Epic Real Estate Investing - How Kamala Harris Will Hold Back Affordable Housing | 1345

Episode Date: September 12, 2024

In this episode, we take a deep dive into Kamala Harris's ambitious campaign promise to construct 3 million new homes as a solution to America's persistent housing shortage. We scrutinize the feasibility of this pledge, evaluating whether it can be effectively implemented and what potential bureaucratic challenges might arise. The discussion contrasts this promise with historical political pledges and previous housing policies to assess its viability. We also explore various perspectives on the matter, including those of former President Donald Trump, who has his own stance on housing and real estate. This comparison provides a broader context for understanding the political landscape and its impact on housing policy. Moreover, the episode highlights the ramifications of these political promises for private investors in the real estate market. We discuss how strategic investing becomes crucial in light of shifting political priorities and market dynamics. By examining potential policy changes, regulatory hurdles, and market fluctuations, the episode offers valuable insights for investors seeking to navigate an evolving housing landscape. Whether you’re a seasoned investor or just starting out, understanding these dynamics will help you make more informed decisions and capitalize on opportunities in a potentially shifting market. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. She made a campaign promise. By the end of my first term, we will end America's housing shortage by building 3 million new homes and rentals that are affordable for the middle class. Kamala Harris has officially kicked off her presidential campaign, and she's putting housing affordability front and center, promising to build 3 million new homes. This wouldn't be the first time a politician made a lofty promise to sway public opinion without a real plan to deliver.

an ambitious goal, but she's betting it'll resonate with voters who are feeling the squeeze without regard to the reality or the intention of pulling it off. The promise reminds me of Obama's Affordable Care Acts, Keep Your Doctor Promise. And that means that no matter how we reform healthcare, we will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor, period. And I'm not picking on the left, George H. W. Bush famously promised, my lips, no new taxes. You remember that?

My opponent won't rule out raising taxes, but I will and the Congress will push me to raise taxes and I'll say no, and they'll push and I'll say no, and they'll push again and I'll say to them, read my lips. No new. If you don't know the history, both of those promises midterm were canceled. Kamala's gamble is likely to pay off though, like it did for Obama and Bush, which is why politicians always make audacious promises during elections. But there are some uncomfortable truths about affordable housing promises, Kamala's promise in particular,

that nobody has yet to bring up that you need to hear before election day. For example, does it make sense to build 3 million new homes to solve the U.S. housing's affordability crisis while simultaneously building additional demand out of undocumented immigrants and giving them free money to buy those new homes. It's on the table. And here's what we're dealing with. Kamala Harris is focused on housing. That's a big deal.

Not to mention smart, because let's face it, housing has become a nightmare for so many people. Prices are skyrocketing, and finding an affordable place to live seems impossible for just too many families. Harris is promising to change that, and she's not just talking the talk, she says she's got a plan.

Here's the meat of it. Harris is calling out corporate landlords who are buying up houses by the dozen, making it more difficult for regular folks to buy a decent home. These companies then rent them out at extremely high prices, her words, which is subjective, and that kind of gives you a clue as to who she's pandering to. But she paints these corporations, who, ironically are her biggest donors, as part of the problem because they're increasingly controlling the supply. On the flip side, Trump has taken a different approach.

He's tying housing issues to illegal immigration that's driving up demand. Historically, probably not the strongest argument. But with open borders, his position has legs. And then there's this to consider. The reality of California's move just last week, which approved a bill to extend home mortgage aid to undocumented immigrants. Elon Musk chimed in with a post on his social platform X that half of Earth should move to California,

given all the incentives to do so. This bill, the California Dream for All program, in one sense, it reminds me of the $150,000 of zero percent, interest capital chase has made available for real estate investors and business owners. If you have a 680 credit score or better, no collections or bankruptcies in the last seven years, you can get instant approval at no-costcapital.com. But this California Dream for All program, it too offers no interest loans up to $150,000 to cover down payments and fees, but to undocumented immigrants.

And it's unclear right now if a credit score is even needed. I mean, how many undocumented immigrants have one? Details still to be revealed, but what we do know is these loans don't accrue interest or require monthly payments. Considering California Governor Gavin Newsom and Vice President Kamala sit on the same side of the aisle, it's not crazy to think that this program could go national if she's elected. For example, in 2006, Massachusetts passed a comprehensive health care reform law under Governor Mitt Romney. The law mandated that all residents have health insurance. At the time, this approach was seen by many as a bold and potentially risky experiment in health care reform.

It was this state-level health care reform that became the blueprint for the Affordable Care Act, also known as Obamacare, which was signed into law in 2010. 20 million people instantly had health care, but then made it unaffordable for 20 million different people. So did it really serve the American people? The point here is there's precedent for a crazy state bill to go national. So if history were to repeat itself, how does this math serve Americans? To construct 3 million homes to tackle the housing affordability issue,

while at the same time creating more demand by providing undocumented immigrants with incentives and financial support to fill them. The program would overshadow natural citizens, not to mention documented immigrants who are really having difficulty themselves. People who have followed all the rules are going to have to have to. to compete for these new homes with those that didn't. A program like this would kill the incentive to become illegal. It's not rocket science.

If you're giving out free stuff along with free money, more illegal immigrants will come. I mean, who wouldn't sign it for that program? The reality is that this is just a California thing for now, but is it unimaginable that it could go national if the wrong people ended up in the right seats? You can't say no because it's happened before. Trump is also accusing Harris of wanting to destroy the subject suburbs by pushing for more apartments and condos in suburban areas, calling it a war on the suburbs. It's a stark contrast to Harris approach and highlights the clear divide at how each candidate

views the housing crisis. Now the uncomfortable truths nobody is talking about, and there are many of them. The first one that stands out, 3 million. It's a big number depending on the perspective you view it through. If you consider the bureaucracy involved, it's a huge number because the government isn't exactly known for speed. Even if Kamala's administration committed to building these homes, the red tape, zoning issues, and endless bureaucratic delays

will slow the process down to a crawl. I mean, if you've ever built or did a major rehab on a house before, you know what I'm talking about. Now multiply that by three million. Exactly. Three million homes is a ginormous number. But in the context of the housing crisis we're in, would it even move the needle?

You see, the housing market, itself is enormous. As of 2003, there are approximately 140 million housing units in the country. Adding 3 million homes increases the total housing inventory by just barely over 2%. Now, it's not that big of a number,

is it? And when you consider that illegal border crossings have surpassed 12.5 million since Biden Harris took office, it's barely a drop in the bucket. And then there's this. The real estate mantra is location, location, location. even if 3 million homes were built, where they're built matters a lot.

I mean, if they're not in the areas with the highest demand, like major cities or growing suburbs, then they won't relieve the real pressure in the market at all. Face it, the government isn't going to build these affordable homes in downtown Los Angeles, New York, or Miami. They'll build where land is cheap and available. And those may not be places where people actually want or need to live. So there's a good possibility you'll see a glut of homes unless. desirable areas, while the desirable markets remain unaffordable. Now, let's say this assumption

is wrong, and I'm just totally crazy, and these homes are built in high-demand areas. Well, now basic economics comes into play. While an increase in supply might initially put some downward pressure on prices, the market has a way of adjusting, and it will. Developers, investors, and even homeowners would respond to a sudden increase in inventory by adjusting their prices, holding back building new units and selling what they do have until the market stabilizes. The prices, they might dip slightly, but they'd return to where the market demand keeps them. The idea that 3 million homes will suddenly make housing affordable really overlooks the complexity of the market, exactly what you would expect from someone who's never run a business or even

worked in the private sector. Prices are driven by a myriad of factors beyond just supply, including interest rates, income levels and demand. Prices will adjust to meet what the market can bear, as it has done, and as it has us where we are today. The promise to build 3 million homes doesn't guarantee they'll be high quality or truly affordable either. I mean, if you've ever lived in government housing, you know what I mean. Trust me, you really don't want the government building homes. Government projects often face cost overruns and compromises and quality. I mean, think Boston's big dig project, a massive infrastructure project in Boston, Massachusetts, designed to re-referenced

route, the city's central artery highway underground. Initially projected the cost $2.8 billion, the final cost ballooned to over $14.6 billion, and the project faced numerous issues, including leaks, ceiling collapses, and defective materials. The compromises on quality led to ongoing maintenance issues long after the project was completed. And then there's California's high-speed rail, which aimed to create a high-speed rail system connecting major cities in California, like Los Angeles to San Francisco. The project was a on November 4th, 2008, but didn't begin construction until more than six years later, January 6th, 2015.

Originally estimated at $33 billion, the cost has since soared to over $100 billion, with significant delays, and here we are nine years later, it's still not done due to challenges in land acquisition, engineering, and construction. And now the debate is around whether they should even try to finish it. Then there's the health care.gov rollout. The website was created to facilitate the implementation of the Affordable Care Act. The project cost was initially estimated at $93 million, but ended up costing more than $2 billion to build a website. And then there's the Pentagon's F-35 Joint Strike Fighter. I won't go into it.

You get the point, right? That building 3 million homes by the end of a presidential term is an improbable task for the government. They're just not good at this type of stuff. If they were successful, though, the term affordable is relative. The Affordable Health Care Act, that comes to mind again. What the government deems affordable for some may still be out of reach for the average person. And this is especially true for real estate in high demand areas. Flooding the market with government-built homes could destabilize the housing market.

It could discourage private developers from building new homes or maintaining existing ones, knowing that they can't compete with government subsidized price. We've already seen very recently that private developers couldn't compete because of the prices caused by a disruption in the supply chain. They pulled back. Another disruption in the free economy will lead to a drop in overall housing quality and numbers as private investment dries up. That's what we call an unintended consequence. This is what happens when a simple system tries to regulate a complex system. If the government were to build and subsidize these three million homes, the unintended consequences,

could be significant and varied and wide and far-reaching, like, one, depressing property values. Flooding the market with government-built homes could lead to a housing surplus in certain areas. This could drive down property values for existing homeowners, negatively impacting their equity and wealth, or two, quality and maintenance issues. Rapidly constructed, mass-produced homes could suffer from lower quality, leading to higher maintenance costs and potentially creating entire neighborhoods of poorly built housing. This could lead, as it has done before, to long-term infrastructure problems and increased government spending on repairs.

Or three, social segregation. Concentrating affordable housing in specific areas could lead to social segregation where low-income families are clustered together in certain neighborhoods, potentially exacerbating social inequalities and limiting economic mobility. Or four, the strain of. on local services. And influx of new residents and areas where these homes are built could strain local services like schools, health care, and transportation leading to overcrowding and a decline in service quality. And those are just some of the things that I can think of. But in reality,

the unintended consequences of simple actions like this end up being far worse than what anyone could have anticipated. We have recent proof of that time and time again during the pandemic. In essence, while the intention behind building three million homes might be to solve the housing crisis. The reality could be a mix of positive and negative outcomes with some potentially severe unintended consequences that could undermine the original goal, holding back the whole movement. But here's what we actually know. The housing crisis isn't just about the number of homes. It's about the cost of labor, mass illegal immigration, the supply chain, and policies that restrict supplies such as zoning laws and building regulations. Instead of addressing these root causes,

the government, it's slapping on a band-aid, one with a weak adhesive, where the primary motivation is to win an election. But without fixing the underlying issues, the crisis will persist. And then, where does the money come from? Taxpayers, they're going to foot the bill for this massive construction project. And with government projects notoriously going over budget, there's a real risk of higher taxes or cuts to other essential services to fund this housing boom. The promise to build 3 million homes, it's a flashy headline. But in reality, it's a superficial solution that doesn't address the deeper issues in the housing market. It's more about political points than practical implementation or impact. And when the dust settles, we're looking at another empty promise that

leaves us right where we started. Now, if you're in real estate, especially as a private investor, here's where the opportunities lie. With Harris pushing for new construction and Trump focusing on the suburbs, there's potential for significant shifts in the market, whether it's getting a of the demand for affordable housing in urban areas or capitalizing on suburban developments. Understanding these political moves could give you an edge in your investments. The savvy investor would listen to everything that I just said and ignore the politics, ignore the ideologies, ignore all that stuff altogether, and walk away knowing that there is and will be for a very long time massive demand for affordable housing.

Precisely the type of housing you can find at cash flow savvy. So here's my advice. Set your emotions aside. Elections tend to bring out the worst of them in all of us. But when it comes to investing, there's no room for emotions. It's just logic and math. So pay close attention to how this unfolds. The housing market is about to get a lot more interesting.

And as a private investor, there's a lot to gain if you're strategic about where you put your money. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them.

And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home world. We got the cash flow.

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