you had to go trudge up there, um, and then you know we had, we had seen the house, um, and then went back to kind
Speaker 1:of look at it, the the um. You know we always look at on the fixed flip deals where you have green toilets and pink bathrooms and stuff. So this was a green kitchen with a lot of ornate wood that really didn't belong anywhere. So the house had good bones but it needed a lot of work. The basement obviously was very musty and all that good stuff. And it was funny. I was talking with a realtor about, you know, trying to buy. He said, well, worst comes to worst, you're getting such a deal you could just close off the basement and I'm like well, I don't think we could really do that, but you have like the HVAC and some other stuff, maybe some bodies down there.
Speaker 1:So I get into the escrow and so now I'm very excited. I'm like this I think is going to be a good deal. So we get an appraisal going, I get into escrow and try to figure out what had happened. So nobody even has plans or anything. So I have to go to the HOA request plans, get the plans, kind of figure out how it's made, and then you start looking around and then it obviously wasn't built according to the plans, which you know, would be a nice thing, but those are the plans you had.
Speaker 1:So then you're kind of guessing. But the main thing was, you know, just trying to figure out the water issue. And so the leak coming through the wall was just some of the concrete had gotten away, so that was a pretty easy one. The trying to figure out what happened with the basement was sort of a bigger task. Fortunately they had dug up all of the dirt, so I paid $1250 for a plumber to go and scope the French drain that's around at the base of the basement, which funnels all of the water from around the house into, um, you know, into the sump pump pit. And I said is something not right here? He said no, it all goes right to there. So we go, look at the sump pump. The sump pump actually worked. It was a 20 amp sump pump and it was plugged into a 15 amp switch, not even a gfi switch oh it just.
Speaker 1:It went off, it stopped working and there was a flood, and so literally and whoever had that one still in our house today I put in another one on top of that one, but yeah, so we still have that one, uh, today.
Speaker 1:So we obviously, yeah, we had to take up right we had to take out all of the drywall and do some other stuff. But yeah, it was crazy. But we got a great house at a great price. The house even as is. When we were buying it. It appraised for 20% more than what our contract amount was. And then the funniest thing is this was a transaction that we did with. It was a national bank. It was arm's length for sure. The county recorder's office here tried to say that it wasn't an arm's length transaction and they wanted to put the tax basis about where the house had appraised at.
Speaker 2:I'm like no.
Speaker 1:so I had to go argue that I showed them the pictures and they're like oh, did you show us these pictures? Yeah, I already sent them in. They're like oh, don't worry about it, we'll take care of it. So it was yeah, it was a lot of work and we kind of did a bunch of stuff and that's years old, so now we'll probably get at it again.
Speaker 2:I don't know if you know this story and I certainly didn't know. But you know, when we first started working together, we decided to pick a top agent that we were, you know, selling some of our inventory with. Agent that we were you know selling some of our inventory with we won't say his name and um, and we said, hey, we'll take him to a, you know a football game on a sunday. Yeah, and so you know. Plan was meet at steve's place and steve has a buddy coming and uh I get there a couple minutes early, and then this agent you know,
Speaker 2:pulls in and looks at me and then looks at the house. He's like why in the face? And he's like I and he's a funny guy just in general. He's like, yeah, I'm having deja vu. I think I've been here before, but I don't know why. I don't know and I don't know what's happening. Like is this? Why are we here right now? Like all this is this is my business partners house. And he pulls it up on his phone. He's like, oh my gosh, I worked for the bank that was processing the short sell eight years ago when this transaction happened, yeah, so he and I were on the phone during the process because they got the bank to agree, and then they had to get the second to agree.
Speaker 3:So they're like wait, wait, wait, wait, wait, and they're like're like okay, no, now we need to close sounds like he did a good job, yeah yeah, you got it done, funny enough he says that that's not the trickiest one, so your most interesting one is definitely his worst or trickiest yeah, we'll have to hear his. That'll be our next one and still in the house.
Speaker 2:You're happy and loving it.
Speaker 1:We are, uh, still in the house, so we have three kids most of them are out now A couple of dogs and a happy wife.
Speaker 2:So it's all good, that's all you can ask for right. So it was worth a year of no response.
Speaker 1:And a year of putting Humpty Dumpty back together again.
Speaker 3:Yeah, that's your lesson, though that's your takeaway. You got to stay on it and come through in the end. Yeah, you could have. You could have given up and you didn't, so so I you know takeaway today, I think from our podcast, is uh the election we don't really know what's going to happen in the industry.
Speaker 2:It you know. We all, I think, tend to agree that uh, consumers might be like like lack confidence essentially to go and purchase because they get so immersed in the election cycle. But that doesn't mean that it's a good or a bad time to buy. I mean, I think to a certain degree.
Speaker 2:That might mean it's a great time to buy, right, you know, and certainly a great time to sell and you know, on the investment side of the business, you know, I'm sure there's a tremendous amount of opportunity. I mean, we're licking our chops looking at a lot of really good deals right now. So you know good, or you know, whatever happens with the election, I think if you are in tune and working hard and staying diligent, you probably can capitalize during this time.
Speaker 1:The good news is the world will go on as usual. Right it has forever right.
Speaker 2:Obviously, second topic was awesome to hear about such a crazy story. I'm just confused as to why you didn't put a basement swimming pool.
Speaker 1:Yeah, we thought about that.
Speaker 2:We were right there. Yeah, that was interesting.
Speaker 1:Oh, the other thing I forgot to mention was so there was like a finished attic and we poked our heads up into the finished attic. There was a dead like hawk in there. There had been probably 10,000 bees were dead on there. It was like it was. It was interesting. Yeah, so it wasn't just the basement, yeah yeah, it was it was. Yeah, there was, it was.
Speaker 2:That is episode number four of Realty Talk Podcast, your favorite podcast on the planet. Check us out, hit, subscribe, regardless of what channel or network you're on, and please use our comment section. Send us any questions that you'd like us to address on the next episode. And, uh, I'm still very curious to get an el paso fix and flip deal done. I'm gonna hold on to that one until we get a deal in el paso through the podcast. See you next time.