Where Real Estate Gets Its Dirt

Industry Relations Podcast:  Exploring the Impact of MLS PIN’s Proposed Rule Changes

Are you familiar with the new rule changes proposed by MLS PIN settlement? Join us as we explore the unintended consequences of these changes and how they could affect the real estate industry. Rob and Greg dive into these rule modifications and their potential impact on buyers, sellers, and agents nationwide.


Thank you to our sponsor, Zenlist. To modernize your MLS visit zenlist.com for more information! Click here to sign up with Zenlist.

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This podcast is produced by Two Brothers Creative 2023.

  1. Hope you dont mine~

    I work with people who don’t always want to sit through an hour cast, and want just consumable text, and if it can be summarized, all the better… sooo…

    I yanked out the text, wrapped it into a pandas dataframe

    [449 rows x 10 columns

    Oddly, after breaking it down and segmenting it, and running semantic analysis against it, GPT-4 finds 449 rows, and from the rows

    Neutral 409
    Positive 24
    Negative 16

    Here are the summaries per row

    Summaries:
    [‘On this episode of Industry Relations, Greg Robertson is joined by Rob Han to discuss low inventory and interest rate lock-in. Greg announces a new sponsor for the show,Zenlist, a mobile application that provides search, tour scheduling, chat, client collaboration, and listing input. Greg gives a brief recollection of his trip to the UK, which included a day at Wimbledon.’, “Greg recently returned from an exciting trip to Scotland with his kids. While he didn’t have a chance to meet with real estate agents in the UK, he did notice some of the differences in the outdoor areas. Upon his return to the US, he discussed the current housing market with his friend. Prices are high due to low inventory and the number of transactions, yet the housing market is still overheated due to a lack of supply.”, ‘Our friend Keith Robinson has highlighted a phenomenon called interest rate lock: due to the low mortgage rates below 5% and even 3%, homeowners have a huge amount of equity and could benefit from moving up. This is evidenced by a recent Zillow chart that showed home prices appreciating since 2020 by up to 53%. As nobody has been able to get a 20-50% raise in salary, this shows how much equity there is in the market for those homeowners.’, “Someone should do the math and create a data visualization to show what having a lot of equity would mean when looking to purchase a new house. Additionally, there is a myth that mortgage rates will return to a low of 3-4%, but it’s unlikely to happen in our lifetime. It’s not clear yet if having a lot of equity would really help someone in their decision to buy or if it would allow someone to eventually rent and have an extra $300,000 to start a business, invest in the markets, or plan for retirement.”, ‘The main point of the document is that the Fed raising rates so sharply and quickly has caused some marginal buyers and sellers to be wiped out of the market, which was demonstrated by the example of a growing family having to move from a one bedroom condo to a three bedroom starter home. It is this change in life circumstances that makes them marginal in the market and the increasing rates means many may not be able to move up and stay at this level, making them unable to purchase an additional property.’, ‘The discussion explores the effect of the macro market on marginal buyers and sellers, such as those looking to buy and sell a starter or four-bedroom home. The conversation highlights that the current low interest rates, along with other influences like the price of housing, makes home ownership more difficult for such groups. This results in a significant decline in total home sales of around 20-25%. The conversation also notes the market in Tampa has increased by 50% adding further pressure on marginal buyers and sellers.’, ‘The housing affordability in many cities is in a difficult state, partly due to a lack of salary increases relative to the significant increases in housing prices. Additionally, consumers are becoming more willing to make the jump from renting to buying in order to gain more utility, and first time buyers are taking advantage of the more-stable 3% mortgage rate despite market changes from the peak.’, “A couple with a baby on the way is looking to move from a studio condo to a three bedroom starter home. They are exploring the idea of taking advantage of the market and taking their gains to move into a larger home, but they find that the postcards and emails they receive regarding interest rates suggest that this could lead them to a less than ideal home. They consider the builders’ ability to play with the rates to accommodate them a better option. Retirees who would normally downsize to a smaller home after the kids move out find that the four Ds are no longer applicable, and the four bedroom house is too big for them.”, ‘The speaker discusses the issue of low inventory for the housing market, as well as the lack of change in the situation. They question whether or not home ownership is now only restricted to the wealthy, and if flyover states will become the new places to buy starter homes. They also bring up the fact that job security is an issue when relocating.’, ‘The speaker discusses the new normal of San Francisco wages and the ability to move to Oklahoma, as well as how this trend is not sustainable and may lead to potential issues such as young people unable to purchase a home. There is a discussion around potential solutions such as rent control and longer mortgages, like those in Japan.’, “Japan’s flat property prices for the past 20 years have created an opportunity for a new financial product that takes into account the shared responsibility between banks, consumers, and landlords. This product, which could potentially be co-ownership, would wreak havoc on the economy 20 years from now if an MBS mortgage-backed security banking crisis like the one seen this year were to occur. There may be a way to find an innovative solution to this issue.”, ‘This document discusses the effects of rapidly changing interest rates on various investments. Equity instruments, such as a 50% ownership in a property, could provide stabilization to the banking system. Discussion also centers around the issue of marginal buyers, and the issue of new construction being usually geographically distant from desired areas of living. The document ends by considering how new construction may provide a better option than moving to a faraway place.’, “Buying a home can be a stressful process and is often marked by compromises. A broker or agent should consider the buyer’s financial situation and what they are willing to sacrifice in order to find a home they can afford in the current market. The agent should also advise the buyer to take more steps to make the property affordable, such as setting up bunk beds or looking for alternative housing solutions outside of the immediate area.”, “There is a narrative that suggests now is a good time to buy real estate, as prices are down. However, selling real estate may not be the most profitable choice right now and geographic arbitrage (moving to a state with lower prices) is the only way to truly capitalize on the reduced prices. Even then, this may not be a good option for people who won’t feel comfortable in their new location.”, ‘A real estate agent has a new marketing tactic where they target consumers from Southern California, providing them with 10 premium homes in 10 different markets that they may not have considered. They emphasize the lifestyle benefit that comes with not having a mortgage, such as going on vacation and enjoying a different environment. The idea is extended to businesses, suggesting that companies can move themselves and all of their employees to a different city such as Kansas City if it suits their interests.’, ‘Commercial brokers should leverage their expertise and brand to target niche audiences. The example used is home protection and gun owners, who could be attracted to a specific agent. The idea is for residential agents to bring a commercial partner along to talk to doctors with medical practices and pitch the advantages of moving to cities where office rent is a third of the current price.’, “This article talks about the issue of having too many doctors and too much healthcare in the US. The speaker then refers to the issue of healthcare wait times and how this could be improved. They also discuss whether the speaker could see themselves living in the UK, or if they prefer to stay in their current residence of Southern California, as it is a place they consider to be a vacation spot. They conclude with a suggestion to use Two Brothers Creative’s content in a box option to help business owners with marketing and SEO without the need to dedicate huge amounts of time and resources to it.”, ‘Two Brothers Creative offers services to help businesses increase their success through a new marketing playbook. This playbook provides the knowledge and direction needed to hyper-focus your marketing efforts in order to achieve real results. Start reaping the benefits of personal business growth by accessing the playbook at thecontentbox.com.’

    Here is the segmented form that was pulled from

    1 – On this episode of Industry Relations, Rob and I talk about low inventory and interest rate lock-in.
    2 – Let’s go. This is Industry Relations, a podcast that’s at the intersection of real estate and
    3 – technology from an insider’s perspective with Rob Han and Greg Robertson. Hi, everybody. This is
    4 – Greg, and I’m really happy to announce that we have a new sponsor for Industry Relations,
    5 – and that company is Zenlist. I’ve been tracking these guys a while. It’s a great new mobile
    6 – application. You can do search, tour scheduling, chat, client collaboration, listing input,
    7 – all from any mobile device. These guys are pretty cool. They’ve got about 100,000 agents across the
    8 – United States. So please visit zenlist.com to schedule a demo. So if you’re an MLS exec,
    9 – you’ve got to check this out. Visit zenlist.com to schedule a demo. And once again, my thanks
    10 – goes out to Zenlist for sponsoring Industry Relations. Hello, everybody. Welcome back
    11 – to Industry Relations with Rob and Greg. This is your co-host, the notorious Rob Han. And as always
    12 – with me is the fabulous Greg Robertson. Looking very British. Now, where’s your kilt, dude? I
    13 – mean, you look tan, which I wouldn’t expect from a trip to the Emerald Isles there. But-
    14 – Yeah. Hola, hola, man. Yeah, I just got back on two days ago, late Saturday night. And we spent,
    15 – for those of you who don’t know, I was in the UK. So we had, it was a long trip. We were,
    16 – I guess, 14 days. So six days in London and did the whole tours of that thing. We did a walking
    17 – tour in London, which is pretty cool. We actually got on and saw one day at Wimbledon, which was-
    18 – Oh, wow. Okay.
    19 – Really great experience of, they have a whole program where you can, I mean, you can skip,
    20 – there’s a lottery to buy tickets. And then I think there’s an aftermarket that they can
    21 – give a scalp. But there’s another thing where you can join what they call the queue,
    22 – which is not what the queue means here in the US. It’s where you can stand in line and get good
    23 – tickets, right? So me and my son and my brother-in-law went out there early, early that
    24 – morning, Monday morning, and basically stood in line for about six hours and got tickets,
    25 – really great seats for court number one. Wow.
    26 – And saw three great matches. And that was, it was awesome. We got inside the whole thing and
    27 – had the strawberries and cream and a few pints. And it was spectacular.
    28 – So Greg, when you joined this queue, did you have to give them your name, your identification?
    29 – No, when we got there, they just handed us a ticket with a number on it.
    30 – No, okay. So when you joined the queue, you’re anonymous.
    31 – Right.
    32 – So it’s kind of a queue-anon type situation.
    33 – Oh, God. I’m the one that tells the jokes here, buddy.
    34 – And that’s a terrible one. So, you know, this is why you tell the jokes.
    35 – It’s not queue, it’s Q-U-E-U-E, right?
    36 – But it’s spelled Q. It’s pronounced Q. That’s awesome. That’s awesome.
    37 – And then we went for six days in Scotland, which was great.
    38 – Oh, that’s awesome.
    39 – And we did that. So yeah, still a little bit jet lagged, but I’m happy to be here.
    40 – And diving right back into the world of real estate in the United States,
    41 – did you do any real estate related stuff in the UK? Like look at any of the differences?
    42 – Yeah. All I did was look at some of the outdoor, outside of the windows at different things. I
    43 – didn’t meet any real estate agents while I was there. I mean, we had my kids. Again,
    44 – I needed a vacation for my vacation. We were doing so much.
    45 – Of course. Of course.
    46 – It was crazy.
    47 – Of course. I’ve always felt that going on vacation with your kids is not really a vacation.
    48 – It’s more of a, I don’t know, educational tour for all that benefit.
    49 – But welcome back. Welcome back.
    50 – Thank you.
    51 – Great to have you. So I thought, because we hadn’t really had a chance to prep with you being on the
    52 – road and there’s a lot of stuff going on, but there is one topic I thought is worth touching on,
    53 – which is at this point, I feel like the entire world has woken up to the fact that the housing
    54 – prices are not really coming down, but it’s because inventory is so short and number of
    55 – transactions here are going to be redonkulously low. So the expectation is of course, when you
    56 – have lower demand and lower inventory, because that’s what Redfin said, right?
    57 – Yeah.
    58 – He said buyer demand is like all-time lows, but buyer inventory is at lower still.
    59 – Yeah.
    60 – So that’s why prices really haven’t come down. Our friend Keith Robinson at Next Home,
    61 – I saw a video that he did on LinkedIn talking about kind of around this topic,
    62 – and he addressed a very particular phenomenon. I just thought we’d chat about it and get your take.
    63 – The phenomenon is interest rate lock, right?
    64 – Right.
    65 – And there’s been a number of studies that are out saying something like 70, 80% of people
    66 – have mortgage rates that are below 6%.
    67 – Or like below 5% or 4%.
    68 – Below 5%. There’s something like 40 or 50% of people have below 3%, right?
    69 – Yeah.
    70 – And the point is rates now are like north of 7%. They’re not selling. They’re not selling.
    71 – And Keith was pointing out, look, that might be true, but
    72 – a lot of them have enormous amounts of equity. A lot of these people who are homeowners,
    73 – they’re sitting on maybe 3%, 4.5% rates, but they’ve got $200,000, $300,000 of equity
    74 – because home price has gone up so much and they could move up if they wanted to, right?
    75 – So the point is go talk to those sellers, point out how they could move up and yada, yada.
    76 – Yeah. That sounds like-
    77 – What do you think?
    78 – Yeah. So two things. And I saw you comment that it’s on Twitter and I wrote a little
    79 – quick post about it. It was Zillow’s recent chart that I think Fortune put together,
    80 – Fortune Magazine put together about the appreciative homes since 2020.
    81 – Yeah.
    82 – And you were talking about some markets, it was 53% from the price of home went up from 2020 to now.
    83 – Yeah.
    84 – Some 35%, some 19%. I mean, that’s just incredible. And I think your comment was like,
    85 – who’s gotten a raise, a 20% raise or a 50% raise since 2020? And the answer obviously is nobody.
    86 – That’s right.
    87 – But that goes to speak to your equity kind of thing there. No, it sounds like that’s like,
    88 – again, maybe because I’m a vendor and I make CMA software, I’m a hammer, everything looks like a
    89 – nail, but that’s a chart that somebody should make of like, if I’m an agent for Express,
    90 – well, yeah, you have a 3.5% mortgage rate right now, but let’s look at your equity.
    91 – And if we apply that equity down on the next thing, that’s going to bring it to this.
    92 – Yep.
    93 – And over the long run, this is going to happen, right? So I think somebody should do the math and
    94 – then do a data visit of that and see if that works out. I’m not sure if that’s going to work out.
    95 – God, if you’ve got a rate below 3.5%, that’s still a lot that you have to make up for, but that is
    96 – something definitely to look at. But again, I think it’s going to have to go back to,
    97 – you got to, what do they say? Date the rate, marry the house, right?
    98 – I just, but I mean, I can’t see, now what I’m hearing the thing is like, okay, well,
    99 – we’ve had 10 months of the interest rate, I’m sorry, inflation going down. It was as high as
    100 – 11 or something, and it’s now down to three or whatever. And we’ve had 10 consecutive months
    101 – of that going down. Well, we’re going to get back to interest rates that are four or 5%,
    102 – or three or 4%. That’s the other myth that I see is starting to percolate, right? The myth before
    103 – was like the housing prices are going to go way down. That’s obviously not happened. And now it’s
    104 – like, well, are people going to still think that those interest rates are going to go back down to
    105 – 4% or 3%? I don’t think that’s ever going to happen in our lifetime ever again.
    106 – Probably not.
    107 – So I don’t know if this equity, I mean, I guess somebody has to do the math and show me in a data
    108 – viz chart, what does that mean? Does having as much equity really, if you’re going to go buy
    109 – another house, really help you? Or are they talking about a lifestyle change where you go to
    110 – rent and now you’re sitting on a nest egg of $300,000 that you can start a business with,
    111 – or can start the planning of putting in the markets if you start a retirement? Is that
    112 – the narrative there? I’m not sure exactly. I didn’t see the LinkedIn video, so I’m not
    113 – exactly sure what he’s saying there. Right. No, he was making an interesting point. He was
    114 – making a good point. And so I agree with Keith on most of it. The point I want to make with that
    115 – though, I started working on a piece and I said, I don’t know if this is, but I figured you and I
    116 – would discuss it. So let me state the conclusion, then I’ll try and kind of tell you how I got
    117 – there. The conclusion for me is I think what this does is the Fed raising rates so dramatically,
    118 – so fast, it wasn’t even the amount, it was the speed. I think what it says, I think it’s wiped
    119 – out marginal buyers and marginal sellers. Here’s what I mean by marginal. So if you have a serious
    120 – life change, and the example would be divorce, you get divorced.
    121 – Or the four Ds that we talked about, right?
    122 – The four Ds, right. Or you die, obviously that’s a lifestyle change, but you know what I mean?
    123 – Some serious significant life change, you’re like, I have to sell.
    124 – Diploma, divorce, death, and whatever else. Yeah.
    125 – But it’s like the whole, you just got relocated. Your job just moved you, so now you have to move.
    126 – If you have to, then rates, none of that shit matters because you have to, right?
    127 – But if you’re not facing one of those, if it’s just a move up, and this is where I think the
    128 – marginal comes in. What I started imagining was I remember buying my first condo back in 1997.
    129 – Do you know what I mean? We bought a tiny little one bedroom condo because it was just me.
    130 – And at the time, my fiance, my wife, right? And we had a baby, right?
    131 – And moving from that one bedroom condo to a three bedroom starter home was a gigantic change,
    132 – like lifestyle change wise, right? It really is a huge change.
    133 – And then we had a second kid and it wasn’t like, okay, you can accommodate that.
    134 – And what I thought was if we had a third child in a three bedroom apartment, in a three bedroom
    135 – starter home, right? Would we have moved up? And the answer is that’s when we’re a marginal buyer.
    136 – Right. That’s what you’re saying, right? In other words, like-
    137 – You don’t have to, but if everything aligned, you could do it, right?
    138 – If the price is right, et cetera, it’s like, okay, moving up to a four bedroom house would
    139 – make life better for us, right? But what’s the cost? What’s the, et cetera. And to me,
    140 – that’s the marginal buyer, right? The marginal seller as well, because then obviously you have
    141 – to sell your starter home in order to move up. And I think that group is completely decimated
    142 – because of interest rates. And I think if this interest rate lock-in is at work anywhere,
    143 – it’s with that group, right? And I don’t know who they are, right?
    144 – Yeah. But I mean, that’s something we talked about already. I mean,
    145 – we’ve been talking about how the macro market has affected those, as you call them,
    146 – marginal buyers and sellers, right? Where the four Ds are going to, you have to do that.
    147 – But we were both surprised by how much the macro market has an effect on that, right?
    148 – But this is where-
    149 – What are they predicting the, I mean, I think I’m going to lose this bet because I think you
    150 – were really pessimistic at the beginning of the year. What are they predicting the total sales
    151 – now based upon… It’s in the fours, right? It’s in the fours.
    152 – The latest I saw was 4.2.
    153 – Okay. So if we’re talking about a normal market as a 5.5, that sound right?
    154 – Yeah. Something like that. Yeah. Historically.
    155 – So you can almost kind of then do the math there and say, okay, well, hell, that’s 1.3, 1.2…
    156 – Yeah. It’s a 20 to 25% decline.
    157 – Right. Which is about the macro market, right? That are-
    158 – Correct.
    159 – That tie to that. So that’s an interesting kind of thing to think about going forward of what
    160 – that swing can be. I’m sure all the economists already think about this and know this.
    161 – Of course. Of course.
    162 – But yeah, that’s crazy. And then-
    163 – Right.
    164 – But then the crazier part is, forget the lock-in, which we get, but these other factors,
    165 – what we just talked about, if you’re in Orlando, I forget which one it was, but-
    166 – It was like Tampa. I want to say it was like Tampa. It was like 50%.
    167 – Like Tampa, a 50% increase in the price of your home. Now you’ve got the double whammy,
    168 – right? Because now it’s like, okay, let’s say that I have to move,
    169 – or even though on the marginal buyer, it’s like, well, Jesus,
    170 – you made that much there, but you’re going to have to give it all back away to somebody else.
    171 – Right?
    172 – That’s right. And then some.
    173 – Yeah. It’s just nuts.
    174 – Yeah. And then some.
    175 – Yeah. It was Miami. Miami was 53.43%.
    176 – Yeah.
    177 – I mean, Tampa was 55. So you’re right. Yeah. That was the biggest jump here.
    178 – But even a market like local where I know, Riverside, right? That was still up like 18%.
    179 – I mean, I’m thinking like Riverside, no, sorry. I’m sorry. 38%. I mean, what the hell?
    180 – And the thing is, I think people are looking at the year over year change and saying,
    181 – oh, home prices have dropped.
    182 – Right.
    183 – Because they’re looking at like 7% declines in Las Vegas and things like that. Like, oh,
    184 – it’s dropped from the peak. And I’m like, fuck the peak, dude. Look at from 2019.
    185 – Yeah.
    186 – And again, my thing is like, but no one’s made that much money.
    187 – Nobody got raises. Nobody got 50% raises in two years.
    188 – So housing affordability is utter crap because of it. But here’s the thing. I think we have been
    189 – seeing this. We’ve been hearing this. I think Mike Simonson, for example, a couple of weeks ago put
    190 – out a tweet saying, it looks like the consumer has adjusted to the new mortgage rates. Like,
    191 – we’re starting to see more mortgage applications and things like that.
    192 – Yeah, yeah, yeah.
    193 – Purchase mortgage. I’m like, yeah, that’s true. I’m willing to bet that those are first time buyers.
    194 – Right.
    195 – Because again, to go back to that-
    196 – They can’t wait any longer, right? So there’s like, okay, this is the new normal, blah, blah,
    197 – blah.
    198 – Not only that, but like I said, the utility, right? There’s like the benefit you get.
    199 – Going from renting to owning, it’s a world of difference, right? It’s a huge, huge jump.
    200 – Going from a small one bedroom condo to a house, a detached house, it’s a big jump.
    201 – Right? So I think those people are willing to do that. And like, whatever, 7% and I have a 3%
    202 – rate, who cares? I’m going to go from a tiny studio condo that I was sharing with my wife to,
    203 – we’re going to move into a three bedroom-
    204 – House.
    205 – Because we’re going to have a kid, right?
    206 – Yeah.
    207 – That’s a dramatic change. Going from a three bedroom starter home to a four bedroom move up
    208 – home, I mean, it’s a change, right? But it’s not a dramatic change.
    209 – Yeah. Do you want to swallow that bill for that-
    210 – Correct.
    211 – Change, for that little of a change, right?
    212 – Correct. Correct. And that’s the issue, right? So this rate thing is coming in because again,
    213 – we get, I think we still get like postcards and emails from random, like, Hey, you know,
    214 – rates, whatever. And you know, did you know your home value went up 30% or 40% or whatever? So
    215 – and we’ll look at it like, but based on these rates,
    216 – we would end up settling for a crappier house. Like we would sell our house right now and capture
    217 – our gains. And then we move, we’d have to move to a smaller crappier house at the same payment.
    218 – Why would we do that? No one’s going to do that.
    219 – Well, I mean, I think that’s why we’re seeing, and it just goes back to our kind of conversation
    220 – with Keith was the new home market, right? Because they can play with that stuff.
    221 – And that’s why they’re doing so well there, right? That’s perfect for the situation you
    222 – talk about, right? Where I’m going to go into an existing home. You’re going to have to,
    223 – that’s a thing you got to deal with as far as interest rate, but the builders will play with
    224 – that thing to kind of get you in that inventory. That’s right.
    225 – Yeah. And then the other area where this really, really hurts are all the retirees,
    226 – right? The old people who normally would have been like, okay, well, the kids have moved out.
    227 – And this is where even the four Ds are no longer applying, right? Because it used to be the D,
    228 – the diploma piece, you’re now an empty nester, right? And now this four bedroom house is too
    229 – big for you. You know what? Let’s sell, let’s capture some of the gains. We’ll move into a
    230 – smaller thing that’s appropriate for two people, right? Et cetera. I think now what’s happening is
    231 – they’re looking at like, but we have a 3% rate. Why would we sell and then buy a smaller, crappier
    232 – place at a much higher, like, no, we’ll just keep it. We’ve been living here 10 years anyway. We
    233 – love our home. We’ll just keep it. We’ll just onto it. Maybe we’ll pass it onto our kids or
    234 – something, but there’s no reason to leave. So if that’s a scenario, the question is how do you
    235 – unlock the inventory? Yeah. I mean, and then that’s the question for sure. Then the other
    236 – question is like, what is going to change? I mean, what makes this thing change in the next year?
    237 – Again, if we feel that the interest rates are not going to go back down to 4%,
    238 – if we feel that there’s this not going to be a bunch of houses coming on the market because of
    239 – foreclosure, we’re not definitely in a 2008 situation. I mean, what actually changes here
    240 – to make things, because this is affecting everybody, this industry, if you have less
    241 – transaction, this affects associations, MLSs, vendors, agents, brokers, franchisors,
    242 – termite inspectors, builder, I mean, everybody. So that’s the kind of really,
    243 – that’s a tough question to ask. It’s like, how, I mean, what, it’s not, I don’t see us a way out
    244 – of this. There’s no magic bullet here. And what does that mean? Is this a new normal?
    245 – And is home ownership now just for the 1%ers, as you call, as we talked about before?
    246 – Pretty much.
    247 – Oh, God.
    248 – Pretty much.
    249 – Or does this open up more, there is now going to be, I guess, with the COVID stuff, there was this
    250 – whole thing of people from San Francisco moving to Sacramento, but now is it going to be more of a,
    251 – I’m moving from California to Nebraska, loving Nebraska, because our producers are from Nebraska,
    252 – but I mean, to buy a home, right? I mean, it’s that type of thing. These flyover states become
    253 – the new places to go to kind of buy a starter home.
    254 – Yeah. That’s already happened. That’s already happening. The issue is your job.
    255 – So yeah, it made sense during the COVID thing, right? When all of a sudden it’s like, okay,
    256 – everybody work from home. Cool. I’m making San Francisco wages, but I can move to Oklahoma?
    257 – Like, yeah. I mean, that makes all sense to the world. But as we’ve discussed,
    258 – like a number of companies are starting to backpedal from that.
    259 – And not everybody has those kinds of jobs, right? I mean, people can’t do that.
    260 – Not everyone has those kinds of jobs, right? Or you just straight up go, hey, you know what?
    261 – We’re hurting, so we’re going to lay off. Okay, now what? Right. So yeah, I think this is kind
    262 – of the new normal. I think what we’re headed… Now, here’s where I differ. I’m like, yeah,
    263 – it is a new normal foreseeably, predictably. I think I don’t get though, I don’t believe this is,
    264 – this is not sustainable. Like just as a country, we are not a country that’s just premised upon
    265 – the wealthy elites own everything and then everybody else just become tenant farmers.
    266 – Like that’s just not in our nature. Like that’s Europe, right? Europe has been that way since like
    267 – the middle ages. Asia has been that way since whatever time of Genghis Khan. That’s not America,
    268 – right? So I don’t know that we would tolerate that. And then you have to go, okay, what happens
    269 – as a result of that? So in other words, let’s say we’re at like 4 million homes sold this year,
    270 – right? Let’s say interest rates are 8% going forward, but homes are still increasing at
    271 – 10% a year or whatever, like whatever it is. So we just have like entire generations of young
    272 – people are like, I can’t ever buy a house. I don’t think Americans will stand for that. I just don’t.
    273 – We have an election year coming up. So what are we going to see? Are we going to see
    274 – crazy rent control? We’re going to see something, right?
    275 – Yeah. I mean, I don’t want this to happen, but is it like 40-year mortgages? Is it some other
    276 – financial mechanisms to make that kind of stuff happen? I mean-
    277 – 90-year mortgage. Like, okay, so are we going to tolerate that, right?
    278 – Well, I know they have some of that kind of stuff in Japan, right? Where it’s a
    279 – multi-generational mortgage, right? No, I think Japan is going the other direction.
    280 – So the thing about Japan is their property prices have been flat for about 20 years, I think,
    281 – right? Because they have these various policies. They’re like, no, you’re not expected to get rich
    282 – off your home, right? So I don’t know what’s going to happen. I’m just saying like, if this
    283 – is the new normal, it’s not going to be a new normal for long, right?
    284 – I mean, it does smell like an opportunity. I mean, and we’ve talked about this before.
    285 – There was a great talk about this that I think it was Alex Rample made from Idris,
    286 – Portland. Yeah, A6&C, yeah.
    287 – Where how home ownership in this country has basically been an all-in, all-out situation,
    288 – where either like a hundred percent on the freaking tab for it, or you have zero equity
    289 – or any care, like your renter or home owner, right? If you’re owning it, like if something
    290 – happens, it’s all on you. You’re renting, it’s all on the landlord. And that, is there a financial
    291 – product or mechanism where we can take that the banks and the consumer are aligned, right?
    292 – Co-ownership, yeah.
    293 – Co-ownership, but like they both partake in the equity event that is going to happen later on. So
    294 – if I’m going to do a mortgage with, let’s say, Goldman Sachs, right? I’m going to buy a
    295 – million dollar home. I’m going to only pay 500,000. I’m on the hook for 500,000.
    296 – They’re on the hook for the other 500, and whatever that works out to. But when it’s sold,
    297 – I get half of what that is. It smells like there’s, and then what 20 years later,
    298 – there’s a product, a financial product like that. How does that wreck our economy,
    299 – freaking 20 years from now, right? That’s the fear there.
    300 – There’s got to be some innovative ways of getting out of this for sure.
    301 – I’m actually unsure what that’s going to be. Because now having said that, I do think about
    302 – the banking crisis that we’ve had this year, right? Like the collapse of Silicon Valley Bank
    303 – and all these other things. We know for a fact that a lot of it was connected to
    304 – the MBS mortgage-backed securities that they were holding,
    305 – completely dropping in value because rates went crazy.
    306 – Well, they went crazy in a very quick manner.
    307 – Correct. Right. Correct. A lot of these guys were holding bonds that were paying 2%,
    308 – and all of a sudden rates are like 7%. They’re like, well, the bonds are just paying 2%. It’s
    309 – the worst the paper’s written on. But if they held these equity instruments, that would be
    310 – different, right? If they didn’t hold bonds, like if they held this whatever thing is 50%
    311 – ownership in Greg’s house, and Greg’s house went up 40% in value. Therefore,
    312 – the value of this security went up 40%. So who knows? Maybe that’s how you stabilize the banking
    313 – system. It would be not a mortgage-backed security, but it would be like a mortgage-backed
    314 – equity security. Yeah. It’d be like equity-backed security of some kind.
    315 – Yeah. Equity-backed security. Exactly.
    316 – Yeah. Is that something that’s possible? I don’t know.
    317 – Maybe we should open up a freaking house here in Estellas.
    318 – I’m pretty sure there are a whole bunch of very well-funded companies that are trying to make
    319 – something like this happen. I imagine they’re probably running into all sorts of regulations
    320 – that make that very, very hard. But yeah, I just want to talk about this whole rate lock thing.
    321 – The issue is the marginal buyer. And for real estate, the issue is the marginal buyer is the
    322 – marginal seller. And to your point, like, yeah, new home construction is reaping the benefits of
    323 – that. There’s some real negatives to new construction though, right? And this is
    324 – something that I’ve brought up in the past and it just doesn’t get addressed, which is the thing
    325 – about new construction is that it’s brand new. So it’s nowhere near anywhere you want to be,
    326 – typically. So take Houston, for example, which is where I have the most experience.
    327 – New construction in Houston right now is like 45 minutes outside the city.
    328 – So what happens if you want to live closer to the stadium or closer to downtown?
    329 – New construction is not an option.
    330 – Well, but it’s a better option than moving to Nebraska. That’s the other option of getting
    331 – into a house you can afford. It’s not ideal, but at least it’s better than having to move out of
    332 – state, right? So there’s got to be sacrifices that are made there. And again, that might be a no,
    333 – but I think your first condo, it wasn’t where you want it to be.
    334 – Oh, it was actually.
    335 – But I mean, a lot of people, their first purchase isn’t the ideal home. It’s your starter home.
    336 – Oh, sure. Yeah, yeah.
    337 – So that’s not a, that problem, the problem you laid out of like the new homes are somewhere else,
    338 – that’s not a new thing. I mean, people have to sacrifice when they, but for the marginal buyer,
    339 – I think I do get your point where in a marginal thing, you want to upgrade to something that’s,
    340 – you kind of compromised and now you reap the benefits and want to move to something where
    341 – you’re not compromising as much and get really what you wanted to begin with. But I think you’re
    342 – exactly right on that. That’s right.
    343 – So, I mean, from a broker agent standpoint, I think when you’re talking to like a seller,
    344 – I mean, I think it probably pays to think about that marginal utility piece. Not as like, okay,
    345 – I’m talking to this homeowner, they’re a young family, they have two kids in a three-bedroom
    346 – house. Okay. If they have a third kid, that’s going to be real tight. Right?
    347 – But the trade-off isn’t like, if he just goes, hey, you have all this equity, you should upgrade
    348 – to a bigger house with a swimming pool. I don’t know if that’s going to play ball as much as
    349 – they could just have their kids room together. They can get bunk beds. Like whatever you’re
    350 – offering has to be better than that. Right? You know what I mean? Like it’s almost that type of
    351 – thing. And I’m sure the great agents out there are doing that. They’re thinking about their
    352 – clients and say, okay, what’s your life situation? Is this the right time? Or quite frankly, from a
    353 – fiduciary standpoint, you should be like, you know what? You shouldn’t. Just get a bunk bed
    354 – for now. Right? Just get a bunk bed or rent it out and then move to Kansas. You know what I mean?
    355 – Whatever. Yeah. But I mean, I’ve seen some of those agent videos, let’s say three months ago,
    356 – four months ago, like, you know what? And these are also the financial gurus. Like,
    357 – if you’re thinking about buying a used car, I would wait. Also a house, if you really don’t
    358 – have to move, wait 12 months. But again, now it’s like, what’s going to change in 12 months?
    359 – Right. It’s only going to get worse. Here’s what could change is you could buy a house now,
    360 – and it could be up 38% next year. That could change. Right? But I mean, as far as the rates
    361 – going down and the price of homes going down, no, that’s not going to change. So there is a
    362 – narrative there to say, it is a good time to buy. I mean, everybody can spend these things any way
    363 – they want. No, but if it’s a good time to buy, it’s not a good time to sell. Yeah. Right. I mean,
    364 – I’m sorry. It’s a great time to buy and sell. You had a situation here in California for a while
    365 – where you did have a perfect storm where the home prices were way up. You could sell it and here’s
    366 – the other part is that if they stayed, they’d be way more up. But the problem is back then you
    367 – could move from California to let’s say Arizona and basically go into a home in Arizona where
    368 – you didn’t owe anything and had some money on the side. Sure. Geographic arbitrage. Right?
    369 – But that kind of stuff is not happening any longer. Those kinds of deals are-
    370 – I think they still exist. Right? I think they still exist. But to your point, you really have
    371 – to do geographic arbitrage then. So you’d have to sell a place like Newport Beach for like $4
    372 – million and then move to Nebraska. Yeah. Right. And there’s some arguments you made that depending
    373 – on your lifestyle, that might make a ton of sense. But most people who live in Newport Beach,
    374 – I imagine aren’t going to enjoy living in Nebraska. You know what I mean? I just don’t
    375 – think their lifestyle works. Right. But I mean, there was something there where…
    376 – And we all see this when we’re traveling. It’s like, oh my God, look at that home.
    377 – Look at the land they got, especially coming from Southern California. It’s crazy. Right?
    378 – Sure. I mean, imagine an agent whose niche is… Okay. You may not think Idaho. You may not think
    379 – Arizona. You might not think Nebraska is whatever. But I’m going to find these premium homes with a
    380 – lot of land and everything else and type up the lifestyle thing there. And then I’m going to mark
    381 – it to Huntington Beach or Irvine people saying, listen, yeah, I know you got it great here.
    382 – Right? But if you can work from home, let me… Here are 10 homes in 10 different markets that
    383 – I know you haven’t considered, but take a look at this. Here’s the school ratings. Here’s the…
    384 – Whatever. And make people go, fuck man, I can move there. I don’t have a mortgage anymore.
    385 – Right? And there’s just that list of benefits they put like, okay, here’s what you are now.
    386 – Here’s what you could be. Yeah. It snows. It gets colder. Right? There’s not as… There’s
    387 – a third restaurant. You know the restaurants.
    388 – Starbucks. Yeah. Yeah. Yeah. Yeah.
    389 – But imagine right now you didn’t have to pay a mortgage. What’s your life would be?
    390 – You could go on vacation. You could do… There’s this lifestyle kind of
    391 – marketing that agents can kind of drip into, right? That I think would be really interesting to see.
    392 – That would be interesting. I wonder if that could apply… So here’s what I’m wondering. I wonder if
    393 – you could do that for entire companies, right? As someone who’s been a company owner, right?
    394 – Imagine it’s not just because it’s not just you moving to Idaho. What if it’s like,
    395 – hey, are you a company? Are you a business owner? Move the entire business along with all your
    396 – people to this wherever, right? Because now you get rid of the job issue, right? It’s not
    397 – if you can work from home. It’s like, you know what? No, I have an auto welding shop or some
    398 – kind. All right. Move the entire operation to Kansas City because this neighborhood needs an
    399 – auto welding shop. And now you, your four employees and your entire business can move.
    400 – I wonder if something like that would be… You know what? If you’re listening to this and you
    401 – maybe go reach out to some commercial broker that you know and have a conversation like, hey…
    402 – Well, yeah. It goes back to your kind of like… And this is a little bit a stretch,
    403 – but I don’t think that much. It’s like brokerages or agents that really leverage what they are,
    404 – that they know that a certain brand of people are into. Like the guys that you said was like in the
    405 – home protection, guns and stuff. That was part of this whole thing was like,
    406 – that was his persona. He attracted that kind of people. Who just had a post on this was
    407 – Brian Barrero from Thousand Watt. Imagine if Taylor Swift said, I’m recommending real estate
    408 – agents and tap into that fan base, right? I mean, that’s a little bit off the thing. But I mean,
    409 – if you really leveraged lifestyle, this is what your life is now. And this is what your life is
    410 – after that. And yeah, there’s some sacrifices, but the fucking upside are crazy.
    411 – Upside are nuts. All right. So I got this and we only have four minutes left. So I want to put this
    412 – out there as an idea for our listeners. Okay? Here’s the idea. Focus specifically on medical
    413 – practices. Okay. All right. So what you do is as a residential agent, you go talk to the doctor,
    414 – right? And then you bring a commercial buddy along and says, okay, you have this type of
    415 – medical practice with this many, whatever patients, this, that, or the other thing.
    416 – You could replicate this in this other city, right? Where there’s a lack of your particular
    417 – specialty or whatever. And home prices are a third of what they are here. So if you sell all of your,
    418 – you know, blah, blah, blah, sell here and then move to this other city, you and your entire staff,
    419 – all your nurses, all your people improve your life. Office rent is going to be a third and it
    420 – will take you this much time to bring your practice back up. Move the entire thing.
    421 – And I say medical practice specifically, because that’s the one thing that I don’t care. Like
    422 – every town, every city in America, there’s never like, oh, we have too many doctors.
    423 – Oh, we have too much healthcare. Like nobody’s saying that. Everyone’s like,
    424 – we have too few, you know, the wait times are too long or whatever. So
    425 – I want to hear more about, like, I want to hear somebody do this and like, let us know,
    426 – like, would that work? Interesting. Yeah, for sure.
    427 – Anyway. All right. We got to wrap. So wonderful to have you back. This, inside the United States.
    428 – I know. Good Lord. Greatest country, you know. It is.
    429 – Actually, so let’s leave with this. Now that you’ve actually spent so much time in the UK,
    430 – could you see yourself living in the UK? No. I mean, again, I like to visit there. It’d be nice
    431 – to have, not live there now, but you know, to visit, sure.
    432 – Because America. Well, yeah. But I mean, you know, listen,
    433 – I live in a place, I live in Southern California. This is where people come to vacation. I live in
    434 – a vacation. People come to vacation. I mean, I used, I was born in Seattle and grew up a little
    435 – bit in Seattle and, you know, that’s what London reminds me of is rain and big city. And I love
    436 – that kind of stuff. But yeah, I like it here in Hudsonville Beach. All right. All right. Well,
    437 – with that, thanks everybody for listening to this Ramble and we will see you next time. Thanks.
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  2. Whoops. There are some spelling errors in the last comment, how embarrassing :(. It’s hard to get so much in a little box and to see what’s going on with the text.

  3. @Joe This is interesting. Is there another podcast/website that includes text/summaries like this? We do have transcription of the podcasts but I really haven’t figured out a way to present them in a way that would be helpful to readers/listeners and wondering if any other podcast you know of have done this well.

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