Real(ty) Talk
Real(ty) Talk
Government Housing Promises: Hope or Hype?
Are government-led housing initiatives the solution to our current real estate woes, or just another political promise doomed to fail? In this episode of Realty Talks, we tackle these questions head-on, starting with Vice President Kamala Harris's ambitious proposals: a $25,000 down payment assistance program for first-time homebuyers and a goal to construct 3 million homes if elected president. We scrutinize these measures, weighing their potential benefits against historical precedents of inefficient large-scale projects like the Boeing Starliner. Alongside this political analysis, we offer insights from our own experiences running a growing brokerage in a fluctuating market, highlighting increased buyer activity and the complexities of managing a team with diverse personalities.
Switching gears, we address the pressing issue of housing affordability, particularly in California's strained real estate market. We examine the California Dream Program's impact on first-time buyers and discuss broader issues of inventory and affordability. Controversial policies, such as taxing unrealized gains, are also on our radar as we consider their potential effects on the market and investors. With the backdrop of a politically charged landscape and numerous candidates presenting their housing solutions, we share our concerns about the efficacy and practicality of these proposals. Tune in for a candid conversation that blends political critique with real-world real estate experiences.
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This episode so far seems like we're probably poo-poo Camp Harris.
Speaker 2:Which is funny, because I would say neither of us necessarily are.
Speaker 1:No.
Speaker 2:I don't think that that is the case. I'm sure you know people listening are very surprised.
Speaker 1:All right, welcome back. Favorite podcast on the planet in the world Realty Talks podcast. It is episode number 15.
Speaker 2:It is, yeah, 15. Look at us go.
Speaker 1:Yeah, it's really exciting. Yeah, we have a lot to talk about probably. Yeah, we do A lot to unpack.
Speaker 2:Yeah, I think we should just jump right in. I think today we're going to talk about some things that have been mentioned politically that would really impact the real estate industry, so I think it's important to jump right into that.
Speaker 1:Yeah, any broader updates? How is life as the CEO of a rapidly growing brokerage?
Speaker 2:You know it's been an interesting few weeks I have to say We've had some just very unique. There are so many personalities that we work with on a daily basis, so it definitely keeps me on my toes. I will say yeah, what about you?
Speaker 1:Yeah, yeah same A lot of change oh yeah.
Speaker 2:Yeah, You've had some changes too, yeah nothing.
Speaker 1:I mean you know everything's good. Just you know the market kind of is what it is. You know rates coming down a little bit have helped with some of our resale. Yeah, we still see a lot of opportunity on the investment side. But I think business is easy and people are hard.
Speaker 2:Yeah, definitely.
Speaker 1:Like generally.
Speaker 2:Yeah, yeah, exactly. I will say I have felt more buyers in the market. We've moved some inventory that had been kind of stagnant. So I think that the word is out that rates are going down and even maybe will reduce more next week, depending on how that goes.
Speaker 1:So yeah good news what I hear you and I both saying is that market everything's fine, but you know managing large scaling few new gray hairs for both of us.
Speaker 2:Yeah, yeah yeah. But I think we so let's jump in. I think there were some headlines this week, yeah, Vice President Kamala Harris mentioned. The first thing I think we could talk about is $25,000 for down payment assistance for first-time homebuyers. You have to be on time with your rent payments for the past two years. There's always some sort of stipulation there. It kind of initially made me think about the California Dream program that we had in California specifically, but let's talk about it. What are your thoughts?
Speaker 1:Where is that money coming from? Yeah, I mean I think I don't know. I mean I want to be really careful. I don't have, I'm complete independent.
Speaker 1:Yeah, I don't really buy into either side. But when I saw that statement I was so concerned Because you know to me, anytime you give somebody something for nothing, you know they're not going to take care of it, there's no value, they didn't work for it. You know, I could certainly see how that might, you know, speed up homeownership. But we already have an inventory problem, and so putting more buyers into a place where they go and buy the limited inventory that exists with money that we don't really have, I don't understand the logic.
Speaker 2:Well, you mentioned an inventory problem. I think she also mentioned that there were going to be 3 million new homes.
Speaker 1:Yeah, she said, if she's elected president, that she's going to build 3 million homes during her four-year tenure.
Speaker 2:She's going to build them.
Speaker 1:Sweet hammers, she's going out.
Speaker 2:Yeah, she's hitting the streets Well, so would that actually solve the inventory problem then?
Speaker 1:No, I mean my opinion. This is just for a disclaimer, this is my opinion. It is probably the worst thing that any political candidate could ever say. I think you know. Just broad picture is that, like you know, number one, building three million houses in a four-year run is unbelievably complicated.
Speaker 1:I would go back to the example of SpaceX and Boeing. From NASA for $4.6 or $4.8 billion to create the Starliner, which would take astronauts, you know, to space and back. At the same time, spacex was awarded a $2.4 or $2.2 billion contract for the same thing. Essentially, you know they are both. You know private companies, or I guess you know Boeing's a public company. I guess SpaceX is now too, but you know, but different structures, you know. And so SpaceX today, in 2024, has cut costs so far from what the government had been doing previously. I mean even down to like a spring in Elon's book he talks about. You know how it would cost NASA $16,000 for a spring on a door, and he got the cost down to like five cents because there's no difference between the aeronautical or aerospace steel.
Speaker 2:Right.
Speaker 1:You know, than what's being sold or what he can go manufacture. You know, and you know, fast forward to where we are today. I think SpaceX has done 13 manned trips to space and and come back, uh, in Boeing. That behemoth that they are uh still has not done one, and they had double the funds to do it. Um, actually, they, they just completed their first one two weeks ago and the astronauts are going to be stuck at the international space station until 2025. Oh, wow, because they had an engine issue. Oh no, they're stuck in space right now.
Speaker 2:That doesn't surprise me, though, with Boeing, I have to say.
Speaker 1:But I guess my point and this is a long-winded answer, but it's like any time our government steps in to try to solve a problem that really should be private enterprise, they overspend like crazy, they are slow moving, there's way too much red tape and they can't get it done. So if that was actually to happen number one, where do those houses go? Number two, where does that money come from? But if they were to actually try to accomplish that, it would probably be the single worst thing for single family residences in the US that we've ever seen in our lifetime. Ultimately, if I'm right and maybe I'm wrong, but they would probably drive trade costs up 10x. So all of your national builders would basically stop building because they would A not have access to workers. B once they do get access to those workers, they're going to have, you know, a new expectation of compensation, and so I think the number of starts on new development would go down significantly. And then, when that music stopped, then those workers would not want to go back to work at market rate.
Speaker 2:Right.
Speaker 1:But I guess for me the simplification is you're going to go and build houses and then give people money to buy the houses. That can't afford the houses. I don't understand that math problem.
Speaker 2:Yeah, and to me it just kind of feels like it wasn't necessarily a vetted comment or, you know, proposal, I guess I would say, because I think, you know there've been quite a few holes poked in it immediately. But you know, I think also and we've talked about this before it kind of comes down to, things are said all the time from both parties that were just like where is this coming from? Who gave you this idea? And yeah, it's terrible, talk to the people that are actually in the industry, or, you know, have, you know, a better understanding? Because sometimes it feels like maybe that's not happening.
Speaker 1:Yeah, I mean, I didn't do enough reading. I, you know, spent a little bit of time looking at it, but and so maybe they have a plan for all of that. But yeah, I mean, it just seems crazy.
Speaker 2:Yeah.
Speaker 1:Yeah, I don't. I mean, I don't know what that would do. You know, from a realtor's vantage point, what do you think?
Speaker 2:Yeah, I mean, that's that's what I would say, I think, as from a realtor. Um, yeah, it's like California Dream Program, where it's, I mean, that's not so different from the concept. I would say and you know, again, I don't think there was enough information released. Yeah, Because with the Dream Program that is paid back.
Speaker 1:The down payment assistance.
Speaker 2:Exactly, there is down payment assistance there, but it is paid back, but that was something that we were super excited about because, you know, it is bringing buyers into the market. It is enabling first-time homebuyers to do something that they wouldn't normally be able to do. So I do think that there is something that could be done that could help for affordability for homebuyers and you know, we, but maybe that is not it.
Speaker 1:Yeah, but you know, I mean, maybe that's the intention, right, yeah, maybe that is. Maybe we didn't, you know, read enough, or maybe she just hasn't said enough. Yeah, maybe they intend to go and create some sort of a bond and then have that money get paid back?
Speaker 2:Yeah, and I think that's a completely different conversation and a different.
Speaker 2:Again, it is hard with headlines, right, and we try and read as much as we can, but I mean, even before this I was digging to actually read the full proposal. It's not as prevalent. So, you know, maybe there's a master plan, but what I will say is we do. There is a problem with affordability and you know, there across the country, I would say especially in California. So you know some, there probably should be something that changes a little bit, or, you know, a little bit of help there. But you know what does that look like.
Speaker 1:Yeah, I mean, I guess that's another question, though, right, like we're primarily between innovate and buy-by-house focused in Southern California. You know, when we talk about the lending arm Center Street, you know we start to get a little broader throughout the US, in 37 states, but where do you put those houses in California?
Speaker 2:Yeah.
Speaker 1:So if part of the affordability or inventory problem is here where a lot of the jobs exist I mean Bakersfield, the Inland Empire I mean those are good markets, but are they going to be commuting?
Speaker 2:for those jobs? I don't know.
Speaker 1:I mean it's kind of crazy.
Speaker 2:Yeah, yeah, I mean you Like I don't know, I mean it's kind of crazy. Yeah, yeah, I mean you know that I think 3 million houses seems a bit of a stretch, a little bit of a reach.
Speaker 1:And yeah you're right.
Speaker 2:I mean, if the problem is here where I mean, because I will say there are certain pockets that already do have a little more inventory. So I don't know if it's I mean, but even here in California there are you know. So it's, yeah, we've seen quite a change and shift in Florida, but overall, I mean there are there are places that you can buy in California but, you know I don't.
Speaker 2:as far as affordability goes, interest rates have been ticking down a bit, but maybe there needs to be some creative programs out there. I mean, the buy-down programs were great to get the interest rates down, yeah. I mean the data points. To me it's not going away, that problem.
Speaker 1:Yeah, I don't think so, At least not anytime soon. The markets that we operated in the most, san Diego still is hovering around 30 days of inventory. The opposite end of the spectrum, south Florida, is like almost a year of inventory. But I mean, again South Florida, like were you building in South Florida, in the bayou. I don't know, maybe, but yeah, again South Florida, like were you building in South Florida, yeah, in the bayou, yeah.
Speaker 1:I don't know maybe, but yeah, it just seems crazy. I couldn't believe she said those things. She also said this week that she was going to tax unrealized gains at 25%, which I don't know how you would do that and that's like the whole point of investing is not paying your tax. So I think and again I might be overreaching on what I understand, but an unrealized gain would be if you purchase, you know, $100,000 worth of Apple shares and then they double to 200 in this fiscal year, whether you've sold them or not, you're going to have to pay 25% of that gain, which is not a good thing Doesn't seem to make a lot of sense.
Speaker 1:I don't think yeah, but I mean I guess, if we want, I mean this episode so far seems like we're probably poo-poo, Camp Harris.
Speaker 2:Which is funny, because I would say neither of us necessarily are.
Speaker 1:No.
Speaker 2:I don't think that that is the case. I'm sure you know people listening are very surprised, but I think it's important that we talk through. I mean both any comments that really affect our industry, or any proposals or any ideas. I think it's important for us to just be real about you know, no matter where it comes from.
Speaker 1:Yeah, I hate both people about you know, no matter where it comes from. Yeah, I hate. I hate both people.
Speaker 1:for clarity, right now I'm incredibly uninspired by the two people that are trying to become the leader of the free world. Uh, you know, I look at myself in the mirror every morning and I'm like, is this the best we have? You know, it's like pretty bizarre. Uh, you know, but if if I feel like we should at least level set the playing field a little bit, like, while she's out saying those things, I mean, Trump is on this crazy podcast train right now.
Speaker 2:He's going on everyone's podcast, we might get him on ours. I was so. Yeah, he. I mean back to back interviews where, um I I heard last night one of his interviews that he said he has never had a glass of alcohol.
Speaker 1:Yeah.
Speaker 2:Do we think that this is a true statement? Theo?
Speaker 1:Vaughn's podcast. Is that who you're?
Speaker 2:talking about yes, yeah.
Speaker 1:There was a full conversation about how Theo Vaughn used to do a bunch of cocaine and Trump said like, oh, so you're off of the cocaine, so then you just revert back to alcohol. And Theo was like oh, you know, yeah, but then once I have a glass or a drink, then I want to have more cocaine. And Trump was trying to ask questions like oh, is that like a real big upper, like you could tell he'd never been in that environment before. I think he's factual. Do you think that's?
Speaker 2:factual, but like to say I have never had a glass of alcohol, which is a weird way to say it. I've never had a glass of alcohol, but like you've never even. Yeah, I mean.
Speaker 1:Yeah, it reminded me I didn't know if I could believe that. It reminded me of a story in high school. I grew up in Utah, I have an older sister and at this phase of her life, in high school, she had some questionable friends. My mom was like I don't know if I want you hanging out with that group tonight. And she's like mom, it's not like I'm out there snorting weed and she was all serious about it. My mom's like all right, have a good night.
Speaker 1:That's it, yeah, everything's fine, you know, go, go enjoy your time tonight with your friends.
Speaker 2:Like you know, you're in the clear. You are clearly doing nothing.
Speaker 1:Yeah, but to me it sounded the same when I listened to Trump. He's like I haven't had one glass of alcohol ever in my life. Yeah, okay. So strange, yeah, yeah what are your thoughts on all of?
Speaker 2:it. Oh, I mean on that, not Trump, and booze?
Speaker 1:Maybe you send him a bottle of wine. I did have a lot of thoughts on that. Clearly, Maybe we take it away from her and just the statements, like 3 million houses, the statements like 3 million houses, 25k to make a down payment.
Speaker 2:I'm a believer that a lot of things that people are saying are to generate headlines and interest and gain traction. I don't necessarily understand, I think in theory, to the average person they might be like wow, 3 million houses, that's amazing yeah, and 25 grand for down payment assistance. That's awesome, you know. So I think that is probably what the intention was.
Speaker 1:Sounds exciting.
Speaker 2:Sounds exciting, but I think if we're going to unpack it a little bit, it might not necessarily be as glamorous as it sounds, and I think you know we can do that often with all of the things that are said by both candidates.
Speaker 1:So if you're running for president, what's your statement right now to get people to vote for you? Oh geez.
Speaker 2:I mean, if I'm running, oh yeah, I'm better than both of them. I don't know, that's actually probably really good.
Speaker 1:Yeah, oh yeah, I don't, I'm better than both of them, I don't know. I mean I, that's actually. It would probably be really good. Yeah, it would probably work.
Speaker 2:Yeah, that's, I mean, that's all I got.
Speaker 1:Yeah, yeah, I would vote for you. Where are you running? Yeah, I mean, actually, somebody should just say that. Yeah, I think that wraps it All right. Episode number 15, realty Talk podcast. We intend to talk all things real estate, a lot of single family. This week we got stuck in a little bit of a political rabbit hole, but we think it's important. We think it impacts our buyers and sellers and investors. So we're excited for next week's episode. Check back, see ya.